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Restoration Rewind Delta Development Group Monthly Newsletter

December 2013


Let the Celebration‌and the Disasters Begin The Grand Opening date for Delta Disaster Services of Southeastern PA has been set. Their doors will officially open for business February 26, 2014. Faith and Erik Bones and their staff have been through franchise training and IICRC training. They are nearly ready to move into their new facility. They have ordered all of the printed material and uniforms. And when their doors open in February, they will be ready to serve Southeastern Pennsylvania like Delta Disaster Services is known for. Please feel free to send your best wishes to the group and if the wind pushes you to the east coast in February, be sure to join us at the party

Delta Disaster Services of Northern Colorado – Commercial Fire Loss Delta Disaster Services of Northern Colorado was recently referred a large commercial fire loss by a local existing general contractor whom they have done business with over the years. Ironically, even though they have only been in business for a short period of time, this is not their first fire job. Their first fire loss is currently in progress at a historical home in the Northern Colorado area that sustained moderate fire damage.


In this newer loss, the general contractor was specifically looking for demolition and smoke services only. Ozoning, Chem-Sponging, encapsulation, etc. The building in question is actually also a historical building and is currently self-insured. D.D.S of Northern Colorado was informed that the owner has the funds available to address proper mitigation services, however there might be some limitations and concerns on the amount of total expenditures. Mike Mastous walked the job site with D.D.S of Northern Colorado Field Manager, Adam Hornback and the decision was made to bid the job in two phases. The first phase would be to stabilize the interior components through an engineered shoring plan and then to perform a full demolition. It was decided that the first phase would be bid out utilizing labor hours to include a supervisor as well as general line items like Tyvek suits, respirators, dumpsters, etc. After the complete demolition of the building’s interior, a second evaluation with the general contractor and building owner will be held to discuss what fire remediation procedures would be utilized and which will be bid out. Let’s take a look at some of the photos that depicts the fire loss and review some of the challenges that this office will encounter:

Fire damage included heavy gatoring to the ceiling joists and supports. Temporary shoring will be required


The fire lost was believed to have begun from an electrical line coming into the building.

Adam Hornback performing a field estimate of the commercial fire loss.


J.D. Power: Customers Happier with Homeowner Claims Process Customers are becoming happier with the way insurers are handling property claims, shows results from a recent J.D. Power study of homeowners. Its findings are based on the 2014 Property Claims Satisfaction survey, which polled 1,740 homeowners insurance customers who filed a property claim after June 1, 2012. Customers rated satisfaction with the damage claim experience from first notice of loss through settlement and the repair process. J.D. Power says customers are more satisfied with industry service levels because they are receiving more accurate timelines of claim process lengths from insurers, who are also helping them avoid settlement negotiations – in fact, customer satisfaction increased by 17 points (on a 1,000 point scale) in the third quarter of 2013. “Insurers are doing a better job of setting claimant expectations of the time it will take to settle their claim, which is a significant contributor to overall satisfaction,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power. “Based on feedback from claimants, it is evident that insurers also are more consistently taking the time to explain the settlement, which results in fewer claimants negotiating their settlement.” Overall claimant satisfaction increased to 848 in Wave 2 of the study, which gathered responses in Q3 2013, from 832 in Wave 1, which covered claims filed between April 2012 and June 2013. In Wave 2, 76 percent of customers said their insurer accurately estimated how long it would take to settle their claim, and 75 percent said they


avoided a settlement negotiation – a three-and-four- percent increase, respectively, from Wave 1 of the study. Satisfaction with agent first notice of loss dropped to 853 from 875 in Wave 1, but satisfaction with direct claims reporting via a call center, website or other electronic method improved by about three percent. Customers were also slightly happier with non-catastrophic damage claims in the 2013 study than in the 2012 study, a result of significantly higher scores in estimation process, repair process and settlement factors.

Vendor News Interlink and Bridgewater continue to be one of our valued partners for doing business. Everyone at Interlink and the parent company, Bridgewater, show us on a daily basis how much they value our relationship and they are committed to doing all that they can to help make that relationship stronger. On our end, we continue to “test them” with pricing strategies, information on new equipment, etc. We also “shop” their prices and they continue to be the best value for the money. Have you talked to Brandon Titus, our National Account Representative with Interlink? His direct line is (801) 207-1103. Brandon is an excellent resource for news and information on mitigation equipment. Give him a call and get to know him better. Leon Thompson is also a great resource. Leon will always call you back and if he doesn’t know the answer, he will find one for you. Leon’s direct number is (801) 207-1243.


