How about a study of claim settlements that are suppose to reflect solid replacement – reconstruction business estimating methodology.
Quick for-instance, I just received a State Farm estimate from a client.
Now check this out this summary page, and see if you can help the public understand it is NOT a synthetic construction \”estimate\”;
Summary For Hurricane
$10,103.19 Line Item Total
$114.67 6.000% Materials Sales Tax __________
$10,217.86 Replacement Cost Value
$ 2,607.44 Less Depreciation
__________
$7,610.42 Actual Cash Value
$ 761.04 Overhead @ 10%
$ 761.04 Profit @ 10%
__________
$9,132.50 Actual Cash Value W/O&P
$2,272.00 Less Deductible
__________
$6,860.50 Net Actual Cash Value Payment
Two (hard-to-detect) synthetic / false construction estimation points…
1. Contractor overhead and profit was NOT applied to the ACTUAL projected loss replacement – reconstruction value sum, ($10,217.86), but to the DEPRECIATED $7,610.42 sum. Hmmmm…
2. The estimated business profit value is THE SAME as the business overhead factor.
Since anticipated (10% profit) can only be measured against the whole investment risk of a project, a SYNTHETIC profit amount exists. Again, Hmmmm…
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4-30-2006
How about a study of claim settlements that are suppose to reflect solid replacement – reconstruction business estimating methodology.
Quick for-instance, I just received a State Farm estimate from a client.
Now check this out this summary page, and see if you can help the public understand it is NOT a synthetic construction \”estimate\”;
Summary For Hurricane
$10,103.19 Line Item Total
$114.67 6.000% Materials Sales Tax __________
$10,217.86 Replacement Cost Value
$ 2,607.44 Less Depreciation
__________
$7,610.42 Actual Cash Value
$ 761.04 Overhead @ 10%
$ 761.04 Profit @ 10%
__________
$9,132.50 Actual Cash Value W/O&P
$2,272.00 Less Deductible
__________
$6,860.50 Net Actual Cash Value Payment
Two (hard-to-detect) synthetic / false construction estimation points…
1. Contractor overhead and profit was NOT applied to the ACTUAL projected loss replacement – reconstruction value sum, ($10,217.86), but to the DEPRECIATED $7,610.42 sum. Hmmmm…
2. The estimated business profit value is THE SAME as the business overhead factor.
Since anticipated (10% profit) can only be measured against the whole investment risk of a project, a SYNTHETIC profit amount exists. Again, Hmmmm…
Care to see some more underpayment schemes?
rogerpoegc@yahoo.com