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INDUSTRY comment
Spreadsheets in construction: Friend or foe?
Barry Chapman, Managing Director at Chalkstring, explains why spreadsheets can leave
construction projects open to risk - and contracting businesses out of pocket
The construction industry is second
to last when it comes to
technology adoption, according to
the 2016 KMPG Construction
Technology Report. Ahead of only
agriculture, we trail behind all other
industries. It's therefore not surprising
that 69% of construction businesses
admit they are either following the
industry or are behind the curve when it
comes to technology adoption.
From experience in providing project
cost control software to construction
contractors at Chalkstring, it seems that
many businesses have made the move
towards digitisation by replacing
historically manual cost management
processes with electronic versions of the
same process. Despite there being a
wealth of construction software available,
contracting has generally seen a migration
from paper to spreadsheets, with the more
progressive companies using several
software packages to deliver projects.
What's clear though is that very few
contracting businesses are truly
harnessing technology to deliver projects
in a fully integrated and efficient way.
It begs the question, in this digital world
where integrated construction software
exists, why is there an inherent
dependency on spreadsheets to deliver
multimillion- and even billion-pound
projects? And more importantly, what is
the impact of over-reliance on these
spreadsheets for project delivery?
SPREADSHEETS - THE DEFAULT
CONSTRUCTION TOOL
Spreadsheets are ever-present in
construction, with project teams relying
on numerous worksheets to manage
critical business and project information.
From estimating departments creating
tenders, through to Quantity Surveyors
(QS) managing onsite costs, variations
and progress, and even Business
Owners determining project profit levels,
spreadsheets are often the 'go to' option.
Versatile and able to deal with large
volumes of data, spreadsheets are
without doubt powerful. However,
construction projects are often complex,
and therefore the spreadsheets used to
deliver those projects must mirror this
complexity. The fact that the majority of
spreadsheets are uncontrolled and not
audited only amplifies the risk.
Although many businesses seek
standardised templates, the inner
workings of spreadsheets are often
known only to the author, with complex
formulae, pivot tables and macros used
to manipulate and connect large
volumes of data.
Although spreadsheets may link to
each other there is little integration with
other software packages, and
maintaining real-time data across an
entire project is nigh on impossible.
At a practical level, vital information sits
in silos, on servers and local hard drives,
making version control difficult - thus
increasing the risk of the project team
using outdated information. And
because spreadsheets are often
bespoke, sharing data across a project
team can be difficult often resulting in rekeyed
data and loss of productivity.
LIKELY TO CONTAIN ERRORS
Considering the sheer volume of
disconnected spreadsheets used across
a typical project, a certain level of human
error is inevitable. Indeed, a Forbes
study found that 88% of all spreadsheets
contain significant errors, demonstrating
how vulnerable and exposed to risk the
industry is with its overdependency on
spreadsheets.
By way of example - a Chalkstring
subcontractor client recently shared a
real story whereby their project showed
an unexpected £35k loss. The
discrepancy was flagged because the
figures produced by Chalkstring for an
application for payment did not match
those of the main contractor. After
comparing Chalkstring's data against the
main contractor's spreadsheet, it was
found that the spreadsheet template
contained an error, shaving £35k off the
subcontractor's bottom line. It later
became apparent that the main
contractor had been using the same
template across multiple projects, hence
other subcontractors were potentially left
thousands of pounds out of pocket.
RIGHT TOOL FOR THE JOB?
It's not just the risk of errors we should
be concerned about. Should we be
relying on such a generic tool to manage
specific construction workflows and
processes? Using the analogy of a Swiss
army knife, Excel is a versatile utility tool,
but if you needed to cut a log in two,
you'd probably use a proper saw rather
than the one of the many tools on the
penknife. If you were serious, you'd use
the purpose-built, right tool for the job.
It's the same with the construction
industry - why are we determined to use
software that hasn't been designed
specifically for construction purposes?
And what is the impact of this?
According to the 2016 Construction
Technology Report, 67% of the industry
is monitoring live project performance
using spreadsheets or other manual
methods. This means that critical
business information that drives cash
flow and other financial decisions, is
being collated using numerous
unconnected worksheets, rather than
optimised, real-time software.
Most contractors use spreadsheets to
painstakingly create Cost Value
20
November/December 2018