These estimating mistakes could be costing your shop money

Steve Feltovich recalls some years ago walking into a large shop for which he was going to be doing some consulting work. Feltovich, who conducts estimating and other training as the manager of business consulting services for Sherwin-Williams Automotive Finishes, recalls that he went out into the production area of the shop and looked at the paperwork and work-in-progress on three vehicles.

“In less than 30 minutes, I found $1,740 of actual repair work being done that was not on the original estimate nor being tracked for a supplement,” Feltovich said. “This was easy-to-document and easy-to-negotiate stuff, and that was on just three vehicles.”

Feltovich believes that type of inaccurate or incomplete estimating costs shops thousands of dollars in lost sales every year, and brings with it other problems such as increased cycle time, added administrative costs and even hits to customer satisfaction.

Here are some of what Feltovich and others believe are some of the most common causes of estimating mistakes that can have a big impact on a shop's bottom line.

Being distracted and rushed during estimating. Preparing a proper estimate takes time and concentration, cautions Bruce Burrow, an Automotive Management Institute (AMI) instructor who specializes in estimating system training. You won't write an complete, accurate estimate if you're trying to answer phones and technicians' questions at the same time.

Burrow recommends having a dedicated desk or area where estimators can work with limited distractions. Keep the “tools” the estimator may need handy: a flashlight, floor jack, paint mil gauge, etc. Provide magazines or a television to give customers something to do while the estimate is being written.

Not understanding the link between good estimating and cycle time, effective scheduling, etc.

Feltovich said poor quality, incomplete estimates lead to delays in completing jobs because of last-minute parts orders, and prevent a shop from scheduling in work effectively based on accurate assessments of labor hours per job. Poor estimates also increase supplements and the administrative time they require.

Not making sure you have read and understand the “P-pages.” Even if your shop uses only one estimating system, there's no excuse for not becoming familiar with the estimating guides and procedure pages for all three major estimating systems.

“There's a load of money in becoming a student of the procedure pages and being able to interpret them,” Feltovich said.

They can be viewed or downloaded and printed at no charge from each of the estimate system company's websites:

• Audatex: http://www.support.audatex.us/ , then click on "Audatex Database Reference Manual (May 2007 version)".

• CCC Information Services: http://www.cccis.com/webhelp/motor/gte/GUIDE.htm

• Mitchell International: https://www.mitchell.com/mcms/content/pub/Brochures/cegEnglish-1940.pdf .

Not getting estimators adequate and on-going training. Feltovich said at one time he was a trainer for insurance adjustors and knows that many of them receive training every few months.

“But only 2 to 3 percent of front-line managers and estimate writing staff at shops have had any training within the last 3 to 5 years,” he said. “So if that's the case at your shop, if they're not receiving formal estimating training, guess who has been training them? They're being trained by the insurance companies.”

Not detailing out frame time. Even if your estimate lists only a lump time for frame or unibody damage, make sure you have notes or a worksheet that breaks that time out: x hours for buckle, x hours for twist, x hours for floor pull, etc. This will make your labor time easier to understand (and for you to defend) when it is reviewed by an insurer.

Not creating or using an “unforgettable list.” The industry's best estimators have on their desk lists of non-included items that are often needed as line items on estimates but are often overlooked. Items on such a list may include common R&I parts (mirrors, optional moldings or emblems), materials (seam sealer, panel bonding adhesive, sound deadening foam), refinish items (mask engine compartment), disassembly items (stripe/decal removal), re-assembly items (caulk seams) and job completion items (glass clean-up, road test).

The Automotive Service Association offers two such lists, one related to new parts and one related to used parts. They are available for $10 each (or $15 for both) through the ASA online store ( www.ASAstore.com ) or by calling (800) 272-7467, ext. 295.

Not understanding what one small missed item per estimate can mean. Feltovich cites an example of a shop that does 150 repair order a months missing just one operation, worth three-tenths of an hour, on every estimate – a legitimate charge for an operation the shop is actually doing.

“You can multiply that by your door rate and the number of repair orders you have every month,” Feltovich said. “For this shop, that three-tenths operation was worth $1,890 a month or $22,680 over the course of a year. And that's without having to add any additional staff, equipment or brick-and-mortar.”

But Feltovich said that writing complete estimates is important not just for the impact it can have on a shop's bottom line. Such thorough documentation, he said, will help protect the shop from liability if there is a question of what was actual done to the vehicle.

“As the professional, you are responsible for the repairs, for the crashworthiness and safety of that vehicle regardless of what the insurance company paid you for,” Feltovich said. “Some shops seem to think that if an insurance company tells you to write an estimate a certain way that they're assuming responsibility. That's dead wrong. You're ultimately responsible.”

John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (www.CrashNetwork.com). He can be contacted by email at jyoswick@SpiritOne.com.