Brigade Cost Accounting: An Important Reserve for Reducing the Cost of Geological Work

P. I. Stepanov

(Presented by the scientific seminar of the Department of Techniques for Prospecting Mineral Deposits)

In the Program of the Communist Party of the Soviet Union adopted by the Twenty-Second Congress, great importance in the creation of the material and technical base is attached to increasing labor productivity and reducing the cost of production at every enterprise through the identification and broad introduction of intra-production reserves. One such reserve, as indicated in the Program, is “the introduction of cost accounting into all links of production”; moreover, it is emphasized that “it is necessary to strengthen cost accounting” [1].

Cost accounting, as one of the principal methods of economizing funds, is widely applied in the performance of geological exploration work and has a major influence on increasing its efficiency.

Especially great attention has been given to economy in the conduct of geological exploration work since the extraordinary Twenty-First Congress of the CPSU, which obligated workers of the geological service to increase the efficiency of the work performed.

One of the ways to increase the economic efficiency of geological exploration work is the systematic reduction of the cost of operations. This is achieved through the introduction of new technology, automation and mechanization of production processes, and also through the identification of intra-production reserves, especially in the field of organizing production and labor.

Workers of the country’s geological service are carrying out significant work in this direction. However, alongside the identification of ever newer reserves for cost reduction, very great importance attaches to work on the broad introduction of reserves that have proved themselves in practice but have not yet become widespread.

Among such reserves should be included brigade cost accounting, which represents a further development of cost accounting in geological exploration parties.

Brigade cost accounting began to be introduced in geological exploration parties in 1950–1952 [2, 4].

In 1952, the Main Coal Geology Administration of the former Ministry of the Coal Industry of the USSR for the first time developed a manual on the procedure for pe—

transfer of drilling, mine-driving brigades, and brigades of auxiliary-support shops to cost accounting. In 1955 a second edition of this manual was published [2].

In January 1957, the Ministry of Geology and Protection of Mineral Resources of the USSR approved a provisional regulation on the procedure and conditions for transferring drilling brigades engaged in mechanical core drilling to economic accounting.

In geological parties that introduced economic accounting, work to implement the regime of economy was intensified [4, 5]. Not only managerial and engineering-technical workers were drawn into this work, but also workers, on whose results the actual amount of almost all production costs that make up the basic expenses depends.

For example, in the Kazakhuglegeologiya trust, the transfer of drilling brigades to economic accounting had a decisive influence on the fulfillment and overfulfillment of the task for reducing the cost of work. The transfer of drilling brigades to economic accounting began in 1952, and in 1954 all drilling brigades of the trust were covered by economic accounting. Whereas before the introduction of brigade economic accounting, in 1951 the estimated cost had been reduced by 8.4%, in 1953 the reduction amounted to 12.8%, and in 1954 to 15.7% [5].

In the Zaangarsk Geological Exploration Party of the Irkutsk Geological Administration, the transfer of drilling brigades to economic accounting made it possible, over three months (May, June, July 1959), to obtain the following economic effect for individual brigades:

The experience of introducing brigade economic accounting in geological exploration parties of the country shows that workers participate most actively and effectively in the struggle to reduce production costs when they are materially interested in carrying out this work. In those places where the introduction of brigade economic accounting is carried out without paying remuneration for savings of material assets, the economic effect obtained is insignificant.

In the geological exploration parties of Glavuglegeologiya (of the former Ministry of the Coal Industry), workers of drilling brigades were paid a bonus amounting to 50% of the amount of savings on materials (wiping materials, fuels and lubricants, timber and forest materials, etc.), drilling pipes, hoses, steel ropes, drive belts; senior foremen were paid 10% of the savings obtained by reducing the planned costs under the work order [2]. Remuneration to drilling brigades, in accordance with the provisional regulation on the procedure and conditions for transferring mechanical core-drilling brigades to economic accounting, approved by the Ministry of Geology and Protection of Mineral Resources of the USSR, was paid in the amount of from 25 to 50% of the total amount of savings, with the maximum—

it was recommended that the maximum amount of bonuses be established for savings of more important and scarce materials, and the minimum for less important and scarce materials, low-value and rapidly wearing items and accessories.

In 1960, in connection with the transition to a shorter working day and new wage conditions for employees of the country’s geological service, all previously existing regulations on bonuses for workers of cost-accounting brigades were abolished, and no new ones were established.

In our opinion, such a situation cannot be considered correct.

The application of Lenin’s principle of the material interest of workers at socialist enterprises in the results of their labor is a powerful instrument of the Communist Party and the Soviet government in mobilizing them for a systematic increase in labor productivity and a reduction in the cost of production.

Especially great importance in fulfilling and overfulfilling planned production targets and reducing the cost of geological exploration work is attached to bonus systems.

Bonus systems, apparently, should be constructed in such a way that they equally and to the same extent materially interest workers, managers, and engineering-and-technical personnel both in increasing labor productivity and in reducing all types of production costs. However, the existing bonus systems for workers in geological exploration production, in our view, have certain shortcomings in this respect.

Thus, while the bonus system for managerial and engineering-and-technical personnel materially interests the latter in reducing production costs both by increasing labor productivity and by applying other organizational and technical measures, the bonus system for workers provides for their participation in reducing only part of production costs, namely, through increased labor productivity. Labor productivity, although it is the principal reserve, is nevertheless not the decisive one in reducing cost.

In addition to reducing cost through higher productivity, workers have the opportunity to reduce it by saving materials and electric power, by reducing wear of low-value and rapidly wearing items and accessories, and wear of fixed assets, which entails a reduction in the costs of services from auxiliary and support production units, as well as a reduction in transport costs, etc. It would be incorrect to think that workers do not participate in this work. Undoubtedly, they do participate in it, but their participation would be even more effective if a material incentive were established, encouraging them to reduce production costs below the norms.

