The Hidden ROI in Repair Standards
Sitting over breakfast this morning on a cold fall day in the U.K., it was a pleasure to receive the latest issue of FenderBender to read with my coffee. It’s been a strange period recently as I haven’t been out of the country for a couple of weeks, which I am sure many regular readers will know is a little unusual for me.
When I’m back home, I tend to catch up on all of the news and things I’ve missed in the local collision industry, and one item that still perpetually does the rounds is that of the PAS 125 Kitemark Standard. So it was of great interest when I read in the October issue of FenderBender that the SCRS (Society of Collision Repair Specialists) had sent a delegation to the U.K. to understand what it is all about.
To my amazement, the one thing that seems to stand out above all of the other comments is that it was difficult for the delegation to see where the return on investment (ROI) was, and that there were other things to fix first, such as repair documentation, and that perhaps standards should be introduced one step at a time.
For me, the ROI is simple and immense, and I’ll get to that later; however, I believe that the introduction of standards is critical in an unregulated industry which repairs two-ton passenger vehicles capable of speeds well in excess of 100 mph.
Let’s start at the beginning. The U.K. Publicly Available Standard No. 125 (PAS 125) was born out of a conference in 2001 at which industry leaders recognized that our estimating systems didn’t give consistent results, and our estimators (the people) were also inconsistent in the method. This led to huge amounts of friction between estimators and insurance adjusters and it essentially became a fight when negotiating—most of the time based on subjective opinion.
During that conference, it was decided to create a group called EAST (Estimator Accreditation & Systems Transparency). The group worked with collision repair experts, insurance adjusters and their governing and examining bodies, because it was plainly obvious that insurance adjusters saw estimators as amateurish, unreliable and inconsistent (which, in many cases was valid). And estimators often saw insurers as aggressive, dictatorial, out to cut costs and often looking for shortcuts.
Clearly these two parties had a dysfunctional relationship. The solution was obvious—put both sides through a robust training and examination program using the same tools and methods for repair, and harmony should prevail. Getting the two factions to talk and eventually to complete exactly the same examination (often at the same sitting) was like pushing water uphill. The outcome was VDA—the Vehicle Damage Assessment accreditation. Both insurers and estimators have to do this, and negotiation is now almost a thing of the past.
The interesting thing that happens once you start to break your problems down to “root cause” is that you realize that everything works holistically. In other words, the ability to sort out one problem is often compromised by another. Such is the case with VDA, because if you’re neither using the same basic method of repair nor training technicians to use the correct equipment, the whole process falls apart.
The core to this is using the correct method of repair. In the U.K. we are very fortunate in that we have an independent body called Thatcham (thatcham.org) that researches the correct method of repair, works with vehicle manufacturers and publishes the information. Add to that the availability of vehicle manufacturer methods through European Union Block Exemption Regulation (BER) and independent suppliers such as Ezi-Methods (autoindustryinsider.com), and we have the basis for understanding exactly how a vehicle should be repaired.
So now picture the scene. We have estimators and adjusters that have access to accurate calculation data and methods of repair. How difficult is negotiation? Not very, and in many cases repairers will self-authorize the repair and start work immediately, without the need for an up-front estimate. (Starting to see the ROI here?)
Of course, just because an estimator knows how to repair the car in theory doesn’t mean that in practical terms it will be repaired correctly, because of tooling and skills on the shop floor. This immediately brings into question what level of training technicians should attain and whether the types of equipment required by the method of repair are actually being used.
More consultation and significant work with many areas of the industry created a training process and examination for accreditation to enable technicians at every level and in every discipline to achieve an ATA (Automotive Technician Accreditation) status.
Tools and equipment also need to be serviced and calibrated (obviously, but you’d be doing that anyway, wouldn’t you?). Shops must also be able to demonstrate who repaired the vehicle and what equipment and methods were used.
When you add up all of the above and document and audit it, you have a standard. It’s called PAS 125.
In order to understand the ROI, you first have to ask what it costs. Well, I can say that when we built our first Bodyshop Revolution facility from nothing just over three years ago, it cost us about $9,000 to achieve the PAS 125 Kitemark. We employed skilled, accredited staff. We purchased the correct equipment for the repairs we carried out (we’d have to do that anyway), and the only other expenses were the gap analysis (comparison of actual performance with potential performance) and auditing.
So an investment of $9,000 initially. Even adding in a recurring cost of about $3,000 annually for auditing, this is hardly a significant investment for a professional shop generating, say, $2 million or more each year.
The real advantage is this: You are able to attract not only insurance business, but that of local authorities, such as military and police contracts. It demonstrates to your customer that you are a true professional that can prove you know what you are doing when it comes to safe repair. It ensures you are getting the correct price for the job and eliminates many of the unexpected problems that paralyze the repair process downstream. It reduces cycle time and helps for prompter payment.
Insurers have peace of mind when they supply you vehicles to repair.
Repairs are more likely to have been carried out correctly, and done right the first time. Each technician is well trained in modern repair techniques, is using the correct equipment, and has read the specific methods for that vehicle—and is far more efficient. Many of our Bodyshop Revolution facilities now achieve a 175 percent or greater shop efficiency.
Going back to the October article about the SCRS visit to the U.K., I can only assume that the real details—and the overall benefit—were not properly addressed, which is a shame. It’s not really a big elephant you have to eat, but a simple standard that, in the long run, lets everyone win—the collision shop, its staff, the insurance carrier and most of all, your customers.
Jon Parker is managing director of the Byteback Group, a U.K.-based information technology and services company aimed at advancing the collision repair industry. Parker can be reached at email@example.com.