Managing the small and medium-size project

Date ______

cc:    Project

   Management List

To: Project
      Participants
      List

FROM:            R. Staples

SUBJECT:       Long-Range Research Program Status Report

The attached flowcharts represent our research plan. The broad plan is divided into three basic “levels”, each representing a series of experiments designed to accomplish a specific goal. The time to achieve these goals is estimated and completion dates are designated as targets. On a monthly basis, we shall monitor progress through each level by estimating our position relative to these target dates. The time-line below shows our current estimates.

Each numbered box on the flowchart represents a task; each diamond, a question. The initials of the individual(s) responsible for the task are shown above the box. That person will be called to estimate his progress within the “level”.

The flowcharts are designed to be informative communicating devices to monitor our progress in this long-range research effort. They will be changed as plans change.

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Information ranging from design to construction provides the engineer with many useful guidelines, so that he can successfully initiate and complete a project within the allocated funds and time estimates.

Occasionally, the engineer or technical manager for whom project management has not been a fulltime pursuit will nevertheless find himself in charge of such a project. Generally, the projects most frequently assigned this person are in the small to medium range–i.e., involving a few thousand dollars to perhaps a million. Managing such a project can be made easier for the project manager, or someone specifically assigned the job, if he takes advantage of organized management techniques.

The term “Project Manager” is used to describe many functions, but for our purpose he does exactly what the words say: he manages the project. He does not do all the work. Although he may take care of some of the detail, his prime function is to see that it gets done. He does not make all the decisions but sees to it that the right questions are asked and that the required information is available. The project manager may have all the answers and may, in some cases, be in a position to make all the decisions, but such cases are very rare.

The term “project” includes everything from the addition of a storage lean-to to an existing facility, to the construction of a new multimillion-dollar facility where nothing existed before. The same rules of project management are applied to both projects, and to all that fall between them—whether for construction of a structure or the addition of equipment alone.

Every project goes through certain phases; some in more detail than others. Although shortcuts are taken and certain steps exist in someone’s mind, the development of any project includes all or most of the steps listed in Table I.

It is important to note that these steps do not include the actual engineering or design, nor do they include the actual construction work, whether by in-house staff or outside contractor. In cases where the project manager is also responsible for the engineering or architectural design, he will of course be wearing two hats. When this is so, he must strive to maintain absolute objectivity as it relates to pride of design. One of the advantages of having a project manager who is not a member of the design team is his ability to function as an objective reviewer of the design, and an arbiter where the design is questioned or must be modified because it does not meet the established criteria or allow construction within the budget.

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Steps in Project Development—Table I

□ Design Criteria

□ Budget Parameters

□ Project Planning Schedule

□ Design Review and Cost Control

□ Construction Estimate

□ Bidding Documents

□ Purchasing (Owner’s)

□ Contract Bidding, Negotiating and Letting

□ Current Working Estimate

□ Construction Progress

□ Change Orders

□ Project Inspection

□ Progress Payments

□ Move-In and Startup

Design Criteria

The project manager has to find out from those who are supposed to know what they want, exactly what they really want. Depending on the size and scope of the project, this can include meeting with top management, operations, engineering, maintenance, etc. Or, it can consist of the warehousing manager saying, “I need a lean-to near ‘receiving’ to store twenty 54-gal. drums.” Establishing the design criteria is nothing more than formalizing the information that will be required by the design team.

When design criteria are established on the basis of data compiled from more than one department, the project manager should see to it that all parties are kept informed. He should be sure that engineering, operations, traffic, safety, security, insurance and any others who may have design requirements are given an opportunity to have their say at this time. It is easier and usually cheaper to incorporate the requirements of the various departments during the preparation of the design criteria than at any other phase of the project.

Where conflicts in design criteria are created by the diverse requirements of different departments, the project manager must see that the differences are straightened out, and ambiguities eliminated through whatever chain-of-command exists within the organization. He must always keep in mind that the established criteria will be the guide from which the actual project will be designed.

Budget Parameters

The term “budget parameters” means nothing more than establishing guidelines for how much is to be spent for the project. In some cases, the budget is set by the project manager from the project’s definition in the design criteria. To do this, the project manager may rely on his own experience, or may be able to find out from records available to him within his own organization, or he may have to go to an outside consultant.

In most cases, the budget is established by the amount that management is willing to spend. It is up to the project manager to apportion the budget for each facet of the project. These parameters let everyone involved know how much money is available for each part of the project. They serve as a guide for the design team in preparing the plans and for the project manager in reviewing the design.

The budget parameters for the lean-to can merely consist of: slab, $1,000; frame and roof, $2,000.

For a plant expansion, the budget might be broken down as follows: sitework; foundations; structure; plumbing; heating, ventilating and air conditioning; electrical power and light; exterior finishes; interior finishes; and process equipment.

The project manager should break the project into manageable parts—small enough so that he can have a handle on each, but not so small that he ends up with a rigid budget for every item before he really knows what the details will be.

If while establishing these budget guidelines for the design team, he determines that the proposed project cannot be completed within the established overall budget, he should say so, so that either the project can be modified or the budget changed. The best time to find out whether “warehousing” is going to live with a $3,000 lean-to is before design and construction start. If the design criteria call for a $4,000 lean-to and the budget allows only $3,000, the matter should be straightened out at this stage. The project manager does not have to be the person to make the decision, but he must get a decision.

In preparing the budget parameters, the project manager should allow for those items that seem incidental to, but are a very important cost item of any project. These include: engineering, surveys, supervision, insurance, bonds, contract preparation, bidding, inspection, safety, legal counsel, security, traffic control, purchasing and expediting, storage and warehousing, winter protection, temporary heat and utilities.

Not every one of these items is applicable to every project but each should be considered in preparing the budget.

Project-Planning Schedule

The overall schedule for the project must take into consideration the time required for planning, designing and constructing the project. In preparing the schedule, the project manager should talk to everyone who will be working on the project, to get their best estimates of the time they will need for their part of the project.

People or organizations that may be involved in certain parts of the project may not be available to the project manager. For their parts of the project, he will have to estimate time requirements, based on his knowledge or experience, or the experience and knowledge of others who are involved. In preparing the master schedule, the project manager should keep in mind that this is not a detailed construction schedule but a guide schedule for the total project.

The schedule has to be tailored for each project. For the storage lean-to, it can consist of a short list of items such as: complete the design, procure material, build.

For the larger facility, the master schedule may consist of a complex CPM (critical-path method) network that is prepared with the assistance of a consultant. Such a network would show the responsibilities, scheduling requirements, and interrelationships for decision-making of all those involved in the project. The master network would include:

Preliminary feasibility studies.

Management review of these studies.

Budget estimate.

Schematic design.

Schematic design review: management, engineering, operations, safety, legal department, etc.

Preliminary design.

Preliminary estimate.

Preliminary reviews: management, engineering, operations, etc.

Preparation of construction documents.

Review of construction documents.

Final-estimate review.

Establishing equipment-procurement program.

Bid invitation.

Receipt of bids.

Review of bids.

Letting of contracts for construction.

Construction (as a gross activity for planning).

Startup.

The project-planning schedule is not intended to serve as the detailed schedule for the whole project but as a guide schedule. Later, we will examine a detailed construction schedule.

Also, for the larger project, detailed scheduling networks may be prepared for each phase of the design process to help control the flow of information between various engineering disciplines and those involved in reviewing and expediting the work.

Design Review and Cost Control

As the design goes through the various steps from schematic to final working drawings, the project manager should be sure that, as each phase is completed, the design is reviewed to see that the design criteria are being adhered to. For the small project, the review may be only a quick look. For the bigger project, the review will require passing the design at prescheduled phases to management, engineering, operations, safety, and anyone else the project manager feels should be involved at a particular stage. It is up to the project manager to move the project by seeing that information and decisions flow.

A very important part of the review procedure is to see whether the limits established by the budget parameters are being adhered to. As the design gets closer to the working-drawing stage, the cost of buying and installing equipment, and of constructing the project, can be estimated with greater accuracy.

Estimates should be made at every review. These should be checked against the original parameters. If the newly estimated costs exceed the original ones, the project manager should determine why and take the necessary steps to either reduce the costs or get the budget increased.

He can review the design at each phase with the designers to determine whether something less expensive will perform the same function. He can review the design with operations and management to check whether they really need everything as called for. He will most likely do both, but whatever he does, he must stir the information around so that a decision is made that can be lived with and that is understood by everyone—less project, more money, or a combination of the two.

Construction Estimate

Preparation of a construction estimate is just an extension of the regular cost reviews that were made while the design package was being put together. The estimate is made up of the best cost data available to the project manager. He can get cost data from his experience, from records available within the company, by using outside cost consultants, or via a combination of all three.