SAVE THE DATE! What: Delta Disaster Services: 2nd Annual Convention! When: March 14th & March 15th 2014 Where: Arvada, CO – SpringHill Suites by Marriott Hotel rooms at special Delta Disaster Services rates are available at SpringHill Suites by Marriott

Who: Franchisees, Spouses, Employees, Guests

Please come and join us, we will have 2 days packed with great Guest Speakers, Industry News, New Equipment Demonstrations, Informative Consultants, Food and Fun!

Much more information to come, Plan to attend NOW!


Delta Disaster Services Fire Loss – UPDATE! This month’s update (61-90 days) comes directly from Rob Roussel, the construction supervisor assigned to the loss.

Now that we are over 2 months into this large loss, there is a light at the end of the paperwork tunnel. Our sub-contractors have all been selected based upon the bids they submitted. And after much deliberation, the homeowner has finally selected the upgrades and/or modifications to the rebuild of her home. Most importantly at this stage the expectations have been placed on us to turn the devastation into the dream home where she will spend the reminder of her years. The expectations are high but that is not unusual for these larger jobs, and it is nothing that Delta can’t accomplish. We have learned that the customer feels much more comfortable, and frankly is easier to work with when she has a sense of involvement. So we are taking every step to make sure she is included in every aspect where she can be. Money is at the top of this list, and the customer has a full and complete understanding of what she will owe at the end of the job and how her money will be spent. She understands also that she is in control of the amount of money that will be owed at the end and the fact that it will only go up if she decides to change or deviate from our existing scope of work. Another way we have included this specific homeowner is by assigning certain aspects of the job to her such as selection of tile, color of paints and other detail specifics to make sure and keep that sense of involvement and control within the homeowner throughout this entire process. We divided this job into three phases to help prevent confusion with the homeowner who is nervous and had never been through an insurance


claim or home construction process before. Phase one, which we are currently in is the “dried in” phase. This is the toughest phase of all of them and the most important to prevent secondary damages from moisture intrusion. Here in Colorado, weather is a huge factor of when repairs can take place. Since the roof and rafters of the home will need to be completely removed it will leave the internal house exposed to the elements. That means coordination between homeowner, framing subcontractor and roofing sub-contractor is the key to success. A start date for demolition will be determined upon the delivery of premanufactured building components preordered to the specifications of the engineering reports given to us by the adjuster. The roofing subcontractor understands the expectations of immediate installation of the new roof immediately following completion of the framing. Even though this particular tough customer has extremely high expectations, keeping her informed throughout the process and educating her on the steps to completion has kept tension and stress levels down. As long as she is smiling I’m doing my job correctly giving her “peace of mind… during uncertain times”. And of course let’s not forget the 3P’s. Policies, Procedures and when executed… Perfection!

The Long, Lethal Shadow of Asbestos BOSTON, May 11 (Reuters) - As anyone in the United States with a TV or Internet connection probably knows, lawyers want you if you've been exposed to asbestos, and they're paying to get you. At one point earlier this year, 15 of the 100 most expensive keyword search phrases for clickthrough ads on Google contained the word "mesothelioma," the deadly cancer caused by asbestos exposure. The single most expensive phrase, online marketing


firm SpyFu reported, was "Florida mesothelioma lawyers," at $177.74 per click. The hard sell reflects a troubling truth: Half a century after the first wave of lawsuits were filed for illnesses linked to exposure to asbestos and 40 years after new regulation sharply curtailed use of the insulating and fireresistant mineral, the asbestos-litigation business is booming. Some of the country's biggest and bestknown law firms -- many of them handling asbestos cases almost exclusively -- say the number of lawsuits filed annually, after falling off from a peak, has picked up in recent years. More important, they say, is that payouts for plaintiffs who win their cases have soared. "It's easy to see why they're buying time on CNN and the like. All you need to get is a couple of claims in to make that commercial buy worth the money," says Marc Mayerson, a litigator with the Orrick law firm in Washington and a professor of insurance law at George Washington University, who has represented defendants in asbestos-related cases since the 1980s. No central registry keeps track of asbestos lawsuits filed yearly or their outcomes. A tabulation of jury verdicts and settlements, based on an average of all asbestos-related lawsuits reported in Westlaw Journal Asbestos, a Thomson Reuters publication, found that the average award was $6.3 million in 2009, $17.6 million in 2010 and $10.5 million in 2011 -- amounts much greater than what lawyers say was the norm more than a decade earlier.


