Restoration Rewind

Delta Development Group Monthly Newsletter

December 2015

Convention NEWS!! We are pleased to announce Mickey Lee as one of

the keynote speakers at our Annual Convention!

Mickey Lee has over 30 years of experience in operations, management, training, consulting and writing services in the areas of property damage restoration, psychometrics, drying science, temporary climate control and structural drying services.

He is currently one of a select group instructions that teach the of IICRC Commercial Loss certification class.

Mickey helped develop the IICRC’s Commercial Drying Specialist Certification and now serves as the chair of that Commercial Drying Committee. Mr. Lee is also the chairman of the S500 Standard of Professional Water Damage Restoration. He served on the advisory committee of RIA’s Water Loss Institute from 2002-2006. In 2003, he served on the task force for the development of the Body of Knowledge for the Water Loss Specialist (WLS) certification program.

Mickey Lee is also a well-known writer, speaker and instructor throughout the restoration industry, including articles in Cleaning & Restoration Magazine, Claims Magazine and presentations at the RIA Convention, The Experience and PLRB.

Previously, Mickey was long-time Training & Technical Manager and Vice-President of Global Technology & Sustainability for an international air treatment and property damage restoration company.

Mr. Lee earned his Bachelor Degree in Business Administration from Texas A&M University and completed two Advanced Moisture Mechanics courses from Lund University in Lund, Sweden. Mickey currently resides outside of Atlanta, Georgia.

We are very excited to be able to welcome Mickey Lee to speak at our convention. He will be delivering an entire day of knowledge on commercial restoration. If you haven’t begun making arrangements for you and your team to come

to the convention in March, now is the time. Please remember to book your hotel reservations directly with The Golden Hotel at www.goldenhotel.com Contact Ragan Neblett if you have any questions.

Biggest Changes to SEO This Year That Will Change How You

Do Your Job

PTIMIZATION FOR MOBILE TRAFFIC

“Many have been predicting that mobile traffic would exceed desktop traffic, and in 2014,

that’s exactly what happened,” the infographic reads. “The percentage of organic traffic from

mobile devices continues to increase. As a direct result of that, Google has been placing

increasing importance on mobile-friendly sites and has been penalizing sites that lead to errors

for mobile users.”

Takeaway: Make sure your site it optimized for mobile.

FOCUS HAS SWITCHED FROM KEYWORD RANKINGS TO ROI METRICS

Though many companies are less interested in how they rank for certain keywords, they are

becoming more interested in the ROI of their investment in social media marketing and SEO.

The bottom line is: how much money is being made by the investment put into these two

efforts?

Though there is a lot of desire to measure social media and SEO ROI, most companies don’t

know how to do it yet. “Almost 4 out of 5 surveyed are not currently able to track their email

ROI,” according to the infographic. “Only 44% of companies say they can measure paid search

ROI effectively.”

THE IMPORTANCE OF BRAND MENTIONS

“Brand mentions and implied links are less likely

and less easy to be manipulated than direct,

keyword-focused links,” according to the

infographic. “Google is starting to place more emphasis on brand mentions, so they will

eventually become just as important as direct links to sites.”

On top of that, over 80% of B2B marketers say their top goal in social media is increased brand

awareness.

THE DEMISE OF GOOGLE+

“Although social media experts have pushed businesses to have a Google+ presence, and in

particular, Google Authorship, Google has ended the Authorship program and will be

dismantling Google+,” according to the infographic. “Google+ will be split into three parts, and

Streams will become the newsfeed-like service. Businesses will likely go back to other social

media platforms, such as Facebook. The SEO implications? Definitely a shift in social media

platform weighting/importance attribution.”

FOCUS ON BUILDING RELATIONSHIPS INSTEAD OF CREATING CONTENT

“Simply creating content is no longer enough to maintain a loyal following. It is now necessary

to reach out to bloggers and influencers to continue to spread brand information,” according

to the infographic. “However, more connections are not necessarily better, the quality of those

connections are more important.”

Take away: Influencer marketing anyone? This is a way of building a web of interrelationships.

Also, you can never have customer service that is too good.

SEO IS BECOMING INTEGRATED WITH MARKETING, RATHER THAN ITS OWN DEPARTMENT

“SEO, social media, and marketing are merging together with a common goal to promote the

business,” according to the infographic. “Dedicated SEO consultants will likely be phased out

in the future. Many PR agencies are picking up on the trend and are now offering SEO services

to companies. In fact, 72% of PR agencies now offer SEO services.”

A MORE FOCUSED SOCIAL MEDIA APPROACH

“It’s important to locate where your customers actually are online and put the effort there.

