Your estimate…what we strive to do to make it as accurate as possible, and why it inevitably won’t be..
If you have a spot on our schedule for your vehicle to be restored, you have already gone through our estimate process. You know what the process looks like and you might have even gone through a few iterations of your build sheet and estimate, each time tweaking the build’s details to make the finished product exactly what you want. By now we bet you’ve realized that we’ve put a lot of work into our estimating process. It’s a job we take very seriously. Our estimate system, like everything we do, is under an ongoing process of continuous improvement. So why can’t it be accurate? I’ve organized the answers to this question in ascending order of impact. The first being the lowest contributor to change to the bottom line of a final cost, and the last being the biggest reason why most builds cost more than expected.
The first reason is that because of our backlog, time will pass between your estimate generation date, and the time we actually begin the work on your project. It’s unfortunate, and we regret it, but sometimes that means that our costs have increased during that time. Our estimates are constantly being checked against recently completed builds to update hours and parts costs, and constantly refined to cover the costs of running our operation. This difference isn’t usually that significant, at 2-3 percent per year on average, but with aftermarket cost fluctuations and supply chain problems so prevalent in recent months, it’s possible that the time that has passed will effect your estimate even more than that. We wish we could always honor the hourly rates and parts costs that were on your original estimate, but unfortunately we simply can’t. Our costs have to be covered, or we won’t be able to provide you the service you expect.
The second reason that estimates change is that our processes and projects are also themselves in a pattern of continuous improvement. Our techs are motivated to make each build nicer than the last, even if only in the smallest ways. The reality of that is that the time to make the improvements usually increases the time to finish the project. Yes, there are improvements in process that reduce the time necessary to complete some parts of our projects, but we never cut time if it means reducing quality, so most of the time, the net gains in process time don’t outweigh the actual times involved. This might be hard to understand, but the quality of the finished product is always our focus. We can reduce costs by simplifying a project, but not by taking backwards steps in quality. This affect can change the actual vs estimate costs a few more percent.
A third reason, and the biggest so far for estimates being inaccurate, is the existence of “unknowns”. There are 2 general types of unknowns. The first type involves the condition of the vehicle. These unknowns are usually uncovered in the first hours of the project, but they can have significant impact on the cost of a restoration. During the teardown process and initial body steps of a restoration, many surprises can surface. These surprises involve discovering hidden damage exposed by removing parts, or previous repairs, that were covering the damaged areas. The most common example of this is exposing hidden rust or body damage by removing parts from the vehicle, or by sand blasting away old body work or undercoating. Even the number of bolts that break off during disassembly can impact the cost of a restoration. These surprises aren’t limited to the body though. It’s common to find mechanical and fabrication issues, like previous sloppy repairs or poorly done custom modifications. It’s always more time consuming to correct other’s work that to start with a clean, OEM slate. Because of the nature of this kind of problem, the unknowns, it’s very difficult to weigh the impact of this on estimates. Most of the time, hidden damage effects the “metal work”, “body work”, “fabrication repair”, and “mechanical repair” sections of the estimate. It’s not unreasonable to find that these unknowns can change the bottom line of a build by 10-20 percent, or more.
The second type of unknown is when we perform tasks or modifications that we haven’t done before, or perform work on vehicles that we aren’t familiar with, (usually non-Land Cruisers). Pretty much any modification or accessory that isn’t a “pod” in our estimate system is an example of this. These unknowns aren’t as common, but they do occur. The good news is that we should at least be able to see them coming, and I should have let you know by now that I can’t provide a good guess about the time it will take to engineer and execute the work for that particular part of the build. In some cases, like the extremely custom vehicles that we occasionally build, there are many of these unknowns. If you have a project like this in the schedule, we should already have had a discussion about this.
Lastly, and usually the biggest factor for estimates being inaccurate, and easily carrying the biggest impact, is client driven change to the scope of the build. This isn’t a bad thing, for the most part. Let’s face it, this is a fun process to go through! Partly because of the time spent waiting, the anticipation, and partly because of the freedom represented by what we are doing together, clients get excited about their projects. They start to research, visualize, and dream about getting the finished product. All of this leads to thinking about optimizing the vehicle for their wants and needs, and this usually results in adding features. There are a lot of upgrades and additions that add value to the vehicles we build. It’s natural to want to add some of them. Unfortunately, all of these additions add to the cost of the build. Some of them add significant costs. We have “pods” already attached to our estimates for lots of common upgrades to our builds, and those are easy enough to calculate in to the estimate, but there are smaller additions too, and all of them add up. It’s not uncommon for clients to double the scope of their build once we get going. This can mean tens of thousands of dollars, or more.
Side note…Earlier in this section. I mentioned that “this isn’t a bad thing, for the most part”. Let me explain. We are dedicated to building the ideal vehicle for each client, and every client gets our full attention when their spot in the schedule opens up. The trap is, that this kind of scope creep not only adds cost, but it also effects our schedule. It’s a difficult thing to deal with…but more about this in a future Q&A / blog.
By now, some of you are thinking “why not build in some safety, you know, pad the estimate a little, especially to cover for 1-3 above?” The answer is, that doing that might steer away clients that don’t trust us yet. We have integrity, to the point that one of our core values is that we “are the guardians of our customers’ pocketbooks” Adding 15-25 percent to each estimate might give the impression that we are trying to squeeze more profit out of each client. That’s not the case. We just want to provide the highest quality workmanship possible and still make it work financially for a relatively complicated company to run. We know our services are expensive, but they still need to be fair. That’s why this explanation is important.
If you have an estimate and have any questions about this Q&A, or have any feedback for us. Please don’t hesitate to contact me.