Clearly, mesothelioma and other asbestos-related payouts persist at levels companies and their insurers never expected. Insurers have been adding hundreds of millions of dollars to their asbestos-claim reserves. Travelers Ins, in its annual report for 2011, echoed its peers when it cited a "high degree of uncertainty with respect to future exposure from asbestos claims." Meanwhile, the dozens of trusts set up by companies forced into bankruptcy by asbestos liabilities are facing such heavy claims that many are paying only a few cents on the dollar. Some have had to suspend settlements. That has created inequality among victims.

Why Use Phoenix? (www.usephoenix.com) By Brandon Titus – National Accounts Manager, Interlink Supply As part of the Delta Disaster Services network of franchises, you have been outfitted with a well thought out package of equipment and chemicals. Each item is designed to accomplish a particular function. One of the headline pieces of equipment is the Phoenix R200 LGR Dehumidifier. Besides the obvious fact that the color of this rugged roto-molded body matches the color scheme of Delta Disaster Services, many of the features of the R200 are key contributors to your success. The headline of this article is a question, “Why Use Phoenix?”


I will answer that question in a few short sentences. First, the R200 is rated to remove 125 pints per day at AHAM. It is also designed to be very easy to use and transport. The recessed back wheels are 12� in diameter the wheels in combination with the telescoping handle allow you to easily transport this dehumidifier anywhere you need to use it including taking it up a set of stairs. The cord and drain hose can be coiled up and set just inside the top cover keeping them out of the way during transport and storage. As

with many of the other Phoenix dehumidifiers the R200 is equipped with a bypass feature which allows you to operate the dehumidifier at higher temperature ranges. When you receive your R200 the bypass is in the down or covered position. This is the ideal position to operate the dehumidifier in lower temperature conditions (below 90 degrees). Once the temperature conditions rise above 90 degrees, you can simply loosen the screw on the bypass cover and reposition the cover in the up position. This improves dehumidifier efficiency by increasing the amount of airflow over the condenser and lowering the refrigerant pressure. Simultaneously, this slows the airflow across the evaporator allowing the air temperature to be lowered to the dew point and increases dehumidifier capacity. Perhaps the best two reasons to “Use Phoenix� is the quality of their equipment and the quality of their customer service. In the rare situation that you have any issues with your R200, reviewing the troubleshooting guide, you can quickly solve most issues. If you are not able to solve the problem using the troubleshooting guide, Phoenix has a very customer oriented service department which can help you work out these issues. Simply call them at 1-800-533-7533. If you ever have any questions about this or any other product/process, please feel free to contact us at Interlink Supply by calling our National Accounts Hotline 1-800-284-5184.


Marketing for the Holidays The holidays present a good marketing opportunity for your franchise. In the past our offices have sent out holiday cards to those they call on and do business with. Not everyone specifically celebrates Christmas, but many people do celebrate the holiday season in general. At our Denver location we have recognized the holidays by having either a custom holiday card made or by using generic cards. In recent years, we have seen many firms send Christmas greetings via HTML emails. Accounts that refer to Delta Disaster Services, and are able to accept gifts, do receive them from us. Our marketing representative in Denver, Nicole, knows her referral sources very well and that has allowed her to be able to personalize the gifts that she gives them over the years. During this time of year it is also important to recognize your employees and all of the hard work that they do for you. In Denver we recognize our subcontractors by sending personalized cards to them and their families. As a company, we hold an annual Christmas party for all of our employees and their spouses. We always find a nice location and include fun activities and great food and drinks for everyone. We also have an office potluck just prior to the Christmas holiday. It is held in our warehouse and everyone contributes a dish. Having just the potluck alone, is a good alternative to a Christmas party if you do not want the expense or have the time to do something formal.


From all of us at Delta Development Group

The Case of the Burning Bed: Arson or Grounds to Subrogate?


The story that follows is based on fact. The names, places and descriptions have been changed to protect the guilty. This story was written for the purpose of providing insurers, those in the insurance business, and the insurance buying public sufficient information to recognize and join in the fight against insurance fraud.

