Effective Estimating: How to Avoid a Poor System
Having an effective estimating system can sometimes go unnoticed, but what if it could boost your sales by 30 percent, improve your cycle time by two days and improve your touch time by another 30 percent?
Those are the numbers Dan Bailey, operations manager of All Line CARSTAR Auto Body in Bolingbrook, Ill., and former president and COO of CARSTAR, was able to achieve after implementing a better estimating process. The shop now boasts $4.2 million in annual revenue, a cycle time of seven days and a touch time of 3.6 hours.
But his numbers weren’t always that impressive—in fact, just a few years ago, his estimating process was full of starts and stops and multiple orders and burdened with a high supplement ratio. It’s a process that was hurting his shop’s production.
“If not the, it’s one of the most critical things that a collision center can do to drive their metrics,” says Ted Williams, manager of business consulting services at Sherwin-Williams, about effective estimating systems.
In fact, Williams has watched shops transition into a better process and seen sales increase up to 50 percent.
Both Bailey and Williams break down the most common issues with shops’ estimating systems and how to solve those problems.
The Problem: Not understanding the true definition of an estimate.
Williams says many shops that he has visited will accept their initial estimate as being a “good enough” foundation for placing the vehicle into production—an indicator the shop’s process is not controlled.
The Solution: Distinguish between an estimate and an analysis.
For Williams, it all starts with the correct term. An estimate, by definition, according to Williams, is a rough calculation of what the damage looks like. For example, an insurance adjuster looks at a vehicle and uses some type of technology, while the vehicle owner takes photos of the damage and sends them in for an estimate.
An analysis is a “detailed evaluation of the elements of the subject.” This process will include a teardown of the vehicle in order to identify all of the damage upfront.
The Problem: Incomplete teardowns.
When it comes time for the teardown, Williams says it is very rare that a tech will disassemble the vehicle to the degree necessary to fully assess the damage.
Instead, techs will frequently disassemble to the point where they feel comfortable making a judgement call that there isn’t any other damage. That judgment call, according to Williams, simply isn’t accurate enough to suffice.
For example, a tech may partially take apart a bumper cover because he or she doesn’t want to go through the time of completing the process. But upon installing a new cover, he or she may identify that additional parts are needed. It’s a mistake that could be easily avoided if done right the first time.
Bailey says that prior to its current estimating process, his team experienced the same issue.
The Solution: Schedule vehicles appropriately.
The issue comes down to prioritizing. Williams says that you may have a commission-based tech who is more focused on building a sheet of hours versus conducting a full teardown, which puts the shop behind. If a shop can produce eight cars in a day, and eight new vehicles are brought in, but only four are assessed that day, the remaining four roll over into the next day. So, Williams says, the shop becomes overloaded with 12 new vehicles the next day.
“It becomes this perpetual cycle where you never get the assessments done in a timely manner,” he says.
Make sure you have time to look at the vehicles coming in, Williamson says. For example, if you have two estimators, one can start on the administrative tasks, while the other handles the assessment.
After a joint corporate effort from Sherwin-Williams and CARSTAR to better the estimating process, All Line CARSTAR transitioned into its new-and-improved process in September 2015.
Bailey says there are 10 cars scheduled each day: three fast-lane vehicles (completed in two days or less) and seven standard jobs.
The Problem: Lack of communication.
Williams says another common mistake is that the writer remains in the front office and will make only occasional trips to look at the vehicle. This can create issues because any new issues or concerns aren’t communicated and the estimate is thus not adjusted in the system.
The Solution: Designate the people and the space.
Williamson says setting aside a designated “analyst” and a space for disassembly makes sure that a controlled process is in place to keep up with the work.
At All Line, the estimating process handled by a team of two people: a disassembly-for-repair (DFR) technical writer (who was once the production manager) and a DFR technician.
“Many shops separate administration and assessment functions and reassign an existing writer to be an analyst,” he says
Every car is then pre-washed, regardless of the size of the job, placed in the staging area where it is mapped and the vehicle is fully disassembled. A repair plan is then written by the DFR technical writer. According to Teresa Kostick, president of All Line CARSTAR, all repair plans are strictly written with all OEM parts, not per the insurance company's guidelines.
Once the DFR is complete, the writer notifies the the repair consultant and the production manager. The repair consultant then audits the estimate to comply with the specific insurance carrier.
Due to the effectiveness of this particular system, Bailey says that less than 5 percent of the vehicles that come in need additional items after completing the process.
The Problem: Dead cars everywhere.
If a thoughtful approach to disassembly is not taken, Williams says that reassembly can become a tedious process. Disassembly should include printing out the appropriate technical data sheets; taking photographs so the techs can remember how parts go back together; tagging parts and wiring harnesses to ensure the technician remembers how it needs to be reconnected; and staging parts and confirming parts availability, according to Williams.
If these steps are not taken, the shop fills up with dead vehicles because it doesn’t have the required authorizations or parts to complete the repair—all because the appropriate steps were not taken in the first place.
The Solution: Standardize consistency.
You can’t sustain any change without discipline, Williams says. While it takes a transition period, you should make sure to dedicate people in your staff to this task to ensure consistency.
As long as you have a complete process in place and identify all of the damage up front in the disassembly phase, your shop should have a consistent cycle of cars coming in and going out.
“It changes your life,” Bailey says. “It just makes life easier.”