CALCULATING OVERHEAD EXPENDITURES AND WORKING CAPITAL REQUIREMENTS OF SOVIET CONSTRUCTION-PLANNING ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600400255-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: August 25, 2011
• Sequence Number: 255
• Publication Date: July 11, 1951
• Content Type: REPORT

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CALCULATING OVERHEAD EXPENDITURES AND WORKING CAPITAL REQUIREMENTS
OF SOVIET CONSTRUCTION-PLANNING ORGANIZATIONS
fThe following information is taken from chapters XII and XIII of Vino-
gradov's book.7
The chief cost items of construction-planning organizations are overhead
expenditures, which include all expenditures or materials used in planning and
estimating, but exclude basic wages for production personnel. A planning or-
ganization's overhead expenditures are limited to a percentage of its basic ex-
penditures (i.e., to the baL.ic wages of production personnel). Before overhead
expenditures can be increased, it is always necessary to obtain the permission
of the Committee on Architectural Affairs under the Council of Ministers USSR.
The following is a list of overhead expenditures and their maximum limits
in percentages of the basic wages or production personnel:
2. -Expenses for traveling to the site of construction for
purposes of liaison, coordination, and studying local
conditi
on
s
2.0
3.
Supplem
en
tary wages
for production person
nel
8.0
4.
Additio
ns
(nachislen
iya) to wages of prod
uction pe
rs
onn
el
6.0
DATE
PUBLISHED
CLASSIFICATION CONFIDENTIAL `pfNFlns r A i
CENTRAL INTELLIGENCE AGENIC 11 `DF`? T?REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
Economic - Planning
Book
Moscow
1947
THIS DOCUMENT CONTAINS INTOONATION AAECTINS THE NATIONAL DIFININ
OF THE UNITED STATES WITHIN TNN MISSING OF NIPIONASI ACT ND
N. S. C.. II AND NE, AI ANISEED. ITS TNANSNISSION ON THE NEDILATION
OF ITS CO NIENTS II ANT MANNER TO AN NNAOTMONIEIO PERSON IS PRO?
NISITND NT LAW. REPRODUCTION Of THIS PORN U PROHIBITED.
DATE OF
INFORMATION 147,
DATE DIST. fl Jul 1951
SUPPL
REPOR
50X1-HUM 1
SOURCE Planirovaniye i Khozraschet v Proyektnykh Organizatsi akh Gosudssst-
vennoye Arkhitekturnoye Izdatel'stvo, pp 1111.-56,
CLASSIFICATION
NSRB
]( FBI
ILI
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6. Cost of materials
E ditures for the development of standards, norms, and
n
2.5
3.0
7. xp..
4.0
scientific research
8. Administrative expenditures for production sectors and
divisions (shops) 6.0
9. Administrative (general office) expenditures 14.0
Total overhead expenditures 47.0
10. Deductions for the architectural fund (applicable only to
architectural-construction planning) 10.0
11. Planned accumulations (profit) 5.0
Total overhead expenditures, including planned accumu-
lations 62.0
Planning organizations which have a large number of clients in other cities
(State Institute of Planning for Cities, State Institute of Planning for Agri-
culture, Belorussian State Planning, and others) may have Item 2 above increased
in their overhead expenditures from 2 to 5 percent; however, the total of over-
head expenditures, including the deductions for they architectural fund and the
planned accumulations, may not be more than 65 percent of the wages for all pro-
duction personnel.
Planning organizations where the wage rates established by the former Peo-
ple's Commissariat of Ferrous Metallurgy apply may not have their overhead ex-
penditures exceed 60 percent of the wages for production personnel; furthermore,
administrative expenditures, both shop and general office, may not exceed 18
percent of the overhead expenditures.
The limit for administrative expenditures applies to planning organizations
with 200 to 300 workers. Organizations with a larger or smaller number of workers
must use the following corrective coefficients:
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Up to 50 men
1.3
From to 100 men
1.2
From 101 to 200 men
1.1
From 301 to 400 men
0.9
More than 400 men
0.8
A clarification of the individual items listed under overhead expenditures
follows:
Item 1 includes the basic and supplementary wages for both staff and non-
staff experts and consultants, as well as the expenditures incurred in their
work. Expenditures for experts and consultants from other organizations which
help in planning are also included. However, expenditures involved in approv-
ing the planned and estimated material costs are borne by the client and are
therefore not to be listed in the overhead expenditures of the planning organiza-
tion.
