Spreadsheets have been a popular tool for a long time, but their popularity is waning among construction estimators. More and more companies are moving to database-driven estimating software. In fact, it’s estimated that just 1 in 5 construction firms still use spreadsheets for estimating.
And for good reason. While basic spreadsheets were once the de facto standard, they’re no longer the best solution. They lack critical features and functionality that could be putting your profits in danger.
If you’re still using spreadsheets for your construction estimates, read on to understand the seven deadly sins of spreadsheets and evaluate your risk.
Deadly Sin #1: Potential for Error
Researchers estimate that each cell in a spreadsheet has a 1% to 5% risk of containing an error. On its own, this may not seem that bad. But those errors add up, particularly in construction estimates that contain hundreds, if not thousands, of individual cells.
In fact, around 9 in 10 spreadsheets contain errors, according to the research. Should your estimates be among those that do have mistakes, you’ll also be hard-pressed to find them. In nine separate experiments, only 60% of spreadsheet errors were found.
The bottom line is that it’s too easy to make a mistake in a spreadsheet, and it’s too hard to find if you do. Given the high level of detail and complex formulas involved in a construction estimate, even a seemingly small mistake can become a costly error that eats into your margins.
An estimate built in a spreadsheet is built on a shaky foundation at best. Read our FREE eBook to learn more.
Deadly Sin #2: Inefficiency
A spreadsheet doesn’t provide a repeatable and standardized process to create your estimates. Your estimators are forced to take a personalized approach, which may or may not be consistent and methodical, costing you both accuracy and time.
This lack of uniformity hurts your productivity, but that’s not all. It also makes your estimates time-consuming and difficult to review, and it puts you sorely at risk if an estimator decides to leave. You could be left trying to make sense of their process and decoding the reasoning behind their calculations.
To add insult to injury, you know it can take weeks—months even—to put together a thorough estimate, especially if you’re working with spreadsheets. When you don’t have a standardized and efficient estimating process, you’re left with little to no time to review and finetune, let alone value engineer, putting you at a competitive disadvantage.
Deadly Sin #3: Inflexibility
Even if you do have time to value engineer, it’s too hard to make changes and test options in a spreadsheet. Because side-by-side comparisons aren’t easy, you may need to create multiple spreadsheets to make comparing options easier. This may seem like an acceptable workaround, but it’s an unnecessary step that requires a lot of time and focus.
This also hints at the problems with having multiple versions of a spreadsheet. You have to come up with some pretty creative naming to keep track of each one. If you also have multiple people reviewing and making changes, you’ll be even more challenged to keep track of the most current version of your estimate.
Deadly Sin #4: Lack of Collaboration
The inflexibility of a spreadsheet makes having multiple versions of an estimate almost unavoidable. You may have several versions of an estimate in circulation at any one time. Or to avoid this, you may have several people creating portions of the estimate in separate spreadsheets that you’ll need to consolidate later.
Either way, your estimating team’s ability to collaborate is limited when they can’t easily work in the same spreadsheet. And when your team can’t work together, they’re not learning from each other.
This creates an environment where estimating best practices remain predominantly in the minds of your top estimators. You’re reliant on them to work on every estimate to make it as good as it can be—putting you at risk every time they walk out the door.
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Deadly Sin #5: Complexity
As if working around all of the problems with spreadsheets doesn’t make your job hard enough, there’s also the sheer complexity of spreadsheet estimates. With hundreds of cells and formulas, your estimates can get complicated fast. Add multiple reviewers and versions into the mix, and you’ve added a whole lot more difficulty.
Just one mistake—like an inadvertently deleted formula—can create a ripple effect throughout the rest of your estimating spreadsheet, leading to broken links and those dreaded ERROR! cells. You could spend hours trying to find and fix what went wrong.
And should you be faced with consolidating several spreadsheets to create a single complete estimate, you know all too well what a hellish experience it can be. As anyone who has experience with this burdensome task can attest, consolidating multiple spreadsheets is far from a simple undertaking.
Deadly Sin #6: Lack of an audit trail
Piggybacking on the complexity problem, perhaps one of the most glaring problems with a spreadsheet is its lack of an audit trail. Its limited tracking tools require you to either come up with a complicated workaround or take your chances.
Lacking a safeguard against errors, you’re taking a big risk. If a potentially costly error has occurred—like a change to a formula—there’s a 40% chance you won’t find it, putting your profitability in danger. Even if you do, you’ve lost valuable time that could’ve been better-spent value engineering your estimate to make it more competitive.
When you don’t have an audit trail, you’re not just at risk of losing projects and profits, you also lose the opportunity to find out who made the error. This isn’t about assigning blame; it’s about missing a learning opportunity. Without an audit trail in place, you don’t know which team member’s inexperience is putting your company at risk.
Deadly Sin #7: Riskiness
While risk management is an integral part of your business, your estimating process doesn’t need to be so risky. By continuing to rely on spreadsheets, your estimates are unnecessarily vulnerable to inaccuracies and errors of omission. You’re also working in an inefficient and complex way that furthers your potential for mistakes and missteps.
Spreadsheets may also be breeding a risky reliance on tribal knowledge. By continuing to rely on spreadsheets, your senior estimators’ tribal knowledge remains their own. When you don’t have a centralized cost database, you must rely too heavily on your best estimators, instead of leveraging their expertise in a way that’s accessible to your entire team.
This opens up your company to unnecessary risk. You’re not capturing your estimator’s experience from past projects or transforming their best practices into an automated process. Your company’s ability to grow is thwarted, and your intellectual property is locked in the minds of your individual estimators.
Upgrade to a Safer Estimating Solution
There’s no denying that spreadsheets were once the gold standard for estimating. But you have a better option: estimating software developed specifically for construction estimators.
Making the switch isn’t only the safe move, it may be easier than you think. Some estimating software, like Trimble WinEst, actually maintains the look and functionality of spreadsheets. You can continue to work in a familiar way, while mitigating the dangers traditional spreadsheets pose.
Want to learn more about making the move to database-driven construction estimating software? Get the FREE eBook.