Justifying Supervisory Hours in Xactimate for Drying Jobs

Xactimate supervisor hours have been an area of debate for a long time. Contractors place supervisor hours on Xactimate invoices/estimates with the expectation they will automatically be removed. Some do this with the thought, “you have to give the adjuster something to remove”. That is not a good estimating strategy. It also undermines the use of justified Xactimate supervisor hours in the entire industry. The other issue is that adjusters simply ask contractors to remove supervisor hours even when justified. They use the logic that these hours are included in overhead or in the line items. This is not always accurate either. When are supervisor hours justified when using Xactimate billing?

Understanding Supervisory Hours in the Restoration Industry

“Xactimate Supervisory hours are not warranted on a single, non-complex trade.” Sound familiar? A variant of this statement has been used for many years. When performing water restoration, many contractors choose to use Xactimate to detail and explain their invoices. Using Xactimate has positives and negatives. 

One of the issues contractors have is how Xactimate accounts for general overhead. Most contractors feel charging for supervision is warranted on a water restoration project. Most adjusters do not agree. But what do the facts say? Is billing Xactimate supervisory hours truly justified?

Common Misconceptions About Supervisory Hours

When asked to justify Xactimate supervisory hours, you may hear a contractor use the reasoning: “If supervisory hours aren’t necessary on a single trade project, why do adjusters have a manager”. While this is a clever quip, it won’t get you paid. Also, it is evidence that you may not completely understand Xactimate supervisory hours. The same goes for an adjuster that uses that negotiating tactic. It simply isn’t true. Supervision may be necessary on projects of various sizes based on the circumstances of that project.

Another common misconception is that just because a project manager or lead tech was onsite, that supervisory hours are justified. In reviewing estimates, it has been noted that contractors may bill for supervisory hours while the lead tech was performing mitigation services like demo, setting up or monitoring equipment. Then these items are being billed for in addition to the Xactimate supervisory hours. Technically speaking, this is double billing. That may be why you’re receiving pushback.

Why Supervisory Hours are Necessary for Drying Jobs

Does that mean that Xactimate supervisory hours are never justified? Absolutely not. Supervision may be necessary for a number of reasons. On commercial projects, having a project manager onsite to handle decision making and working with facility management is common. When handling water restoration in a residential home, having a supervisor sit onsite for the entire project without handling job related tasks is not normally necessary. Might they be necessary for portions of the project? Yes! 

Supervision may be needed when complications occur onsite. For example, there may be a confined space or a permit-required confined space that requires water restoration. Supervision may be necessary when the project first starts to perform hazard assessments if they are considered a competent person. Some companies send a supervisor to handle the pre-inspection meeting with the homeowner or to set the scope of work for technicians. 

These are reasons a supervisor may be sent on a water restoration project but the reasons alone may not be enough justification to get you paid. That doesn’t mean to stop sending supervision when necessary. Instead, do the right job and then find the justification to get you paid. Going to a third party for the justification is important in getting paid for Xactimate supervisory hours. What is the justification?

OSHA Standards for Worker Safety in Restoration Projects

OSHA 1926.20(b)(1) states that employers shall initiate compliance programs. 1926.20(b)(2) regulations add to it and state that as part of the required program to maintain the safety and health of workers, the employer has to designate a competent person to make “frequent and regular inspections of the job sites, materials, and equipment.”

Did this law state, “unless the project is a Category 1 water damage?” Or did you read the part that says “Unless it is a single, non-complex trade?” Of course not!!

OSHA 1926 uses the term “Competent Person”. What does this mean? According to OSHA, a competent person is, “one who is capable of identifying existing and predictable hazards in the surroundings or working conditions which are unsanitary, hazardous, or dangerous to employees, and who has authorization to take prompt corrective measures to eliminate them.” That is a whole mouthful! Now ask yourself, does that sound like a technician with fundamental levels of understanding of a water damage project?

The definition for a competent person states existing and PREDICTABLE? In other words, a person’s “title or position” within the company doesn’t really matter. Their experience, knowledge, and the authority granted by their employer all are part of being “competent”. 

This person not only has to have a great understanding of water damage, but also building construction methods for that region. That could include buildings built last week and/or 125 years ago!

This person must be able to determine what hazards are present at the project. In addition, they must have general industry knowledge that gives them foresight of what they may encounter over the next several days on the project so that specific control measures can be provided to affected employees, implemented on the project, and guaranteed that workers are following them. 

How can you make application of these regulations? The size of the project and the initial source of the water damage are not the only determining factors of when a supervisor is necessary according to federal law. 

