Calculating Mechanic Efficiency should be on your mind daily when working flat rate in the automotive repair industry.
Calculating Mechanic Efficiency is pretty easy, most shop management software will keep track of how many hours you worked during the week. Some software can allow you to track Non-Billable Hours during the week as well.
Calculating Mechanic Efficiency accurately is next to impossible without using software that has a built-in time clock and mechanic efficiency reports. Can it be done, yes of course with a fair bit of time and effort, but then you are spending hours on a project that should take minutes.
Why should it matter to know your Mechanic Efficiency? It’s simple. Who do you know that works 40 hours per week yet only gets paid for 30 hours, well besides you?
What is Efficiency?
Merriam-Webster Dictionary description – effective operation as measured by a comparison of production with cost (as in energy, time, and money)
What does that mean to you? It means how much work did you get done in one week, 40 hours, vs the number of hours billed out.
If your labor guide says the job should take 2 hours and you took 2 hours, then you were 100% efficient. If you did the job in 1 hour, then your efficiency rating went up to 200%. This is called Book Hours vs Clock Hours, how long did the labor guide say the job should take vs how long did it actually take. We have run a diagnostic only repair shop running 112% -117% efficient, it can be done if you follow proper procedures.
Calculate Mechanic Efficiency
To calculate Mechanic Efficiency you only need to know 2 things, (if you’re not accounting for Non-Billable Activities)
– Book time (suggested time)
– Clock time (actual time)
X (Book Hours) divided by Y (Clock Time) = 30 Booked Hours / 40 Clock Time Hours = 75% Mechanic Efficiency. If you make $25 per flat rate hour you just lost $250 per week or $13,000 (a new toolbox or RV) per year.
Non-Billable Time from Clock Hours comparing to Book Hours. This is the only accurate and fair way to evaluate job performance. Real life in a repair shop varies by management style, service writer skills, and job description. This is the real difference between shops that are profitable and those that aren’t.
Road tests, parts ordering, paid breaks, driving a customer home, running for donuts, jump starting a vehicle, taking out the garbage, going to the tool truck, pushing in a vehicle, helping another mechanic, all these activities eat hours that could be used to repair vehicles.
It takes shop management software, a service writer, an owner, and a mechanic who is disciplined to track Hours Paid (Clock), Hours Billed (Booked), and non-billable Hours.
Working out Mechanic Efficiency is possible in a repair shop that doesn’t use management software, but it is not easy and gets confusing. It’s also not a good use of time.
Each member of staff clocks in and out at the beginning and end of the day, so you can see clocked hours (if anyone is late or clocks out early it will show on a report). Mechanics can then clock into each labor line on jobs. They clock off if they stop for non-billable time, road tests, parts ordering, paid breaks, delivering a customer, running for donuts, jump starting a vehicle, taking out the garbage, going to the tool truck, helping another mechanic, they then clock off as they finish the labor line and then clock onto the next job or go to lunch or home.
The times are calculated and added up by the software (no need for timecards, or scribbles on the back of envelopes) and are available in an easy-to-read report. You can see what labor lines on what RO’s they logged onto and how long they took on each.
The time clock helps with time keeping, payroll and mechanic efficiency reporting. If you do not use a time clock currently you really don’t know what your efficiency is. It’s your money, don’t you want to know?
Efficiency and Profitability go Hand in Hand
The old management trope about “what can’t be measured can’t be managed” is absolutely correct.
Measuring Mechanic Efficiency is critical. Performance, normally seen as how cars are pushed through your bay daily in some ways is the easiest but also most useless metric. If you are not efficient the number of jobs you do a day doesn’t reflect your true potential, improving Mechanic Efficiency will naturally increase your efficiency and pay. Increased Mechanic Efficiency will almost certainly lead to an increased profit per hour and make you more money.
If most shops tracked their Mechanic Efficiency numbers, they would immediately see they are overstaffed. That being stated they have to take on more work or cut lose a mechanic. This should be the one on the team is not pulling his/her weight.
How to Increase Technician Efficiency
As you start to track your Mechanic Efficiency you will see it improve, and you will start doing things to make it improve. Look at your systems and procedures, look at your parts ordering process, start taking notice of which parts suppliers consistently send you wrong parts. Have your tool dealer come at a time that doesn’t affect your time and money-making abilities. If your parts store takes too much time to get you parts, find another parts store. Your time is money! Your money!
Every time a mechanic that is waiting around for parts is killing efficiency and reducing the number of cars worked on. That means customers have to wait longer and some will get annoyed and not use your shop again. Lack of efficiency in the auto repair business has real costs to everyone involved.
Mechanic Efficiency is also depleted by smoke breaks or personal phone calls while on the job. These seem like simple things, but they add up:
- 5 Minute Phone Call Per Day = 21.66 Hours Per Year, at $25 = $541.67
- 35 Minutes on Tool Trucks Per Week = 30.33 Hour Per Year, $25 = $758.33
- 30 Minutes Waiting for Parts Per Day = 130 Hours Per Year, at $25 = $3,250
- Running 1 Customer Home Per Week = 52 Hours Per Year, at $25 = $1,300
- 15 Minutes Per Day Non-Essential with Service Writer = 65 Hours Per Year, at $25 = $1,625
- Being Late 15 Minutes Per Week = 13 Hours Per Year, at $25 = $325
- 1 Hour Shop Walk and Talk Per Week = 52 Hours Per Year, at $25 = $1,300
- 2 Hours Per Week Pushing Cars in That the Service Writers Should Push In = 104 Hours Per Year, at $25 = $2,600
- 30 Minute Per Day Smoke Break = 130 Hours Per Year, at $25 = $3,250
TOTAL = $14,950 – it’s the little things add up.
Increasing Mechanic Efficiency requires you to look at the whole process that you go through from when a car comes into the time it leaves. Small improvements at each step of the process will result in greater Mechanic Efficiency which equals more money in your pocket.