Outsourcing - Workshop Accounts

 

Outsourcing - Workshop Accounts  

• Source: Rolling Stock Code 2022 -11th chapter - Capacity Optimization and Product Development 

 

Background: 

 

• In this dynamic world, new products emerge and old ones disappeared.  

 

• Demand shifts from one product to another. 

 

• Innovation alters methods of production and so on.  (Examples is Vande Bharat Trainsets/DPRS- Distributed Power Rolling Stock) 

 

• However to meet such rapid changes in technology and to meet the wide changes in the product matrix or quantum of Outturn, out age old Production Units and Workshops (3 to 4 decades) are not ready. 

 

• Moreover such changes are notified only during the year in question and not having sufficient time for advance planning. 

• So it is necessary to create flexible structures with complete freedom to adopt strategies like outsourcing, staff multi-tasking, multi-skilling, flexible deployment of manpower amongst different shops within the PU/Workshop to match capacity with demand etc. 

 

• In PUs/Workshops, final assembly and production of certain critical sub-assemblies and components has to be done in-house. 

So that, non-critical jobs can be outsourced and the staff that may be rendered excess in these shops to be re-deployed in assembly and critical items of work.  

Need to Outsource: Where the outsourcing the work to other agencies become inescapable under circumstances such as: 

1. No possibility of getting the work in other Railway Workshops with known capacity & capability for the Product. 

2. Sudden spurt in the requirement of components/sub-assemblies far beyond the capacity of the shops. 

3. Reduction of staff in Non Core shops (due to shifting to Core shops) 

4. Introduction of new mateial/technology for which skills/capacity/equipmet may not be available within the PU/Workshop. 

5. Economy in Cost due to large scale of production with the supplier. 

6. Short-term or One time jobs - For which permanent capacity cannot be feasible. 

7. Requiring heavy infrastructure which may not commensurate with the quantity required by Railways.  

Under the above circumstances, the Shopin-charge should decide to opt for Outsourcing.  

• Outsourcing - Two types  

1. Outsourcing to Units outside the Railway Workshop  

 

2.  Outsourcing for Works within the Railway Workshop premises

Outsourcing to Units Outside the Railway Workshop

• Approval of the PU/Workshop In-charge  

 

• Finance Concurrence required.  

 

• Certain excluded items - finalized by Zonal Railways only with Finance concurrence. 

 

• Pricing: In-house manufacturing cost minus  over heads plus overheads at commercial rates  for cost comparison purpose.  

Outsourcing for works within the Railway Workshop premises 

 

• In case of certain assemblies, sub-assemblies and critical items and their testing. (because quality is important) 

• Control of quality of workmanshipi through stage inspections. 

 

• Specilized large-scale infrastructure needed for the manufacturing process not available with vendors. 

 

• The costly specilized equipment not useful for other than Railway works. In such cases, it will inflate the vendors bid price which will ultimately get loaded on the cost of production. 

 

• Logistiical problems and disproportionate transportation costs.  

Safeguards to avoid contract disputes - If Work is outsourced within the Railway Premises: 

1. Separation: Work area for the Contractor and Railways 

2. Defining Shared machine and equipment time available to the Contractor to avoid mix up. 

3. Raw materials and consumables to be supplied by the Railways - Stock should be kept separately and accounted for. 

4. Consumption norms for raw materials and consumables for eachh item issued to the Contractor by the Railways 

5. Agreement - signed by the Contractor and Shop In-charge 

6. Accounted and documented of Electric power, water and utilities incl: tools provided by  Railways 

7. Control of quality of workmanship by Inspection 

8. Accountal of Scrap / left over material to be returned by the Contractor and kept separate 

9. Industrial safety standards as prevailing in the shop – equally applies to the workers engaged by the Contractor. 

10. Compliance of all legal provisions. 

 

Check List

 

 

Check list for precautions to be taken before contract is awarded for outsourcing work inside the workshop with outside labour.
Sl.  No.	Precaution to be taken	Yes	No
1	Separate work area for Contractor
2	Requirement of Railway supplied consumables – like special electrodes, water, electricity etc. been computed and listed
3	Material requirement for outsourced job been separately worked out
4	Machine hours for use of Railway equipment for the job been computed and listed
5	Payment to contract workers is being made through bank, in a transparent manner or not
6	Separate ID for workers of Contractor
7	Accountal of contractor supplied items, raw materials and consumables
8	Proper Railways supervision on the work.
9	Complying of all legal provisions
Note: The answer to all the items is to be ‘yes’,  Before outsourcing Contract is awarded.

 

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AMC - M&P in Workshop Accounts

 

AMC - M&P in Workshop Accounts  

• Source: Rolling Stock Code 2022 -11th chapter

• AMC stands for Annual Maintenance Contracts  

 

• Millwright Organization in PUs/Workshops/Open Line - Responsible for maintenance of M&P assets 

 

• The need of AMC - With increasing sophistication and extended use of electronics based control system in M&P, the skills of Millwright staff have not been upgraded to keep pace with maintenance requirements.  

