Seemingly Small Mistakes Create Huge Issues! Why?
When writing estimates, there are only a few things that make up the final price. Your sketch/measurements, your scope of work and your unit pricing. Each one affects your profitability differently. Let’s start our discussion with the scope of work. For many, that is what you get the most push back on when dealing with adjusters. It is also an area that, when tracked, can make huge changes in your average dollar sale. Here’s the issue, you can adjust your scope of work, relatively. But once the work is done, you shouldn’t be adjusting the scope of work when doing mitigation. You bill for what you did. So, you would need to make these adjustments before you get on site. That means tracking your estimates to see what items you are performing most often and what items you want to make a goal of performing as a standard service. By getting your crews all pulling in the same direction as your vision, you can accomplish changing your scope of work together.
What are some examples of this?
Spraying antimicrobial is one. Let’s say you look at the last few estimates, and notice antimicrobial isn’t being sprayed. Or you notice the techs are spraying antimicrobial but they aren’t spraying the walls. What affect does that have on your average dollar sale? Let’s say for the average job, we have 4 rooms, all 12×12. Really creative I know… just stick with me. That is 576 sq. ft of affected floor that needs to be sprayed. In the Atlanta price list for March 2020, botanical antimicrobial is $.23 /sq. ft. Doesn’t seem like much does it. If this crew isn’t spraying the affected floor space, that would be a loss of $132.48 on this job. A travesty! What’s worse is that this crew isn’t spraying because they weren’t trained and certified at Reet’s Drying Academy WRT/ASD combo course. So they won’t spray any antimicrobial the entire year! 200 jobs give or take…. That $132.48 just turned into a $26,496 loss. Does that make you sick to your stomach! It should… because it’s about to get worse.
Spraying antimicrobial 2 feet up the walls is also a possibility on many jobs and is being missed. In our same example of 4 12×12 rooms, that is an additional 192 sq. ft that should have been addressed. At $.23 /sq. ft, that is an additional $44.16 per job! Ok, that isn’t as much as the floor, but if they aren’t spraying anything it’s a big problem. That is $176.64 being lost per job. Yearly just missing the walls, at 200 job, the loss is $8,832. If they are missing the walls and floors, you’re over $35,000 lost!!!!! For 1 line item!!!
But There Is An Issue…
Some will look at the average dollar sale and blame the estimator. And it may be partially their fault. If they see this issue and don’t report it, then it is partially on them. If neither the techs nor the estimator know they are even missing line items like this, then who is to blame? Sorry Mr. Manager or Mrs. Owner, it’s on you. Get your techs and estimators certified and then continually train them. Put them in classes that focus on mitigation profitability and how to maximize every job by doing what they are supposed to do!
Also, have a clear vision and goals for your team. Don’t allow them to shadow box. Throwing haymaker after haymaker and never getting anywhere. Do you know what happens if they feel that way? They get tired. Techs, estimators, mitigation managers will all continue to have turnover if they don’t have attainable goals (not easy… but attainable) and incentive to reach those goals. So, come up with a plan and follow through. Want to know what works for us? Come on down to the Estimating and Negotiating Combo class in April 20-23. We discuss the incentive plan that works for Jeremy Reets and give you the documentation for enacting it in your own company. We also look closely at the WTR, HMR and CLN line items to make sure you are using them in the proper way. If you can lose over $35,000 with 1 line item, don’t you think you should investigate to make sure there aren’t others you are missing?
Written by: Nick Sharp
Nick Sharp has worked with Jeremy Reets for over a decade now. He started in carpet cleaning and mitigation before moving to the construction side as a project manager. He then was the senior estimator for Champion Construction for over 8 years. Since its inception in 2015, Nick has been an instructor of our Restoration Estimating & Negotiating course. His most recent venture is as a restoration estimate consultant. Nick is an Xactware Certified Trainer and is also has his Level 3 Certifications in Xact 28 and X1. He’s a bad boy on that sketch but better at finding lost money!