SCHEDULE SAID MINUS $6,200. JOB MADE $11,500.
Everybody argues about percent complete on a WIP schedule. On storm restoration work the field that's wrong is the one to the left of it, because an insurance job's contract value moves twice before the roof is signed off.
A carrier pays a storm job in pieces: the actual cash value first, the withheld depreciation once the work is complete and documented, and supplements whenever the adjuster gets to them. A $48,000 roof with $11,000 of depreciation held and a $2,500 deductible pays a first check of $34,500. Post that $34,500 in the contract value column of your WIP schedule against $40,700 of cost and the job reports 118 percent complete and $6,200 underwater. The true contract value with $4,200 of approved supplements is $52,200, so the job made $11,500 at a 22 percent gross margin. The schedule was wrong by $17,700 on one roof.
Percent complete was correct the whole time. The denominator it was measured against had two pieces missing from it.
This post covers one column of the WIP schedule on one kind of job. That page covers the three things roofing margin is lost to and how the trade is run. Read Roofing Operating System for the complete treatment, worked figures included.
WHAT IS THE CONTRACT VALUE ON AN INSURANCE JOB?
On a commercial job it's the number on the subcontract, and nobody thinks twice about typing it into a WIP schedule. On a storm restoration job there's no subcontract. There's a carrier estimate, a scope of loss, an actual cash value check, a depreciation holdback, a deductible the homeowner owes, and a supplement process that can run for weeks after the crew is off the roof.
So the roofer's office has to pick a number, and the number sitting in the file on the day the schedule gets built is the first check. It's the only figure that has cleared a bank. Every other piece is a claim, an expectation, or a request in an adjuster's queue.
That's how the wrong number gets in there. Nobody decided to understate the job. Somebody entered the only figure they could prove.
ONE $48,000 ROOF, THREE DIFFERENT NUMBERS.
Replacement cost value on the carrier's estimate is $48,000. Depreciation withheld is $11,000, released once the work is complete and documented. The homeowner's deductible is $2,500, which the carrier subtracts and the roofer collects. So the first check is $34,500.
The crew does the roof. Cost comes in at $40,700 in materials, labor and burden, which is what a $52,200 job looks like at the 22 percent gross roofing subs run at $1M to $5M. Two weeks after completion the office submits supplements for ridge vent, ice and water shield the original scope missed, and a second layer tear-off. $4,200 of that gets approved.
True contract value is $52,200. True gross profit is $11,500. And the WIP schedule built the week the crew came off the roof said $34,500 against $40,700 of cost, which is 118 percent complete and $6,200 in the hole.
WHAT THAT DOES TO THE WHOLE SCHEDULE.
One job wrong by $17,700 is a bookkeeping annoyance. Thirty storm jobs on the same convention is $531,000 of gross profit your own schedule says you never earned.
And the errors all point the same direction, which is what makes this different from ordinary estimating noise. Every insurance job in the schedule is understated by its own depreciation holdback plus its own pending supplements. There's no offsetting job that reads high. The whole storm portfolio reads as a loss.
Then the release happens. Depreciation comes in, supplements get approved, and the following month's schedule swings positive by six figures with no operational change behind it. A roofer looking at those two months side by side has no reason to believe either one.
MOST SUBS MISS THIS: A SCHEDULE NOBODY TRUSTS COSTS MORE THAN NO SCHEDULE.
The $531,000 is the smaller half of the damage. A WIP schedule that swings without explanation gets stopped being read. The office keeps producing it because the bonding company or the bank asks for it, the owner glances at the bottom line, and every genuine signal in it goes past unread.
So when a job really does go bad, the schedule says so and nobody reacts, because the schedule has cried wolf on thirty storm jobs already. You lose the tool at the moment you need it, and you lose it for a reason that has nothing to do with the job that went bad.
Screenshot for the office: a WIP schedule earns its keep by being boring. The month it swings six figures, the first thing to check is the contract value column, and never the crews.
HOW TO POST AN INSURANCE JOB CORRECTLY.
Contract value is replacement cost value plus approved supplements. Full stop. The depreciation holdback belongs in accounts receivable as retention, because that's what it is: money earned and held pending documentation. A holdback has never been a reduction of the contract.
Pending supplements get their own column and stay out of contract value until the adjuster approves them. That gives you a second number worth looking at every month, which is total supplement dollars pending and how old the oldest one is. Most roofers have never had that figure and it's usually larger than they expect.
The deductible is revenue and it's your collection problem. Post it in contract value and post it in receivables, aged from the day the roof was signed off. A deductible that goes uncollected is pure gross profit walking away, because the cost of the roof was already spent.
THE ONE THING TO DO THIS WEEK.
Open your current WIP schedule and find every insurance job on it. For each one, write down what the contract value column says, then add the depreciation holdback and any approved supplements.
The total of those additions is what your schedule is understating right now. If it comes to more than one month of your overhead, then the schedule you have been handing your banker has been describing a company that doesn't exist.
THE SHORT LIST.
FREQUENTLY ASKED.
