Construction Business Owner, June 2007   

Editor's Note: This is the first article in an eight part series called "Better Next Year," by Fred Ode, CEO, chairman and founder of Foundation Software.

We learn over and over again that too much of a good thing can be a bad thing—case in point: Spreadsheets.

For many small contractors, spreadsheets are the first and only technology solution needed to get their companies up and running quickly. After all, spreadsheets are extremely versatile and easy to use. They can be used to create and track job estimates, billings, payroll, job costs, financials and more. As a company grows, however, so do the spreadsheets associated with each of these functions… not to mention the amount of time required to maintain them all.   

Contractors intent on becoming "better next year" (i.e., taking the steps needed for long-term success) need to take a long and hard look at their spreadsheet use. Like any business tool, spreadsheets excel (excuse the pun) at specific functions, but should not be used for every imaginable purpose. 

Recognizing Spreadsheet Abuse 

In business, there are always painful processes that scream “INEFFICIENT!” Owners will generally waste no time seeking solutions to these in-your-face problems. But over reliance on spreadsheets is usually not like that; it sort of sneaks up on you one day. All at once, it seems, your beloved spreadsheets have spiraled out of control.

In construction, the scenario generally goes something like this: The small contractor uses spreadsheets for estimating jobs and invoicing clients. Because spreadsheets are flexible and easy to use, the contractor creates more and more worksheets to analyze job costs as needs arise. Soon, however, the contractor has “islands” of data that cannot be linked. He ends up spending much more time building and maintaining the spreadsheets than analyzing the figures themselves. And as the volume of data grows, it takes longer and longer to maintain the spreadsheets, and reports (or billings or payroll!) fall behind. Soon the data is outdated, and the owner no longer has a clear picture of the company’s financials.   

In its day, spreadsheet technology was leaps ahead of manual methods. Back when the first program was introduced (more than twenty-five years ago), construction owners were amazed at how fast and efficiently their estimating, job costing and accounting tasks could be accomplished. Since then, however, newer and more sophisticated software tools have become available at costs even small business owners can afford. More importantly, good construction-specific applications offer owners the tools they need—such as instant access to consolidated data—to compete in today’s highly-competitive construction environment.