It used to be so easy to write an estimate.
Easy, that is, until the ARMS people announced
to the country: "A customer doesn’t need an estimate. The
customer is in pain and wants his vehicle made whole again."
This tiny piece of information had a huge
– and dramatic – effect on many leading shop owners – shop owners
who immediately went about changing their approach to vehicle
owners and to writing estimates.
It’s taken much longer, however, for the industry
as a whole to recognize that how you approach writing an estimate
is the absolute key to profitability.
The Purpose of an Estimate
First and foremost, the estimate creates a
blueprint of operations and procedures required to restore the
vehicle to its preaccident condition. A well-written estimate
will generate an accurate parts order and work order that give
technicians all the vital information they require to perform
repairs without delays or interruptions.
Second, a thorough estimate is a powerful
selling tool that can remove doubts from a vehicle owner’s mind
about choosing your shop.
And finally, how you compose an estimate and
how well you understand the system you use to generate an estimate
will have a measurable impact on the profitability of your business.
Improving Your Bottom Line
To start, you need to learn all you can about
the computerized estimating system or the crash books you use.
There are considerable differences between systems, and included
and not-included operations can vary dramatically.
A solid working knowledge of your system is
a necessity, and the best way to gain this knowledge is to take
advantage of training offered by your system’s manufacturer. Read
all documentation that came with your system – and practice! Try
all the features of your system. Invert the order of items entered,
and compare printouts to see if the outcome is different. You
might be surprised to find that your system will calculate final
times differently, depending on which panel you start your estimate
with. Learn everything there is to know about your system: how
it figures overlap, what the included operations are and when
grouped operations reach a threshold.
Spend time regularly practicing with estimates.
Write the same repair from the inside of the vehicle to the outside,
from the front to the rear. Figure a job with panel replacement
versus panel repair. Although guides are typically written for
new, undamaged panels, if you do an eight-hour repair on a roof
or quarter panel and add priming, block-sanding and refinishing
time, you could have a more profitable repair with a lower bottom
line – which will, no doubt, make the adjuster happy.
Note: When working on your system, be cautious
if the word "overhaul" comes up on the screen before
or after printing. If suspension parts are involved, the word
"overhaul" could create a liability exposure.
If you find that insurance companies you do
work for use a different estimating system than yours, have copies
of the procedure pages for those other systems, as well. It’s
no secret that insurers approach the estimating process from a
cost-containment point of view – which can be in direct conflict
with the vehicle owner’s desire to have his vehicle restored to
preaccident condition and with your need to generate profitable
Also, if you’re not currently using a checklist
for additional operations, you might be surprised at what you
do that you aren’t getting paid for. Some items and operations
are market specific. But, if you don’t write them down, chances
are the adjuster won’t either.
A partial list of operations often performed
but not billed includes:
Prep LKQ Part
Refinish Weld Area
Remove Bumper Coating
Remove and Install (R&I) to
R&I Fog Lamps
R&I Sound Deadener
Strip LKQ Part
Thoughts from Around the Industry
Recently, the Collision Industry Conference
(CIC) conducted an informal survey of shop owners and insurers
about key issues facing the industry.
Industry issues identified by repairers included:
- Shrinking database times;
- Declining margins;
- Unrealistic labor rates;
- Technician shortage;
- Lack of implemented computer standards; and
- The transfer of administrative costs associated with direct
repair programs from insurers to shops.
Industry issues identified by insurance company representatives
- Claims-process cycle time;
- Air-bag replacement costs resulting in total losses, new versus
- Legislation on title branding;
- Confusion about CAPA parts;
- Repairers lack of desire to use nonOEM parts; and
- Diminished value costs.
Concern regarding wasted time and money caused by the friction
between the two industries and the issue of fraud in any segment
were also mentioned. Both sides have some major concerns here,
and the estimate – regardless of who’s generating it – figures
heavily into the concerns of both shop owners and insurers.
John Disher, owner of J&L Auto Body in Summerville, S.C.,
has a passionate approach to the computerized estimating situation.
Disher says that after taking a close look at how the data providers
market their programs, he’s accepted four things as absolute truths.
"First," Disher says, "regardless of how much I
pay for that service or how well I use that system, it’s not going
to give me what was promised or advertised, which is complete
and unbiased compensation at an efficient and accurate rate.
