Why spreadsheets are not the right tool for estimation

Posted by Hadeel Dabbagh on March 26, 2023

Spreadsheets are a commonly used tool across the construction industry, from finance, project management and reporting. They are a powerful tool for organizing data, performing calculations, and creating charts and graphs. However, when it comes to estimation, are spreadsheets the right tool to use?

Estimation is a collaborative process

Estimation often involves a team of people, and spreadsheets are simply not designed for collaboration. Sharing spreadsheets poses several challenges for estimators working in teams. One of the biggest challenges is that the format and formulas used may not be well-understood by everyone, leading to confusion and errors. Moreover, the manual entry of formulas and data can be a recipe for disaster, as accidental changes can lead to incorrect estimates. Despite the common use of shared folders, there is a strong tendency for estimators to create their own versions of spreadsheets - leading to discrepancies and uncertainty in version control.

Spreadsheets are not databases

Spreadsheets are excellent for data manipulation, but are not designed for data storage and organization. This is particularly true when it comes to estimating using a modular or building block approach where previous estimations are re-used for things like resources, activities and standard items. Re-entering these each time can be time-consuming and error-prone when managed in spreadsheets as opposed to a database application.

Spreadsheets fall short for detailed cost breakdown analysis

While spreadsheets can suffice for high-level cost estimates based on the estimator's experience, they often fall short when it comes to detailed cost breakdowns. To achieve the level of accuracy necessary for competitive bidding and generate reports for different departments, a detailed breakdown of all labor, equipment and material costs is necessary. This level of detail is required for budget reports for finance, activity reports for planning as well as detailed resource breakdown reports for procurement and can be very difficult to produce using just spreadsheets.

Estimation with multiple sets of quantities

Estimating cost and price using two sets of quantities can quickly become complex when using spreadsheets. If you need to calculate costs based on both client quantities and take-off quantities, the complexity of a spreadsheet can double. This is where a database application, specifically designed to handle multiple sets of quantities, comes in handy. It can easily manage and calculate costs based on multiple sets of quantities, making the estimation process more accurate and efficient. By using a specialized database application, you can streamline your estimation process and reduce the risk of errors due to complex calculations.

Last minute changes to estimates?

Making last-minute changes to a bid proposal can be a daunting task for estimators. Shortly before bid submission, management often requests changes based on various what-if scenarios, such as reducing the cost of equipment or negotiating with subcontractors for a discount. These changes can be time-consuming to apply in a spreadsheet estimate, leading to delays and inaccuracies. However, a database application, specifically designed to handle these types of scenarios, can quickly implement changes in a matter of seconds. With a specialized tool, estimators can ensure that the best proposal is submitted on time and with accuracy, giving their organization a competitive edge.

Spreadsheets and indirect cost calculation

Calculating and distributing indirect costs can be a complex task when using spreadsheets. While a simple percentage markup is sometimes applied equally to all items, more often than not, indirect cost calculation requires its own full-fledged estimation, similar to direct items. Additionally, the distribution of indirect cost may need to be unevenly distributed in some circumstances, leading to even more manual manipulation within spreadsheets. A specialized estimation application can simplify indirect cost estimation and enable the distribution of indirect costs in strategic ways to achieve the target price.

The old way is not always the best way!

If you are hesitant about moving away from spreadsheets, keep the above points in mind. You might feel that spreadsheets are the way to go because they are commonly used for tendering and cost data. However, it’s important to note that some specialized estimation applications are highly compatible with most spreadsheet applications, so you can get the best of both worlds and use the right tool for the task at hand.

Interested in seeing an alternative that will help you improve estimation efficiency, accuracy, and results? Schedule a session with us to learn more.

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