RIA has been examining the issues that impact profit and overhead. One aspect of the issue involves the estimating software used by insurance adjusters to determine the price of the claim they are paying. While many of the estimating software programs provide general expense figures, each contractor needs to customize his software to reflect the true costs incurred for a project. At the RIA convention in Palm Springs, Jim Mellon, Jr., CR, of Mellon Certified Restoration, provided members with a foundation to begin compiling their actual overhead costs. He created an Excel spreadsheet that will enable each member to accurately evaluate his fixed costs such as labor, supplies, subcontracted services, etc. (The spreadsheet can be viewed by clicking here.)

While estimating software is a great tool for those in the industry, the numbers it relies on are only as accurate as the data in its system. Mellon stressed the importance of compiling this information so members could identify the true costs and value of their services and then recommended providing the software companies with accurate figures to include in their programs. "Why provide feedback to create a custom database?" he asked. "Because it's our only vehicle, and we're the ones doing the work."

To assist the software firm in arriving at industry averages, the panel suggested that each contractor upload on a quarterly basis, their retail labor rates. If your company is providing this information to Xactimate quarterly, let us hear from you. Click here and complete our survey form.

This discussion on Profit and Overhead will be continued at the Restoration Conference in St. Louis, September 14-17, 2005.