The construction estimate is the last check before going to bid, where contracts are let by competitive bidders. Where contracts are let by negotiation, the construction estimate is used for negotiating the contract.

The project manager must be sure to include to the actual cost of purchased equipment and construction all the incidental costs involved in erecting any project. These incidental costs are listed in Table II.

Bidding Documents

The bidding documents include: invitation to bid, bid proposal form, plans, and specifications (including special, general and technical provisions).

The invitation to bid must spell out the form of contract that will be entered into–i.e, lump sum, unit price, labor contract, cost plus a percentage of cost (with or without a maximum upset cost, with or without a sharing of savings between the owner and contractor), cost plus fixed fee (with or without a maximum upset cost, with or without a sharing of savings between the owner or contractor), etc.

The different forms of contracts being used today have been thoroughly discussed in previous articles.* I prefer a lump sum contract, with unit prices for those items of work for which quantities may vary because of site conditions, i.e. excavation, piles, foundation concrete, etc.

Plans and specifications are normally prepared by the architect or engineer responsible for designing the project. The project manager must see that the architect or engineer includes all the owner’s requirements in the special provisions of the specifications. These could include, but would not be limited to, the specifications given in Table III.

The invitation to bid for the small project can be no more than a telephone call to contractors known to the project manager, who asks them whether they are interested. If so, he invites them to look at the plans and specifications and to quote a competitive price or one to be used as the basis for negotiation. Or, the invitation to bid can be a formal publication in the local newspaper and construction-trade publications. The invitation is very often in letter form and sent out to a selected list of contractors.

Contractors are chosen because they are known to the project manager, have done work for the company, or have been suggested by the architect or engineer who designed the project. If the project manager cannot come up with interested contractors, he should call the local contractors’ association and describe his project. The associations are usually most helpful.

Incidental Costs In Project Construction—Table II

Bonds

Engineering and layout

Expediting

Inspection

Insurance

Owner’s cleanup

Safety

Security

Storage and warehousing

Supervision

Temporary buildings or trailer

Temporary heat

Temporary utitilties

Traffic and control

Winter protection

Special Provisions of The Specifications—Table III

Minority hiring practices

Limited working hours

Limited work areas

Insurance requirements

Safety regulations

Traffic regulations

Site protection

Protection of existing facilities

Scheduling requirements

Purchase of special materials

Supply of specialized equipment

Forms or equipment for payment by
                    the accounting department

Bonding or surety requirements

Purchasing

In most cases, the project manager has little or nothing to do with actually buying materials or equipment for the project. However, he does have to see that the materials and equipment actually are bought.

One of may things might happen in building our lean-to for the 20 drums. The project manager might go out and buy the lumber and hire a carpenter (contractor) and helper, or he might have plant maintenance erect it with the lumber he bought, or he might have maintenance arrange for the purchase and erection, or he could enter into a contract to have the lean-to erected and let the contractor make his own arrangements for the required material.

In an organization with a purchasing department, going out to buy would mean ordering through purchasing, and following company procedures. (Purchasing for the larger project is identical. There may be a greater variety and larger volume of construction materials, but the procedure is not any more complicated — there is just more of it.)

For the lean-to project, as would be handled by a non-professional project manager, the best approach would be to sign a contract with a reputable contractor and let him take care of purchasing all the materials required for construction.

Purchase of specialized equipment for the process and production is another matter. The project manager should determine from production and engineering exactly what their requirements are, and work with them to write as detailed a specification of these requirements as possible, including preferences as to the manufacturers (possibly a list of preferred manufacturers). Once this is done, a lot of help is available not only from the literature but from sales engineers and technical representatives of equipment manufacturers and suppliers.

Once everyone agrees as to what should be bought, I recommend that all operating equipment purchased for the project have the stipulation that purchase includes assembly, startup and warranty.

Unless the purchasing organization has an expediting staff to follow all the components, an engineering staff to maintain quality control over the parts, and an erection operation to put it all together, most small to medium-size projects are best handled without parceling out the responsibility for creating an operating whole.

Although we are discussing small to medium-size projects, we are not considering the addition of a small pump, the changing of a gage, or hanging of a light fixture. Although rightfully each of these is a project, we will assume that minor items of work are performed by the regular maintenance staff.

Where a project is of size or scope, to warrant professional project management, where an organization is geared for such management, or where a project management consultant is retained, there may be definite savings to be realized from separate contracts — both for construction and equipment supply.

