March 2005 UMORS 1 UMORS Vander Kooi and Associates, Inc Ultimate Multiple Overhead Recovery System

2March 2005UMORS Introduction UMORS is a computerized process based on the Multiple Overhead Recovery method developed by Charles Vander Kooi. The method outlines the manner in which overhead expenses incurred in the conduct of a service business are recovered through mark-ups of Materials, Equipment, Subcontractors and Labor. UMORS is NOT an estimating program but a program that determines mark-up rates you need in developing estimates and charges for the work your company provides. The successful UMORS software is highly recommended for small to large businesses

3March 2005UMORS Starting UMORS Date of Release Version Number Licensed User of this Program User’s Serial Number

4March 2005UMORS Work in Progress A quick review of the Gross Sales for the base year and projections for the new year. Sales for the Whole Company Sales for Each Department in the Company

5March 2005UMORS The Vander Kooi ABC Method The ABC method is an easy and fair way to distribute overhead between departments. A = The percentage of a Departments gross sales to the Company’s total sales. B = The percentage of Overhead Employees allocated to a Department. C = The percentage of Field Employees allocated to a Department. These percentages are key to properly allocating budgeted expenses to departments in order to calculate the Labor Mark-up percentage.

6March 2005UMORS The Main UMORS Menu This Menu will allow a user to quickly access any function of UMORS.

7March 2005UMORS General Information on the Company Departments Pertinent information for each department are presented to indicate employee distribution and sales base and projections.

8March 2005UMORS Normal work schedules and paid off-days are determined for each department. These are used to determine department overtime and benefits. Field Employees Work Schedule

9March 2005UMORS Define each type of crew and the crew positions associated with the work the crew all perform. This essentially models the ideal work force structure for the departments in the company. There is no limit to the number of crew types or crew positions within a crew type. Each individual worker can later be assigned to a crew and position. Crew Type and Crew Position Definition

10March 2005UMORS Labor Cost are entered in two categories: Overhead Employees : Company officers, office staff or an employee that is not directly chargeable to field work projects. Field Employees : Employees that actually perform the field work of your company. Labor Cost Short Method allows you to input gross payroll total for a quick calculation. Entering each individuals wages is the desired process.

11March 2005UMORS Simply enter the employees name and the salary or hourly rate. Assign the employee to a department and click the ‘Calculate’ button. Overhead Employees

12March 2005UMORS An overhead employees’ time can be allocated in any percentage to a company department. That department will be responsible for generating that portion of the employees’ pay through the overhead calculation. Allocating Overhead Employees Time

13March 2005UMORS Budget Overhead Calculation Every time you exit from the Overhead Employees screen, UMORS will prompt you to automatically calculate and and enter data into the Budget Overhead Category for Office and Officers Salaries. Normally, you will select ‘YES’ to the question below. This will let you know that any changes made to the Overhead Employees have been taken into account.

14March 2005UMORS Enter the names and wages for each employee that will perform the work of the company. You can assign each employee to a department, a crew, and a position on that crew. Optionally, you can specify whether or not the employee will be paid overtime and what company benefits they will receive. Field Employees

15March 2005UMORS Each Employees time can be allocated in any percentage to each department. Initially the employees time is allocated 100% to the department that was assigned in the Field Employees screen. This assumes that the employees hourly wage is constant for all allocations. If for some reason an employee will receive a higher or lower rate for some work, that that employee should be entered as a separate person with a new wage rate. That persons work schedule should then be as a ‘Part Time’ basis. Field Employees Time Allocation

16March 2005UMORS There is a ‘Quick Locator’ button on a number of function screens. This will save you time finding the record of interest quickly. Simply click on the item in the list and then click the ‘Locate (item)’ button. You can also list the items in a number of ways. QUICK LOCATOR

17March 2005UMORS Labor Burden The Labor Burden Rates are generated for the Field Workers and the Office (or Overhead) staffs separately. There are 9 categories that make up the Labor Burden Rate.

18March 2005UMORS Enter each item of equipment and vehicles that the company department owns in order to do work. UMORS needs the following information about each item : Purchase price Amount financed Interest rate Finance period Years of service expected Hrs/day being used Days/week used Weeks/yr used Maintenance Cost/yr. (Fuel and oil)/hr Annual insurance Property tax License and tags Salvage Value Equipment Cost Worksheet

19March 2005UMORS After you have entered the necessary data, CLICK the ‘Calculate’ button. The TOTAL COST/HR. that should be charged for the item is calculated. The TOTAL YEARLY COST that will result from the hourly charge is also determined. Calculation Area Actions Area Equipment Cost Worksheet (cont) General Information Area

20March 2005UMORS Equipment, like employees, can be allocated to different departments. This form will allow you to allocate each item to departments depending on the percentage of utilization. When a department is selected, the equipment, % used and the crew assignment will display in the top left of the form. The top right of the form will display the departments, % use, and $/Hr. charge. Allocation Information Allocation Selections Equipment Allocation and Assignment

