G.— ENGINEERING. 135 



more do not reflects in a large measure their capacity to assess what these 

 things mean, and their knowledge of the science of Economics. It is also 

 well known that some, at least, die wealthy. 



Few contracts are now entered into on what was the old-fashioned 

 " lump sum " basis, where the contractor undertook to produce something 

 that the employer considered he required and demanded to the satisfaction 

 of himself and his engineer, whether, in fact, the drawings indicated the 

 whole of what was thought to be wanted. The " lump sum " had to 

 provide any finished result that was implied in the documents or specifi- 

 cation, or that might arise out of the requirements of the specification, in 

 spite of any possible error of judgment in the design or in the description 

 of the physical characteristics or geology of the country in which the work 

 was carried out. '"'•- "•• bi ?* ■• < 11 • "\ 



Apart from the " lump sum " system, when all these risks have been 

 considered and, as already stated, an estimate has been made of the actual 

 values of labour and material based on knowledge of what such material 

 could be got for in the locality where the work is to be done, there has to 

 be added something for the uncertainties and contingencies that I have 

 described, as well as for profit. The capital requirements for construction 

 purposes vary according to the place and the character of the work. For a 

 large engineering contract where big deposits are not called for, the capital 

 required may easily run up to 15 per cent., of the gross cost. In other 

 words, the maximum peak that may be reached before the earnings from 

 work done (less retentions held by the Government or company) may be 

 easily 15 per cent, above the receipts at that time, and possibly on a five 

 years' job, between three and four years may elapse, the time varying 

 according to the margin for profit, if such accrues before the contract 

 receipts cross the line of expenditures. In diagrammatic form one has to 

 compute what the interest will be on the average capital for the time before 

 such desired result is achieved. Thereafter capital, instead of having to be 

 found, should begin to flow into the coffers of the contractor, and therefore 

 be on the credit side. The initial expenditure being as I have indicated 

 anything from, say, 12 to 15 per cent, of the gross cost of the work at a 

 maximum peak, has got to be financed, either out of capital accumulated 

 or by advance by some financial institution, and often a good deal of profit 

 is sacrificed owing to the necessity of procuring these advances. If a con- 

 tracting firm has three or four large contracts running at once, it may easily 

 have to find either out of its own resources, or by borrowing, a sum ap- 

 proaching a million sterling. One contract may lose while another one 

 gains, but with all the risks I have enumerated, and there are others which 

 are not covered even by my long list, losses are often very heavy indeed. 

 If these are not " shouted from the house-tops " but are borne with a grim 

 determination and a mental " tightening of the belt," it is because con- 

 tractors as a whole are a stoical people who prefer to keep their losses to 

 themselves. I do not wish to discourage the young from venturing on the 

 path that leads with hard work and luck to the summits that the successful 

 contractor rises to, for the joys of fighting with nature and dealing success- 

 fully with the subtlety of man are the very breath of those who really give 

 their life to this kind of work, and the pity of it is, in view of the confidence 

 they have to show in themselves and others as well as in science and in 