"Second, this company that I’m paying money to is really
working for ‘the banker’ who pays the estimate, and the lower
that company keeps the bill, the more business ‘the banker’ does
with ‘the company.’
"Third, what I see is not always what I get. Contrary to
what I’ve been told, the computer doesn’t follow the book.
Fourth, I cannot accept what I see on the estimate as being proper
or correct. I must screen or flat rate every estimate that I accept
for repairs, whether originated by me or ‘the banker.’ "
In many cases, Disher says, the shop owner or estimator doesn’t
know what to look for. "The screen is OK, the book is OK,
but the printout is changed," he says. "Look below the
surface. Just because the P-page says so doesn’t mean it is so.
You owe it to yourself and to your business to learn your system
More Than an Estimate
Remember, vehicle owners don’t want collision repair – it’s forced
on them by generally painful and unpleasant circumstances. When
they show up at your door, they don’t want an estimate; they want
you to ease their pain.
Your understanding of the emotions at work and your professionalism
while handling the collision repair process will up your retention
rate. A business-like setting and a thoroughly prepared and explained
estimate will work to your advantage, even if the customer thinks
he needs to get more than one estimate to appease his insurance
Don’t just hope the customer is satisfied with your estimate –
see to it! The most successful shop owners in the industry don’t
just remove dents – they remove doubts.
Michael Regan is president of The J.J.R. Company in Cleveland,
Ohio, and a contributing editor to BodyShop Business.
What Shop Owners Say
Q: Have you found errors in times or procedures while using
Ben Williams Jr., Ben’s Auto Body Specialists, Cleveland, Ohio:
"Occasionally. I’ve got an 800 number to call, and [the system’s
reps] can pull up the question on their system. I’ve seen them
correct an error on the next update I receive. I feel that they’ve
been very helpful when a question comes up."
Tom Page, Page’s Body Shop, Bedford, Ohio: "I’ve found some
big differences in times for certain operations on certain vehicles
between the data providers. I compare my times with more than
Q: Do you use a checklist for additional, nonincluded items?
Dale Kiefer, D&S Automotive, Mentor, Ohio: "Yes. Our
system allows us to have more than 100 items programmed in. I
can access this screen for each estimate."
Ben Williams Jr.: "Not presently, but I do manually review
additional items and operations."
Q: Do you find adjusters willing to discuss discrepancies
between your estimate and their estimate?
Tom Page: "In my experience, it’s how you treat them. When
I’m reasonable, they’re reasonable."
Ben Williams Jr: "Yes. In general, I find that an adjuster
who sees what’s necessary to do the repair will make it happen."
Advice from the Other Half
Joe Landolfi – the first insurance company (Kemper) representative
to be elected chairman of the Collision Industry Conference (CIC)
– was a guest speaker at a recent Paint and Body Equipment Association
meeting in Chicago, where he spoke on paint and material compensation.
Regarding the estimating process, Landolfi offered some sound
While acknowledging the friction between shops and insurers, Landolfi
says that shop owners need to learn how to make money. "Shop
owners must become businessmen and not blame insurance companies
for their problems," he says. "You can be a great technician,
but a poor manager. You have to be a businessman to know your
costs and charge accordingly.
"If you didn’t know to charge … once you do know, it’ll
be hard to get an insurer to pay for something you [once] did
Landolfi suggests that you start listing operations you’re performing
and let adjusters know that you’re soon going to charge for these
performed operations. "Insurers know which shops know how
to fix cars. And insurers know which shops know how to charge
for repairs," he says. "Shops must educate. Shops must
job cost, identify short profits and adjust future estimates to
reflect the newly identified need."
Attention to Detail
At a number of meetings around the country lately, the discussion
has centered on shop profitability. And one of the common threads,
whether a shop owner or an industry spokesman is doing the talking,
is the need to itemize – in great detail – the operations performed.
This attention to detail will help you to negotiate with an adjuster,
to perform an accurate repair and to achieve a reasonable return
on your business investment.
If you have a tendency to lump operations into a single dollar
or time figure, do your best to unlearn this habit. A detailed
estimate gives your customers a clear picture of what it is you’re
doing for them, and if you deal with an adjuster who simply can’t
agree to a price without cutting something that you’ve written,
you’ve given yourself a bit of breathing space.