Sometimes what appears to be an obvious arson-for-profit case actually turns out to be an accidental fire. Our story begins with an insured living near the ocean in San Luis Obispo, California. Recently divorced, the homeowner lived alone for many months. The divorce had caused her much emotional trauma. After 25 years of marriage, the insured's husband announced he could not live with her any longer and promptly moved out. The insured then sought treatment for her depression, visiting multiple psychiatrists and psychologists. These futile attempts to quell her misery only served to exacerbate it. Shortly before the divorce was finalized, she happened upon an occult bookstore while walking aimlessly through an older part of San Luis Obispo. She bought a book on the power of the mind. The good book gave her a life purpose, so she began to apply the principles stated in the book. Finding peace for the first time since her divorce, she became a regular customer of the book store. A friendship grew between her and the owner, who introduced her to others interested in the occult and powers of the mind. She applied for, and received, a divinity degree from the Universal Life Church. The insured bought her first crystal ball, on which she concentrated her psychic energies after receiving her degree. The occult, the powers of the mind, and magic were the center of her life. Later, with the divorce behind her, the insured allowed the book store owner to move into the house. As they, and their friends, concentrated their psychic energies, they became convinced that a major earthquake would strike California and destroy all who lived in San Luis Obispo. This convinced her that the only safe place was a small community in northern Arkansas. So she put her house on the market and accepted the first reasonable offer of sale. Shortly before escrow closed, while the insured and her book store owner/boyfriend slept in the master bedroom, a fire broke out in the second bedroom of the house. Awakened by a sound resembling a heavy rainstorm, they discovered the blaze and managed to escape (naked) through the bedroom window and into the backyard. The neighbors called the fire department, which was able to quickly extinguish the fire after all of the contents and most of the structure had been destroyed.


Two damage claims ensued—one by the owner to her homeowner's insurance carrier, and another by the buyer, separately, to its insurer. They had never considered establishing who would have the risk of loss during escrow and, therefore, both maintained separate insurance policies with separate carriers. The investigation conducted by the fire department revealed that the fire was "suspicious." It was unable to pinpoint a specific cause for the fire, which burned very hot. There were marks on the floor in the second bedroom that seemed to indicate that a flammable liquid had been spread. Understandably, the insurer was concerned. It demanded the examinations under oath (EUOs) of the insured and her book store owner love interest. Both testified clearly, concisely, and apparently honestly. The duo testified, with vigor, about their belief in psychic powers. Of course, both adamantly denied any knowledge about the cause of or precipitating factors leading to the fire. Lingering Doubts Their claim was indeed unusual. What's more, neither the adjuster nor counsel had ever received a claim for the loss (by fire) of three crystal balls. The value of the psychic paraphernalia was difficult to demonstrate. Convinced that an arson had indeed taken place, the fire department was stumped by one question: Why then, had the insured and her boyfriend started the blaze while nude? The insurer conducted a thorough investigation, which necessitated retaining the services of an experienced fire cause and origin investigator. This expert sifted through the debris, where he found an electrically operated bed, equipped with a polyurethane foam mattress. The investigator advised the insurer that, after examining the bed and after reviewing the testimony of the insured and her boyfriend at the EUO, he concluded the fire was not intentional. Rather, he surmised it was the result of a short circuit in the bed motor that ignited the highly flammable—and now banned—polyurethane foam mattress. He explained that polyurethane foam, when heat is applied to it, liquefies and burns vigorously. The liquefied polyurethane foam flows on floor surfaces, leaving a trail similar to that left by the spreading of a flammable petrochemical accelerant. With the mystery resolved, the insurer paid the insured the loss she had incurred to her personal property. The two insurers split the cost of rebuilding the structure. The insured used the proceeds of the house sale and the insurance claim to relocate to Arkansas, where she now lives with her boyfriend and


a gathering of believers of the occult on about ten acres of land. Because both the insured and her boyfriend were ministers of the Universal Life Church, they performed their own wedding and are seemingly content, spreading the word of the power of the mind. Interestingly enough, the wedding ceremony was interrupted by an earthquake from the New Madrid fault registering 3.2 on the Richter scale. Fortunately, no one was injured. To date there has not been an earthquake of any force near San Luis Obispo. What appeared to be an obvious arson claim, with insured’s who were far from average, turned out to be an accidental fire that resulted in an effective subrogation action by the insurer against the manufacturer of the bed. The insured’s settled down to avoid a California earthquake on the cusp of the New Madrid fault.

