Millwork Cost Schedules

By E. R. MAULE, Manager, Millwork Survey Service, I,os Angeles

Address delivered before the Tri-Annual Conference of the MiIl- work Institute of California. formation into Millwork Schedules. For he is the man who must live with and use it.

Herbert Hoover, in his message to George H. Moss, Chairman of the Republican lriational C"""!"tion-ai-'f."i""' Ciiv,-ui.a it"i" vrords in his reply to the teleggfm notifying tim of-lis ""-i"iti"", --you ask me tor a message: A new era and new forces have come into--our e,conomic life_arih ouq settint ;-""C tti "iii"rr;i-;h; rvorld. These forces demand -of us Jonstant-study "na if"rt, ii prosperity, peace and contentm-ent shall be -aittiiirred.;,- Milfi.; g,"V qp! contemplate those words in their problems and consider rt condrtions in the millwo-Jk in{ustry are nof entirely favorable for "new forces" to become efiective.

Accurate "Millwork Cost S-c-hedules" is a ,,new force" that is n-e-cessary_"if -prosperity, peace ald contentment shall be miintiinia.; We are.all of an ooinion tha-t the proper pricing of our products is essenual to- prospertty-but how many of you have the conviction that ogr prices, which are dete-r-mined by our costs, must be found by uniform methods ,agre_ed !p-qn by tt i inaustrv,-lf ;;t b;";fi;-i. to accrue to the individrial. co-s-t syltems inventei'by ttrl individuai ma.y be -cgr.r.ect ig..nrincinle and"yei defeat the purpole intina;dfG sell profitably. were our products individualistic this rule would not apply but as millwork il a'standardi"ed prbducf ii d;;-. ;;;;. for the buyer obtaining compe[itive bids "1l".y"-Uuv, ii"--it.'iliii whose.price, as developed by tb-eir cost systern, determines the low_ ::t- 919:. on that particular prgduct, or group of products, under competttton.

To illustrate the disastrous efiect of individual cost systems. and tbis illustration but records actrilr "onaiiio"r "*i.ti"g i"-J.ii"i" klii at the pres-ent time, the folto-wing shows- thrt .rr:en thouch each sygtcqr used is correct for the i4dividual, it defeats its n.ry;;6;;; -profits-when used competitivelv.

. lfill A-figures frames at-$100.00 per thousand feet for material and laDor.making frames at $100.0O per thousand feet.

.narll t; hgures frames at the same material cost ($100.00 per M Ft.) and labor at 5(h per rrame.

Both the mills have tested these labor costs and found them gorect, Mill. A, by dividing thg total board iootag. lnto--tf,. t"i"i laDor- to arrrve at the labor c-ost per thousand fiet; Mill B. bv dividing th-e lotal number of tvpidl tra-is-*ia. -itito-i'r,.-r.rl', cost, thus finding the average cosi per frame.

The second axiom then in Millwork Schedules is-,,the ESTIMATOR should devise the schedules which considers the cost.', Heretofot'e Millwork Schedd{es have been compiled by millmen meeting together and by domp3-riug their cost information agreeing upon- an average value. Each co-operator rightfully believes his cost is correct, it probably is, but no- co-operai-or wili consent to a figure being used that is evidp4tly below-his cost. Thus without searching into the elements of c_osts, such as the method of recording,_ the costs used for raw material and labor, the amount of b-urden applied,- the alerage aggeed upon leaves evlry one confident that the cost is sufficiently safe to warrant tapering down when necessary.to get..a job. Recept competition certainly proves that millmen sharpen their pencils.

A comparison of- cost figure-s between the best operators, based on costs that are individually proven to be correct, will vary so greatly-as to seem-ridiculous. ihe actual costs do not vary to any noticeable extent if arrived at in a similar way, the mittrod ot compilation being solely accouptable for the resulii.