Item 2 is divided into two parts: (a) expenditures for groups traveling
to the construction site for purposes of liaison, coordination, and studying
local conditions; (b) expenditures for personnel traveling to the construction
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site for purposes of drawing up plans. Expenditures for (a) are limited to a
percentage of the wages of production personnel; expenditures for (b) depend
on the type of r^rsonnel, the duration of the work, the location, etc.
Item 3 includes wages for leave time of production personnel, for time
spent in performing public duties, and for severance pay (vykhodnoye posobiye).
Item 4 is self-explanatory.
Item 5 includes all expenditures incurred in blueprinting plans for the
production program, including blueprinting done by other organizations. Funds
expended in blueprinting work for standardization, scientific research, and
other sections are entered in the appropriate item of the production estimate.
Expenditures for blueprinting done for other organizations are not included
here, but, instead, are included under service cost rendered by the planning
organization to other organizations.
Item 6 includes the cost of drawing implements such as pencils, erasers,
ink, and tracing paper, expended in developing plans estimates. Materials ex-
pended in blueprinting, scientific research, standardization, and in the devel-
opment of norms are not entered here but, instead, are entered in the produc-
tion estimate. The cost of office equipment is included in the administrative
expenditures of production shops, sectors, and divisions.
Item 7 is likewise broken down into separate parts and includes the fol-
lowing: basic and supplementary wages for personnel engaged in the develop-
ment of standards and norms and in scientific research; additions to wages,
expenditures for safety measures, cost of materials, printing, and other ex-
penses incurred in carrying out the work mentioned above. Also included are
expenditures for the preparation and checking of developed standards and norms.
Item 8 is also broken down and includes expenditures for the maintenance
of production shops, sectors, and divisions, i.e., administrative expenditures.
Item 9 includes all expenditures for managing the planning organization.
Item 10 provides for deductions for the architectural fund in accordance
with decree No 1858 of the Council of People's Commissars, dated 11 November
193^,. The deductions are set at 10 percent of the wages actually paid to pro-
duction and technical personnel engaged in architectural and construction plan-
ning for industry, agriculture, institutional buildings, living quarters, build-
ings for social and cultural purposes, and in the planning of new and recon-
structed cities. These deductions are made from the wages of the following per-
sonnel: architects, engineers, designers, technicians, draftsmen, estimators,
economists, copyists, and those workers engaged in checking and correcting plan-
ning materials. The following workers are excluded: those engaged in sanita-
tion work (heating, ventilation, water supply, sewerage, central heating, elec-
trical equipping) and those engaged in service sections (clerical, bookkeeping,
etc.).
A planning organization must have its own working capital to cover the mini-
mum material reserves. Upon the creat'on of an organization its working capital
'.s obtained from the budget; but thereafter it is obtained from profits, from
budgetary funds, or from a higher level organization depending on the provisions
in the approved financial plan. Withdrawals from surplus working capital are ef-
fected by the director of a higher echelon organization in accordance with the
approved financial plan of a given organization.
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Cobb "TIAt
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The Committee on Architectural Affairs under the Council of People's Com-
missars USSR established the structure and norms of working capital for plan-
ning organizations on 27 February 1946 and for field organizations on 19 April
1946.
Norms of Working Capital
(Percentage of Production Program)
For Planning For Field
Organizations Organizations
Under Under
Union Union
and Under and Under
Republic Local Republic Local
Assets for Which Norms Jurisdic- Jurisdic- Jurisdic- Jurisdic-
Have Been Set tion tion tion tion
1. Basic materials 3.0 3.0
2. Auxiliary materials 1.0 1.0 1.0 1.0
3. Inventory of little value,
instruments, and uniforms 1.0 1.0 2.0 2.0
4. Minor expenditures 0.5 0.5 0.5 .0.5
5. Unfinished production 8.0 8.0 8.0 8.0
6. Discrepancies in accounts,
as provided for by Articles
23, 24, and 25 of the regu-
lations on contract agree-
ments for planning and
field work 2.5 2.5 2.5 2.r
7. Accounts of clients 5.5 4.0 5.5 4.0
Totals 18.5 17.0 22.5 21.0
The following is an explanation of the individual items in the above table.
