Departmental Staff Difficulties

Apart from the fact that, in most industries, the rapid saturation of any excess capacity made it difficult to get competitive tenders, the Government was hindered by insufficient departmental staff to make advance estimates of the content of jobs. Staff shortage also prevented adequate inspections of the work as it progressed: a deficiency which led to waste and made the checking of firms’ accounts even more difficult.

Lack of advance estimates of job content was the most serious drawback. Without them, there was no possibility of reaching agreement on a price for the job before work started. There was then no target for the contractor which would automatically bring him increased profit if he kept within it. He had no incentive to do the work efficiently.

In those cases where there was no target figure for the whole job, but the profit element was fixed in advance, there was still no incentive for the contractor to keep down costs. Worse still, in the cases where profit was related to actual costs, there was even an incentive to inefficiency—extra costs meant extra profit.

These troubles, combined with inadequate staffs to check progress of work and review charges, left the Government in a very vulnerable position at a time when so much extra war work had to be done.