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Catastrophe RestorationManaging Your Restoration Business

Roofing Work with TPA’s – Your Guys or Sub it?

By Les Cunningham
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cunningham_sl1
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May 6, 2014

Most contractors hate change – enough to do a lot of things before they even try one change! The amazing thing is that business is changing every day. It is possible to see a business environment do a complete change in a very short time. One of the changes that has been occurring since the early 1990’s has been the evolution of TPA’s (Third Party Administrators) with USAA approaching Paul Davis to do work for their policyholders when they experienced a loss within the USAA System. Their efforts grew into what they called PRISM into what you know now as Crawford Connection. As more and more programs evolved, other entities began to start their own programs. They have grown and now represent a large part of the losses being handled by TPA’s in place of the insurance companies handling the losses with their own employees. The programs are aggressively seeking out more and more work from insurance companies.

Generally speaking, a general contractor handles all jobs that need to be handled for clients that need work done. In a lot of areas, the four major subcontractors (electrical, HVAC, plumbing, roofing), have their own construction requirements for their specific disciplines. As a result, rather than the general contractor getting licensed to do the work, they hire the subs to do the work. When a general contractor subs out that part of the job, he needs to supervise the job and ensure that the flow of the job goes correctly, efficiently and effectively. When the job is done, the general contractor then warranty’s the work and repairs anything that was done for a certain period of time. For this effort and responsibility, the general contractor is paid a 10% overhead and a 10% profit. 

But things have changed in the industry. Some TPA’s have started asking the general contractors to do roofing work, but not be paid the standard overhead and profit, as the TPA wants one entity to talk to and handle the job.

This has generated a lot of hot discussions in the industry regarding contractors being asked to do roofing jobs. Needless to say that roofing work isn’t for everyone and may not be for everyone even more so based on some TPA requests. But there can be some big benefits to taking on roofing jobs as well. Here’s a look at some options, based on the above scenario:

  • Your company will do the work without being paid the standard overhead and profit, but you would then attempt to ingratiate yourself with the insurance company and or TPA for future business other than just roofing.
  • Your company would sub the job out to a roofing contractor and hope that it goes well without your company supervision and that it lasts for the warranty period.   
  • Your company explains to the insurance company and/or TPA that it doesn’t make sense to get involved in this type of work. While appreciating the fact that they thought of you for the work they needed done, you need to decline the opportunity to do their work.
  • Helping out: Everyone has done work in order to “help someone out” while they are going through a tough spot in their life. That is an understandable response and a voluntary option on the part of your company.

We all know that the industry continues to change, sometimes in a direction that one may or may not like. In the roofing business, it is continuing to get more and more technical. In today’s market, with the proper software, you can do an estimate without doing a job site inspection. Through aerial photography software, you can view the roof and the surrounding area. You can then do an estimate for either repair or a complete new roof. As long as you specify how the bid information was collected, you can submit a valid bid. This is especially helpful during inclement weather and some of the dangerous conditions that exist on a roof during weather conditions. Prior to materials being ordered and work being scheduled, one can verify the job site conditions once the weather has improved. And that’s one area of change that certainly makes roofing work more attractive.

 The important principal to keep in mind is the fact that you need to decide what business you want to be in and how you want it to operate. You are the one that decides whether or not you are going to run the type of business you choose. Roofing can certainly be an attractive offering under the right circumstances. 

KEYWORDS: disaster restoration natural disasters restoration association roofing restoration third party administrators

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Les Cunningham, CGC,CR,CCR,CGRa, is president and CEO of Business Networks, Inc. He is a restoration industry expert and can be reached at 1-800-525-1009, ext. 14 or e-mail him at Les@BusinessNetworks.com

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