One of the most important roles of the project manger is to see from his project planning schedule that equipment with long delivery times is ordered early enough so that it arrives on schedule.

Contract Bidding, Negotiating and Letting

We discussed the invitation-to-bid under bidding documents. In issuing such invitations, the project manager should specify the date on which he wants to receive prices. Since we are talking about private work, the project manager may or may not choose the lowest bidder.

When bids are solicited by the project manager from a specific group of contractors, it is fair to say that he will not disqualify a contractor from bidding because of incompetence. However, he may decide to award a contract to a more expensive contractor because of a better scheduling arrangement.

When bids resulting from formal advertisement are reviewed, the project manager should ask around about the low bidder’s reputation before automatically awarding the contract. He should check with clients, architects and engineers on previously completed projects. He should specifically ask about whether the contractor completed the work on time, had sufficient personnel on the job, co-operated if and when changes were required, and did not try to take unfair cost advantage upon making such changes. It is inherent in construction that changes will be required, and most disputes arise because of them.

If the acceptable contractor’s price was within the budget (and more than one bid was received), there is usually no negotiating involved and contracts are signed. However, if the lowest acceptable price is over the budget and construction estimate, the project manager should ask for a breakdown compatible with the format of the construction estimate. Comparison of the two can then be used as a basis for negotiating with the contractor to try and arrive at a price within the budget.

Unless the project manager prepared the construction estimate himself, he should have the assistance of the cost consultant who prepared the estimate. If the bid and estimate are too far apart to negotiate the differences, the project manager should ask the prospective contractor for cost-reducing suggestions that will not decrease the functionality of the project. Even where the project manager has the ultimate authority, he should check all changes with the design team, and all changes except very minor ones with the using department.

Current Working Estimate

The current working estimate is a report showing what the budget is, what has been spent against the budget, and what is left to be spent. It is kept up to date by modifying it regularly with each change order and each pruchase that the project manager initiates.

As soon as there is any indication that the budget may be exceeded, this should be called to the attention of all concerned so that remedial action can be taken or, if necessary, the budget increased.

A typical working estimate for the installation of a new mixer facility is shown in Table IV.

Construction Schedule

The construction schedule lets everyone know what to expect of everyone else involved with the project, and what is expected timewise. It also serves the project manager as the yardstick against which he can measure progress. It lets him know whether the project is on schedule and, if not, what is behind schedule.

Current Working Estimate for New Mixer Facility–Table IV

XYZ Chemical Corp Dec. 1, 1971
Item                   Original Budget, $ Committed To Date, $ Change Orders Approved, $ Estimate On Completion, $
Sitework 37,500 42,000 2,700 44,700
Foundations 112,200 103,300 105,000
Process equipment 1,065,000 916,000 18,900 1,085,000
Structure 48,200 43,700 45,000
Piping 243,900 118,200 243,900
Heating, ventilating,
air conditioning
35,200 18,700 35,200
Electrical 189,600 150,400 12,000 200,000
Instrumentation 56,000 53,900 55,000
Totals 1,787,600 1,446,200 33,600 1,813,800
Contingency, 7% 125,100
Total 1,912,700

Current position: Total underrun projected: $98,900 ($26,200 over original budget).

For the lean-to project, the schedule could consist of no more than:

Start…Mar. 1

Finish…Mar. 5

Move in…Mar. 6

The schedule for the larger project might consist of a complex CPM network that is solvable for all practical purposes only by computer. If this is the case, the project manager should retain the services of a scheduling or project-management consultant.

The construction schedule should indicate the dates that are important to the owner. These are especially the date on which equipment installation can start and the date on which the owner can begin using the facility. The schedule must indicate sufficient construction detail so that the project manager can monitor progress. Any project larger than the lean-to is worthy of a CPM network even if it contains 10 to 20 activities on an img x 11-in. sheet. An example of such a report is given in Table V.

Construction Progress

Since few projects ever proceed exactly as originally planned, the schedule should be modified to indicate the changes in progress and scheduled progress. Everyone who might be affected should be notified of all changes.

If the project falls behind, the project manager should determine whether the delays are caused by lack of information, or lack of action on his part or that of the design team. If not, he should meet with the contractor to bring whatever influence or pressure the contract allows in order to get an improvement in the schedule.

Sometimes, just letting the contractor know where he is falling behind will help bring things back on schedule. At other times, more-drastic measures are required, such as threatening to hold up payment, or putting him on notice that his contract may be terminated unless progress improves. Whatever is done should be done with a cool head and not in the heat of passion. Holding up payments or terminating a contract are extreme measures to take.

