From 'Funny Time, Funny Money' to Realistic Labour Times

Applied Probability Trust: The Mathematical Scientist 40 (2), 2015

13 Pages Posted: 22 Sep 2014 Last revised: 6 Dec 2015

See all articles by Xiaolin Luo

Xiaolin Luo

Government of the Commonwealth of Australia - CSIRO (Commonwealth Scientific and Industrial Research Organisation)

Pavel V. Shevchenko

Macquarie University; Macquarie University, Macquarie Business School

Brad Sayer

Insurance Australia Group

Date Written: December 5, 2012

Abstract

The motor vehicle retailing and services industry is one of the largest service industries in the developed world. A persistent issue concerning consumers, motor vehicle insurers and smash repairers alike is how much a smash repair job should be paid for the paint labour time. While attempts are being made to replace the old system known in the smash repairs industry as "funny time, funny money'' by fairer systems based on empirical evidence, there is lack of rigorous analysis based on observed data and sound statistical methods. This paper proposes and calibrates a statistical model for estimating paint labour times, accounting for the inherently significant uncertainties in the paint process. Fine details such as flash off time, the number of paint layers and the number of coats per layer are included in the model. A series of experiments were conducted at various paint workshops over a few years to collect data for model calibration. It was found that, excluding drying time, paint labour times obey a simple relationship to the panel areas. A case study was performed to compare the model predicted upper bounds with an empirically developed commercial system of paint labour times.

Keywords: motor vehicle insurance, smash repair, paint labour time, New Times and Rates (NTAR) system, linear regression

Suggested Citation

Luo, Xiaolin and Shevchenko, Pavel V. and Sayer, Brad, From 'Funny Time, Funny Money' to Realistic Labour Times (December 5, 2012). Applied Probability Trust: The Mathematical Scientist 40 (2), 2015, Available at SSRN: https://ssrn.com/abstract=2499301 or http://dx.doi.org/10.2139/ssrn.2499301

Xiaolin Luo

Government of the Commonwealth of Australia - CSIRO (Commonwealth Scientific and Industrial Research Organisation) ( email )

Riverside Corporate Park
Julius Avenue
Sydney, NSW 2113
Australia

HOME PAGE: http://www.cmis.csiro.au

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Brad Sayer

Insurance Australia Group ( email )

Sydney
Australia

HOME PAGE: http://www.iag.com.au

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