February 2024
by Karl Vantine, Chief Customer Officer at Contruent
Has your company successfully managed a capital project that met its planned cost and schedule outcomes with only using computer spreadsheets? If the answer is yes, you’re one of the lucky few.
If the answer is no, and you still rely on them as your primary cost management method, you’re not alone. Computer spreadsheet programs have long been a staple in construction companies’ tech arsenal, the unwavering choice to manage project costs. And they did the job just fine for a while.
But capital projects have gotten larger, costlier and more complicated. Spreadsheets have followed suit, becoming more complex. They’re being used to handle the endless influx of data — collecting, calculating and tracking it to better report on and understand project progress and cost performance. And they’re having difficulty keeping up, proving insufficient in controlling evolving costs.
What was once an advantage has become a glaring disadvantage.
After all these years, the reasons for spreadsheets being ill-equipped to handle mega projects haven’t changed:
- They’re too hard to use for collaboration on big datasets.
- Data integrity is awful.
- Using them for reporting periods gets unwieldy quickly.
They’re too Hard to Use for Collaboration on Big Datasets
Spreadsheets weren’t created with collaboration in mind, and certainly not for the construction industry. Collaborating effectively on capital projects requires accessing and sharing real-time data from one reliable source.
Spreadsheets fall woefully short. Their very structure — with endless rows and columns to wade through and multiple tabs to scroll — is overly complicated for teams to interact with and interpret. They sometimes lack real-time version control, access permissions and audit history capabilities. They’re improving with online versions and shared sites, but ultimately, they’re still not the right tool for the job.
With no easy way to know who last updated a spreadsheet, what they did and whether they are working from the latest version, collaborating on those datasets is less effective and more cumbersome than it should be. And the effects can show up in less certain cost control decisions.
Data Integrity Is Awful
Many construction companies consider data to be among their most valuable assets. And yet, far too many of them trust that asset to a program that wasn’t designed to handle the growing volume and complexity of capital project data.
Broken formulas, incorrect data formats and empty cells are far too common. One seemingly small error can quickly go from snowball to avalanche, as that error lives on uncorrected.
It comes down to spreadsheets being subject to human error in cost data management. Someone has to be responsible for building the macros, entering the formulas and transferring information from one tab to another. All it takes is one slip. Suddenly, everything is wrong. There’s no way to identify and correct errors without continuous human involvement. Spreadsheets — and project costs — are too dependent on individuals to serve as designated data gurus.
Using Them for Reporting Periods Gets Unwieldy Quickly
Like many other businesses, construction companies periodically (often monthly) collect and track information from suppliers and evaluate how they’re doing at any given point in the process. At the end of the period, the data should be locked and closed to move on to the next period.
That’s extremely hard to do using spreadsheets for several reasons. They can’t be easily closed, which means anyone with access can go back and “fix the history.” A big no-no.
Let’s go back to the structure challenge. All those rows and columns represent specific types of information, from individual months across the construction lifecycle to budgeted/actual/forecasted costs and so on. You can easily wind up with millions of columns. However, there are limits to how many rows and columns spreadsheets can work with. Sure, an expert can come in and create pivot tables and make everything look good and usable, but the pool of pivot table gurus is low. The complexity will get out of hand very quickly on mega projects.
Therefore, you lose any ability to evaluate cost trends, run monthly forecasts and produce accurate reports.
It’s Time to Ask the Tough Questions
“That’s the way we’ve always done it.” It’s a common refrain but a risky one to base operating a business on.
Project sophistication is advancing too much to keep clinging to mismatched technology that was never meant to be a construction tool in the first place. To avoid being left behind, it’s time to get real and ask tough questions about how computer spreadsheet programs may hurt your business.
Avoidable Costs
- What does it cost to pay staff to review spreadsheets and correct data entry and formula mistakes? How much time is being consumed? What other higher-priority tasks could they instead be doing?
- What’s been the costliest mistake discovered in one of your project spreadsheets? Is your company willing to take that chance again?
- How many tech-savvy hires is your company losing out on because you’re not using modern technologies to manage project costs?
Data Integrity
- How confident are you in the accuracy of your data?
- Are you confident in your decisions and forecasts using that data? How have decisions been compromised?
- Do you have a specific person who oversees and validates the accuracy and integrity of your data? What happens if they’re out sick, go on vacation or leave the company?
- Is there control over data access, versioning and security?
Risk Assumptions
- How much financial liability are you willing to assume by continuing to work with computer spreadsheets?
- How much profit are you willing to give up due to their continued use?
- Are there compliance risks incurred by using them?
- How much business are you losing to competitors by not adopting the latest cost management technology?
Investing in a Cost Management Solution
- What is holding your company back from investing in a cloud-based cost management solution: Resistance to change? Skepticism of advanced technology? Worry about not getting a healthy return on investment (ROI)?
- What will you do as more capital project owners require advanced cost management technology to help control project costs?
Embrace a New Approach to Cost Management
If computer spreadsheet programs are still a mainstay at your company, it’s worth evaluating what it’s costing you. Other construction firms have thoroughly reviewed their options and have chosen to abandon spreadsheets and transition to specialized cost management software, like Contruent.
Your company can, too.
Contact us to find out how our solution can positively impact your business or request a demo today!