Mitigation: Controlling the Scope and Cost

Mitigation: Controlling the Scope and Cost

By Larry Henderson ,Sr. Consultant

Loss Management Solutions

Have you ever walked into a loss location involving a multiple level building that had water damage, discovered hundreds of fans and dehumidifiers in every cranny, and wondered if the mitigation was out of control? How often have you run into someone who wants to tear out every square inch of sheetrock when only the bottom 2″ of the wall is wet? When is it necessary to do dramatic demolition or a simple dry out? When faced with these types of questions it is beneficial to engage a mitigation expert to help navigate through a loss for the best results to reduce the restoration period and give your insured peace of mind.

If the Scope of Work (SOW) during the mitigation is not properly outlined it will have a rippling effect on the entire project. The rebuild can be expanded beyond where it should have been. The scope of the mitigation should be defined. Mitigation should be divided into two specific phases.

Phase 1 Emergency Mitigation: This is defined as the first 24 to 48 hours after a loss occurred. The scope for this is not going to be real defined. In this part of the recovery process it is important to minimize the effects from the loss. For example; if the loss is related to water the restoration contractor might be responsible for the removal of the water. Move furniture and other items out of harm’s way. They should concentrate on working with the insured and stabilizing the building and the environment. Once the emergency has passed and the building and the environment is stabilized then Phase 2 of the Mitigation process can be implemented.

Phase 2 is much more defined. While Phase 1 is being completed the insured, restoration contractor, insurance adjuster and any appointed consultants should work together to develop the full SOW (Scope of Work). The SOW should include but not be limited to the following.

1. Identify the areas impacted on a map and by name.

2. Identify the extent of damage in each area.

3. Agree on the method of cleaning/drying.

4. Agree to what should be removed and what should be cleaned/dried

5. Identify the order that things should be completed.

6. Create a time line concerning the mitigation process. The time line should be very specific to the task and the area. The time line should take into

    account the needs of the insured.

7. The budget to complete the project must accompany the SOW.  Xactimate budgets will only be acceptable on bids below $50,000.00.

    All other bids should be submitted as a Not to Exceed T & M (Time and Material).

Once the SOW is completed the last thing to do is to provide billing expectations. It is recommended that the following items be discussed with each vendor that is providing a quote to complete the above mentioned scope. 

 1.  Overtime will be based off a 40 hour work week. The 40 hours per week is based off the time the employee spends on this assignment only. If

      the employee is working several assignments and works more than 40 hours in total (less than 40 hours on this assignment) the overtime would not

     acceptable to this assignment.

  2.  Equipment will not be invoiced on a daily rate unless the assignment lasts less than four (4) days. The equipment rates should be as follows:

       a. 4 Days = 1 Week

       b. 3 Week = 1 Month

  3.  Small tools are charged only on the labor classifications that use them. The general rule would be for General Labor only.

  4.  General Labor should not be replaced with Restoration Technician unless a Restoration Technician is needed. This should be agreed upon prior to  

      the start of the project.

  5.  Supervisor to General Labor Ratio should be approximately 1 to 10 unless otherwise agreed upon.

  6.  Out of town personnel should be pre-approved.

  7.  Pulling vehicles (F250, 2500’s, Semi Tractors) will only be billed as pulling vehicles when they are pulling a trailer. Otherwise they will be billed

       as supervisor vehicles.  Vans to transport workers will not be billed unless agreed upon prior to the start of an assignment.

  8.  Sign in sheets, material usage, moisture readings/maps, equipment placement maps and equipment logs will be provided on a daily basis.

  9.  PPE will be billed as one PPE per person per week.

10.  Moisture meters and IR cameras are required tools of the trade. The daily usage charge for these types of tools will not be allowed.

Since the mitigation is the first step in recovering from a loss incident it is critically important to manage that process. Effective management of the mitigation will reduce the period of restoration to allow the insured to return to normal operations in the shortest time. If these few steps are followed the insured, insurance carrier and the service provider will have a clear understanding of the process and it will eliminate any confusion that might occur at the beginning of the repair process.

Mr. Henderson is a senior mitigation consultant with Loss Management Solutions. If you would like to learn more about this topic, please contact him at (404) 357-9697 or write to Mr. Henderson at lhenderson@lossms.com.