A category 1 project may have extenuating factors that will affect employee safety. A competent or qualified person must perform a hazard assessment on each project to determine what PPE is necessary for employees. This competent or qualified person may be a supervisor in your company. If so, you have justification for Xactimate supervisor hours.

ANSI s500 Standards for Water Restoration

Just knowing what OSHA says regarding Hazard Assessments will not necessarily get you paid though. Is there more justification? What does the ANSI s500 say regarding supervision or management on a water restoration project?

The 2021 ANSI s500 15.1 states: “large projects are handled differently from other water damage restoration projects and usually require a higher level of project management or administration.” What exactly is a large project? A large project for a person just starting to do work is different from a company that has done catastrophe work for many years. 

ANSI s500 12.3.10.4 states that at the completion of Category 2 or 3 projects a post-remediation evaluation should be conducted. This “evaluation can be performed by a competent restoration professional…” Might a supervisor or project manager fit the standards of a competent person in your company? Possibly.

How can we apply what the ANSI standard says about Xactimate supervisor hours in your company? These quotes give some justification for more onsite supervision on large projects. It also gives justification on water projects from a contaminated source. But once again, is stating this standard all you need to justify supervision on a project and get paid? Not exactly.

Overcoming Pushback from Adjusters and Third-Party Administrators

What is the role of the contractor when billing through Xactimate? First, we must fully understand how to safely and effectively dry a home to limit the damages to the home. Then, invoice accordingly. This means it’s our job to increase our knowledge base on technical and billing solutions. This includes being able to justify our Xactimate invoices.

The second part of the issue may be that restorers perspective towards adjusters and TPA employees. Contractors either view them as being more knowledgeable or  Some may even revere those they believe to have a higher knowledge base. That’s a problem! But a fixable problem. How?

Understanding Adjuster and TPA Roles

In many cases, contractors will point the finger of judgment at carriers, adjusters or third-party reviewers. They certainly play a large part in this discussion. What is their place in the claim environment? Knowing their roles will help you understand why you’re getting pushback and how to overcome it. 

It is the adjuster’s job to adjust claims based on training or what their manager tells them. That includes being balanced and paying for indemnifying the policyholder based on their policy (in a perfect world). It also includes maintaining that balance and not overpaying for a service that did not have to be done. As for third-party administrators, it’s their job to save their client money. Their value is placed on skimming through invoices and finding items the insurance company may deem unnecessary or excessive. Most TPA’s claim to know and use the standards to accomplish this. 

Step-by-Step Guide to Justify Supervisory Hours in Xactimate

Justifying Xactimate line items is a process that involves everyone in the company. These principles start with technicians and go right through management. We discuss these principles in our estimating and negotiating course. This course teaches you how to do the right job and get paid for it. Supervisory hours is just one line item we discuss. How can these principles be used for a step-by-step guide for justifying Xactimate supervisor hours? 

1. Justification for supervisory hours begins with training. Is a supervisor needed on site? Develop company standards that highlight situations for when a supervisor is necessary. These company standards should align with OSHA and industry standards. Then train your employees to follow the standards. Company standard operating procedures should include checks and balances to ensure justification. For example, train and designate a competent person that goes to each of your projects to assess the known and potential hazards onsite. They determine what PPE should be worn by workers on site. This is a justified charge for a supervisor on projects of different size and scope.

2. Identify the justification. If there is going to be pushback, consider addressing it up front with the homeowner and the adjuster instead of putting that money at risk when you turn in your invoice. Present options to the adjuster when necessary.

3. Finally, include your justification for Xactimate supervisory hours in the quote that makes up your invoice. 

Using F9 Notes in Xactimate to Strengthen Invoices 

Justifying Xactimate supervisory hours is not just about what is done onsite. Communication with the customer and their adjuster is key. This communication should be done via email or phone call before completing the work if possible. Then, follow that up by using the opening statement or F9 notes in your Xactimate estimate.

When justifying Xactimate supervisory hours in your estimate, don’t just quote the regulations. Instead, let the customer know why this standard applies to their job. For example,your note could state “Per OSHA 1926.20(a)(1), we used x labor hours to perform a hazard assessment to determine the present and potential health and safety hazards on site.” This addresses the justification and the application of why you had to perform this task on that specific project. If you spoke to the adjuster, adjust the note to state you received approval on x date. 

Conclusion

In conclusion, are Xactimate supervisory hours warranted on a project? Perhaps, yes. That may be large projects or even smaller projects. Does that mean you will be able to invoice for it with no pushback? Not necessarily. If you use supervisor labor when a lead tech is doing work on the project, expect pushback from an adjuster. You may be double-billing. Using Xactimate supervisor hours to account for specific job related tasks that are not accounted for elsewhere in the quote is justified.