The 'Nitty Gritty' of How Labor Times Are DevelopedPosted 11/19/2007
By Rachael J. Mercer
How Is Time Developed?
Shop estimating system providers develop their times differently, and yet, sometimes very similarly. Some providers test vehicle repair or refinish processes in a controlled environment, while others pick shops to perform the repairs in real-world situations. Some providers develop their labor times assuming a certain level of expertise on the part of the technician. Those assumptions on expertise level may vary greatly. But the goal of each information provider is to develop the best, most efficient and correct labor times possible. Here is a look at how the three main estimating providers develop their labor times.
Audatex, a Solera Company
Audatex, which pioneered computer-generated estimating systems in the mid '70s, has built a system that contains a large depth and breadth of labor knowledge, according to Rick Tuuri, vice president of industry relations for Audatex.
According to Tuuri, Audatex conducts continuous time studies in collision repair facilities across North America and continues to stay in touch with the "latest and greatest" techniques as vehicles continue to change and develop. "Audatex's labor times are significantly different than other providers," said Tuuri. "We build them on a part-by-part basis, so that the system automates the included operations and eliminates labor 'overlap.' Our system is extremely interactive."
Tuuri stressed that input from real-life users is important to Audatex and its developers. "We provide labor times that are averages, but an important part of our development is to stay in continual contact with the end-user." If a collision repair technician or professional estimator finds a problem with an Audatex labor time, they can submit a request for review (RFR). Audatex professionals will research and respond to each RFR.
"Sometimes as many as 40 to 50 labor times are changed each month, whether there is a significant difference or not," said Tuuri. "We want our times to be as accurate as they can possibly be." Tuuri pointed out that many shops perform millions of operations each year, and even the smallest changes in labor times can affect their profits. Updates on labor times from Audatex are available in a monthly vehicle load process, although Tuuri indicated that in the future, these time changes might be accessed via the Internet - eliminating the need for CDs, mailing and wait times.
"We use every means available to us to develop independent labor times. Our OEMs are tremendous business partners and provide an incredible amount of information that helps us serve the collision industry, and we welcome input from our independent partners as well," said Tuuri.
CCC Information Services
CCC uses times developed by MOTOR Information Systems in the operations of its shop estimating systems. John Lypen, director of industry relations for MOTOR Information Systems, explained MOTOR's development of labor times.
"MOTOR uses several information sources and processes for developing labor times," said Lypen. "These include operation procedural analysis, technician operation familiarity analysis, MOTOR historical database analysis, OEM warranty times (as a change indicator), user input and operation observance."
As part of operation procedure analysis, labor time editors research vehicle construction sequence and part replacement, ensuring that the required steps are performed as part of the auto body repair. Technician operation familiarity analysis examines how often a particular repair is performed. Lypen said, "Factors considered during this evaluation are vehicle model sales, frequency at which this operation is generally performed, unique features of the vehicle model, unique characteristics of the operations procedure and the skill level required to perform the operation." Lypen emphasized that changes to the MOTOR labor times are performed following an assessment by the editorial staff and are not a fixed percentage.
"Predetermined percentage adjustments are not an acceptable means of deriving labor times at MOTOR," stressed Lypen.
"A key component in the development and maintenance of MOTOR labor times is feedback from the users of our publication," said Lypen. According to Lypen, all inquiries concerning labor times are evaluated, and if the concern stems from a published labor operation time, an editor assigned to the concern begins the research process and evaluates all available information sources to resolve the concern. Lastly, whenever MOTOR receives an inquiry regarding a labor time, the inquirer is notified of the results of their research, whether or not it results in an adjustment to the published time.
MOTOR has earned I-CAR Gold status for 12 consecutive years and has a certified I-CAR instructor on staff.
Tom Fleming, vice president of industry relations for Mitchell International, discussed its system for developing labor times. "Mitchell International develops labor times based on a non-dealership environment," said Fleming. "The warranty times suggested by the OEMs provide a basis point for the beginning of our labor research."
Mitchell International conducts its labor time studies using 11 labor editors - many of whom come from a background of real-world technician experience. "Most of our labor editors have eight to 10 years of shop experience as a technician or a higher level," said Fleming. "Many have gone on from the technician level to be estimators for shops or insurers."
Mitchell International provides a set of guidelines for the editors to work through in developing the labor times, and the editors use information from the manufacturer's service information as a reference basis. "We have formulas that apply to repair and refinish procedures such as spot welding," said Fleming. "We identify how many welds must be performed and then use our formulas to develop a time for that procedure. We work through the operations ourselves to develop our times.
"In reviewing these operations, we make sure that the service instructions from the OEM matches what is seen on the vehicle, and we verify the steps that must be performed to complete that particular repair.
"When new models are released, we use a profile with diagrams we've built based on a relational matchup to previous models. Sometimes these diagrams or profiles must be changed because of the new metals - such as aluminum - or plastics, which are more challenging to repair."
If there are no OEM guidelines for replacing a certain part or performing a particular repair procedure, Mitchell International uses I-CAR guidelines to develop a labor time for that process.
