8 BULLETIN 660, U. S. DEPARTMENT OF AGRICULTURE. 



classes. One will be referred to as "engineering and supervision" 

 and will include those items of inspection and engineering which can 

 be charged directly to the project. The other class will be referred 

 to as "administration expense" and include those expenditures 

 incurred in conducting all the activities of the department which 

 are so general in character that they are not assignable directly to 

 any particular project. 



The desirability of separating the project cost of engineering and 

 supervision from administration cost and unit costs will be apparent 

 after a little consideration. The work of the engineer in preparing 

 the plans and specifications affects labor and material costs only in 

 the kinds and amounts that may be required and not at all in the 

 efficiency of their expenditure. By carefully worked out profiles and 

 cross-sections an engineer may reduce the yardage of excavation 

 required, but such planning may not reduce the cost per unit of 

 excavation. To secure efficiency in operations is the function of the 

 superintendent or the foreman who is responsible for the cost of such 

 operations. If engineering and supervision cost is incorporated in 

 unit cost, an element is included over which the foreman or superin- 

 tendent has no control, and his efficiency is obscured thereby. If, on 

 the other hand, engineering and supervision cost is included in the 

 charge for administration, it is placed in a class of expenditures over 

 which the engineer has little or no control. 



Highway administrative organizations are prescribed largely by 

 statute and the attendant costs necessarily are dependent, in a large 

 measure, upon the form of the organization, the various duties 

 required, the methods of financing, and many other factors, all of 

 which are conditions imposed by legislation. To include with these 

 administrative costs the cost of project engineering and supervision 

 would mean the loss of valuable comparable information on the 

 efficiency of the divisions of an organization and one type of admin- 

 is trational organization with another. 



Administration. — Administration costs include such expenditures 

 as salaries and expenses of the executive officers, legal services, main- 

 tenance of office, departmental engineering, investigations, experi- 

 ments, clerical staff, fiscal operations, and miscellaneous fixed charges. 

 These expenditures can not be allocated directly to any particular 

 class of work or to individual projects. 



Cost accountants have devised numerous ways of distributing 

 general expenses to the various classes of work. Most of these, 

 however, are not practicable in tho distribution of such expenses on 

 road work. Since indirect labor and indirect materials are distrib- 

 uted directly in the unit costs, and engineering and supervision are 

 chargeable directly to projects, the remaining portion of what would 

 be considered "burden" by factory cost accountants is comparatively 



