MASTER SCHEDULE SYSTEM

Southland Times, Issue 24882, 23 October 1942, Page 4

MASTER SCHEDULE SYSTEM

Defence Construction Works

(Special) WELLINGTON, Oct. 22. The cost of defence construction works under the master schedule system, as compared with the competitive tender method, was the subject of a statement in the House of Representatives this afternoon by the Minister of Public Works, the Hon. H. T. Armstrong. He said that the master schedule had been adversely criticized from both sides of the House, mainly on the ground that considerable saving could have been made had the tender system still been followed. He would have agreed with this in principle until recently, but after having watched the operation of the schedule system, he believed that this system, inaugurated as a war measure, had come to stay. Mr Armstrong said there was no doubt in his mind, and in that of his officers, that the tender system would have completely failed to meet the tremendous defence programme and that costs would have soared. Serious competition between building firms foxlabour and increasing labour costs, and the necessity fox- control of the limited material resources, had made the tender system inapplicable. He was satisfied that the schedule system was sound, although it must be, and was subject to, constant check as costs became available. TWO ASPECTS OF SYSTEM There were two aspects of the master schedule, namely, the rates for materials and for labour, said the Minister. Material rates were fixed on ruling prices and would be the same were the tender system used. Labour rates affected comparative costs and the sclxedule was adjusted on this section over and above that arrangement, which was as near perfect as it could be made. Arbitrarily there was a final check on the cost of works after they had been completed. The purpose of this was to see that the various firms concerned did not realize more than 5 per cent, profit and 2A pex- cent overhead on the cost of the work. A margin of 7£ per cent to cover profit and administration costs showed a very satisfactory return to the builders, and a basis was provided whereby the Government was secured against excessive profit on one contract and perhaps having representations made to it fox- x-ecoupment of losses on anotheicontract.