You can't assign overheads - that's the point, they're the bit that's not assignable, because you either have to pay it anyway (rent) or you can't track where it went (who finished the sandpaper?). Your jobs have to be sufficiently profitable in total to allow you to pay for overheads out of the general budget. Not assigning them doesn't mean that you have to run at a loss.
IMHE, only the ones being taken over by f****it MBAs who'd spend $100 to track a single screw.
This works for Ford. A million screws is big money. But on the scale of Ford you don't need to have overheads. Your volume is large and predictable, so you can track plant utilisation accurately and thus assign even things like rent and wear on the carpets. Overheads turn into per-item costs.
In a jobbing shop though, you can't do this. A smallwaterjet shop with one expensive machine finds it hard to do, because they can't predict utilisation perfectly. For a typical woodworking shop, with two guys and half-a-dozen machines, it's impossible. Will you be using the saw or the moulder tomorrow ? Which project column should I book the sharpening charges to ?
Suspision confirmed - but only because the consultative effort was small.
I lean toward what you are referring to as the conservative approach when I contract to to things as well. No matter whether it's painting a car, building something, repairing something, etc. One only has to operate in an environment where consumables prevail, for a short time to develop a genuine understanding of overhead. Having said that, there is the other side of me that represents my value add, which is my expertise or my experience or even my sense of "another way". It's that side of me that is free to say "have you considered this instead?". That value add is, for me, overhead in that it's not priced out in the project. It is something I expect to do and it's something I believe customers can expect of me. It's something that I would not think to charge for. It's a small and simple up front engagement that hopes to ensure that the project will succeed and both parties will be satisfied in just one iteration of the job.
Ah well.. everybody gets a shot now and then. LOL
Good one.
--=20 Will R. Jewel Boxes and Wood Art
This is where the distinction between hobbyist and production shop become operative. For a large percentage of hobbyists, $100 for an hour or two of work that is not so different from what they do every night for free, is a pretty good deal. For a production shop, it's a whole different issue. The hobbyist will often feel he learned something from the exercise, or feel good about having done a paying job, or maybe expand his/her skills by trying something they've never done before. But - the important point is, the hobbyist is by definition, not in it for profit. He's in it for the fun of it. Any pay he receives is gravy to him. Losing proposition? Yeah, maybe, by a measured standard, but if hobbyists were to measure their profitability, we'd all have to quit our hobby.
Fair enough. We're not that far apart I guess.
Good enough answer for me.
--=20 Will R. Jewel Boxes and Wood Art
(Toronto actually - but what the heck...) :-)
I never said anything about MBA's -- you did. (Just in case any crazed=20 MBA's with guns are reading this.) Now I gotta clean my screen cause I=20 spit all over it... Notice I carefully avoided comment on useless=20 f****it MBA types. But wasn't thinking of tracking single screws --=20 except as noted by you. Simply referred to overhead... And you have=20 answered well so you don't need to re-comment unless you would like=20 to... (But loved your "way with words".)
But I think I understand your point - so that's OK -- tend to agree that =
trivial items should be tracked only on large jobs. The the only issue=20 becomes the "cut-off point" -- which is by nature quite debatable.
(And no -- no MBA here)
Agreed. Easier to do at that level. Agreed.
Created system that do this data collection -- so just different=20 experience I guess.
You can't predict utilization better than 80% even in large shops (not=20 in any industries I saw anyway) -- you can only observe (what happened)=20 with close to 100% accuracy. This requires closed loop (adaptive)=20 systems - which should be discussed somewhere else.
Can't argue with your reasoning though if the shop isn't equipped to do=20 the data collection you are correct. IMO. (and since most probably don't.= =2E.)
Understood. Appreciate the comments. Promise not to get an MBA.
--=20 Will R. Jewel Boxes and Wood Art
Agreed
Agreed. Knitting it is. :-)
--=20 Will R. Jewel Boxes and Wood Art
but I didn't get the first impression that he was
Looks like this is the fundamental issue .
(Not trying to get you out of context -- I believe you nailed the=20 fundamental issue -- so am just trying to isolate it.)
Guess some of us decided that he was -- and that "the why" did not matter= =2E..
The "Why" could have been intent or naivety or some combination.
In my experience the result is usually the same -- supplier takes the=20 hit if the job goes bad or takes too much work.
Other people likely have had the same experience and had the same=20 thoughts - rightly or wrongly. (Other people may be better judges of=20 character or intent...)