Schedule Status Report-Table V

XYZ Chemical Corp.
New Mixer Facility Dec. 1, 1971
Schedule
The latest CPM update indicates the project is 4 working days behind schedule.
The following items of work must be expedited to bring the project back on schedule:

Structural steel

    Piping prefabrication
    Electrical switchgear delivery
The following must be started by the date indicated, to maintain the schedule:
    Erection of control panel............. Dec. 11
    Erection of pipe rack................Dec. 13
    Start process-equipment installation .... Dec. 17
Budget

The current working estimate is $1,813,800 vs. the original budget of $1,787,600. When the 7% contingency is included, the predicted final underrun is $98,900.

Change Orders

Change orders are formal changes to the contract. They should always be in writing.

For the smaller project, the change order may be no more than a note to the contractor telling him what changes need to be made, and indicating the agreed-upon price change to the contract. This may be an increase or a decrease.

For larger-sized projects, the change order will be a formal order issued by the architect on a standard form available for this purpose. Basically, the form details the change and indicates the price change to the contract.

Very few projects do not require some changes after the construction contract is signed. Sometimes the changes result from changed conditions at the site, such as finding rock where all indications were that excavation for the foundation would be made in earth. Sometimes the changes result because new information indicates that the facility originally planned should be modified while still under construction. For our lean-to, warehousing might suddenly realize that it needed space for 30 barrels instead of the originally planned 20.

Or a new procedure might have been added to our process line that would need an additional piece of machinery not originally considered. This will not only require new equipment but also the addition of a footing by the construction contractor.

The sooner a change is brought to the attention of the contractor, the cheaper it is to have the work done. The cost of changing the work includes: time lost because material has to be ordered, or work delayed while plans are being redrawn — as well as the actual cost of doing the work. Therefore, as soon as the project manager knows of a change, he should alert the contractor.

A change that affects work already in place is more expensive than one initiated before prior work has been completed. This is another reason for making changes as early as possible in the course of construction.

Sometimes, management is interested in a change but wants to know what it will cost before authorizing it. When this happens, the project manager should ask the contractor for a cost proposal to help management decide.

If the change is a voluntary one not resulting from unanticipated conditions, the project manager should negotiate the cost of the change with the contractor, and then have the contract modified by change order as soon as possible.

Sometimes a change is of involuntary nature, such as finding something that was not expected, or discovering that something was left off the drawings or not considered during design. The project manager will often find that he does not have the luxury of time to negotiate the cost of a change order prior to instructing the contractor to proceed with the work either directly or through the architect or engineer. Under these circumstances, it is best to give, or have instructions given, as quickly and as clearly as possible. It is also important to make sure to document the work performed, so that its cost can be established fairly. Change orders should be then finalized as soon as possible after this work has been completed.

One of the major areas of dispute in construction is the resolution of change orders that are held up because of lack of decision or because of arbitrariness on the contractor’s or owner’s part. If a fair price can be arrived at, the change order should be written immediately, and the contractor paid that which is due him. The project manager will find that fairness on his part is to the owner’s advantage in the long run.

Project Inspection

Unless the project manager is technically competent and experienced in inspecting construction projects, or the project is so small that it does not require engineering inspection, it is best to leave technical inspection of the work to the architect or engineer who did the design.

The project manager should be sure that the architect’s or engineer’s contract calls for inspection services. No matter who performs the formal inspection, the project manager should visit the job on a regular basis, so that he is familiar with how the work is progressing and can be generally satisfied with how it is being performed. If he does not like something, he should call it to the attention of the architect or engineer to whom the contractor is responsible. It is best that the project manager not address himself directly to the contractor unless he is in fact managing the construction under the terms of the contract.

As the project nears completion, it is common practice to prepare a “punch list” — a list of items requiring correction by the contractor. This is prepared by the architect but is very often initiated by the owner’s representative. The project manager should also prepare a list for the architect, indicating all those items with which he is not satisfied or which he is not willing to accept as complete. The architect will issue this list to the contractor who, hopefully, will take corrective action.

Although the architect usually retains control of technical inspection, the project is not complete until the owner, in this case the project manager, accepts the project. The architect and the project manager make a joint inspection of the project before final acceptance.