21March 2005UMORS If you rent equipment to perform work, enter the item, rental period, rental charge and then click the ‘Calculate’ button. There is no limit to the number of items you can enter for each department. Rented Equipment

22March 2005UMORS Overhead vehicles are vehicles that are used in support of company business not directly billable to work projects. These could be the company officers vehicles or allowance paid to employees that use their vehicle for work related purposes. The data entered is basically the same as for regular equipment. Overhead Vehicles

23March 2005UMORS Once all the overhead vehicles have been entered, and calculated, you can assign the vehicles to employees. Click the ‘Assign Overhead Vehicles’ button. Overhead Vehicles (continued)

24March 2005UMORS The overhead vehicles and the employees will display in lists. To assign a vehicle, click on a vehicle and then on the employee. Then, click on the ‘Assign’ button. The vehicle name will disappear from the left list. The assignment will appear in the list on the right. After you assign all the vehicles, click the ‘Next’ button. Assign Overhead Vehicles

25March 2005UMORS On this form, you see how the vehicle cost will be allocated to the departments. The allocation is determined by the employees’ work allocation. The additional expense will be determined if you give the employee an Operating Allowance or Mileage Reimbursement. This is also allocated to the departments based on the employees work allocation. Overhead Vehicle Expense

26March 2005UMORS The Materials cost that each department requires is entered as a gross number for each department. This is normally determined by the cost from the previous year and then estimate whether you will use more or less. The Projected Materials cost will be used to determine future calculations.Materials

27March 2005UMORS The Subcontractors cost is also determined from your previous year experience and the estimating whether you will use more or less in the next year. Subcontractors

28March 2005UMORS The Budget Overhead data is where you will enter all the incidental expenses incurred in doing business. This data can be entered in two ways: Corporate Level and Department Level. Corporate Level: Expenses that benefit all departments or cannot be attributed to a department will be entered at this level. UMORS will automatically allocate the cost to departments based on the ABC method. Department Level: Expenses that are unique to to a department are entered at the Department level. There may also be a Corporate level allocation for the same expense. Budget Overhead

29March 2005UMORS UMORS provides 28 categories of expenses with a total of over 115 Activities in the categories. These are provided as ticklers to stimulate your thinking and data collection. Once again, these expenses are ones that benefit all departments and a portion will affect that departments overhead expenses Based on the appropriate ABC value. Corporate Level Budget Overhead

30March 2005UMORS The Department Level overhead is similar to the Corporate Level with additional information. The allocation for the category and activity from the Corporate Level is displayed. If there is an amount that is unique for this department, then enter the amount. The total amount will be the Activity Amount plus the Corporate Allocation. Department Level Budget Overhead Corporate Allocation Amount Total of Corporate and Department amounts. Department Amount

31March 2005UMORS The purpose of UMORS is to determine the mark-up amount for Labor charges in order to recover the departments overhead. Part of the overhead is recovered from marking up Materials, Equipment and Subcontractors. The residual amount must be recovered from Labor. The Vander Kooi Method does this in a balanced manner. Department Solution Mark-up percentage for Labor for this department. This value would be used in your estimating and work charges.

32March 2005UMORS UMORS also calculates the Mark-up percentage for Labor for the company as a whole. If you haven’t departmentalized your company then this is the value you will use. For a company with several departments, this is a good reference to compare the department recovered mark-ups. Labor Mark-up for the Company as a whole. Company Solution

33March 2005UMORS The Crew Calculator is a quick way to assemble a crew with employees and equipment. The crews can be saved for future reference. It is also very easy to substitute employees and/or equipment to see if it impacts the final burdened charge. An employee or equipment can be assigned to more than one crew making them job specific. Depending on the risk level, the percentages for overtime, fudge factor, and profit can be adjusted on an ad hoc basis. Crew Unit Man-hour Rate Calculator

34March 2005UMORS UMORS Reports UMORS provides a number of reports that provide essential reference. Employees Reports: Salaries Employee Allocations Labor Burden Rates Equipment Reports: All Equipment Details All Equipment Summary Equipment by Department Overhead Equipment Details Overhead Equipment Assignments Equipment Worksheets Budget Overhead Reports: Department Allocation Corporate Allocation List of Categories and Activities Solutions Reports: Department P/L Company P/L Department Solution Company Solution Crew Unit Calculator Report: Crew Unit Man-hour Rates Print Screens: All Screen Images can be printed.

35March 2005UMORS UMORS Purchase UMORS Software: $ US Included in the purchase price of the UMORS program, you are entitled to have a brief review of your first database by a senior associate for Vander Kooi and Associates, Inc. If you have any questions about UMORS or wish to purchase the program, contact Vander Kooi & Associates, Inc. Phone/fax: