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The SIMSOL/CRAFTSMAN Insurance Restoration Databases
a White Paper from John Postava, President, Simsol Software, Inc
July 01, 2004
The Industry's Most Accurate Cost Databases For Insurance Restoration When Used Properly By Professional Property Adjusters
Orlando, Florida - Due to a recent newspaper article questions have been raised concerning some of the cost databases and price guidelines made available to adjusters handling claims for the National Flood Insurance Program (NFIP) in the wake of Hurricane Isabel. The NFIP published a pricing "guide" which has been called into question with regards to its accuracy. It was stated on the pricing guide that its source was the same source that SIMSOL uses for some of the cost data utilized in our construction cost databases. Because the reported source, The National Construction Estimator, is a construction cost guide for new construction, it has caused some confusion among non-insurance industry individuals and professionals.
The SIMSOL estimating tool incorporates data from the National Construction Estimator (NCE). But the NCE is only one source of the data used by the system.
The purpose of this white paper is to clarify the means and methodologies used by Simsol Software in the creation of its insurance restoration cost databases and why SIMSOL has become, and continues to be, one of the most popular estimating and adjusting software products used by thousands of professional staff, catastrophe and public adjusters.
The SIMSOL construction cost databases contain thousands of repair line items and operations. These repair items include standard construction items as well as the additional insurance restoration and remodeling construction items and costs which should be added to estimates prepared specifically for insurance claim purposes.
When a repair item is selected by the user, the SIMSOL estimating software instantly calculates the repair's cost using multiple factors which make up the item's total unit cost. These factors may include a tradesman or crew labor rate, a labor productivity factor, a unit material cost, an equipment charge and other factors such as waste and sub-contractor's overhead and profit. These items are combined into a single unit cost and then factored for material, labor and equipment for the local area. SIMSOL has used this method of calculation since we developed our first estimating software in 1984. Millions of insurance claims have been successfully estimated and settled in this manner all across the United States.
SIMSOL uses the location factors, labor and crew rates and some pricing from Craftsman's National Construction Estimator (NCE), now in its 52nd edition. Each of our users receives a copy of the National Construction Estimator with each annual license renewal of our software. In addition to the core data obtained from Craftsman, SIMSOL uses adjusters, employees and cost consultants to monitor construction pricing around the country and make additions and modifications to the core data on a regular basis. Pricing updates are made available to our users on a quarterly basis. By combining both Craftsman data and our own research, SIMSOL makes every effort to supply our users with accurate local level pricing specifically for insurance restoration purposes.
Recently there has been some talk of "new construction pricing" versus "restoration construction pricing". Why do we use some core data based on new construction? The answer is simple - it's more accurate. The National Construction Estimator is now in its 52nd edition and can be found in the offices and bookshelves of thousands claim professionals and contractors all across the country. The NCE publication does include some additional construction costs for demolition and tear-out and recommends adjustments to its published pricing based on a variety of different construction situations such as extreme temperature differences, small jobs and after catastrophes to name a few.
It is our opinion, after the loss debris is removed, the demolition is completed in the damaged area, the adjacent, non-damaged areas are protected from the reconstruction process and the damaged area is prepped for repair you are dealing with new construction during the installation and finishing phases of the job. For example, once a wall is properly prepared for paint and adjacent areas are protected, it cost the same to paint that wall whether it is in a new home or an existing home.
The SIMSOL construction cost databases contain both restoration-specific additional items such as demolition, tear-out, adjacent area protection and temporary removal of undamaged items as well as other commonly used restoration-related items such as re-installation of existing materials and minimum charges for small repair jobs. Professional estimators, using SIMSOL, simply add these additional items when preparing insurance restoration estimates. By using the labor crews and productivities from the National Construction Estimator, adjusters, contractors and estimators have a solid, time-tested reference point from which to prepare their estimates. If, after adding the necessary insurance restoration line items found in the SIMSOL database, additional adjustments are necessary; SIMSOL users can modify any part of the unit cost calculation process to make their estimates specific to the work being performed at the specific loss location.
As previously stated, estimators and adjusters are able to use the SIMSOL estimating tool to modify and/or add any cost where extra time or materials are needed. Although Craftsman publishes remodeling and restoration cost books from a variety of outside editors, we have always found the data from the National Construction Estimator to more closely represent the true cost of construction when installing new materials. When the estimating software tool is used properly, adjusters and estimators add all the additional restoration costs (in addition to the "install" line items) to develop accurate insurance repair estimates.
The unit costs generated from SIMSOL do not contain an arbitrary adjustment for remodeling or restoration. Adjustments for remodeling are not necessary as long as the estimator includes all the necessary additional insurance restoration operations in his or her estimate. These additional restoration line items and costs are in the SIMSOL database and available to the user for insertion into any estimate.
The Craftsman 3-digit zip code factoring system for labor, materials and equipment continues to provide our users with accurate local prices for repair items in everyday claim situations. But even as stated in the National Construction Estimator, "Estimating is an art, not a science", estimators also have to keep in mind local market conditions and who is performing the repair work when preparing their estimates.
For example, after a catastrophic event such as a major flood or hurricane, prices tend to increase over time as the labor pool evaporates. However, this is not always the case. It is up to the professional estimator and user of any estimating software system to use common sense and keep abreast of current local pricing trends and make changes to his or her estimate when necessary. Construction costs are not written in stone and cost adjustments are sometimes necessary due to a variety of uncontrollable and usually unforeseen reasons.
In summary, when used properly by the professional adjuster or estimator, SIMSOL estimating software and construction cost databases contain all of the necessary repair line items to prepare accurate insurance restoration estimates. Since 1984, SIMSOL has provided the insurance industry with state-of-the-art adjusting software tools. Over the years thousands of SIMSOL users have settled millions of insurance restoration claims before, during and now after Isabel using SIMSOL estimating software and our insurance restoration cost databases.
John A. Postava
President
Simsol Software, Inc.
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