Progress Payments

As the project progresses, the contractor will request progress payments in accordance with the terms of the contract — usually on a monthly basis. The project manager should be guided in reviewing progress payments by using the construction estimate, the current working estimate, and any estimates prepared by the contractor for negotiating the contract.

The project manager should require the contractor to prepare a payment breakdown within two or three weeks after the signing of the contract. This breakdown should be reviewed against the aforementioned documents and estimates to see that it is realistic and not “front loaded.” It is very common in construction for contractors to try and get paid at the beginning of the job more than the value of the work put in. This helps them finance startup costs.

In reviewing the regular progress-payment requests, the project manager should assure himself that the contractor is not asking for more money than the value of the work-in-place in accordance with the contract. There is nothing more embarrassing than getting part way through a contract and having the contractor walk off or go broke, and finding out that you have spent more than the value of the work-in-place and have less money left than it will cost to complete the project. In many cases, the architect checks an approved payment request, but the project manager is usually the one who gives final approval for the payment. The project manager should not be at all embarrassed to question the architect in detail.

Move-In and Startup

The project is of no value to the owner or using organization until they actually move in and start to use the facility.

For our lean-to project, it is a simple matter for the project manager to look and satisfy himself that the lean-to is in fact standing, and then walk into warehousing and tell them it is theirs.

In a production or processing facility, the project manager must work with the using department and help it move in, and phase into operation. He must act as the go-between for any operating failures in the equipment, and must see to it that the suppliers or manufacturers are informed so that corrective action can be taken. The project manager should determine that he has all the warranties and operating manuals required. His work is not done until the user of the facility is satisfied that the job is completed.

Irv Fogel is president of Fogel & Associates, New York City. He has a degree in civil engineering from Indiana Institute of Technology and has completed courses in management engineering at Long Island University. He is a licensed professional engineer. He is a member of PMI and is presently serving as Treasurer.

According to a recent survey by the Opinion Research Corporation of Princeton, New Jersey, most Americans think that business profits run about 28%. That is, that the average U.S. company or corporation nets 28¢ on the sales dollar.

Nothing could be further from the truth. The truth is that U.S. business as a whole nets less than 3¢ on the sales dollar.

In 1971, as reported by the Department of Commerce, total U.S. corporate profits after taxes amounted to $47.4-billion – or 2.9% of total sales of $l,650-billion.

Some companies, of course, do better than the average. But even the largest, most successful U.S. corporations do not begin to approach the mythical figure that the public has in mind. A standard & Poor’s analysis of the 1971 earnings of major corporations shows that these leaders averaged a 5.6% net on sales. Almost double the national average, but only one-fifth of the reputed average.

But it does not matter, except to the companies concerned, that business makes less, as a percent of sales, than most people think.

What matters, and matters greatly to all Americans, is that business has less than most people think. Less, far less, in total profits after taxes — which is to say in disposable income to use for its own needs and purposes, or to contribute to other needs and purposes.

If U.S. business had netted 28</ on the sales dollar in 1971, total corporate profits would have amounted to $462-billion. This is a fabulous amount of money. In every sense of the word — imaginary and immense.

The difference between $462-billion and $47-billion is roughly $400-billion. And it is this difference — this $400-billion misunderstanding – that leads to a great deal of fruitless debate, dissension and division in American society today.

To the extent that the American people believe the myth about business profits — either the precise myth about $462-billion or the more general myth that business has a vast hoard of undistributed wealth – they are deluding themselves.

Or are being deluded. By the very few who think that profits are immoral, or by the very many who think that profits are a very good thing — that ought to be more widely shared. Because they believe that the sharing will solve most of the nation’s public and private ills.

The demand for wider sharing presupposes that business profits are a public, as well as a private, asset — a national resource, money in the bank, to be drawn on in case of need.

Let us, for the sake of argument, accept this concept.

And let us also accept the validity and the urgency of the whole array of public and private needs that are usually cited.

The practical question remains — what then?

How much money is there in the bank? If we simply confiscate all corporate profits, exactly $47.4-billion.

How far will it go? That depends. Suppose, for example, that we divide it fifty-fifty – half for public needs, half for private. Half to add to the $37.2-billion that business already pays in taxes, and half to add to the $450-billion that business already pays in wages.

The $23.7-billion in additional taxes would increase total U.S. tax revenues by about 8%. For one year.

The $23.7-billion added to wages would increase the average American worker’s pay check (before taxes) by about 5%. For one year.

Why only for one year? Because the final practical question remains. What happens when the money is gone?

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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