Requests for review can be filed by calling Mitchell International. According to Fleming, any discrepancy in the published time that is discovered as a result of the review request is reported to the customer. Fleming pointed out that in the first several months after a new vehicle model is released, additional time studies are often requested to locate and rectify any time discrepancies. Changes in labor times are published on CD-ROM and are released monthly for upload by Mitchell International customers.
Many of Mitchell International's labor editors have a mechanical background, according to Fleming. "The labor times we develop are created based on an expected technician experience level of three to five years," said Fleming. "When a technician has more than five years experience, he or she can probably perform the repair in less time than what is stated. However, if a technician has only a year or two of experience, he might have more difficulty performing the repair in the published time frame, but eventually those two situations even themselves out."
Be Familiar with Each System
While many shop owners and technicians have difficulty finding time to understand their estimating software thoroughly, many experts stress intimate familiarity with one's estimating system. "The end user needs to have familiarity with the proper times," said Denise Caspersen, Collision Division manager for the Automotive Service Association (ASA). "They need to be familiar with all the steps, because with shrinking profit margins due to other issues in the collision industry, collision shop owners must be sure to include all justifiable repairs and labor times on an invoice."
Others encourage familiarity with all three major shop software systems. Carroll Proctor, ASA Collision Division Operations Committee member, points out that the differences between the labor times for the same job between each of the three estimating systems should be examined carefully by shop owners and technicians. "The average shop owner is at a disadvantage if he doesn't know the P-pages of all three providers," he said. "If he doesn't know about them, then he's selling himself short."
What's Included with that Time?
Have you ever taken time to consider what's included in each hour of labor time? Of course, you know that each job performed in your shop requires diagnosis, setup and cleanup, in addition to the actual performance of the repair.
Labor times can vary greatly between the three major systems for the same repair. Familiarity with the P-pages and with what is and is not included is essential, Proctor emphasizes. "Just looking at the picture of a repair process is not enough," Proctor said. "You must understand what is and is not included. When there are times that are not included, you must add them to your estimate and have enough understanding to know how to defend those additions to the insurer or a customer."
To assist technicians and shop owners in determining what is and is not included in their estimates, ASA has developed Not-Included Charts. The ASA Not Included Charts are available at www.ASAstore.com or ASA members can go to www.ASAshop.org and then click on the ASA Store button on the left-hand column. They are available in print and PDF format for ASA members at a set rate of $15 for the PDFs and $40 for the spiral-bound print version. Non-ASA members can purchase the not-included charts in print format only at a cost of $225.
Increasing Your Profits
Understanding labor times is key to increasing your profits, along with understanding your estimating system and what's included in the labor times for each repair. "What your business gets out of an hour depends on productivity. Labor productivity is the key to profitability," said Fleming, who developed the Mitchell International presentation "What's In an Hour?"
Labor times factor in indirect and direct time jointly. Indirect hours can include things like holidays, training, sick days, meetings or vacation. Direct time should account for 75 percent to 80 percent of your business time, according to "What's In an Hour?" Direct time can be affected by employees' personal needs, interruptions and delays or fatigue. Eliminating needless delays and interruptions is one way to increase the direct time that is actually being used to perform vehicle repairs, boosting your shop's bottom line.
Take It a Step Further
Getting involved in the labor time process is possible on many fronts. First, becoming familiar with the Database Enhancement Gateway (DEG), discussed in the sidebar on page 20, can lead to increased accuracy for you and for others. Report discrepancies, even small ones. Representatives for each information provider discussed their processes for conducting time studies whenever a problem with a labor time is discovered. Secondly, get involved on advisory boards. Michael Anderson, owner of Wagonwork Collision, serves on advisory boards for Mitchell, CCC and MOTOR Information Systems. In addition, his shop has been used to conduct time studies.
"Mitchell and MOTOR have both conducted time studies at my shop on several occasions," he said. "A representative from MOTOR visually watched specific replacement operations and made notes and took digital pictures. Mitchell has done the same and also set up video cameras to record the events involved in a particular repair."
Becoming active with information providers allows you to have an involved relationship with representatives who will value your opinion and expertise, and will lead to more accurate labor times for all in the collision industry. Get some understanding, and get involved!
DEG to Review Requests on Labor Times
The Database Enhancement Gateway (DEG) is a joint effort by three national collision industry associations to enhance accuracy and functionality of estimate programs currently in place in collision businesses around the country. Designed to allow technicians and business owners to more precisely develop labor times when fixing today's high-tech vehicles, the DEG was launched recently. The DEG also allows collision repairers to file a "Request for Review," or "RFR," and will post the responses from the information provider(s) once available.
The Alliance of Automotive Service Professionals (AASP), the Automotive Service Association (ASA) and the Society of Collision Repair Specialists (SCRS) have joined forces to develop a Web-based portal that will examine and enhance the content of the data found in the industry's leading estimating systems. The DEG is managed by a full-time administrator who will be managed by an oversight committee developed by AASP, ASA and SCRS.
Rachael J. Mercer is a freelance writer based in Moultrie, Ga. She can be reached at firstname.lastname@example.org.
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