To illustrate this: cut stock fp; sash and doors may be purchascd, rs 9u! stoclq for costs of $5d.00 per thousand for- shqi cuttinej to $1,fl).00 for_ long cuts. The avirage cost of production of ilt cut-s is -aqproximately_$75.00. Two competing milis, both of whom make their own stock, rnay us-e cither thc range of purchase costs to find the rralues or may di{er by one usingfthe piurchase range and the other the average cost. Thus the costlf maierial may vaiy from 33-l/3 to 50 per cent for the same article.

- Either,the average cost or {he arbitrary range of vatues used in the ptrcha,se price may be pqoven correct by production costs. But since the results caused by ihe different methois of cost findins give a ridiculous variation of competition prices to the buyer it ii necessary to choose a uniform {nethod for the industry to use. An outside man, one compet€nt to jirdge from the evidenci given by the rnterested parties, must be choggn to make these decisions.

- rn competttlon lor business !,oth mills will have the same price f_o_t--"q AVERAGE size frame, Mitt A *itt-'t r"" .lo*i, piG ii,"" Mill B on a frame smaller tian auei"!i,- ""d ruril B ;ii h";;-; lowe-r price than Mill A on 4 fra-."iirgei than averaee:-- Bu; the bu.yer pays the low co_mpeiitive prici ;;;rt ii;;'l"a.'ir JtL !9s,ts th9 costing methods of_6s many mittl as-fr"e "rn !.i--U-iA, fr'"- tnnopes ot gettrng the v-ery lowest price. lne nrst axlom then in compiling Schedutes for an industrv is_ "Costs of MILLWORK muit uE fild b;--St""i".'a-il.d'c""t Sy-s_tems .!9 prevent ridiculous competiiive -oriJds."

.No millm.an, worth-y of thq name, hai failed to invent clever mulwork sch€dules. Not having a Standard Cost System develoo_ ing.cost information, men,of -illeci..iiv irre"t-orlgiri"i t*ti"a."5i apptyrng prtces. I'o search into the personal books and records of mitlwork estimators will aitonish inv""i at the tr,ou"r,i ""a ingenuity these men have giveq to the fiLbiem "f iaifr*"rf S.f,?l: ules. _Give them factory recori-s.of coit, "n? trr.v ippiy ih;t;t" to. their proble.m -of estimating i,ittr ama"i"j aptitride';ra ;i;;r;;;. Ln,._r: l: losrtrvely no task in the miilwork industry so prbductive ot rnterestrng prob-lems, loyal apglication of efiort foi the iomoanv,s ;:,rr;:. nor prrde !n prohtabte results than occurs in the estimator,s

The rnan who applies the price is the man who best can invent the quickest and most practical method of arranginj lt. *s-t'l":

Thus the third axiom-"A -"q*p.t.nt arbitrator' is required to settle the differences in opinions." To permit one of the rebresentatives of the mills to decide these questions iisks the confidence that every member may have in the the.schedules.

It is very difficult to accompiis! rapid pr-ogress in cost scheduling in a meeting- ,with more - thaq - three oi {our men present. Fivi workers should be the limit. Talkinc across the boari- leclr of con- meeting. with more tha4:kers Talking board. lack of conr rnan or tour men Tgtking boar lreater division of ooinion occurs centrati,on ""a - gi."ti._,at"iit6-ti-.? ;;iil;;' to the number present, The fifth axiomthen is "Work with i small committee of competent men."

Men are reluctant to-give ,tl-re inside dope on the efficiency of their own operations. It is but natural for every one to have a pride in their organization and feel they can whip the world when it comes to bed rock competitign. The thinc moit feared is isnorance, financial strength or agglessive sales tactics from the -other fellow.

Most men are confident that they can take care of their business if they caq get an even break. At least this is all they want. And it should be the aim of co-operators in the industry to work for just that and notblng more. fn other.words "fair play and let the best man win." This is the tay of civilization and uirder thiJ 6; industrial progres.s moves forward in an orderly fashion; the tther law known as "the survival of the fittest" eventually brings about the same results but in a most cruel and unnecessary fashion. Success comes to those who earn it; you cannot give it to those who

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