The absence of a material incentive for workers disrupts the unity of action of the entire collective of employees of geological exploration parties in identifying and introducing internal production reserves aimed at reducing all types of costs that make up the cost of the work performed. Such a situation often creates difficulties in introducing organizational and technical measures. Frequently, managerial and engineering-and-technical personnel plan the introduction of valuable organizational and technical measures that make it possible to reduce considerably the consumption of material assets. However, these measures are either not introduced at all or, if they are introduced, then with great difficulty, and the period of their use is, as a rule, limited. This occurs chiefly only because workers are not materially interested in their application. As an example, one may cite the results of introducing small-diameter ...

…of supplying the face with shot by means of shot crushers when drilling exploratory core holes.

In the geological-exploration parties of the East Kazakhstan Geological Administration (the former trust “Altaĭtsvetmetrazvedka”), as early as 1950–1955 it was proved that the introduction of this method of feeding increases drilling productivity by 30–50% and reduces shot consumption by up to 40% in comparison with the trip method [3, 6]. In view of such economic effectiveness, fine-portion feeding, on the initiative of managers and engineering-technical personnel, began to spread beyond the borders of East Kazakhstan. However, fine-portion feeding with the aid of shot crushers has still not found wide application. Drilling brigades, in introducing this method of feeding, are concerned above all with increasing drilling productivity, since this makes it possible to exceed output norms and accordingly to receive higher wages at piece rates; they are least of all interested in the possibility of saving shot by consuming it within the limits of the norms established for trip feeding. In our opinion, this circumstance has a decisive influence on the results of introducing fine-portion feeding.

It has been proved experimentally, under laboratory and production conditions, that an increase in drilling productivity with fine-portion feeding can be achieved only by reducing shot consumption in comparison with trip feeding. In this case, with the corresponding amount of flushing fluid at the face, the most rational ratio of round to crushed shot is maintained under the end of the bit, at which the most intensive destruction of rock occurs. Feeding shot to the face in a quantity greater than is required to maintain this ratio leads to a reduction in productivity to the level obtained with trip feeding, as a result of which workers refuse to use fine-portion feeding through shot crushers and revert again to trip feeding. If a material incentive were established for saving shot, it can be stated with confidence that fine-portion feeding would by now have found very wide application, and the productivity of drilling operations would have risen sharply, while their cost would have been reduced both through the growth of productivity and through the saving of shot.

The introduction of bonuses for self-supporting brigades for saving materials and other planned costs of basic production will make it possible to bring into full correspondence the material interest in the results of their labor in reducing production costs both on the part of managers and engineering-technical personnel and on the part of workers.

The Ministry of Geology and Protection of Mineral Resources of the USSR, the Central Committee of the trade union of geological-exploration workers, together with the State Committee of the Council of Ministers of the USSR on Labor and Wages, should consider this question thoroughly as soon as possible and permit self-supporting geological organizations to pay bonuses to members of self-supporting brigades for saving basic materials, electric power (where an electric meter is available at the workplace), low-value and rapidly wearing items and accessories, provided that other planned costs of basic production are reduced.

The economic expediency of introducing this measure is obvious. Indeed, either the workers of brigades engaged in mining, drilling, and other operations, while consuming material values within the limits of the norms, irretrievably lose that part of them which could be saved; or, by reducing consumption below the established norms and obtaining savings, one part will…

use to improve their own well-being (through bonuses), and the second, and larger, part they will give to the state for general public use.

In our opinion, brigade cost accounting should be introduced first of all in drilling and mining operations, since the expenditures on these types of work account for up to 40% of the total expenditures on geological exploration. Moreover, these types of work are the most material-intensive. The introduction of brigade cost accounting in drilling and mining operations is at present facilitated by the fact that, in carrying them out, a collective piece-rate wage system is applied almost everywhere under general-brigade and complex forms of labor organization.

Under these forms of labor organization and the collective piece-rate wage system, planning and accounting for the actual costs of basic production are considerably simplified. Planning and accounting for the actual expenditure of material assets should be carried out not for each individual shift, but for the brigade as a whole, with the bonus amount distributed among the individual members of the brigade in accordance with the grades assigned to them and the time actually worked.

Experience in introducing brigade cost accounting for drilling brigades, or in partially introducing some of its individual elements, shows that this work requires almost no increase in the staff of economists and accounting personnel of geological-exploration parties.

A positive resolution of the question of paying remuneration to workers of cost-accounting brigades, and clarification of the existing manuals on organizing brigade cost accounting, will make it possible to introduce brigade cost accounting widely in the performance of geological-exploration work and, on this basis, to achieve a further reduction in the cost of the work performed and, consequently, an increase in its economic efficiency, as well as an improvement in its quality.

References

1. Program of the Communist Party of the Soviet Union. Gospolitizdat, 1961.

2. Manual on grass-roots planning and cost accounting in geological-exploration parties of the Main Geological Administration of the Ministry of the Coal Industry of the USSR. 1st ed., 1952. 2nd ed., 1955.

3. Osipov S. I. Rational technology of shot feeding as a factor in increasing efficiency and reducing the cost of geological-exploration drilling. Information collection of the geological-exploration service of Rudny Altai, Ust-Kamenogorsk, 1960.

4. Proskurin N. V., Gebler B. I., Bismildin A. Z. On ways to reduce the cost of drilling operations, Alma-Ata, 1960.

5. Samsonov M. G. From the experience of geological-exploration work in the Karaganda coal basin, Alma-Ata, 1957.

6. Stepanov P. I. Experimental studies of the periodic method of feeding the bottom of boreholes with shot. Proceedings of the Tomsk Polytechnic Institute, vol. 90, 1958.