Overhead and Profit (O&P) in Xactimate Line Items?Is it true, there is no O&P in the Xactimate repair line items? Xactiamte trainer and estimating guru, Ben Justesen, joined The DYOJO Podcast to discuss this topic and more. On Xactimate Sessions File 005, Ben responded, "This is a good question. Whether you realize it or not, it's a little bit loaded. When I when I think of overhead and profit (O&P). as a markup, that markup is not included in the Xactimate line items." The Difference Between Markup & Profit for Insurance Claims EstimatingWhat is markup? You have your line items coming together to form the cost of your scope. You add a markup, which in the insurance industry is often considered this arbitrary 10% overhead plus 10% profit (aka 10 and 10). This add-on to the end of your Xactimate estimate is your markup. Markup doesn't actually give you a guaranteed profit margin, which is what you actually take away from the project once you've paid for the work and the cost of goods sold. In simplified terms:
"However," remarks Mr. Justesen, "That markup is only a portion of the margin that you would need. So there is some margin in the line items themselves. But it's on a certain component. That's the labor component. There's are no margin on materials, there is no margin considered on equipment. So the margin that you have to consider is on the labor." in addition to running a multi-site restoration company out of Moses Lake, Washington, Ben also has created the Enlightened Restoration Solutions (ERS) course to help insurance claims estimators elevate their skill sets. He is the leading proponent for encouraging restorers to make their own pricelist within Xactimate and teaches them how to effectively do so. He reminds contractors that if all they rely upon is the 20% markup added to their estimate, they will struggle to cover their true overhead costs or meet their actual profit margin goals. If a restorer sticks to a strict 20% markup, they need to understand they are only netting a 16.67% margin. 20% Markup is only 16,67% Margin for Restoration EstimatesI will try to do this justice. This is something Ben justesen demonstrated when I attended his ERS course. If you watch the video you will notice that I am using the legal pad from the Law Offices of Edward H Cross, aka The Restoration Lawyer. Another resource like to shout out is The Book on Restoration Collections by Ed Cross. This book is available through their website and is designed to take the mystery out of collections for insurance claims.
Restoration professionals hear all the time that 20% overhead and profit (O&P) is more than enough. But, you and I know that this is actually only 16.67% margin. I will demonstrate how:
Why is this? That is because if we had an invoice from a subcontractor for $1,000.00 and the gracious insurance company allowed us to mark that invoice up by 20%, we would then be charging $1,200.00. From our $1,200.00 we pay our sub $1,000.00 and we are left with $200.00. Our $200.00 is only 16.67% of the $1,200.00 that we charged. So, not only did we NOT get at least 20% (which is far lower than ANY insurance company makes as an overhead and profit margin), we also likely had to wait on the money so the insurance and the client allowed us to finance the payment interest free while they waited to pay the $1,200.00 so that we could recoup what is left of our $200.00. Most restoration companies, most contractors, and most insurance companies have a higher profit margin goal than 20%. This markup can really drag those margins down on your individual projects and your overall goals for the year. If you're only getting a 20% markup on the front end, it can really skew your margin on the back end.
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The Xactimate Sessions from The DYOJO Podcast File 003 - Fake it until you Xactimate it The DYOJO Podcast Season 3, Episode 68 Guest: Nick Sharp, Consulting Specialist at Reets Drying Academy If you can't estimate, you become a trainer. Right? Nick Sharp joins us on The DYOJO Podcast to share his experiences from cleaning carpets to learning to fake it until he made it as a reconstruction estimator. Nick shares how his positive mindset and consistent work ethic helped him to progress in his property restoration career. As Nick says, "I never went into anything thinking that I can't do this." This week, on The Xactimate Sessions from The DYOJO Podcast, we sit down to discuss Xactimate with a restorer-turned estimator who transformed into a restoration industry trainer. Nick shares a few tips for aspiring professionals and growth-minded estimators, including:
PODCAST SPONSOR: The DYOJO Podcast is sponsored by Advocate Claim Service (ACS), "Where you can find solutions to claims that are causing you anxiety." David Princeton and his team are ready to help you navigate doubtful and disputed insurance claims. If you are a business owner, manager, or intentional restorer, you will appreciate Nick's insights as well as this key question, "Why are we teaching estimators the program (IE Xactimate) instead of what is going to be profitable?" We supplement our discussion with Nick with clips and comments from many sources including
