Measuring auto physical damage estimating performance by benchmarking key performance indicators (KPI) has been in place since the advent of electronic estimating. Unfortunately, so too have misunderstood metrics and efforts by appraisers to 'game' the numbers. This seems especially true when it comes to measuring auto parts performance.

The 'industry standard' metric of measuring the percentage of parts dollars spent by part type has been used by many insurers as the sole way of judging this performance for years, despite having an inherent flaw. Anytime you measure the percentage of something, you have to watch not only the numerator of your equation, but also the denominator. 

A simple example of this is taking a $1,000 parts spend. If you have a recycled part that is $200, then the percentage of parts dollars for recycled parts would be 20 percent. However, if we find a less expensive part—let's use $100—then we would change the numerator to 100. Then the denominator also changes to 900, meaning our percentage of parts dollars for recycled parts is now 11 percent.