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Is Xactimate the BEST Option for Mitigation?

construction estimating disaster estimating firedamage invoice mitigation restoration waterdamage xactimate May 30, 2023
 From the desk of Klark Brown (no AI was used in the writing of this creation)
 

It’s a fair question, right?

 
First, let me run for cover. I expect hate missiles and possibly even an attempt to be canceled. When we start to discuss Xactimate, it brings out a rainbow of emotions in people. Both love and hate. 
 
Let me clear the air. If you have ever read my content and coaching, I am often heard providing alternatives to Xactimate for a host of reasons. That is usually met with die-hard fans hearing what they think I am saying…and that is that Xactimate is not good. In general, it is a very powerful tool and software.  That said, I feel a few factors exist that create negative impacts on contractors’ businesses. Let me Explain. 
 

What's wrong with Xactimate?

 
Honestly nothing. It is a software program. A tool. A program designed to assist in creating an accurate estimate for construction-related trades. It helps calculate labor, materials, and overhead burdens. It is strong at creating scope sheets and material work orders. As with any data-driven software, it is SH*T IN/ SH*T OUT. 
 
It is NOT an invoicing tool. It is an estimating tool. It is NOT pricing software. You are to build your own price according to your own company's needs. In that context, it is great. I would even say nothing else beats it….
 
But Still…..I don’t think it is good for mitigation or home services
 

Estimate vs. Invoice

 
I have been using this conversation for YEARS. 
 
When did we simply just wake up and accept that work that we already completed, paid our staff to perform, and bought materials was negotiable?
 
Why are we pretty much the ONLY trade that allows it to be called something it is not? The difference has consequences. Invoices are to be paid. Estimates are work not started and could be negotiated. That isn’t hard to conceptualize. I know the answer of course generally of how this started, but that does not excuse it. There is a tried and true set of business principles that lead to a successful business. 
 
  1. Never let an outside party dictate our business practices. 
 
  1. Estimate for bid work. 
 
  1. Invoice for services that are agreed upon. 

 

Reasons to NOT use Xactimate for Mitigation

 
  1. It is expensive and limiting (the number of users you may have)
 
  1. It can be inefficient in time to use for smaller projects. 
 
  1. It is arguably not transparent for a service-based product
 
  1. It is WEAPONIZED by insurance companies and TPA’s ( their belief that it is a pricing program)
 
  1. Cumberson flexibility for complications, emergency services, and unique conditions
 
  1. Difficult to learn for nontech staff
 

Alternatives to Xactimate

 
There are a handful of powerful alternatives to using Xactimate for your water damage, fire, mold, and other related services. Before choosing a program or tool to use, you must be clear on what method works best for you
 
Format (methods) options may include: 
 
  • Lump Sum
 
  • T&M (time and materials)
 
  • Square Foot
 
Lump Sum: 
 
Giving a solid hard number to do the job. Not generally requiring any backup or extensive cost documentation. Remodeling and construction companies do this daily.
 
  • PRO- You know exactly what will be collected for scoped work. 
 
  • CON- A very specific scope needs to be agreed upon and a close watch for change orders. 
 
This can be created in any sort of Microsoft Suite product or simply with your Quickbook, which you likely already use daily. 
 
T&M:
 
A very detailed and transparent documented invoice with consumption and usage outlines. This is a very flexible format and is preferred universally by 1000’s of strong contractors (and myself)
 
  • PRO- A defined set of contractually agreed-upon rates (no haggling) and billing conditions. It also simplifies the ability for any production staff member to inherit ownership of documenting their production. Remove the differential in line items for different water categories, etc. Simply invoice for the time and materials you use to get the result the customer. Ability to modify your published rates and conditions to market conditions. 
 
  • CON- Slight shift in experience mindset. While conceptually, this is the simplest method, vacating old habits of Xactimate style generally thwarts success
 
You need to understand that more and more restoration companies are shifting out of Xactimate to alternatives that best suit their company and processes. We receive up to a dozen inquiries a month on how they can make this change. The biggest roadblock is generally the fear of the insurance company's pressure to use Xactimate. More on that in the next section. 
 

Why our industry is so tethered to Xactimate?

 
That is not a complicated or confusing question. There are 2 answers that I feel might encompass this question. 1. It’s the way we have always done it…aka, we are not certain another way would work.
 
*Change is very hard for everyone and most people are uncomfortable being the outlier. 
 
  1. Insurance Fear. The customer not getting paid, therefore we don’t get paid (too much to unpack there)
 
They have control and control the narrative that XM8 pricing is standard and any deviation from that is not agreed upon. We have a great simple mini-course on this here;

 

Conclusion

 
As a wrap-up, my advice is to approach this process and part of your business logically and objectively. If efficiency and consistency are the most profitable characteristics of a company, then you need to look at what serves your company the most. Your client will not generally be affected by your choice. Most service companies operated differently and onboard their clients to their processes and system. I am more than aware of all the objections that you might tell yourself. I hear them daily.
 
 I do not mean to sound condescending but they are almost all inside voices. 
 
I also hear people tell me “We have invested tens of thousands of dollars to become Level 1-2-3 certified. I get it. But business is all about change and if you do not change with it, you will be the Blockbuster or The Phone Book. Obsolete and Broke. 
 
If you are a program vendor or working with a TPA, you are contractually bound to use the agreed-upon software. Thats true. But outside of that, it is your company and your process to do as you wish. In those cases, you could try a new method on noninsurance or TPA jobs. Then of course, as anyone who has ever come across my content will know, you should be doing everything in your power to stop working on insurance programs and develop a free and independent company. Your life will change. 
 
When you hit your ROCK-BOTTOM and are absolutely sick of not growing because of time lost and low profits, I encourage you to pursue looking for better alternatives that support your business goals, not those of outside parties. As always, if you need help with any of these changes, reach out to us and we will see if we can’t help make them a reality. 

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