Electronic spreadsheets have been around way longer than you think; the first software, LANPAR, was developed in 1969 for Bell Canada and AT&T. And while countless estimates have been calculated on spreadsheets ever since, they do lack some critical functionalities. If you’re still relying on them for estimates, you could put your profits at risk.
1. Spreadsheets are More Prone to Error
Research has shown that each cell in a spreadsheet has a 1% to 5% risk of containing an error. When you add up the number of cells in a single spreadsheet, you can see why the error risk is so significant. Then, consider that people often work with several sheets and it should come as no surprise that an estimated 9 out of 10 spreadsheets contain errors. Unfortunately, mistakes in a spreadsheet are easy to make and hard to find. In fact, in nine separate experiments, only 60% of spreadsheet errors were found.
2. They Leave No Audit Trail
When errors inevitably occur, you are often left searching to see how they came about. Sometimes a number for an estimate needs to be changed, which means the changed value lives on in later estimates, without explanation. Not knowing the source of the mishaps means they’re more likely to happen again, and makes securing a mistake-free and additional-cost-free production chain harder.
3. It’s Difficult to Make Changes
Using spreadsheets to test different options and make adjustments can be time-consuming and inflexible. This causes most people to choose the most viable option: working with multiple spreadsheets at once to facilitate comparisons. On a project level, though, this option makes processes longer, harder and, again, more prone to mistakes. When you have multiple people working simultaneously on multiple, separate sheets, keeping track of changes becomes increasingly difficult—no matter how good collaborative web-based spreadsheets are getting.
4. Spreadsheets Get Broken Easily
While a spreadsheet does have its benefits, it’s not dynamic. When creating a complete estimate, you typically need to consolidate several spreadsheets, making it likely that an extra spacing, wrong format or an erroneous number creeps in without you noticing. When this happens, ERROR! messages begin popping up all over your hard work and you don’t know where to scout for the problem. Unfortunately, until you find it, you don’t have a viable estimate.
5. No Single Source of Truth
Inputting information in a spreadsheet doesn’t work to the advantage of a collaborative team. Pouring one person’s expertise into a static document prevents the benefits of cooperation and knowledge-sharing. Plus, if someone leaves the company, it can be difficult to decipher the thought process behind their numbers and formulas.
6. Money down the drain
All of the above—ineffectiveness, inaccuracy and inflexibility—all result in additional costs that could easily be avoided. When a single project accumulates multiple spreadsheets, cells and calculations, there’s potential to rack up excessive costs to pay for fixes, extra steps and more manpower.
Estimates should be done quickly and consistently, with the highest possible degree of accuracy. Unfortunately, relying on spreadsheets makes reaching these goals considerably more challenging. Because so many possible missteps can happen along the way, using spreadsheets for estimates is always going to be risky.
For these reasons, and more, it’s time to move on from this outdated tech and embrace software designed to be more efficient and effective.
Want to learn more about how estimators can influence their shop's competitive advantage? Check out The Steel Estimator's Guide to Staying Competitive.