 

• So the AMC is entered with the OEMs - Original Equipment Manufacturers or their authorized agents for maintenance of M&P Assets   

 

• OEM stands for Original Equipment Manufacturer

 

• However, efforts shall be made to get the Millwright staff trained in maintenance of M&P items to gradually reduce the expenditure on AMC

 

• If possible, AMCs can be entered at the time of purchase of M&P items itself by factoring the AMC cost along with the Purchase Price.  

 

• Object of AMC:  To provide a high up-time for the M&P items by providing a reliable maintenance support.  

 

• Alternative to OEMs - In case OEMs are not responsive or quoting exorbitant rates/unacceptable conditions  - Considered proven sources for AMC of M&P items.    

 

• The above contents are applicable to all establishments of Rolling Stock Production & Maintenance i.e., Production Units, Workshops & LCDs of Open Line Establishments.  

Key points for MCQ: 

1. AMC stands for Annual Maintenance Contract  

2. OEM stands for Original Equipment Manufacturer 

3. M&P stands for Machinery & Plant  

4. L C D stands for Locomotive sheds and Carriage and wagon Depots

5. Millwright organzation - Responsible for maintenance of M&P items 

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Outturn Statements - Workshop Accounts

 

Outturn Statement - Workshop Accounts

• Source: Rolling Stock Code 2022 

• Prepared every Month

• Prepared from WGR - Workshop General Register 

• Showing all Work Orders (Completed, awaiting adjustment, On hand) 

 

• Purpose: Charging the Total expenditure incurred in the Workshops to the Accounts Heads (like Plan Heads, Revenue Heads like erstwhile Demand Nos 5,6,7) and transfers to the Other Railways etc. 

 

• Divided into Two parts i.e., Part I and part II 

 

• Part I - Adjusted Items   - Completed in the on hand month

 

• Part II - Awaiting Acceptance    - equals to Closing Balance of WMS - Workshop Manufacturing Suspense7

Part I - Adjusted Items  - Completed and adjusted in the Month on hand. They are as follows: 

1. Home Line Capital Works (Plan Heads 21 - Rolling Stock and 41 - M & P) 

2. DRF works 

3. DF works 

4. Capital Stores Suspense (Plan Head 71 - Stores Suspense)  

5. Home Line Revenue Account (Erstwhile Demand Nos 5,6 & 7) 

6. Works done for Divisions, Home Line Depts, Foreign Railways 

7. Other Government Depts & Public bodies 

8. Home Line Railway Employees 

Part II - Awaiting Acceptance - They are as follows: 

1. Manufacturing Works 

2. Stores Dept Works 

3. Works done for Home Line Depts & Divisions 

4. Works done for Foreign Railways, Other Govt Depts, Railway employees & Private bodies 

5. Works Executed on Grouping Work Orders  

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Differences between Incentive schemes of CLW & Group Incentive

Differences between Incentives schemes of CLW & Group Incentive

Source: Annexure 4.2 of Rolling Stock Code 2022 October 

SN	ITEM	CLW System		Group Incentive
1	Basis for Incentive	Individual & Time completed		Shops & Outturn
2	Staff / Shops categorized as	Direct Workers (DW) Essentially Indirect Workers (EIW)		Production Group  Support Shops  Support Depts
3	Incentive %	DW - 100 % Incentive EIW - 80 % Incentive of DW		Production Shops - 100 % Incentive  Support Shops - 80 % Incentive of Average Incentive of Production Shops  Support Depts - 50 % Incentive of Average Incentive of Production Shops
4	Shop SEs/SSEs Incentive Bonus	15 % of their Basic Pay  No linking with the staff incentive		Maximum 15 % of their Basic Pay Linking with the actual incentive of their shops  15 % - If Shop incentive is 15% or more than 15 %  Less than 15 % - If Shop Incentive is less than 15 %, (SEs/SSEs get proportionately)
5	Penalty & Quality	No penalty clause in respect of quality factor		Penalty clause is existed in case of bad quality and excess detention of Rolling Stock
6	Incentive assessed for	For each & every nature of repairs on the Rolling Stock		Unit of Account is SPU - Standard Production Unit
7	Linking of Incentive with the minimum targetted Outturn of Entire PU / Workshop	Incentive allowed if the section targetted outturn is completed.  No link with the Outturn of entire PU/Workshop		Incentive allowed is link with the Targetted Outturn of entire PU/Workshop
8	Inspection	No Incentive is payable unless the jobs passed by the Inspection staff		Physical parameters as reported by the users are quantified to measure Quality & determine the Incentive
9	Overtime Allowance	Allowed		Not allowed
10	Equalising factors for Different types of Rolling stock	No		Yes.  1.eGSCN for POH of Coaches. 2. ICF wheel set for turning of wheels.  3. VU - Vehicle Unit for POH of Wagons
11	Idle Time allowed	For more than one reason i.e., Non availability of tools/materials, Machine Breakdown, power cut, waiting for work etc.		For power outage for more than one hour only.  Not allowed for other reasons
12	Maximum Incentive	50 % of time taken by an Individual		the Maximum % of additional Outturn i.e., 50% .  Example: If the capacity of workshop is POH of 100 coaches, the maximum incentive is applicable for additional 50 coaches over and above 100 coaches only.

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