Social media is no longer just a means of customer service, but it is also a marketing channel,”

according to the infographic. “Concentrating on just two or three social platforms can build a

loyal audience. 78% of companies have a dedicated social media team, only 26% fully integrate

social media into business strategy.”

EARNED LINKS ARE MORE VALUABLE

“Earned links, particularly citations from respected

publishers, will improve SEO. Quality content is

one of the most important aspects to earning links,

along with choosing the audience carefully,”

according to the infographic. “Blogging is the most

recognized method of quality content, for a targeted audience. Companies that blog, and

regularly create purposeful content, get much more earned links.”

Cash in the Door!

Based on October royalties…

Southern Colorado wins the Great Pumpkin! Yes, Emmis, Rosey, and the rest of the Delta Disaster Services of Southern Colorado does it again. They brought just a little over $150,000 in the door. Great month and CONGRATULATIONS!!!

Flood Insurance Policy puts Missouri Agent in Hot

Water Clients sue agent for breach of contract and negligence

after a basement floods and the insurer denies their claim

The National Flood Insurance Program (NFIP) policy is a creature of federal statute and is limited to what it says to protect the federal treasury. In Pittman v. Farmers Fire Ins. Exchange, the insureds, by failing to comply with the policy conditions and by having a loss not covered by the policy, lost their suit against the insurer. That left them with nothing more than a suit against the agent, who they claimed promised coverage that did not exist in their NFIP policy, for misrepresenting the coverage available. Case background Plaintiffs Catherine Lynn Pittman and Troy Vernon Pittman owned a single-family home in the town of Peculiar, Mo., on property that abuts a river. Catherine contacted defendant Colby Yoder, an insurance agent for Farmers Fire Insurance Exchange, a “Write-Your-Own” Standard Flood Insurance Policy (SFIP) company. Catherine specifically told Yoder that she wanted a flood insurance policy to cover the contents of her basement. She detailed the high-value possessions she kept in the basement, including furniture, televisions, kitchen appliances, a computer and hunting supplies.

Yoder asked her several questions to complete the SFIP application. Yoder said that he could procure a federal flood insurance policy that covered up to $250,000 for the house and $100,000 for its contents. He specifically promised that the policy would cover all of the contents of their home, including items in the basement. Catherine did not have a

copy of the prospective policy in front of her during this conversation. The parties later executed the policy.

Changes in the NFIP has sparked interest in the private flood market. In June 2008, the river flooded the Pittmans’ house and damaged some personal property in their basement. Farmers agreed to pay for structural damage and for most of the house's contents, but refused claims for most items in the basement, because SFIPs, pursuant to federal regulations, specifically limited: “Coverage for items of property … in a basement … to the following items, if installed in their functioning locations and, if necessary for operation, connected to a power source:

1. Air conditioning units, portable or window type;

2. Clothes washers and dryers; and

3. Food freezers, other than walk-in, and food in any freezer.”

Contrary to what Yoder had told Catherine, their policy did not cover most of the items in their basement. The Pittmans formally submitted a claim, but Farmers decided that the claim was incomplete per the policy's terms and so it could not be considered timely. They properly executed their proof of loss in July 2012, over four years after the flood and well beyond the 60-day requirement of the policy.

Analysis In court, Yoder moved for summary judgment on all claims against him: breach of contract, vexatious refusal to pay, negligent procurement and negligent misrepresentation. As for the first two claims, because the Pittmans conceded that “actions for breach of contract and vexatious refusal to pay … cannot be asserted against Defendant Yoder,” the court granted Yoder summary judgment on these claims.

Count II alleged that Yoder negligently failed to procure insurance for the Pittmans that covered the contents of their basement. As the court explained, a negligent procurement claim cannot stand when “there was no insurance that could be purchased insuring against the peril causing the loss.”

The court found that there was a genuine dispute over facts material to the Pittmans’ negligent misrepresentation claim and concluded that it must deny summary judgment to Yoder.

SFIP policies, which are governed by National Flood Insurance Program regulations, look like an insurance policy but are, rather, a tightly limited government entitlement, providing funds to rebuild a dwelling and replace its contents after a flood that no insurance company is willing to cover. The policy wording is strictly enforced. The agent who sold the policy is considered to be a broker, transacting insurance with, but

not on behalf of the insurer, who, regardless of the name on the policy is really the U.S. Treasury. If the agent misrepresents the coverages available and the insured relies on that representation to the insured's detriment, the agent may be held liable for damages resulting from the misrepresentation. It will take a trial to tell whether Yoder owes anything to the Pittman.

