Another class of construction on which a contractor should have had special experience in order to insure his efficiency is that of steel buildings. Here the to be handled are often very large and heavy. The handling of heavy weights economically by a small force of men and with the aid of derricks and other plant, is a peculiar art which comes only from practice. Sailors are generally good at this sort of work, and men who have not had experience in it are practically helpless when confronted by its prob lems. The iron worker as a laborer is in a class by himself. He is courageous and determined, strong and active, and under some circumstances requires considerable tact, as well as firmness, on the part of his manager. After the metal has been set up and bolted, it is necessary to rivet it together—which is a large item of cost; and here special experience will generally teach a manager how he can apply devices for pushing the work.
The contractor should have some experience of the locality in which he expects to work, since local ordinances are likely to vary a good deal, and the manner in which the laws are adminis tered is also likely to vary a great deal in differ ent localities. The local conditions of labor, be sides, are likely to vary. One town may be pretty well unionized, and another not far away may contain a rather different class of labor and require different methods for pushing work. The prices of labor and material are not very differ ent in New York City and in Brooklyn, just across the East River; yet prices obtained by contractors for doing work on Manhattan Island are considerably higher than those in the other Borough. This is due partly to these local con ditions as above mentioned, and partly to the density of traffic on Manhattan Island and the difficulty of getting through the streets. A strange contractor cannot easily tell beforehand how much trouble he is going to have in unload ing his wagons in the streets until he has been at least once "up against" the local ordinances.
Size of the Job. A man who is accustomed to handle small pieces of work is generally in the habit of doing a good deal of the field managing himself, and is not necessarily very strong in the organization line. He may be able to manage very efficiently a piece of work which requires a small number of workmen, but not be so good where the individual counts for less and the general business organization counts for more. If the bulk of his experience has been on
works of small magnitude, he is not likely to be particularly good at the large ones; and on the other hand, if his work has been in the line of heavy construction, employing a good many men, he will usually not bid as low on a small piece of work as will a man who has had most of his experience in small jobs.
Insurance. In the old-fashioned form of con tract, the contractor guarantees that he will do the work for so much money. This particular part of his contract is nothing else than a sort of insurance by which he undertakes to assume the risk of the work being more expensive than he originally figured. If it costs more, he loses; and if it costs less, he gains just that much— which, as has been indicated above, is an induce ment to him to operate with economy. In prac tice, this works out in the following way: The contractor always either makes or loses, and frequently his bookkeeping methods are such that he does not know whether he has made a profit on the contract or whether he has actually lost unless the profit and loss should happen to run into a considerable amount. If he is gen erally successful in making substantial profits his business grows and he waxes prosperous; or if he makes a good many small losses, or one or two very large ones, the amount of capital at his disposal is not sufficient to enable him to stand the losses, and he fails. If he fails while the con tract is at a critical stage, the owner is likely to lose money unless he is protected by a bond, and he is sure to lose in the matter of time for the completion of the work. The large contractor with a large capital is less likely, of course, to fail on a comparatively small contract than a small contractor, and the additional security in the way of insurance which this larger capital gives the owner is one reason why the owner is sometimes willing to accept a higher bid from a large contractor than he can obtain from a small one.
The insurance feature has a decided eco nomic value from the standpoint of the owner, and is a tremendous risk from the standpoint of ;he small contractor. It will be noted that this in surance which the contractor provides is insur ance as to cost and as to time, the former being by far the more dangerous to the contractor, and the latter sometimes of greater importance to the owner. These features will be considered more fully under the Cost plus Compensation Contract.