Scope of Loss vs. Cost Estimate

June 16, 2017Scope Of Loss, Estimating

In an earlier article we talked about all the detail and effort we put into our Scope of Loss.

The Scope of Loss is done on an Excel spreadsheet format, listing everything that needs to be done to restore the structure to pre-loss condition. The spreadsheet format allows us to sort by room, or by trade.

It does not include code upgrades. Code upgrades are a separate subject, often times not fully apparent at the time of the loss, and covered under a separate bucket of money, to be paid as incurred.

The Scope of Loss does not include any pricing. Pricing tends to distract people from looking at the actual scope of the work.  Initially, we want their focus on the scope of the damage, not on how much money they are hoping to get.

We want the adjuster to review and approve the Scope of Loss, and then submit it to the owner for his review and approval.  When everyone agrees to the scope of work, this document is used by the contractors on site that actually do the work. The Scope of Loss can go out to specialty contractors for pricing their portions of the work, because it doesn’t have any pricing on it. Competitive bidding by the specialty sub trades, based on the Scope of Loss, helps keep the costs in line. Pricing is more accurate if everyone is pricing the same scope of work.

Because the scope is done in the spreadsheet format, it is possible to put quantities and pricing directly on the Scope of Loss and come up with a cost estimate. However, most adjusters want a cost estimate in Xactimate format, so this is what we do. As soon as everyone has agreed to the Scope of Loss, we will start the detailed cost estimate.

Xactimate uses up-to-date pricing data bases appropriate for the geographic area of the loss. Since Xactimate is basically a residential estimating program, we have to modify it frequently to accommodate items we see on commercial structures that are not in the residentially oriented data base.

The goal here is to provide you, the adjuster, with a detailed cost estimate that you can use to settle the claim. As we are general contractors specializing the reconstruction of commercial insurance claims, the consulting service we offer is especially useful, because we back up our estimates with the ability to perform the work for the amount of the cost estimate we provide.

The advantage for the adjuster if we do the reconstruction work, is a happy customer, and a claim that doesn’t need a lot of hand holding. The work is done efficiently and promptly by experienced construction managers familiar with the issues of insurance work.


Eric Johnson; Vice President of Loss verification Services. Eric specializes in commercial insurance property losses. He is an expert at helping organizations recover from disaster. He has worked losses from 7 major hurricanes, and countless tornadoes, fires, collapses and floods. He has consulted on commercial insurance losses in over 31 states, and with his team of project managers, has managed construction projects in 25 states. You may contact Eric at 515-267-2486 (o) or 817-798-2335 © or by emailing him.