CE CORNER Continuing Education classes are a proven successful method when it comes to earning and keeping important referral business. By offering these classes, we solidify our position as knowledgeable and professional restoration contractors in all of our current markets. Recognizing the great opportunity these classes present to all of our franchises, Delta Development Group will be rolling out a new CE Program. This program will help to keep our classes relevant and ensure that the presentation can be done effectively by anyone in your company. Beginning January 1, Delta Development Group will be introducing 2 hours CE Class every month. These classes will be the current classes redesigned to be 2 hour continuing education credit classes. This change will allow a little more freedom and allow for more creative ideas when planning to offer CE classes. By offering 2 hour credit classes marketers can instead offer 2 classes, back to back, for 4 hours of credit versus just one 3 hour class. When these new classes are created, they will be designed so that anyone in the company can feel comfortable delivering the presentation. Many of our seasoned marketers have the CE presentations down to a science, but when new marketers are brought on board, they may not feel as comfortable. Included in these


new presentations will be slide narrations as well as noted presentation references to handouts or other documentation. When a new CE class is rolled out, each franchise will receive a 3 ring binder and electronic copies of all of the class materials. Any handouts and reference material will be researched and located by Delta Development Group and provided in that binder. Many classes require reference to actual Delta estimates or job specific documents, these will also be provided. Also included will be the complete PowerPoint presentation with narrations as a teaching guide. This new program will include new CE class topics and the redesign of some of the older classes that we have now. If you get wind of new topics needed by your referral sources, please let us know. We can design a class around anything that you might need.

Overhead Expenses vs. Job Cost Expenses. This can and will always confuse many people because there are varying philosophies on Job Costing. The easiest to remember is the “But For” rule: But for the job you would not have incurred the cost. So, just where should your overhead be? An average construction company, doing average work, job charging what they should, will typically be 20-25% overhead. This mean 2025% of your income is going to be spent on overhead expenses. If you search internet articles on overhead costs, many construction companies are at 40-60% overhead! I assure you, they are NOT job costing correctly. When this happens, you are not getting a true picture of what it costs to do the work. How do you bid work correctly when you do not know what your true costs are? Your overhead will be higher your first year as you ramp up business. As you reach your second year, your overhead should start to level out as you continue to build your infrastructure. To try to remove some of the confusion, let’s talk about some of the typical overhead costs we all incur: Overhead costs are shared by all aspects of the company. A perfect example of one cost we all incur is “rent”. Rent is always considered a part of overhead. The exception to this is if you rent a storage unit specifically for a job. Then it falls into the “But for the Job” rule, and is handled differently. Some other regular overhead costs are:


Utilities - Shared by all divisions (mitigation, construction, admin) Admin Support - Typically shared unless hired for specific job or a department Marketing - Everyone benefits from marketing! Uniforms - Everyone wears them. Bank charges and interest - Benefits the entire company Those are easy! Now let’s talk about some of the specific job charges: Labor for any work performed for a job is job charged. Materials purchased for the job. Supplies purchased for the job. Storage unit rented for the job. Temporary Labor. Equipment rented for a job…All of these are job charged. Some of the purchases we make are not so easy to distinguish, like trucks and the operating costs for the trucks. Would you have this truck if you did not have jobs? Of course not, everyone would be driving corvettes! Trucks are “Department Charged” which is much easier than trying to job charge them. You can assume your truck costs are going to vary between (12.5% and 25% of your bare labor costs. This does not include the purchase or replacement of the truck). What about the “Payroll Burden”? Would you have burden if you did not have the employee? The answer is no and the burden becomes a part of your labor costs. Complete payroll burden will average between 12% and 18% for our industry and will also depend on benefits, state taxes, etc. Shop Supplies or field supplies used on all jobs? Typically this is 3-6% of your mitigation sales. If you do not know, use 4% as a default. Shop time? We would suggest you “Department charge” this. IF you are not job costing these items, our suggestion is you determine what your true costs are for trucks, shop supplies, payroll burden, shop time, etc. If your average gross profit margin on mitigation is 75%, it is most likely being reduced by the above items that you may be charging to overhead. As you set your goals for 2014, work toward a goal of 18-20% for your overhead costs.


All successful people, men and women are big dreamers. They imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal or purpose. Brian Tracy


Restoration Rewind Dec 2013