The Price is Wrong
By Rachel Stewart | February 20, 2019 |
Do you remember watching the Price is Right, and when they displayed the true cost of box of detergent or a bottle of shampoo and you are completely floored about how expensive the item is? You would turn to the person on the couch next to you and ask, “When did that happen??” And suddenly you are concerned about everything in your life that could be rising in price that you aren’t noticing. Fun, right? Well who wants to play again?
Last year, our company took a deep look into the efficiency of our operations and processes. It was in both cases, enlightening and alarming. The largest issue (we are talking massive elephant, here) was the amount of time and manpower it took to estimate a job, and then manage the paperwork of a file all the way through completion.
As we dug into it, this is what we found: Estimating a claim is expensive. Shocking, I know. Everyone in the restoration industry generally understands that it’s a challenging process, but we had no idea the true costs involved until we actually added up all the time and expense required.
To give you a better idea of the time, effort and expense involved, let’s look at the process up close.
First, understand that in our company we have reconstruction estimators that write only. They solely estimate, negotiate, sell the job, set expectations with the homeowner, write change orders, supplements, and determine final billing on reconstruction work.
Emergency services are handled by another department. In addition, there is an entirely different team member who takes the job and ensures the completed work once an estimate has been written; we also have another department responsible for billing and collecting.
When our estimators do their job, it looks something like this:
Now, obviously this more than twenty or thirty-step process is long and cumbersome. This graphic reminds me a little of that old after-school special, How a Bill becomes a Law, except without the catchy music. You don’t have to read every line to quickly see that is a long, inefficient process, susceptible to stalling out.
The process is fraught with stops and starts and is extremely inefficient. There are so many opportunities for bottlenecks and delays, as we try to meet the needs of the customer, the requirements of the insurance carriers, and coordinate the work of our crews.
Our estimators’ biggest challenges are the constant interruptions in the communication channels between themselves, their customers and the insurance carriers. We have a very healthy relationship with the insurance community that isn’t antagonistic in any way. The back and forth that I have outlined is necessary in order to share and coordinate information and receive proper authorization. (And yes, we use F9 notes).
From where I stand, insurance carriers are in the same inefficient boat. The process itself is flawed and broken. Both sides are working hard to settle the claim and meet the needs of their customer, but they are running into the same issues. Workload and communication and efficiency are of equal concern to them. There are so many elements at play in handling a claim efficiently and in many ways both our hands are tied.
So, what did we discover at the end of this deep dive into the estimate process? Well for us, it wasn’t pretty. As a company, we averaged completing 2 estimates a week per estimator. And this was with the work of the very best estimators in the industry. They are knowledgeable, committed, hardworking, and dedicated. But as hard as they work and as efficient as they strive to be, the lack of transparency and the difficulty in relaying and receiving information was making their job nearly impossible. It became immediately obvious just how broken the process really was.
For us, these numbers were simply unsustainable. How could we continue to absorb the expense of this cost, not pass it on to the customer or the insurance company, and still maintain a healthy and viable business? We had to fix something.
As with any kind of change, we started internally first. We looked at our system from all different angles to see how we could adjust and make things better.
Our initial goal was to eliminate the number of touches or hours spent on a file. We explored what others in the industry were doing to address the problems with the process. We even looked at what other industries were doing. We talked to companies of all sizes. We tried to observe how the best companies were working to improve their estimate efficiency.
We found that in most cases, just like us prior to opening this Pandora’s box, most companies did not have a concrete picture of how much it was really costing them to estimate a claim. They had no idea how to make the process better. None of them knew the specifics, but they knew it was a problem and they knew they were losing money. The most common and typical solution we saw was to load an estimator up with as many files as they could possibly handle, take a hit on customer service and quality, and plan on people burning out quickly from the heavy workloads. Sound familiar?
We did not like that answer. We wanted to offer our customers the service they deserve while taking care of our employees. We are committed to both of these core values. We knew we could do better and so we have spent the last year developing something that we hope can make a significant change. This new approach has been operating in our company for a few months and we are still testing and tweaking the process. We are hopeful that it will be a game changer for us. But our solution doesn’t solve the problem on the carrier side, and it doesn’t solve the problem for most contractors who are trying to survive right now!
As an industry, we have to push for solutions that will benefit everyone. Actionable Insights’ mission is to help and preserve the restoration ecosystem. This should be the mission of everyone cares about this industry!
What can you do to make a difference? Join the conversation! Get engaged in positive ways that bring the entire industry together. Find and know your own numbers and share your insights and developments to help others improve their own processes. When our individual companies are able produce a better product, the whole industry improves.