Standardizing Estimating Procedures Saves Time, Money, SanityPosted 1/13/2005
By Alexis Gross
A shop owner, an insurance educator and a customer service expert walk into a bar... or in this case, an interview. Though they may differ in the details of their solutions, these experts agree on one thing: Estimators and technicians need to talk. With vehicle structure and repair techniques changing every year, a well-trained and well-equipped estimator is the foundation for a quality repair done right the first time. Shops must standardize their estimating process so that each repair is looked at in the same way. And estimators need thorough training so that they know how to do their job.
Though it may seem elementary, Darrell Amberson, AAM, ASA collision division director and owner of Lehman's Garage in Bloomington, Minn., says one of the key pieces of equipment estimators need is not fancy automated estimating software, but good lighting. Simple tools - like halogen pen lights - help estimators get a clearer picture of what's happening inside the vehicle, leading to more accurate estimates.
"Start from the outside and work your way in, preferably before tear-down," said Amberson. "After you get everything torn down, use a pen light to look at pieces that were harder to see from the outside."
Robert Medved, senior claims instructor at State Farm Corporate Learning and Development, notes that in most shops, the estimator's most important tool - the computer housing the estimating system - is nowhere near the vehicle being estimated.
"Technicians have their tools right by the car," he said. "The estimating system is the estimator's tool, but in so many shops, it's off in an office somewhere where they can't even see the car."
Tired of making trips to the vehicle to check on a part, some estimators will include it in the estimate and let the techs sort it out, which creates ineffectiveness and increases cycle time.
Standard operating procedures will help shops deal strategically with these issues and the various approaches required by different clients, according to Robert Tavarez, senior director of client support for Caliber Collision Centers.
"The problem in the body shop is we have lots of different agreements with various clients, whether insurance companies, dealerships, fleet companies, etc.," he said. "A lot of times, you'll get a 50-page manual on what to do for that client. When you're doing that for 15 or 20 different clients and you're writing an estimate for XYZ insurance DRP, you better make sure you're doing the right thing. Should you grab that insurance company program guide and look up what you're supposed to do, or is there a better way? We think there is."
Tavarez, who taught the "Writing Proper Estimates" course at the 2004 International Autobody Congress and Exposition (NACE), has developed a template of administrative processes and estimating procedures, and a list of rates, paint and materials thresholds, and incidental items that are not uniform across the industry.
For example, he said, one thing that's different across the board is covering the car for overspray.
"You can use many different methods, and it costs you materials and labor to do this," said Tavarez. "There's a charge for that, and it's different for each company. You have to discuss each item like that when you're making your initial agreement with a client. Talk about each individual item so that when you're writing an estimate, you're correct from the outset and not learning along the way. Incidental items, parts usage and administrative costs are just as important as rates. Every charge gets covered and discussed, and then put in a standard format - so that even though you have different documents for each company, you have a standard procedure for your shop."
The Perils of Computer Dependence
While some complain that estimating systems need to include more information and drop-down windows, all agree that another concern can be a lack of knowledge on the part of many estimators.
"The most frustrating thing is that new estimators are coming in and relying too much on the computer and aren't familiar with P-page operations that the computer doesn't do," said Amberson.
Medved believes poor estimating is leading to the increase in severity and total losses in the industry.
"If you're using a computer estimating system to write a repair for a fender, the system comes back and says a new fender is only $92," he said. "The system only compares the part price vs. the cost in hours of labor. It doesn't take into account blend times, etc. But the shop makes money on labor, not parts. After all those not-included operations, it may have been cheaper to repair the fender instead of replace it, whereas more new parts bring the vehicle closer to a total loss."
One thing computer estimating systems can do well is help to catalog the different procedures required by the various clients a shop may have.
"In your estimating system, there is a procedure to standardize incidental items," said Tavarez. "If you can put them in your estimating system as a standardized item under the insurance profile, it will come up with the correct charge every time. It's important that you know that you've been complete on all charges, know how to program the estimating system to include all those charges, and know how to use the estimating system to be right every time."
So what can estimating system makers do to help estimators write better estimates?
"Nothing," said Medved. "Their job is to make an automated system. You're not going to get a good estimate until you have a good estimator. Estimating systems are nothing more than a parts and labor database with an algorithm that handles overlap and included operations. People depend on the computer to do everything, and it can't. No amount of drop-down windows is going to make a bad estimator a good estimator. Estimators have to know how to write a good estimate regardless of computer prompts.
"If they don't understand overlap or not-included operations, they don't know if the system is writing the right estimate or not. They don't check, or they assume it's right because it's coming from the computer, or they're using the wrong reference book for the estimating system," he said. "People take things for granted. No one out there is teaching Estimating 101."
Training is a Necessary Investment
How can shop owners bring "Estimating 101" to their business? Several ASA members who are part of State Farm's Select Service Program were impressed by what they learned at the program workshop and believe those procedures would improve any shop.
"We ask everyone - estimators, technicians and owners - to write an individual estimate (with standard rates for the class) without talking to anyone else, and then we share our bottom line total," said Medved. "For a light front-end hit, we get a $1,000 to $5,000 spread."
The group then discusses why there is such a spread, including the different standards used by each person and the reasons they took the actions they did.
"There is a lack of communication between technicians and estimators, and that's a problem," said Medved. "We need to talk about the best repair method for a vehicle."
State Farm calls it "consensus building," and Medved believes shops would benefit from doing such an exercise no less than once a quarter.
"We don't believe there's only one correct estimate," he said. "But we do believe that as a company, you should see repairs and replacements at about the same rate in every store. They're not always going to be the same, but what is the acceptable degree of difference between estimates?"
Some shops do believe in a "perfect estimate," and they've built that concept into an incentive program for their estimators, said Amberson.
For example, he said, "when a customer drives up, you write the estimate. Once it's in the shop and torn down, augment that estimate. Draw a line there, and if there are no additions or subtractions after that, it's a perfect estimate, and you get a prize."
Shop owners can customize the award to suit their employees, but the rewards for the shop are universal: higher profits, improved cycle time and a lot less frustration - because the right parts are ordered up front, and it's easier to negotiate with the insurance company and speak intelligently and confidently about the job.
Tracking performance also helps maintain and improve the relationship with your clients - the insurance companies, said Tavarez.
"Even though you've created your agreement, they should be providing you feedback on how you're doing," he said. "If they're not, you should set up meetings with them and talk about how you're doing, and you should know how you're doing before that meeting transpires."
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