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For those who work in the insurance claims profession, writing an estimate in Xactimate is a constant learning process. As with any tool, Xactimate has its strengths and weaknesses. Often the issues with the platform are related to communicating the story of the loss to the various parties involved in an insurance claim. We will discuss five common Xactimate issues as well as the corresponding responses and resources that will help you transform them into opportunities to improve your process. Common Xactimate Estimating Issue One Writing an estimate that accurately reflects the conditions of the structure and how you plan to restore it to pre-loss conditions is only part of the battle. When working with insurance companies, especially if you do “program work” through third party administrators (TPAs), you have to also learn the requirements of the carriers. Issue number one is poor carrier and program basic level compliance. If you, or your team, is consistently getting rejected for the same basic things, you must STOP blaming “the other side” and START to pull your head out of the dark places of the status quo. Learning from rejection is key to your success with insurance claims estimating. Response: Develop a better mindset, starting with training and consistent processes for estimating compliance. Resource: The Three R’s of Mastering Xactimate discusses the mindset of learning from rejection, repetition, and relationships as you develop your estimating skills. Common Xactimate Estimating Issue Two Even if you are independent and don’t do any program work, you will want to learn the estimating compliance requirements of the carriers that you want to work with so that you can develop a working relationship with them. There are requirements and then there are nuances. Contractors who have poor execution of initial estimate components, such as opening statements, structure and flow of an estimate, and labeled photographs lead to breakdown in communication of the story of the loss. This is basic stuff for restoration contractors, yet it is often someone else’s fault. If an adjuster doesn’t understand the story you are telling, learn to be a better storyteller. The blame game is NOT The DYOJO Way. Have your tantrum and get it together. If it were easy, everyone would be doing it. Response: Develop better habits, starting with attention to details. Learn to become a better claims storyteller. Resource: The Format for Fire Damage Restoration Estimates discusses how to approach and structure your estimate for these complex projects. Common Xactimate Estimating Issue Three Xactimate line items have a basic description and then a detailed breakout, it is clear that many who use the program don’t read either. A lack of clarity regarding proper use of line items relevant to the claim is a common source of back and forth between the parties involved in an insurance claim. You can also use this as a good negotiating tool, whenever there is a rejection, ask the reviewer, “Which line items are not in compliance or have not been thoroughly explained?” As Chris Stanley shared on Episode 38 of The DYOJO Podcast, people in a position of leadership should develop structure and cheat sheets for their teams. Chris reminds contractors that everyone has a boss and a box, if you can help the adjuster work within their box you may find mutually beneficial ground. Do as much as you can within the box and then work with the parties involved in the claim to determine an agreed course of action for those items that don’t fit neatly in the box. Response: Skills development through research, peer to peer counseling, and consistent training will help adapt systems so that everyone is learning from prior rejections. Resource: Habits of Xactimate Estimating Success discusses those items that will help you to operate at your best and stand above your competition. Common Xactimate Estimating Issue Four Each time you get rejected, it should be a learning experience and to the best of your abilities ensure that you don’t get rejected for that same item again. Unless, like myself, you like to push buttons. Assuming you have learned from issues one through three so that you have a consistent estimating structure, you understand the rules of compliance (even if you don’t always follow them) and you know your line items, the next issue is documentation. Poor illustrative support for proposed scope of work will sink your otherwise functioning ship. This ties into the series we did for The Intentional Restorer titled Garbage In, Garbage Out, which reminds managers that we cannot expect our teams to hold a standard that we don’t follow. Telling the story of the loss is a company wide commitment and everyone must learn to master their roles and responsibilities. Response: As you develop your story telling abilities, make sure your stories are packed with good pictures, supporting documentation, and thorough communication. Resource: The DocuSketchers shares interviews with three insurance claim professionals who use this resource to assist in their documentation and estimating process. Common Xactimate Estimating Issue Five If you are frustrated with the claims review process, you are not alone. If you don’t like someone looking over your shoulder and you take it personally when you get rejected, you should not be doing program (aka preferred vendor) work as a contractor. Yet, even if you are independent, you still have to tell your story well and be prepared to defend your narrative. The claims process requires you to clearly communicate, using the tools of the trade, and defending your proposed scope of work. As Ken Larsesn says, you should speak for the structure, and master Andy McCabe’s approach, “Thickest file wins.” In contrast, if you are making up scope you are in dangerous territory and it will bite you in the end. If you are not supporting your claim narrative, your plan will get picked apart. Capture the details, be accurate and thorough in your presentation, and learn to master the skill of claims negotiation. Response: Gather data that will inform decisions so that progress (one of the Four Pillars of Success for Intentional Restorers) can be made. Invest in soft skills development for your team in the same (or greater) measure as you do for technical skills (which also should be high). Resource: Help! Claims Review Shredded My Estimate discusses the process of helping yourself and your team develop a better approach to claims rejections.
