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John, to this point I have not told someone they were wrong. I have only asked questions to try and see others thought process. That being said your comment that “The reason I can justify that is the trade, being whatever it would be, is a professional price for a professional job. If you as a general getting 10 & 10 to oversee the job cannot pick a credible subcontractor then that is your problem, not the insurance company. If you have a bad employee, that is also your problem. It is not right that you try to add a "Project Supervision" charge also to a normal restoration project so that you can go out to supervise someone who is already getting a professional price to do the job, (Double Dipping)” Is completely wrong. I know our cost better than you can imagine and Project supervision is a cost. You talk about backing up what my cost are and that’s why we have chosen xactimate as a tool to aid in our bid process. When estimating a job I have to account for all cost. Project supervision is a cost and has to be written in as a line item since it’s not covered anywhere else in the estimate. This is not only my stance it is the stance of the creator of the software and price guide (see my previous link). You spoke of the bible, when reading and believing do you trust all of it or pick out only the parts that suit you. My point is if you’re going to use a program (like xactimate which many insurance companies do) to aid in the estimating process than you have to trust all of it and not just pick the parts that suits your needs. Our firm does meet resistance to a fee for project supervision but I can say we have had it paid evertime. We went to appraisal three times and had it paid because we can back up our pricing structure. Whats funny is evertime it has been against a carrier where the adjuster used xactimate and ended up hurting their position.

Byran, I'm OK with our conversation. A bit stubborn, but I don't think you were saying I was flat out wrong.

Well, on one had this validates your fee as OK. On the other hand, it shows that there is a pattern of not establishing an agreed value with the parties involved, to the point that it takes outside help to resolve it.

We have aired this topic out pretty thoroughly, and it is evident that when you are dealing with insurance work you may have an uphill battle on the line item for supervision.

If you are working on a plain-jane rental property, that's one thing.  if you do awesome custom homes and need to command the price, then perhaps the fee could be described in the actual tasks being done to get an adjuster to be on the same sheet of music.   I have had claims where everyone who had ever touched the file knew that the homeowner was very demanding, and would not tollerate "Johnny 6-Pack" and the paint crew from hell into his house.  Those kind of premiums can be described when they are warrented, for high-end work. 

You say you are in Houston. I had a high school drinking buddy named Bryan Hines at Westchester High from 1970-1974. He went to college, I went to the school of hard knocks. Are you the same Bryan??

that is some of the sausage that would go into steep and high fees. I don't personally believe it needs to be spelled out in granular detail, as long as the issue isn't overlooked entirely. On your other point, if it makes sense and you see the need, put it in your estimate. Obviously paying for drywall does not give one a toilet - so if the site needs tasks that are tangible, and you are aware of it - then there is something to consider.

I agree with the point Byran made, that temp-power and temp-fencing, toilets, etc. could be legitimate line items. Supervision is legit too - but the consensus here is that 20% covers it. On a $50,000 loss that is 10,000.

Most of you have heard my rants about estimating programs for  a few years. Well lets all think that we had one of the below losses and which box of rules books would apply to a "fair adjustment of a large fire loss". The homeowner is a contractor who has been dealing with insurance carrier's and adjusters for years. He has a home in a very remote mountain region that does not have an all weather road.

He sends in 30 photos before the loss and 10 after the fire loss. He sends in a material and labor cost by the trades which total 70% of the policy limit.{ but no line item estimate} A full set of blue prints and complete inventory of the UPP in each room with a sketch of its location, RC, Age and condition and wants to start rebuilding within 10 days. How would you write up this loss to submit for approval to pay the amount claimed ?

You get a guaranteed replacement cost on a total fire loss from the insured who is also a contractor in a lump sum bid, that is $60,000.00 less than your line item estimate on the carriers select program. However you have a time demand of the of 15 days in the policy. The UPP demand is $60,000.00 more than your amount made up by the replacment department of this carrier. The APS is not resolved at his request and the ALE is ask to be left open for 2 years.

I agree with you - supervision is not part of the unit pricing. No argument there.   Now as to the question of if it is included within the O&P - I have read your reference 3 times and simply don't believe Xactimate is really making a hard stance on something that is not part of their pricing database.  They have zero control or influence of what is or is not included in the 20%.  

They are very good at telling you how many Sf of drywall is allowed for in the min-chge, how many ounces of Mud, how many fasteners.  And here in California their database allows us to depreciate only materials (per law) and they have a very thorough breakdown of hard costs, and soft costs, zip code adjustments, etc associated with their unit costs for repair.  They have no influence on O&P, it simply is not on their radar screen other than pointing out that their unit costs do not include these things.

You can derive what you want from that PDF file, but it is not telling me the same thing it is telling you when I focus on the point of payment for supervision.  I know it's not part of the unit cost database, that is clear.

