We were recently asked, “Who is responsible for determining the labor charge on each work order?”
Before we can decide on the amount of labor that can be added to the work order, we need the technician to diagnose or triage the piece of equipment. (Need Triage Sheets? Check out BCI’s Dealer Toolbox)
If they are triaging the equipment, they will estimate the time needed to complete the repair on the triage form. If they are doing a full diagnostic, they will estimate the time needed based upon previous repair experience. That work order and diagnostic sheet will then go to the service manager or shop foreman. They will compare the “estimated time” the technician provided to a flat rate time for the needed repair. The service manager or shop foreman will then make the ultimate decision on how much time to ask the customer for in terms of dollars.
When the service manager or shop foreman is comparing the technicians requested time to the flat rate times, it is critical for them to understand why a technician might be asking for additional time on a relatively simple repair. Typically, the technician sees some kind of extenuating circumstance during their diagnostic that explains the additional time they requested (i.e. rusted or rounded off bolts or abuse).
Simply put, the tech asks for a specific amount of time and the manager grants them the time allowed. The flat rates need to be modified to fit your tech’s skill levels and tools available to them. We build our flat rates to where a ‘B-level’ tech with hand tools can get the job done in the time allowed. ‘A-level’ techs with power tools should be consistently beating flat rates by about 30%.