6 Reasons Spreadsheets are Terrible for Value Engineering
When you mention the term “value engineering” you almost always get two related responses. The first response is usually a qualified acceptance of the term with the caveat that it isn’t really fair to the process: there’s more to it than that. They’ll then list other more appropriate terms like value analysis, risks and opportunities, or cost reduction. There’s too much complexity in the value engineering process for a simple term to easily convey.
The second common response is often nonverbal in the form of a somewhat soured expression. Maybe this is due to some of the frustrations often experienced during the value engineering process itself, where behaviors and motivations of others are sometimes misunderstood. For example, contractors often feel that, with each new estimate, they’re always the bearer of bad news to the owner. Similarly, architects sometimes feel that their design work is being questioned or criticized.
Interestingly, you can think of spreadsheets in a similar way.
The name spreadsheet arguably originated from the paper ledgers used in accounting as a way to convey what was introduced in the early days of personal computing. Yet modern digital spreadsheets can do so much more than their paper analogs: that name hardly does the tool justice.
Most people find that all that flexibility quickly takes you to the point where you cross the threshold from utility to complexity. Big spreadsheets often create concerns about data integrity, incorrect formulas, sharing it with peers, etc. So it’s not uncommon for people to also have an emotional reaction to the use of spreadsheets for certain tasks: all that flexibility also brings a fair amount of risk.
So it’s ironic that one of the primary tools used to manage the value engineering process is a spreadsheet.
There are many times when a spreadsheet is the correct tool for a particular task, such as when you want to sort and pivot data to look for patterns. And there are many situations where using a spreadsheet creates significant business risks, such as the following scenarios.
1 | Data Integrity
We’ve heard of numerous examples of how data integrity becomes a major issue.
One example involved a preconstruction manager busily updating information in a coordination meeting. Their firm liked to have a percent risk multiplier associated with the options being evaluated as a way to qualify the confidence of an estimate. This person accidentally typed in 500% instead of 50% on an option estimated to have a cost impact of several million dollars. This rippled through the spreadsheet and later ended up setting off alarm bells within the management team when the huge cost implication was shared with a very upset owner.
It’s easy to type an extra digit when entering numbers. It’s also easy to introduce an error due to an incorrect cell reference or formula miscalculation. It’s doubly difficult to find that innocuous error later, especially when you’ve got twenty tabs, thousands of items in each, and cross-references throughout!
Spreadsheets just don’t protect you from making mistakes unless you go to extreme efforts like locking down cells or creating large numbers of lookups for dropdown options. The net result to these protective measures is further complexity that can easily be sidestepped by just creating another spreadsheet without any of these safeguards.
2 | Collaborating with Multiple Stakeholders
You want input and feedback. But sharing a spreadsheet file among a distributed team can create a lot of headaches. Often you end up with different versions of the spreadsheet that you later have to merge back together. Or a single person is responsible for the spreadsheet as a way to introduce quality control but often ends up being a bottleneck when overwhelmed by inputs from phone, email, text messages, etc.
When you do have multiple collaborators on a spreadsheet, you also want a log of who made changes. A desktop, file-based spreadsheet tool like Excel doesn’t do this very well. Hosted spreadsheet tools like Smartsheets can help with collaboration and change logs, but data integrity remains a fundamental risk across the board.
3 | Versions of a Spreadsheet Diverge in an Organization
Version control is another challenge with spreadsheets and its often managed by creating multiple copies of the spreadsheet file as the value engineering process proceeds. This gets exacerbated when you have spreadsheets that propagate across multiple offices where modifications are introduced and you now have no method of standards and quality control.
Nearly every general contractor I know of has this problem and ends up spending inordinate amounts of time trying to establish a common standard. Only to have that standard diverge yet again.
4 | Integration with Other Business Workflow Activities
We use a lot of different software products to help with our productivity. In design-build you may be using a building information modeling product like Autodesk Revit, an estimating product like CostX or Winest, a bidding product like Building Connected, and Procore during execution. You’re also using business productivity tools like your email application, time tracking tools, and your cell phone.
Getting your spreadsheets to talk to all these different applications is possible, but it’s complicated and very fragile. Expect a fairly high level of maintenance headaches if you decide to go down this path. Most don’t do integrations and so they fall back to double or triple data entry in these disparate systems.
5 | Consistent Presentation Models for Specific Stakeholders
Wouldn’t it be nice to know you’ve always got a nice graphical presentation ready for the meeting with your client the owner? And a different detailed chart of items ready for some specific discussions with the design team? Yes, you can create some nice charts, graphs and reports from spreadsheets, but you usually have to do some work to pull them together.
You also don’t have any control over the one person on your team that really likes to use a completely different way of color coding results so you’re having to mentally reset to interpret the results. Just simple changes in how color or fonts are used hinders the ability to digest information when you have to mentally reset to interpret the results from different stakeholders.
6 | Real-Time Aggregation of Spreadsheet Data into Business Analytics
Management really needs to know if a project is going south. The best way to interpret a project is through a set of metrics that compares it to similar projects to know if it’s within an acceptable deviation range.
Aggregating this information for a recurring Monday morning management meeting is a reasonable business request. Having to pull this information from a number of distributed, nonstandardized spreadsheets requires time and expense that cuts into productivity and profit margins. Not doing it creates potentially huge risks for the business.
So, Why are We Still Doing it Like This?
So with all these risks, why do we use a spreadsheet for the value engineering process?
Historically, there hasn’t been any digital tool that addresses this process, and with the popularity and ubiquity of Microsoft Excel and Google Sheets, these tools have become the defacto standards. They’re both inexpensive and relatively easy to understand. But that ease of understanding rapidly declines when you’re trying to utilize a spreadsheet to model a complex business workflow like value engineering.
Those involved in the value engineering process would be much better served by a collaborative, digitally optimized software solution built specifically to address these workflow activities.
Join is one such company that is doing this. With the emergence of preconstruction as a primary opportunity to digitally evaluate options prior to committing resources, we now have a significant opportunity to really assess value in the sense the term value engineering has always implied.
But you’ll need to ditch your spreadsheet to do this.