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Once you have an approved scope and a contract with your client, it’s time to create a project budget. I am always surprised by how many contractors utilized tools such as Xactimate and don’t use all of its capacities. You can go deep into the weeds with any software, but the purpose of this article is to take a quick run through a restoration repairs budget using Xactimate. Your restoration repairs budget will only be as good as your Xactimate estimate Once you have written your detailed estimate, supplemented with thorough documentation following the principles we talk about in Be Intentional: Estimating, it’s time to put the plan to work. When you sketch accurately, you enable yourself to efficiently create and extract relevant project information including quantities of materials, estimated labor, and even the project duration. Restoration repairs budget materials lists from Xactimate
Depending on how detailed you want to be with your budget, this report gives you a deep dive into the materials assumed with the estimate line items. You have a count of framing nails and/or drywall screws at your fingertips. For most projects, I will highlight the larger quantity line items and extract my main data from these. For example, I am looking at an estimate that has a nearly $500 line item on a page where only a few others break $100. This item happens to be a 3 linear foot (LF) vanity, which is an item we will want to note in our materials budget. If you are separating materials and labor for tracking, or in the event that you are subcontracting portions of your work, you will have to decide how in depth you want to break these items out. The components list is also helpful for checking your quantities for materials such as flooring, insulation, and drywall. On this page I have 83.25 square feet (SF) of snaplock laminate. If your flooring is 30 SF per box, you can determine how many boxes you need to order. If you estimated to replace the transition strip in multiple rooms, you will also know how many linear feet of material you will need. Before you take the unit price and give that to your client as their materials budget, go back into your components within the estimate and understand the breakdown of labor, burden, materials, etc. Seth Harrision of Actionable Insights has many helpful videos, including this one covering an Xact Hack for creating a materials budget. To observe the cost factors:
Restoration repairs labor budget from Xactimate While still in the components print out, you can scroll down to observe the labor quantities by work category, Xactimate unit price, and labor factor totals. Using these figures you can cross reference the labor for each of the scope categories. For finish carpentry (FNC), which is for “Carpenter - Finish, Trim/Cabinet”, we have 7.30 hours based upon the assumptions of the software for this estimate. Restoration repairs project budget from Xactimate
Recap by Category assembles all of the line items from each room and combines them into core groups. Each of these line totals include materials and labor. If you are creating a budget, this is likely the report that you will want to start with. If your company is built so that you work for less than 20% overhead and profit, then this sheet may be all that you need. Otherwise, you will need to use these numbers to compose your plan. A simple format for budgeting includes taking the line item totals provided in recap by category, subtracting your profitability goals, budget for project management time, and build in a buffer. You can do this on scratch paper, a simple spreadsheet, utilize budgeting software, or use a program that integrates with your estimating tool of choice. Restoration repairs project scope from Xactimate Another good resource from Xactimate is the scope report. This will provide you with a resource that you can print out and post in each room of your project so that everyone on your team is on the same page with regards to what the approved scope is. Too often only the estimator knows what the scope is and that information is not downloaded to the production team. By training your team to read and understand your estimating document you have a better chance of continuity in your workflow and combating the costly effects of scope creep. |
AuthorJon Isaacson, The Intentional Restorer, is an 18 year veteran of the property restoration industry and a business coach through his organization The DYOJO. Archives
April 2021
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