Building a Profitable Contents Restoration Division
March 1, 2007
It seems that in the last few years a hot topic has been contents restoration. There is so much more information available in industry publications, more contents vendors at trade shows, and increased subject matter delivered on industry programs. If you are a restoration company struggling with contents processing, perhaps you will relate to this scenario:
The final payment has been received and the job file is closed. At last! Another pack out job completed. But, you wonder, why was this job so difficult? Each has its own unique set of problems, and lately you find yourself wishing every job will be your last.
The processing of contents has always been plagued with customers’ complaints about seemingly small issues, issues often resolved with inflated cash settlements that eat away at profits. These complaints also put stress on the production crew; it doesn’t feel good when their workmanship is called into question. Sadly, estimators and production managers find themselves relieved when adjusters cash out on the contents portion of the loss.
I’ve visited more than 50 companies in the United States and Canada and met hundreds of restoration professionals at various industry events. I recently interviewed 45 companies with revenues ranging from $1.5 million to $25 million and asked them to list challenges they have experienced. The fact is, pack outs present common challenges no matter who you are or where you operate. Regardless of years in business or size of the company, problems are going to arise. Unfortunately, there is no magic pill. The best way to address them is through training and established systems.
Can you take control and enhance your services to minimize these issues, be they real or imagined? Absolutely. You won’t eliminate all the challenges, but you can minimize them. It is important to dedicate company resources to develop contents processing as a standalone division. Construction and water divisions are common; contents processing needs to receive the same attention in order to be a viable profit center. But how do you do it? There are four fundamental components necessary in order to have a contents processing division.
Components of a Contents Processing DivisionFacility. This is a dedicated warehouse with areas designated for cleaning, deodorizing, drying, storage and other processes. Many companies start out in a space in their building and quickly outgrow it. A building can be retrofitted to maximize efficiency or you may choose to build a new warehouse. I recommend a minimum of 4,000 square feet for processing area and additional space for storage.
Take a fresh look at your facility and examine the features do you currently have; what would you like to add? Do you have secure and climate-controlled processing and storage areas? Do you have efficient work and traffic flow patterns? Are your cleaning stations easy to work at? What services are you able to perform? What services would you like to add? What modifications would that require? What would be your return on investment?
Personnel. A competent and compassionate on-site project manager (PM) who is a good decision maker is key for successful pack outs. The PM stays on the jobsite during the entire pack out and is the primary contact with the insured. All concerns and communication regarding the pack out are directed to this person. The pack-out crew consists of trained crewmembers capable of handling, packing, cleaning and processing a wide variety of contents. Pack out jobs require handling of personal belongings while in close contact with traumatized loss victims. Have you ever thought how invasive it must feel to have strangers handling your personal belongings? Selecting personnel sent into these situations is crucial. Attention must be given to their grooming, uniform, workmanship, and customer service skills. Ask yourself, would you be comfortable sending them to your grandmother’s house?
Equipment and Supplies. Contents processing requires equipment and supplies often used in other industries, but applied in a unique way for restoration situations. This includes commercial dishwashers, ultrasonic machines, electronics cleaning stations and commercial laundry equipment, to name a few. Each technology is used to perform specialized cleaning methods and/or clean multiple items with consistent results. Due to the volume of contents processed from typical pack outs, investing in automated contents processing equipment is important, and will enable your company to handle multiple jobs efficiently. The supplies you use are important as well. Are you using quality packing materials and procedures that protect the belongings through the entire process? Are you wrapping each piece of furniture or just using a moving blanket, which can slip off and expose the furniture to damage? Are you using appliance dollies? Are you using anti-static bubble wrap on electronics?
Written systems and procedures. Written systems and procedures take the guesswork out of contents processing and allow you to streamline the pack out process. Written procedures become part of your operations manual and training program. To facilitate cross-training and deal with employee turnover, each company should have an organizational chart posted in a public area within the company headquarters and within printed training manuals.
The extent to which your development of these four components will determine the degree of success you have on individual jobs. It sounds like a lot of work; so how do you find the time and resources to devote to it? Refresh your memory by analyzing the purpose of establishing a contents processing division – to create a profit center, not a money pit. If any other aspect of your company was not running smoothly, you would stop and develop a game plan to get it working. If you don’t want to do it, it’s time to outsource contents. If you want to grow the division as a profit center, you will need to develop a plan.
GoalsThe function of a restoration company is to restore. It is your responsibility to evaluate contents and determine the most cost-effective means to handle compromised contents. You are to meet the needs of each of the parties involved:
- The insurer. An adjuster will determine when restoration is more cost effective than replacement. You then provide the restoration service.
- The insured.
- The restoration company.
For efficiency and the ability to handle sporadic workloads, assembly line procedures and use of automated contents processing systems are vital. You want to process large volumes of contents with consistent results, meet deadlines for returning contents and process more jobs.
The goal is to produce more and waste less. Clean and pack out contents with fewer steps, fewer procedures, fewer supplies. You’re not cutting corners, but rather optimizing the results. I’m simply suggesting you use the technology at your disposal. For example: rather than hand cleaning one figurine at a time with a toothbrush, you can clean multiple items with an ultrasonic machine and produce much better results. Rather than carrying boxes one at a time, it is more productive to fill a rolling cart with 12 to16 boxes for transport through each processing phase.
Packing and cleaning supplies should be easily accessed when needed. Stock cleaning stations with a week’s supply of products, and re-stock from a supply cabinet within the warehouse. Bulk storage of packing boxes can be stored overhead in a mezzanine or in a separate storage area.
Bottlenecks in the traffic flow of the warehouse need to be eliminated. Set up dedicated processing areas and create assembly line procedures.
A common complaint (or accusation) of insureds is that contents are damaged or missing. They state a dollar amount that will satisfy them, and a check is issued by your company. One way to avoid this is to use an inventory system, whether it is Digital Photo Inventory or inventory software based on photographing pre-existing conditions of the contents as they are packed out. This system should also track the location of the contents in your warehouse.
Careful handling and packing of contents on the job combined with proper loading of the moving truck will reduce breakage. When the contents have been delivered to the warehouse they should be stored in vaults and open shelving areas. The vaults and shelving units need to be numbered for tracking purposes and easy retrieval of contents.
With these goals met, your company is on its way to having a successful and profitable contents processing division. You will experience fewer problems, process jobs more efficiently and write fewer settlement checks. If you liked this feature circle 133 on page 51.