When can you subcontract a project?

Plant Engineer Ralph English wrinkled his nose when Project Engineer Sam Sharpe presented the lab refurbishing cost estimate to him. "This is much higher than I expected." Sharpe shrugged.

07/01/1999


Plant Engineer Ralph English wrinkled his nose when Project Engineer Sam Sharpe presented the lab refurbishing cost estimate to him.

"This is much higher than I expected."

Sharpe shrugged. "The time and cost figures from the plant were double checked. Some of the guys on the crew are making big bucks. The job could run even higher if overtime costs aren't contained."

"It wouldn't be the first time. Let's get some estimates in from subcontractors."

"Subcontracting! It's a touchy subject. The crew'll have a fit."

"I'm sure they will. But if we don't bring this cost down, accounting will raise a ruckus with us."

"The question is, can we get away with it?"

"Maybe yes, maybe no. We'll see."

Question: When it comes to farming out bargaining unit work, "touchy" may be an understatement. What it usually boils down to is what the contract wording will allow.

English's decision: Three subcontractors were called in to bid on the project. When the plant engineer reviewed the figures, he took one in hand and told Sharpe, "Looks like a green light on this baby. If you're worried about opposition check page 146 of the contract."

Sharpe read the clause aloud. "Subcontracting will be permissible under this agreement if the work can be done for at least 18% less than it would cost if performed by the company's own employees applying standard cost accounting procedures."

English grinned. "No contest. This bidder is a reputable outfit and comes in at 22% less."





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
2016 Product of the Year; Diagnose bearing failures; Asset performance management; Testing dust collector performance measures
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me