When pencils, paper and calculators were the go-to tools for estimating, spreadsheets represented a major breakthrough to contractors looking for a smarter solution. Now, contractors who rely on spreadsheets find themselves at a disadvantage when they compete against companies equipped with estimating software. Even processes built around advanced, customized spreadsheets are no match for the collaboration capabilities provided by specialized software. The following are six liabilities estimators can overcome when they leave spreadsheets behind.
- Costly formula errors—Spreadsheets rely on formulas. The problem is, formulas can be changed, and those changes are hard to detect. Checking and double-checking every cell to prevent errors in the final bid is tedious and time-consuming. Unfortunately, estimators are often forced to skip this step when a deadline is looming and they have to focus on cost components and strategies. Spreadsheets also lack the safety net of automated error checking, a feature that is built in to specialized estimating software. Like spell check, this feature scans the estimate and flags common mistakes or discrepancies, such as a zero or negative cost, undistributed values and other variables.
- Slow systems—With spreadsheets, estimators essentially have two choices. They can start from scratch by creating a structure or framework and then populating it with cost components that they have to find from multiple external sources. The second option is to start with a similar, previous bid and make adjustments. Obvious dangers here are that the cost data could be outdated or they have to verify or change the formulas in the cells. In either case, they lose time and accuracy and increase risk.
- Inaccurate data—When cost information for materials, labor and other components of a bid is maintained in spreadsheets, contractors struggle to keep track of changes and keep the data current. Estimators typically search through multiple sources and previous bids for cost data that may or may not be accurate. Different estimators use different sources, which can waste time and lead to mistakes. A centralized cost database is the cornerstone of specialized estimating software and provides a single source of truth.
- Collaboration challenges—Having several estimators contributing to an estimate is common and essential. That is especially true when contractors bid for large, complex projects, perform a broad scope of work or operate in multiple locations. With spreadsheets, limitations on collaboration are a big disadvantage. Estimators generally have to input information one at a time and in succession, rather than concurrently. This means they can’t see what their colleagues are doing in real time. This can slow the process, create overlapping or conflicting entries and leave companies trying juggle and reconcile multiple versions.
- Lack of standardized processes—Spreadsheets make it difficult to standardize the estimating and bidding process within a company. Each estimator might do things a little differently. Methods and cost data, and how they are applied within the bids, can also evolve over time. This threatens efficiency and the ability to compare one bid to another. More importantly, companies with an inconsistent or nonstandardized process struggle with conveying the bid information to the field and with comparing actual costs of a job to the estimated costs.
- Isolation—Estimating impacts multiple workflows, but spreadsheets isolate the process. Communicating data to accounting, project management and field operations systems can be inefficient, often requiring manual rekeying of data, which invariably leads to errors. The lack of a seamless connection between estimating and field management can be particularly damaging. Teams in the field struggle to plan and execute according to the expectations of the bid, and estimators miss opportunities to use field performance to improve future bids. Incorporating quotes from vendors and subcontractors presents similar integration challenges for estimators relying on spreadsheets. Specialized estimating software also allows contractors performing Department of Transportation (DOT) work to take full advantage of electronic bidding systems (EBS), which involves downloading forms, building bids from prepopulated databases and exporting to a bid file at speeds that would be unimaginable with spreadsheets.
Every dollar a construction company earns or loses begins with the estimate, so there is a lot riding on the accuracy and speed of the process. The spreadsheet liabilities above can force estimators to choose between speed and accuracy and to compromise in both areas. The result is an increased risk of losing potentially profitable jobs.