As I said on the last page, if you do a $50,000 job, there is $10,000 O&P. it's $20,000 for a $100,000 job.
Of course there is a lot of costs associated with running the biz, and this is not all "supervision", but this is the bucket that an insurance person is going to ask you to drink out of when you ask for supervision fees.

Going to arbitration to have to resolve this must be a drag, and present it's own costs and time...
If you do a lot of Insurance work I would consider choosing a battle that is not such an uphill fight.

"I have read your reference 3 times and simply don't believe Xactimate is really making a hard stance on something that is not part of their pricing database."

I'm not sure how hard of a stance you want them to take. They state in black and white that project managers are not covered by overhead! I think its odd that the other examples they give adjusters don't have a problem with. You can also call them and speak with their pricing specialist. We have spent countless hours researching their program and pricing database.I know you probably think its so we can MAXIMIZE our profits. We use the program to help establish budgets and keep them. We also use it for ordering materials, setting timelines and ect.... As for as appraisals are concerned that is our clients fight however we provide them with the info to succeed.

We will have to agree to disagree on this one!

Wes stated "My thoughts on 'supervision'. When a GC subcontracts out the electrical the GC gives the subcontractor the plans and thats it. No supervision needed."  I quess Pilot ,Worley, Statefarm, Allstate don't have managers. I mean once they hire an adjuster thats all they should need.

Someone brought up OSHA requirements. Does anyone know what the requirements are to reroof a one story 6/12 pitch house? (I will warn you this is a loaded question!!!)

Yeah but they are having to do that because they cannot pay your bill with the money that the Insurance company thinks the job is worth.

It's not for Xactimate to say.  They have a reference talking about Overhead and Profit. None of that is part of their unit costs. The reference describes  "General Overhead" and "Job-Related Overhead".  Just because they say that Job Related Overhead expenses should be added as separate line items to the Xactimate estimate does not convince the world that this type of overhead is or isn't included in the customary 20% O&P.   A lot of people use MSB, Simsol, PowerClaim, etc.  Those people care even less what that article says than I do. 

And I am not deciding to include temp-fencing (etc.) in the estimate line items because the PDF from Xactimate mentions it.
If I allow temp fencing, it is to avoid the liability of an attractive nuisance.  If I allow temp-toilets it would arise from the fact that the drywall fee for a "livable" house and an "uninhabitable" house is the same.  The O&P is the same.  So this temp-toilet is likely not allowed for in the unit costs and is a tangible specific cost that most adjusters and their managers would consider. 

I don't care that your reference dumps "project supervision" in the same breath - you have seen first hand how Insurance companies fight that.  I'm not disalowing that fee - I am saying it is part of the $10,000 you get as O&P on $50,000 worth of unit costs resulting in a claim value of $60,000.

If I worked at Xactimate and was writing that PDF article, I would have just said "hey the temp-toilets and temp-fencing are some items you don't want to overlook in your estimate".  Period.

You are a General Contractor.  If you choose to put in a line item for "Project supervision" then that seems to be working for you.  Just don't expect the insurance world to embrace that concept - and the posts from several people other than me should illuminate that point.

Bryan, I am not telling you how to write your estimates - especially if you are a contractor.  If customers love your work and are happy with the price then you are good to go. 

If you are working alongside me at a storm, reporting to an insurance company, I would set you straight as a kindness so you don't get 80 files back in your lap.  
I think this one is aired out - let's call it a day. 

Although I use Xactimate almost every day, I must admit the concept of 10 and 10 is really outdated. Ask almost any insurance restoration general contractor and they'll tell you that their overhead is really around 30-35%. Thus, if they strive to make a gross profit of 40%, a contractor must take their actual job cost or sub bid, and mark it up 67% (or 39% and then add 10 and 10). If they don't stub their toe, they should end up with a 5-10% net profit.

Ex: Sub bids of $60,000.00 x 1.67 (mark-up) = $100,000.00 estimate. Gross profit is $40,000.00 or 40%. After taking away overhead of 30%, the contractor is left with 10% or $10,000.00 profit.

Correct me if I am wrong, but my assumption is that Xactimate must take into account the 39% mark up in the unit cost. And then depending on the complexity of the job, you'll add 10 and 10 when appropriate.

And, supervision, if required, should be built into the unit cost or, if a complex job where a GC is warranted, it is part of overhead.  In my opinion, salaries that are not part of the actual job cost are a part of overhead.

(As for as appraisals are concerned that is our clients fight however we provide them with the info to succeed. )
Yeah but they are having to do that because they cannot pay your bill with the money that the Insurance company thinks the job is worth.

That’s because the value of the job is not based on what” the Insurance company thinks the job is worth”.

(They state in black and white that project managers are not covered by overhead! )
It's not for Xactimate to say. They have a reference talking about Overhead and Profit. None of that is part of their unit costs. The reference describes”General Overhead" and "Job-Related Overhead". Just because they say that Job Related Overhead expenses should be added as separate line items to the Xactimate estimate does not convince the world that this type of overhead is or isn't included in the customary 20% O&P. A lot of people use MSB, Simsol, PowerClaim, etc. Those people care even less what that article says than I do.