Item 1 includes the basic materials, both in storage and en route, which
are necessary to conduct surveying-geodetic and engineering-field work. The
normal reserve of basic materials is determined by the needs of the organiza-
tion for a period of 60 days. The cost of basic materials constitutes 15 to
20 percent of the field organization's total annual production program. Thus,
the necessary working capital in this item is 3 percent of the annual produc-
tion program.
Item 2 indicates the cost of auxiliary materials, both in storage and en
route, including fuels, fodder, and rapidly depreciating articles of little
value which are not being used in the organization's actual work.
Report data shows that the cost of auxiliary materials constitutes, on the
average, approximately 5 to 6 percent of the annual production program for plan-
ning and field organizations. Since the normal reserve of auxiliary materials
is one which is adequate for 60 days, the necessary working capital for this
item is one percent of the total annual production program.
Item 3 includes those rapidly depreciating articles which are actually in
use but not considered part of the fixed assets. The working capital needed
by field organizations in this item is based on the calculation that the annual
output per worker is from 18,000 to 20,000 rubles and that the cost of inventory,
instruments, and uniforms in actual use is from 400 to 500 rubles per worker,
i.e., approximately 2 percent of the total annual production program. The an-
nual output per production worker in planning organizations is calculated at
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20,000 to 22,000 rubles and the cost of inventory and instruments in actual
use at 225 to 250 rubles per worker. Thus, the amount of working capital
needed by planning organizations in this item is about one percent of the
total annual production program.
Item it is composed of expenditures for subscriptions to technical liter-
ature and for rent, telephone service, transportation, etc.
Item 5. According to regulations on contract agreements for planning
and field organizations, the accounts for completed work are to be settled
with clients at the end of the ..onth. If a client's advance payments are
insufficient to cover expenditures incurred during the month for unfinished
work, the difference should be paid out of the organization's own working
capital. The amount of unfinished work which is covered by the planning or-
ganization's own working capital is usually set at about 8 percent of the an-
nual production program.
Item 6. In the case of interim invoices (promezhutochnym cchetam) 90
percent of the planning materials is paid for by the client in advance and
the remaining 10 percent within 2 months of the completion of all the con-
tracted work. The amount of working capital needed in this instance is 10
percent of the bimonthly program, which represents 1.7 percent of the annual
production program. An exception is made for those contracts under 3,000 ru-
bles. In these instances the volume of work to be paid for out of the plan-
ning organization's own working capital is limited to 10 percent of the monthly
program, or 0.8 percent of the total annual production program. Thus, the to-
tal amount of working capital needed to cover the differences between advance
payment and actual cost in contracts is usually 2.5 percent of the total an-
nual production proms:am.
Item 7. According to regulations on contract agreements, the receipt of
completed planning and field work is to be effected between the 1st and the
6th of each month. After the work has been delivered, the documents are pro-
cessed and the documents for payment presented to the bank. The time allotted
for these transactions is 2 days.
Working capital consists of a planning organizations own capital minus
fixed liabilities. Fi'ed liabilities include deferred payments (reserve for
accumulated leave).
The average leave allotted for production workers in planning and field
organizations is equal to the wages for 18 days. At the end of one month of
work the reserve accumulated for leave is equal to lz days' wages; at the end
of 11 months the reserve accumulated for leave is equal to 16.5 days' wages.
It has been determined that the average reserve of leave is equal to the wages
for 9 days, or 2.5 percent of the annual wage fund. Since wages constitute
60 percent of the production program, the fixed liabilities are 1.5 percent of
the ennual production program.
The normal liability for wages (from the time they are first accumulated
until they are actually paid out) is, on the average, 6 days, or 1.7 percent
of the total annual wages for production personnel. Since wages constitute
60 percent of the production program, the fixed liabilities, in this'instance,
are one percent of the a :ual production program.
Thus, the fixed liabilities for planning organizations amount to 2.5 per-
cent of the annual production program.
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