Shame on You: The 2015 Hall of Shame Inductees

Mark Leonard Stuck with gambling habits and debts, Leonard wanted to burn down his home for a $300,000 insurance payday. He botched the plot. The gasoline and escaping natural gas he built up exploded like a drone strike. The blast leveled much of the Indianapolis subdivision, causing $5 million in damage. It was one of the most-violent insurance arsons in U.S. history. Dion and Jennifer Longworth lived next door. Jennifer died when the second floor pancaked, and Dion was burned alive in the basement. Dozens of other neighbors were injured. Leonard received life without parole.

Martin Pang His business in Seattle was struggling, so Pang started a warehouse insurance blaze that killed four fire fighters. Walter Kilgore, James Brown, Gregory Shoemaker and Randy Terlicker died when the floor collapsed and they were thrown into the burning basement. Seven other fire fighters just managed to escape a similar fate.

Pang then took thievery to new heights. From inside the penitentiary he supposedly tried to steal the identities of the investigators in his case, although he was not criminally charged. A court ruled in April that he must repay nearly $1 million to the families of the fire fighters. Pang had earlier received 35 years in prison.

Money Planning: Looking at 2016 and Beyond

Every business owner thinks about the day when they will sell their business no matter if it is in the next year or twenty-five years from now. The number one requirement to selling and getting top dollar will be good, clean financial information. This includes consistency when looking at overhead costs vs job costs.

There are varying philosophies on Job Costing. The easiest to remember: 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 20-25% 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 you’re true costs are?

Your overhead will be higher your beginning years, as you ramp up your business. As you reach your second year, and start to build your infrastructure, it should start to level out. 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 is rent. It is always considered a part of overhead. The exception to this is if you rent a storage unit specifically for a job. Then it becomes a “But For the Job” this expense would never have occurred.

• Utilities: Shared by all aspects of the company (mitigation, construction, admin) • Admin Support: Typically shared unless hired for a specific job or a department • Marketing: Everyone benefits from marketing! • Uniforms: Everyone wears them. • Bank charges and interest: Benefits everyone

These are easy! Now let’s talk about some of the job charges:

• Labor for any work performed 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.

Some of the purchases we make are not so easy. Here is our philosophy:

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).

Payroll Burden: Would you have burden if you did not have the employee? 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 depending on benefits, state taxes, etc.

Shop Supplies or field supplies used on all jobs. Typically 3-6% of your mitigation sales. If you do not know, use 4%

Shop time: I would suggest you “Department charge” this.

IF you are not job costing these items, my 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 2016 work toward a goal of 18-20% for your overhead costs.

Please do not hesitate to contact Dixie if you have any questions or need assistance.

FOR IMMEDIATE RELEASE ANSI/IICRC S500 Standard and Reference Guide for Professional Water Damage Restoration Published Las Vegas – Nov. 17, 2015 –

The Institute of Inspection, Cleaning and Restoration Certification (IICRC) announces the publication of a newly-revised ANSI-approved ANSI/IICRC S500 Standard and Reference Guide for Professional Water Damage Restoration (4th edition, 2015).

ANSI/IICRC S500 provides a specific set of practical standards for water damage restoration. It does not provide comprehensive water damage restoration procedures; rather, it outlines the foundation for basic principles of proper restoration practices. ANSI/IICRC S500 does not include exhaustive performance characteristics or standards for the manufacture or installation of structural components, materials and contents (personal property).

According to S500 Chairman Mickey Lee, the primary revisions made to the Standard and Reference Guide since the 2006 edition was published, include the following:

• Redefined the classes of water intrusion to offer a more objective means of estimating the evaporation load in a building, basing it on amount of affected materials to be dried rather than by vague descriptions.

• Restructured the inspections and structural restoration chapters to flow generally in the order a restorer would perform the activities on a typical water intrusion project, making them more usable and easier to follow.

• Consolidated information and recommended guidance on various materials which previously was scattered in three chapters (i.e. Building Science, Inspections, Structural Restoration) and placed them into a more user-friendly Table of Materials and Assemblies.

• Provided a rationale for airmover placement based on amount of wet, affected surfaces that is applicable to all classes of water intrusions.

• Strengthened the third-party references in the building science, microbiology, psychometrics and drying technology chapters to reflect third party research and enhance their credibility.

"We couldn't be more excited to have the latest release of our flagship document out,” said IICRC Standards Chairman Howard Wolf. “The improvements in readability and usability really made the new S500 worth the wait. Further, the new S500 improves clarity in several areas, including class of water intrusion." To purchase a copy of the new ANSI/IICRC S500: 2015 and other standards, visit

And we will leAve you with this…

“The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” — Henry Ford