NEW BOOK ANNOUNCEMENT: As this series develops, Gabriel J. Jones and I are transforming content from The Xactimate Sessions into a book that will release shortly after the podcast episodes are all released. This will be a great compliment to our first book, Be Intentional: Estimating. Please RSVP your copy today. This book is intended for:
DEALS FROM THE DYOJO: The DYOJO collaboration with DocuSketch offering a $200 discount on the initial hardware package to members of The DYOJO Nation who use the custom code "DS-DYOJO1". The DYOJO Podcast, the official home of the DYOJO Nation as so declared by The Global Watchdog, Pete Consigli, exists to help intentional restorers to shorten their DANG learning curve for personal and professional development. We are doing something different for The DYOJO Podcast Episode 67. This week, Eric "The Tech Whisperer" Sprague and Larry "Pineapple Man" Wilberton, invited Gerrett Stier of GMS Podcast and myself to join them for what they called The Podcast Summit of Blue Collar Nation (BCN). Blue Collar Nation Podcast + GMS Podcast + The DYOJO Podcast = Restoration Podcastalypse Megazord 2021. Eric, Larry, and Gerrett were onsite in Charleston, South Carolina for The Experience, where GMS Podcast unveiled their mobile podcasting booth. You can listen to the results of these escapades on Blue Collar Nation Podcast and GMS Podcast. We hope that this Podcastalypse will be the first of many continued video, audio, and physical collaborations. GMS and BCN will be in Las Vegas for The Experience in September 2021, back at it with their live shenanigans. We hope to assemble the team for our first combined live event at Restoration Industry Association (RIA) in Reno on April 13-17, 2022. Blue Collar Nation + GMS + DYOJO PodcastsIn this episode of The DYOJO Podcast, we share some snippets of Restoration Podcastalypse Megazord 2021 (aka Podcast Summit). We give each other a hard time and dig deeper into what makes each of us tick as well as the value proposition for our shows. The first question we want to ask (POLL), who has the better podcast opening?
While you are contemplating this core issue, you also need to decide whether you are going to LEAD or JOIN a local SOCKTember Team for the 2021 NEW Sock-Raising Challenge. Take a peek at the latest video from The DYOJO and hear about all of our restoration industry friends and peers who are already involved in this effort. Thank you to ARES Restoration, out of Graham, Washington for being our first sponsor for this year. Two Announcements that impact Restoration HistoryMost of you know that following the Restoration Industry Association (RIA) 75th Annual Convention and Expo this year in Florida, Pete "The Global Watchdog" Consigli and I took a road trip further South. We discussed restoration history and meet some amazing people along our journey. We share a clip of Pete bestowing to me something that I will cherish for the rest of my life. We had a lot of fun, ate really well, and shared some great moments together. As Pete says, quoting Jimmy V, "We laughed, we thought, we cried, today was a heck of a day," and we had many heckin good days on the road together. Michelle Blevins, the new owner of C & R Magazine also dropped by to share her exciting news. We will be releasing more content related to my trip with Pete as well as my conversation with Michelle. This was a fun break from our current series, The Xactimate Sessions. We have released File 001 Learning Xactimate from Scratch (TDP 65) and File 002 Learning to XM8 with all the Resources from Xactimate (TDP 66). More to come from Blue Collar Nation, GMS Podcast, and The DYOJO Podcast. This week, on The Xactimate Sessions from The DYOJO Podcast, we sit down to discuss Xactimate with Xactimate. Brian Austin is the director of instructional design at Verisk, Xactware division. Verisk is the parent company that owns Xactware which produces Xactimate. So, if you could ask Xactimate one question, what would it be? We asked Brian several questions and he said that Xactware has worked diligently to build feedback into their systems. Xactimate wants to hear from the everyday restoration contractor and all of its users. SPONSOR: The DYOJO Podcast is sponsored by Advocate Claim Service (ACS), "Where you can find solutions to claims that are causing you anxiety." David Princeton and his team are ready to help you navigate doubtful and disputed insurance claims. Are you able to deviate from Xactimate pricing?The Advocacy and Government Affairs (AGA) Committee of the Restoration Industry Association (RIA) was able to bring Mike Fulton, President of Xactware on for a industry briefing on Facebook Live, June 18, 2021. It appears that this video may no longer be available but portions can be seen via THIS LINK. Ed Cross, The Restoration Advocate, reminds contractors that Section 9 "Limited Warranties" of the Xactware licensing agreement reads, "You are responsible to ensure the estimate includes pricing consistent with components including, but not limited to, actual materials, equipment, and labor pricing...You agree to not inhibit or preclude deviations from the Price Data where contractor requirements, market conditions, demand, or any other factor warrants the use of a different line item price in the specific situation." Resources from Xactimate for new estimatorsThe Xactimate Sessions from The DYOJO Podcast File 002 - Learning to XM8 with all the resources from Xactimate The DYOJO Podcast Season 3, Episode 66 Guest: Brian Austin, Director of Instructional Design at Verisk Brian shares many of the tools available to all Xactimate users including many that are included with your annual Xactware subscription:
Three tips elevating your Xactimate skillsIf you didn't catch this from the previous paragraph, Xactware offers ILX Construction Training which is included in your annual Xactware license and is designed to help take an employees through the complete building process. In addition to these resources, Brian shares three tips for elevating your Xactimate game as well as your personal and professional development:
The DYOJO collaboration with DocuSketch offering a $200 discount on the initial hardware package to members of The DYOJO Nation who use the custom code "DS-DYOJO1". The DYOJO Podcast, the official home of the DYOJO Nation as so declared by The Global Watchdog, Pete Consigli, exists to help intentional restorers to shorten their DANG learning curve for personal and professional development. WATCH on YouTube or LISTEN on Spotify, Thursday at 9 am PST.  Can you teach a child to sketch for Xactimate? Property restoration technicians, project managers, and estimators work in a variety of property damage scenarios including water damage, fire damage, mold removal, and insurance claim reconstruction. The most common tool for constructing estimates and/or agreed-upon scopes of work in the property insurance claims realm is an estimating software called Xactimate. As Jon Isaacson discusses in his book, Be Intentional: Estimating, every insurance claims estimate, especially those composed in Xactimate, need two key things:
Many restoration contractors, business owners, and managers struggle to train their teams to clearly and consistently document the story of the loss. This video from The DYOJO Podcast is an excerpt from their latest podcast episode (Season 3, Episode 65). This episode serves as the launch of their NEW season as well as their NEW series The Xactimate Sessions. The Xactimate Sessions - File 001 Learning Xactimate from Scratch Guest: Greg Power (Tacoma, WA) Four Tips for New Estimators When Creating Your Sketch or Diagram for Xactiamte
The DYOJO Podcast - helping you shorten your DANG learning curve for personal and professional development. Thursdays at 9am PST on YouTube and Spotify. Stay tuned as The DYOJO will be using the content from this current series, The Xactimate Sessions, as the foundation for a new book that will release shortly after the series finale (date TBD). NEW SEASON + NEW SERIES from The DYOJO Podcast The Xactimate Sessions from The DYOJO Podcast File 001 - Learning Xactimate from scratch with Greg Power The DYOJO Podcast Season 3, Episode 65 Greg Power Discusses How He Learned XactimateGreg Power is a project manager/estimator based in Tacoma, WA who learned Xactimate rapidly with no prior industry experience. He initially started writing estimates for property managers responding to damages in apartment complexes and then was soon inundated with a high volume of program work (third party administrator or TPA) for insurance claims. Greg will share some insights on how he approached learning Xacitmate which will be helpful to aspiring estimators and training managers alike. The Xactimate Sessions - File 001 Building from the success and reception for Benchmarks of Growth, a six-part series which The DYOJO Podcast produced earlier this year, the team will be releasing these multi-part Xactimate Sessions weekly over the next few months. Viewers and listeners will receive a great deal of value from the mindset and habits that have helped our guests as well as some deals from the participating vendors and sponsors of the show. Listeners are encouraged to leave comments and/or questions on any of the social media platforms including Youtube, LinkedIn, Facebook, and Instagram so that the discussion can evolve in relationship to need as the episodes drop. SPONSOR: The DYOJO Podcast is sponsored by Advocate Claim Service (ACS), "Where you can find solutions to claims that are causing you anxiety." David Princeton and his team are ready to help you navigate doubtful and disputed insurance claims. Learning Xactimate With No Prior ExperienceOur discussion on The Xactimate Session - File 001 with Greg Power includes:
Learning To Sketch for Estimating with XactimateAs we close File 001 of The Xactimate Sessions, we extend the conversation by discussing approaches to training your team to sketch, as this was brought up in one of social media groups for restorers. Jon references an old video where he was teaching his young children to sketch and announces The DYOJO collaboration with DocuSketch which is offering a $200 discount on the initial hardware package to members of The DYOJO Nation who use the custom code "DS-DYOJO1". The DYOJO Podcast, the official home of the DYOJO Nation as so declared by The Global Watchdog, Pete Consigli, exists to help intentional restorers to shorten their DANG learning curve for personal and professional development. thedyojo.com/listen |
AuthorJon Isaacson, The Intentional Restorer, is a 19 year veteran of the property restoration industry and a business coach through his organization The DYOJO. Archives
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