DEFENCE WORKS

Dominion, Volume 36, Issue 22, 21 October 1942, Page 6

DEFENCE WORKS

Construction Costs On Schedule System REPLY TO CRITIC The president of the Federation of .Master Builders, Mr. C. Luney, yesterday replied to Mr. W. Sullivan, National member for Bay of Plenty, who, in the House of Representatives on Saturday, criticized the cost of defence construction works under the schedule system. “If the statement made by Mr. Sullivan had been made by a member of the House not connected with the building trade, I would have put it down to ignorance,” said Mr. Luney. “Mr. Sullivan, however, is a member of a well-known building firm at Whakatane which has carried out work on the defence master schedule, and the statement made was therefore all the more extraordinary. It is perfectly obvious that Mr. Sullivan could have no idea of the volume of work when he considers that it should be etttried out on the competitive tender basis.” • Mr. Luney said it was a known fact that before the appointment of Mr. James Fletcher as Commissioner. ol Defence Construction, the competitive tender system had broken down. Many firms had been taking on work beyond the capacity of their labour or their organizations with no possible hope of securing additional labour; ami many of the major defence contracts were then mouths behind as far as date of completion was concerned. Again, because of. the lack of fiuaneia resources, large numbers of smad builders’ who had been engaged on housing and other minor contracts were being excluded, the value ot these organizations as a consequence being lost to the Dominion s .war requirements. . Another and more serious factor was inflation of wages caused by competition among the building interests to secure labour at any cost. The orderly system of allocation, therefore, introduced by the Commissioner of 1 Defence Constuction, while it did not altogether suit the larger interests, was the only sane and possible method that could have been introduced if results were to be achieved. To revert to the tender system for defence works, where materials and labour must be controlled, would, at this juncture, not produce the necessary results.

Statement on Costs. “The statement that the cost of the work performed in the Whakatane district was 35 per cent, to 20 per cent, higher than it would have been under the tender system, is a gross misstatement of fact,” said Mr. Luney. •MrSullivan should be definitely aware that the master schedule is divided into »two sections —material and labour, lie should know, too, that the builder is paid only on the net cost of the material, plus o per cent, and 2* per cent., so that a reduction in the net cost of the material by 15 per cent, to 20 per cent, is utterly absurd, because the profit is based on the net cost of materials. In any case, the schedule definitely provides that adjustments will be made in each district for variation of costs of materials, and that •payment can' only be made on presentation of documentary evidence as to actual uet. cost. “Mr. Sullivan, in making the statement about the master schedule, should have been aware that the Commissioner of Defence Construction had called a conference for Thursday last. October 15, when representatives of builders* associations throughout the Dominion were present, together with the Government architect and quantity surveyors attached to his department, to investigate the labour costs on all defence contracts with a view to classifying them into grades and types of buildings and to make such adjustments in the labour factor from actual evidence of building costs obtained since the inauguration of the master schedule. Before making the statement, Mr. Sullivan should have acquainted himself with the result of that conference, and thereby obviated a public statement being made which was casting a definite reflection not only on those responsible for the defence programme, but on the building industry as a whole. . Labour Factor. “For the information of the members of the House, of Representatives and the general public, to whom the statement was made, I have to state that as a result of the conference, and from the evidence which had been collected by Public Works departmental officers, quantity surveyors and builders, the master schedule was acknowledged to be the. onlybasis on which work could be satisfactorily carried out today. Some adjustments were made to the labour factor as follows : —, Grade 1 buildings: The rates in the master schedule to apply' with certain additions for superior finish where indicated by the Government architect. (This will apply to the hospital buildings which are shortly to be undertaken.) Grade 2 buildings (camp buildings) : Master schedule rates to stand. Grade-3 buildings: Deduction on all labour rates of per cent. Grade -1 buildings (open shelter type). Phase (1) (construction of defence works) : The master schedule rates to be reduced by 15 per cent. “For the information of Mr. Sullivan, few, if any. defence contracts have been finalized. The reason, well known Io the building industry, is that these payments were being withheld until a definite check on costs was obtained; it being a specific requirement of the master schedule when contracts are entered into. Now that this condition has been complied with, all defence contracts completed to date will be finalized accordingly. “The statement made that thousands of pounds could be saved if the work of the defence programme were entrusted to the Housing-Department and the Public Works Department,” concluded Mr. Luney, “shows a lack of knowledge on the part of Mr. Sullivan, as he surely must be aware of the fact that both the Public Works Department and the Housing Department are today co-operating to their utmost, as the letting of the contracts and the supervision of all defence works is in their hands.”