Spreadsheets are a familiar estimating tool for a lot of industries. Because they’re a staple of the business software mix, they’re an easy choice. But that doesn’t mean they’re the best choice for your estimating needs.
While plenty of construction firms still rely on spreadsheets, many others have made the move to database estimating software. Spreadsheets just can’t compete with the functionality of purpose-built construction estimating software, nor do they offer the game-changing benefits that a consistent and automated process delivers.
You’re likely familiar with construction estimating software. Maybe you’ve even considered making the switch. If you’re unsure if it’s the right time or best decision for you, read on to uncover two tell-tale signs that you’re ready to move beyond spreadsheets to a database estimating solution.
Already know you’re ready for estimating software? Start planning your move with our FREE eBook.
Are Your Profit Margins Shrinking?
In 2017, construction services ranked in last place among capital goods providers for profitability and #99 among all other industries. It’s estimated that the average annual gross margin for construction services is around 17%, but for many this figure is much lower. Suffice it say, it’s critical that you proactively manage your profit margins when you’re in the construction business.
If you’re feeling the squeeze of shrinking profits, and you’re still using spreadsheets, they could be the source of your pain. The truth about spreadsheets is that despite their widespread use, they breed errors and inconsistencies. It’s just too easy to make mistakes in a spreadsheet and too hard to find them if you do.
9 out of 10
spreadsheets have errors
By their very nature, spreadsheets are complicated and inefficient. There’s no easy way to collaborate without creating multiple versions. Plus, there are very few guardrails. The potential for making costly errors of omission or other mistakes is high when you’re doing manual entry and creating your own formulas. Without an audit trail, you can’t easily identify what’s been changed, let alone what changes have been made.
As a construction pro, you know the value of using the right tool for the job. You also know that construction is risky enough without adding additional variables. But if you’re still using spreadsheets for estimating, you’re using a one-size-fits-all approach, when you should be using a specialized tool. And you’re adding an additional element of risk by using a process that’s notoriously error-prone.
Database Estimating Improves Your Accuracy
Database estimating software gives you a consistent and automated method for producing more accurate estimates. When you use a centralized database of your typical work breakdown structures (WBS) and cost formulas to develop estimates, you reduce the number of mistakes and errors of omission. A database that’s continually updated with your actual, as-built costs further improves the accuracy of your cost estimates.
By providing robust auditing capabilities, construction estimating software also makes it easy to track changes. You can complete reviews more efficiently and effectively, increasing your likelihood of resolving errors before they make it into your final bids. You gain greater confidence in the accuracy of your estimates and increased protection of your profit margins.
Ready to produce more accurate estimates? Get the FREE eBook.
Are You Growing Slower than You’d Like?
Growth can be a double-edged sword. On the one hand, it creates a whole new set of challenges. But on the other hand, it opens up a whole new world of opportunities. And there’s truth in the old adage that if you’re not growing, you’re dying.
There’s also no better time to take advantages of the opportunities. Construction spending in the U.S. has been on an upward trajectory, increasing more than 7% on a year-over-year basis as of August 2018. Globally, construction spending is expected to increase 3.6% per year through 2022.
Given favorable market conditions, if you’re not experiencing the growth you’d like, there are likely two things at play: you need to estimate more projects and/or your estimates need to be more competitive. In either case, spreadsheets aren’t helping you.
Because spreadsheet estimates rely heavily on manual processes and invite individualized approaches, they are inherently inefficient to produce. When you lack a consistent estimating process, your estimates take longer to compile and review, which limits the number of estimates you can manage and complete.
To produce estimates that are competitive, you need a high level of assurance that your material and labor costs are accurate. Without a centralized cost database that’s continually being updated to reflect actual, as-built costs, you’re likely relying too heavily on assumptions or guesswork. Because your estimates lack the accuracy that only actual data can provide, you’re at greater risk of overestimating or underestimating, both of which put you at a disadvantage.
Produce More & Better Estimates with Database Estimating Software
Construction estimating software powered by a central cost database provides the standardized and repeatable process you need to maximize your productivity and your accuracy. When you’re able to create, manage, and update cost estimates in an integrated and efficient way, you’re able to be more responsive to new opportunities.
If you believe as many do that construction estimating is a numbers game, then you need to produce more estimates to win more projects. Database estimating software saves you hours of manual data entry, so you can produce estimates in a fraction of the time.
If you don’t subscribe to the bid-more-to-win-more mentality, then you must win more of the projects you do pursue. To be competitive, your estimates must be accurate. This requires building your estimates using up-to-date costs and a framework that minimize errors of omission and other mistakes.
Construction estimating software provides the structure and standardized methodology to efficiently produce precise, data-backed bids. The gains you make in productivity and accuracy make it possible for you to pursue more projects and do so more competitively, creating the perfect conditions for accelerated growth.
Make the Switch to Estimating Software
If you see your company in either of the situations discussed here, you already know that it’s time to do things differently. Continuing to rely on spreadsheets for construction estimating could be putting you at a disadvantage. Why take that risk when there’s a better way to set yourself up for success?
Perhaps it’s because change is hard. There’s no denying that it’s much easier to maintain the status quo. But staying in your comfort zone could be hurting your profits and costing you projects.
Plus, switching to estimating software can be easier than you may realize. Solutions like Trimble WinEst maintain the familiar feel and functionality of spreadsheets, while mitigating the dangers and disadvantages that they pose.
To learn more about making the switch to construction estimating software, claim your FREE eBook.