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Tuesday, 01 May 2012 19:50

Collision Repair Estimates—Excellence Now Required

by Steven Feltovich, Manager of
Business Consulting Services,
Sherwin-Williams Automotive Finishes

“What can we do to improve the customer experience and our own profitability in a fiercely competitive market?”

Faced with demanding customers and aggressive insurance companies, body shop owners around the world are forced to confront this question every day.

Leaders in the collision repair industry say that an accurate estimate is critical to the success of their organizations.  In fact, nearly every shop I have worked with over the past year has emphasized the importance of the estimate or, as they commonly referred to it, the “blueprint” for damage repairs.

Many shops have moved toward a more comprehensive damage assessment process, which consists of initially identifying all of the damage, both visible and hidden.  This approach provides tremendous value in terms of cycle time reduction alone.  There is so much lost time and money in the redundant steps associated with traditional visible damage estimating.  Consider the amount of time consumed by ordering parts multiple times per repair order, writing supplements, rescheduling delivery dates, extending rental car provisions and reallocating technicians to vehicles they can work on. Ultimately, this creates an environment of internal friction without any positive energy being directed toward process improvement.

Some might refer to the improved process as “blueprinting,” “damage analysis,” or “repair planning.”  Regardless of what you decide to call your comprehensive damage assessment process, the fundamentals remain the same.

So, let us set out on our journey in search of how to achieve estimating excellence.  We will begin by answering one significant question.  “Why does traditional estimating still exist if it is so ineffective?”  You can probably come up with several answers to this question on your own.  Many of us were taught to do it this way.  Management within some shops would claim that their customers expect a traditional estimate.  Some would say that insurance companies demand a traditional estimate as the preliminary estimate.  Often, we simply fear the attempt to try something new.  Many people in our industry have proven that these obstacles are not insurmountable and there is a better way to assess collision damage.

The real winners in collision repair are implementing and refining the “blueprinting” process.  This process is designed to lower the shop’s overall costs while increasing productivity.  Does it work?  Absolutely.  The objective here is a 100 percent complete damage assessment before loading the vehicle into the production area.

The result is phenomenal:
•    More customer confidence in the shop’s capabilities
•    Reduced cycle time, predictable delivery dates
•    Increased technician touch time per day
•    Less administrative work

All of these benefits are achievable with a process-driven damage assessment program in place.  The correct process will reduce the common errors, variations and redundancies which are inherent in traditional estimating activities.

When I am involved in a facility analysis to determine the root cause of scheduling problems, I frequently find the cause to be directly related to an inaccurate initial estimate.  Since jobs are scheduled into the production area based on labor hours and the parts that are needed, inadequate estimates prove disastrous for shops using estimates as a guide for workshop scheduling.  If the estimates are half right with what you consider to be a week’s worth of work you will have actually scheduled two weeks of real work into a one-week time slot.  This creates bottlenecks and fires within your business that consume you and your staff, slow production and stop your business from ever moving forward.

Due to the weaknesses of traditional estimating, we have become an industry of excess capacity in order to compensate for the flawed estimating practices ¾ more facility space and equipment than we really need.  And why do we need that extra space?  That’s right, so we can park all of those dead cars in it!  You know those dead ones which are waiting for parts, supplement approvals and/or available technicians.  How much does it cost your business to park and store those dead vehicles on the expensive real estate of your available production floor space?  In some cases, the vehicles are even parked on the frame machine for a day or two due to a deficient estimate.

Ultimately, our customers and insurance partners are the victims of our broken and failing practices.  We must implement a comprehensive damage assessment process designed with one goal in mind—get it right the first time.  This requires getting the parts, number of labor hours and costs for materials right the first time and every time.

One recent trend that I’ve observed is some shops have begun to make their frame repair pulls before completing the final damage assessment.  This arrangement provides outstanding accuracy in the areas of parts orders, labor times and other associated products and services needed to complete all of the repairs.  There must be a higher level of awareness of the estimate’s importance and its impact on our business.  The estimate directly affects the following listed items:
1.   Revenue
2.   Profits
3.   Negotiation Practices
4.   Workshop Scheduling and Loading
5.   Repair Processes
6.   Cycle Time
7.   Workshop Flow
8.   Production Efficiencies
9.   Finished Product Quality
10. Customer Satisfaction and Referrals
11. Insurance Company Relationships
12. Organization’s Reputation
13. Employee Compensation/Morale
At this point, you will begin to understand the motivation that some shops have for pursuing accurate, estimating excellence.  Perhaps the time has come to change our old habits and begin to design and implement some new “lean” processes, starting with the estimating tasks and activities.  You will soon come to find that your entire operation can be transformed by simply taking control of the estimating process—this is truly the “blueprint” for profit improvement.
Removing the obstacles to implement a comprehensive damage assessment process is not easy.  If it were, every collision repair shop in the country would have already embarked on this new frontier.  But in today’s marketplace, an effective estimating process is no longer a “wish list” item.  It is a crucial component in order to gain a substantial competitive advantage and remain a profitable organization.  Several shops are now posting a 40 percent decrease in their key-to-keys cycle time, which is primarily attributed to their new damage analysis procedures.
Without adequate and appropriate training for the body shop management staff, estimating vehicle damage will continue to be a disorganized and underutilized tool.  Our research and experience confirms that the collision repair industry lacks the skill and knowledge base in regard to estimating: only three percent of the front-line estimators have had any formal training within the last five years.  However, with training and some exposure to a more complete process, it is far more likely to yield positive results—for the collision repair center, the insurers and most importantly the customers.  The collision repair industry has many training resources on this subject.  You’ll find them advertised in the trade press, and promoted by suppliers and automotive associations who are willing and ready to help your organization improve.

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