Structural problems affect the adaptability of design for the purpose intended. They arise also from the physical difficulties encountered. The soil may be rock, or it may contain hidden springs. The elements have to be guarded against; floods, cyclones, earthquakes must be allowed for in the design when the structure is to be erected in a locality where any of these are frequent.

There are problems of insurance, and the federal and various state statutes must be followed. Statutes provide for workmen's compensation being paid to injured employees. The hazards for personal injury to the public must be met. Many other hazards exist, and the cost of insurance must be weighed against possible loss from the risks. There are possibilities of loss through fire, tornado, flood, earthquake. explosives, hold-ups, etc.

Financial Problems

Financial problems are always existent. Provision must be made for securing an ever-sufficient fund of cash for paying workmen and buying supplies. In manufacturing and mercantile enterprises, the turnover is a merchandise turnIn this industry the turnover is one of capital. Merchandise can be bought on credit. Capital in the construction industry must be furnished in cash.

over.

Serious thought must be given to the amount of capital that is invested or is allowed to remain invested in equipment necessary to proceed with construction work. If a contract for new work is offered to a contractor and it requires the purchase of additional equipment, he must carefully consider whether the further investment is justified by the possibilities of profit in the contract. Care must be taken that when equipment is in use on any job a proper charge for such use is made—not a charge that will yield a profit but one that will pay the cost of maintaining the equipment.

Problems of Accounting

These arise

Problems of accounting have to be solved. from many causes: (1) the character of the contractor's activities; (2) the nature of the contracts with the owner, whether lump-sum or cost-plus; (3) if cost-plus, whether the work is financed by the owner or by the contractor; (4) whether the actual work of construction is done by the contractor's organization or is partly sublet to subcontractors; (5) whether the workmen have to be housed and fed; and (6) whether material has to be transported great distances and stables and garages maintained.

The accounting in the construction industry is radically different from that in mercantile, manufacturing, or banking businesses. Theories which are sound in these lines are impracticable in construction work, because of the heavy overhead expense involved or the interference with physical prosecution of the work. The accounting practice developed in this industry is based on the physical, financial, and operating conditions existing in it. Special training is required before a man is competent to act as the accounting executive for a large construction company and to take charge of and successfully direct the accounting to be done. This results not so much from the complexity of the accounting phases of the transactions as it does from the factors which are collateral thereto, and which might cause a construction company the loss of large sums of money.

The industry has its many problems of taxation, and of reports to be submitted to different state, city, county, and federal officials. States require the payment of entrance fees for the privilege of doing business, and annual fees and taxes must be paid on specified dates.

If the construction work is being done by a corporation, it must know what "doing business" means in the different states. Its contracts in some states may be invalidated, so

that it may be precluded from instituting suit thereunder in state courts, through failure to obtain state licenses to operate.

Solving the Problems

How does a contractor plan an organization capable of solving these problems? He develops two forces, and sometimes three-the office force, the field force, and if he has a considerable investment in equipment, the storage yard force.

Office Organization

Consider first the office force. It is not possible to estimate offhand how many men or departments there should be in any particular contractor's office. This can only be decided after a study of the nature and the volume of the work performed by him has been made. An outline of the main activities of his office force follows, although often several of these activities can be performed by one man:

1. Promotion-interviewing architects and owners, and securing contracts for new work.

2. Estimating the examination of plans and specifications for the purpose of ascertaining the quantity and quality of work to be included in the new project.

3. Engineering the examination of plans for sufficiency of design and the solving of construction problems arising during the progress of field work.

4. Construction-the supervision of the actual physical work of assembling and installing the materials in the structure.

5. Contract and purchasing-negotiating for the advantageous subletting of work and the purchasing of materials, supplies, etc.

6. Inspection and expediting-inspection of materials in the shops and at the mills of the firms from which they are bought for the purpose of seeing that the proper quality of material is used, and the hastening of shipments so

that supplies will be at the site of the work when needed by the workmen.

7. Changes the examination of revisions in plans and specifications when extra work is ordered, or the omission of work directed by the owner, the determination of the value of such changes and agreement with the owner as to this value, and the resultant adjustment of prices with furnishers of materials and subcontractors for materials, labor, or services.

8. Drafting the examination and securing of plans and specifications necessary to enable all who are engaged upon the operation or in the furnishing of supplies to have full and complete information regarding the requirements of the work.

9. Cost analysis-analysis of actual cost during the progress of the work to determine the unit costs of production and the reduction of costs where possible.

10. Accounting and treasury-the recording of all financial transactions of the contractor and the custody of his assets, except equipment.

II. Equipment-the proper care and maintenance of equipment needed for construction.

Field Organization

The size of the field organization depends upon the size of the operation.

While a member of the contractor's office force repeatedly visits a job for the purpose of giving advice and directions bearing upon the work of construction, the immediate supervision thereof is conducted by the job organization. This organization, a fuller description of which is given in Chapter III, is composed on a large operation of the superintendent, the timekeeper, the material clerk, the production clerk, civil engineers, rodmen, watchmen, and foremen.

The superintendent is charged with the general duty of seeing that all work performed at the site is in accordance

with the architect's or the engineer's plans and specifications, and that it is done economically and efficiently and completed on contract time.

The timekeeper checks the time earned by mechanics and laborers, enters it on payroll sheets, and sees that the workmen are paid.

The material clerk is responsible for checking the quantities and quality of material delivered at the site. He must not allow any material to leave the contractor's possession without obtaining a receipt there for and seeing that the firm to whom the material is delivered is billed for it.

The civil engineers and rodmen do whatever surveying is required on the job.

The production clerk acts as an assistant to the superintendent in analyzing the cost of performing the various lines and features of work for the purpose of detecting excessive costs and assisting in determining the causes of these costs.

The watchmen guard the works day and night and keep away those having no business on it.

The foremen are charged with organizing the work of the workmen under them and using every effort to keep their output at its highest point.

The Store Yard Organization

The force in the store yard consists of the superintendent, watchman, and whatever laborers, mechanics, chauffeurs, etc., are necessary to load, transport, maintain, and repair the equipment. This store yard force is only a small part of the contractor's general organization. A great many contractors maintain no store yard whatever.

The Contractor's Operating Procedure

A contractor's general method of conducting his business can be briefly summarized as follows. He obtains a contract