It is for them to say they wrote the program! If Simsol stated that Project Supervision is included in Overhead I wouldn’t argue with them that it shouldn’t be I would find a program that matched my accounting and estimating needs.

And I am not deciding to include temp-fencing (etc.) in the estimate line items because the PDF from Xactimate mentions it.
If I allow temp fencing, it is to avoid the liability of an attractive nuisance. If I allow temp-toilets it would arise from the fact that the drywall fee for a "livable" house and an "uninhabitable" house is the same. The O&P is the same. So this temp-toilet is likely not allowed for in the unit costs and is a tangible specific cost that most adjusters and their managers would consider.

Project supervision is a specific tangible cost and financial records can back that up. The temp toilet is for the contractors and the fence is for security as well as not allowing unauthorized persons on the property and getting hurt.

I don't care that your reference dumps "project supervision" in the same breath - you have seen firsthand how Insurance companies fight that. I'm not disalowing that fee - I am saying it is part of the $10,000 you get as O&P on $50,000 worth of unit costs resulting in a claim value of $60,000.

It’s not my reference it’s the creator of the software. The fact that the insurance company fights it does not mean that it’s not a real cost. If you think that project supervision is part of the $10,000 you get as O&P on $50,000 worth of unit costs resulting in a claim value of $60,000 you would be wrong. I would love to see you run a GC company based on that.  By the way, whenever we have had claims that were assigned to seasoned large loss GAs they never blinked an eye on fees for project supervision.

If I worked at Xactimate and was writing that PDF article, I would have just said "hey the temp-toilets and temp-fencing are some items you don't want to overlook in your estimate". Period.

And that’s why you don’t work for xactimate. PERIOD

You are a General Contractor. If you choose to put in a line item for "Project supervision" then that seems to be working for you. Just don't expect the insurance world to embrace that concept - and the posts from several people other than me should illuminate that point.

I don’t care if they embrace it they just need to pay it.

Bryan, I am not telling you how to write your estimates - especially if you are a contractor. If customers love your work and are happy with the price then you are good to go.

I’m not telling you how to write your estimates just keep an open mind.

If you are working alongside me at a storm, reporting to an insurance company, I would set you straight as a kindness so you don't get 80 files back in your lap.
I think this one is aired out - let's call it a day.

If I’m working alongside you at a storm please shoot me! If I got 80 files back in my lap I'm sure I wouldn't want to work or be insured by that company.

Bryan, do your supervisors do anything other than monitor the subs? See my next comment.

Most of the General Contractor firms I have seen will have their own internal skilled trade that they do not sub out - but do themselves. They are expert framers, or came up the ranks in one or many trades.  So they are on-site, doing their thing, and are constantly available to respond to issues that come up with the other trades.  And they can observe something going off the rails before it becomes a nightmare.

Of course with a large loss they will sub out the flooring, large quantities of drywall to someone who does it every day and knows the secrets (like "roto-zip" around the outlet's etc.)  But they will be there doing something other than sitting on their hands.

I mentioned this before, but it bears repeating that if the supervisor is doing actions that move the tasks forward in terms of doing some of the trades or getting materials and so on, then he is doing the tasks that the subcontractor for that trade would be doing.  From your posts it is clear that you folks take pride in your work, and that "someone is watching the store".   But I don't think your supervisor is sitting on his hands for 40 hours a week at a job site - he is likely contributing to one or more trades in a meaningful way.

A realistic example is getting stuck with the customer conversations.  Let's say it is a cabinet job, and if the cabinet subcontractor is working directly with the homeowner, he is gonna have to sit there and go over options, layouts, choices...  If your supervisor resolves all of those issues then he is moving that trade along toward completion of the project.  The cabinet guy is going to charge the homeowner "retail" if it's just a cabinet job and no GC is involved.  And that is the Xactimate unit costs, retail subcontractor prices.  If the cabinet guy answers directly to a GC, then his price is going to be discounted somewhat, as it is a different relationship.

Good to hear - and that was my understanding as well.

Byran I am gonna have to take you off my Xmas card list... remember we are Cat adjusters here. I think you got the answer you sought early in this thread.

I agree that is unusual. The only time I ever asked that was on a fire at a high-end residence where the GC said the unit costs in our database did not match up to the costs the subs were presenting. I asked to see the Sub's bids, and got the stink-eye.

Generally that is a lazy practice for an adjuster - but it may have been part of the attempt to resolve a pricing discrepancy with your company. Ironically, I doubt I would have much trouble writing a sheet that you folks would agree with. You may not see a specific line item for "supervision" but the bottom line would likely end up at about the same place, and that is what matters. I don't pad my estimates or put "fluff" in there - but if something is damaged it goes in my estimate. There are some of us that do understand construction, and accordingly we include repair steps and procedures that a green adjuster may overlook, and I know that does happen.