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Restoration Contractors: Watch Out for These 12 Hidden Costs

Restoration contractor repairing plumbing tubes on a wall and finding 12 hidden costs for his estimate

If you’re a restoration contractor, the last thing you want to do is overlook hidden project costs. That’s because obscure costs that fly under your radar can end up eating away at your profits. With that in mind, we created this list of common hidden costs – and we included tips to help you avoid their potential negative repercussions.

1. Undetected Structural Issues

Structural surprises can lead to additional material and labor costs, which will affect the overall project cost and timeline.

So, make sure to mitigate that risk: Conduct thorough pre-restoration inspections. Include the use of advanced diagnostic technology, such as thermal imaging, to help uncover hidden structural damage before it becomes a costly setback.

2. Inadequate Project Scoping

Insufficient scoping can cause multiple, costly problems – including poorly defined deliverables, inaccurate estimating, a lack of proper resources, and haphazard scheduling. 

Try this: Use a mobile app, such as magicplan, to map every job site more accurately in real time. This will enable you to improve project estimating and planning. With magicplan, you can also submit your project sketch and photos directly to Xactimate®, which helps adjusters speed up the claims estimating and approval process.

Bathroom floor plan with water damage with annotation of the source of loss, pictures and sticky notes icons on an ipad tablet using the magicplan app

LEARN MORE: 7 Must-Have Tech Tools for Restoration Pros in 2023

3. Regulatory Compliance and Permits

Navigating the labyrinth of local building codes and regulations can be a complex task. As a result, many restoration contractors underestimate the time and financial resources required to secure necessary permits and comply with local regulations. This may result in delays that stall the restoration process.  

Solution: Stay informed about codes and regulations and engage with local authorities early in every project. These steps help prevent costly setbacks and will ensure a smoother restoration process.

4. Environmental Considerations

Restoration projects often involve addressing environmental issues such as mold, asbestos, or other hazardous materials. But the costs associated with proper remediation and disposal of these substances can quickly add up. Oh, and take heed: Ignoring government requirements for handling those substances may lead to costly legal repercussions .

Best advice? Be ready: Thoroughly study and understand current environmental regulations. Also, budget for first-rate personal protective gear (PPE) and specialized training for you and your team, as well as the necessary equipment and disposal services to comply with regulations.

5. Time Poorly Spent 

The old adage is true: Time is money. If you don’t use it wisely, the results could be costly.

Tip: Use apps to better manage your time. For example: The magicplan app can help you sketch, plan and estimate projects quickly and easily. A scheduling app can help you and your team stay on top of appointments. And you can explore other mobile-device tools that will help you streamline your workdays.

6. Labor and Skill Shortages

The demand for skilled labor in the restoration industry has surged in recent years, leading to increased competition for experienced workers. You may face challenges in finding qualified professionals, resulting in higher paid wages and stalled projects 

Your best bet is to be proactive: Invest in workforce development, foster strong relationships with trade schools, and adopt advanced training programs. All of these efforts can help diminish the impact of labor shortages, so you can have more control over labor costs and project timelines.

7. Unexpected Labor Costs 

Hidden labor costs can arise from factors such as unplanned overtime, and the need for additional workers due to unforeseen challenges.

Do this: Accurately estimate labor requirements with a helpful app, like magicplan. Factor in potential overtime expenses. And provide ongoing training to make employees more adaptable to different tasks, so they can handle a variety of residential and commercial damage restoration scenarios. These measures can contribute to cost savings in the long run.

LEARN MORE: 7 Ways to Boost Profitability for Your Restoration Business

8. Material Price Fluctuations

The restoration industry is not immune to fluctuations in material prices, which can be influenced by global events, supply chain disruptions, and market dynamics. That means your business may encounter unexpected increases in the cost of mitigation and restoration materials, which can impact project budgets and profitability.

Some suggestions: Establish transparent communication with suppliers, secure contracts with fixed prices, and stay informed about market trends. These actions can help you anticipate and manage material price fluctuations effectively.

9. Misunderstandings That Cause Mayhem

Effective communication is essential in the restoration process – whether you’re dealing with large loss restoration or a small repair project. Without good communication, well…. look out. The failure to manage client expectations can lead to hidden costs, and also can strain your relationships with property owners and insurers.

Good guidance: Implement a robust communication strategy, including detailed project timelines and regular updates, to assure that property owners and insurers have realistic expectations. A strong strategy can foster trust and prevent misunderstandings that could result in additional costs.

Restoration company employees communicating through the commenting features of the magicplan app on a 2D floor plan on an ipad about the condition of a window.


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10. Unanticipated Project Delays

Delays often have a cascading effect on both costs and client satisfaction. Unforeseen project delays can stem from various sources, including weather conditions, supply chain disruptions, or unforeseen site complications. 

That’s why you should plan ahead: Counteract potential problems by building contingency plans into your project timelines and budgets to account for unexpected delays.

11. Equipment/Tool Upgrades and Repairs

Ignoring the need for upgrades and repairs can lead to inefficiencies, increased project timelines, and potential loss of business to more advanced competitors.

Avoid surprises by accounting for these costs early: Each year, be sure to set aside a portion of your budget for regular upgrades and possible repairs.

12. Inefficient Use of Office Supplies

Wasteful use of office supplies can add up over time. But often it’s something that goes unnoticed.

Hint: Find ways to reduce supply costs. For example, you can reduce paper expenses by moving toward a paperless office: Use electronic document storage. Print documents only when necessary. Send invoices and pay bills electronically. And use mobile apps more often in the field.


When you run a restoration business, uncovering and addressing hidden costs is a vital part of business management. By acknowledging and preparing for unforeseen challenges, such as the ones we listed above, you can help ensure a more profitable operation. Simply put, it’s all about doing what you can to survive and thrive in a very competitive industry!




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