In the land of Aloha, there are plenty of challenges when it comes to working with standardized pricing. Shipping cost, shipping time, lack of available vendors, lack of demand, and other logistics specific to being 2,000+ miles from where anything is manufactured are to blame.
Materials pricing has always been difficult to keep accurate, especially in the post-COVID era of manufacturing delays, staggering inflation, and fluctuating demand. Out of necessity I have dug in to learn how individual components add up to create a price per x line item just so we could make intelligent modifications to the pricelist and communicate them proactively in our markets. Nothing is worse than trying to explain to an adjuster that you are deviating from standardized pricing after a loss has occurred.
I would encourage everyone to swim upstream. If pricing is not accurate in your market, get ahead of it. Provide regular feedback to Xactware directly, and deliver the changes you are making to the pricelist, with supporting collateral, in advance of working together on a loss to your adjusters. This will serve you well in your negotiations.
Here are the most common deviations I have found and how to correct them at the estimate level.
The component price as compared to your vendor. In the islands, contractors do not have a ton of trade-specific suppliers so we do rely on the big box stores for most of the materials that are not purchased in bulk. The example below is a common encapsulant we use for odor sealing on fire projects. The current Xactimate price is $68.00 per gallon as of October for the Wailuku price list.
However, price from one of our big box retailers is $74.98.
To correct this, I will do two things within the estimate. The first is change the price from $68.00 per gallon to $74.98 per gallon in the components of the estimate.
Then, I will create an F9 note for the line item that reads something like this. This way I am substantiating my deviation from the price list with real data.
Checking the prices for secondary materials. In this example, I will focus on the DRY1/2 line item. In this line item, there are six individual component lines. One is the price of the actual drywall sheets, the rest are secondary components required for drywall installation. Components below are based on 1,000 sq. ft. of drywall. Let’s look at drywall joint tape. The pricing below is based on paper joint tape. Commonly our teams will use the fiber mesh tape which costs about three times more.
Here is the material we use.
…and so, we will make the same changes to the line items in the estimate that we did above by making a change to the component price and creating an F9 note indicating our change.
Checking prices for equipment rental line items. Commonly, Xactimate will include in the component’s equipment rentals if the line item requires it. The components below are based on 500 sq. ft. of mortar bed installation. In this line item, they have provisions for the daily rental of a mortar mixer.
Here is the actual price from a local equipment rental warehouse.
Again, the changes we will make here are the same as above.
Materials yields are not accurate with job site requirements. Sometimes, the materials pricing is accurate but the yields for the line item are incorrect for our specific job. Remember, yields are an approximation and can be changed in Xactimate. For this example, let’s say we have a 10’x10’ room in which we are installing an engineered floor. The room has a 1/4” dip in the center of the room that needs to be leveled using floor leveling cement. Most of us would write this for a “heavy” quantity of floor leveling cement and not check the yields because the description of the line item states, “From 3/16 to 1/4 inch thick”. When the job went into production, we would be sad because our crews in the field would use way more material to level the floor than we originally estimated. Below are the component lines for 100 sq. ft. of heavy floor leveling.
The calculations above tell us we will need 4.22 – 50-pound bags of leveling cement or 211 pounds. Below are the actual recommendations from a floor leveling cement manufacturer.
This information tells us we will need 9 – 40-pound bags of leveling cement or 360 pounds.
To correct this, we need to know the increase in the quantity of the material as a ratio. To calculate this, we will take how much cement we need (360lbs) and divide it by how much cement the line item yields originally calculated (211lbs). This means we will need 1.71x more cement than originally estimated. As illustrated below, the direct yield for this component is 25.000. If we divide the direct yield (25.000) by our ratio (1.71), we will get the correct direct yield (14.62) we need for this line item.
If we input that yield, we will calculate the correct quantity of materials for our project.
In addition to making the correction to the line item, I would also include the calculations for the quantity of cement with a brief description as an F9 note for the adjuster and customer.
Hopefully, this information has helped explain how you can make modifications to materials and equipment prices and yields to reflect your actual cost of work in Xactimate. With most restoration companies, these increased costs are simply being absorbed, therefore, these changes typically transfer straight to the bottom line as profit. This is work you are paying for as a cost but not getting paid for as revenue.
The biggest question I get is, “What if I’m doing program work?” In my experience, if I supported my changes with hyperlinks and other backup, I have never had a tough time getting paid for actual costs incurred when performing work as a part of a program. I would encourage you to do this even if you are performing program work.
As a reminder, please submit pricing feedback to Xactware at firstname.lastname@example.org for any inaccuracies you may find. Let us help them get more accurate pricing and help ourselves.