Guess the only debate should be on whether you allow the benefit of the=20 doubt on these... With the problem being that if you "give" you must=20 commit to spending the time and money to educate. (Been had before by=20 people playing the sincere naif...)
Don't think it's worth my time debating this as I never did figure out=20 the right answer before (I gave) and not likely to now. (Now I don't give= =2E)
Wish I had some wisdom to offer -- but I don't since I never got it=20 right before and am unlikely to in the future any further comment from=20 me would likely (almost certainly) be pointless.
Feel free to offer any wisdom you have...
And your shot was right on -- I was anything but neutral. See above.
Really appreciate your time and thoughts. Best wishes.
Hope everyone learned something or this was pointless. :-)
--=20 Will R. Jewel Boxes and Wood Art
If you can't run a joinery shop, all in, for under
Ah well.. everybody gets a shot now and then. LOL
Good one.
No - I was trying to acknowledge your efforts at neutral tone and state that I had indeed observed those efforts, so it would be easy for me to embrace that and put forward a neutral tone as well. I was trying to be complimentary. Sorry if it did not come across that way.
Don't apologize. My mistake. But I really did think...
Anyway -- I do respect the smarts I see on this group. You never know=20 here when you are having your leg pulled -- and I probably did deserve a =
shot and assumed... Guess I'll shut up now. :-)
I wasn't sure actually and hence should have "shut up". LOL
Thank you for the tolerance. Respect your intelligence and=20 thoughtfulness -- even if and when in complete disagreement. And that=20 _is_ a sincere complement -- same to Andy Dingley -- and a few others..
--=20 Will R. Jewel Boxes and Wood Art
Bingo!
Well as I said -- in some systems each job gets a percentage of the=20 general overhead, and yes it is often a BS number -- but a reminder that =
each job must pull it's own weight.
Lets assume a shop that is earning revenue and a profit. From my POV if=20 you take the overhead (the unassignable costs in your terminology) and=20 take a job as a percentage of the revenue and then add the same=20 percentage of the overhead to the job as a cost... If the job doesn't=20 still make money you have to examine your motivation for taking the=20 work. I do _not_ mean -- don't take the work. I mean simply that you=20 _do_ have to look at your motivation to take the work and see if it=20 makes sense -- as in -- does it fit in with your plans and goals, give=20 you access to new and profitable markets. Even saying to yourself -- I=20 can lose money on this one -- I am doing it because I am bored is OK in=20 my book. Based on the assumption at the beginning of the paragraph.
Even had that done to me on contracts I was letting -- where a agreed=20 upon percentage (of the job labour and materials) was paid in addition=20 as overhead. It may have been a method for the FW MBA's to justify their =
existence -- but it was done. So I had to grin and just look at it as a=20 percentage of the job and make a decision whether the bid was economic.
I did not even consider it "fair" or "unfair". It was just the way it=20 was -- and if I wanted that "team" -- those were the rules.
There was a logic to it -- it did encourage everyone not to get=20 extravagant... or something -- I guess.
Can't argue with that... Good a way as any to look at it. See above.
Hope I never implied that -- but if I did consider it retracted.
Not arguing with what you think -- just trying to present another way of =
looking at it.
If your bank balance is good, and your cash flow is good -- as I think=20 you implied -- who gives a s**t about the overhead -- it must be OK and=20 a few risks are worth taking. If that's what you implied I am good with=20 that. :-)
Really appreciate the time and the comments.
--=20 Will R. Jewel Boxes and Wood Art
He's English, you know....
Mmm yes I was aware of that "problem" -- did not wish to embarrass him=20 by making a point of it old chap..
You've outed me again. This must stop! :-)
Another snifter of Don Pedro and I shall be fine.
--=20 Will R. Jewel Boxes and Wood Art
Just before 5 I finally had time to slap a piece of MDF in the 'Bot and try my little part program. The mold took 10:10 (min:sec) to cut and has two errors:
[1] I displaced the taper cut by 1/16" up and right. [2] I didn't displace the right cut-off by a tool radius.Otherwise the part came out pretty much as expected. I used a
1/4" instead of 1/2" down spiral to hog out the cavity because the 1/2" bit would leave an uncut area in the corners of the bottom. When I switched to 1/4" bit I also switched from one to two passes to cut down to the 1/2" depth (which would have been a single pass with the 1/2" bit).There's a sketch and photo on A.B.P.W - the ridge around the bottom of the cavity would have been converted to a fillet if I'd had a 3/16" ball end cutter.
Thanks for posting the follow-up Morris. I was quite interested in how you'd make out.
Uh ohhh...somebody let his AMT membership lapse...
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