Copyright to Kim Tremblay, © 2012.
This article is a repeat of an article of the same name first published on December 13, 2011
Reprinted with permission. Published here May 2012

Editor's Note | Introduction | Mistake 1 - Not Getting the Information You Need Up Front
Mistake 2 - Estimating at the Wrong Level | Mistake 3 - Hanging on to Old Technology and Systems
Mistake 4 - Not Using Current Rates and Costs |
Mistake 5 - Failing to Get Supplier/Contractor Quotes | Mistake 6 - Not Dealing with Project Risk
Mistake 7 - Failing to Review Before, During and After | Conclusion

Mistake 3 - Hanging on to Old Technology and Systems

It is so easy to get stuck in our ways, to keep doing what we've always been doing. Most of us have developed an ad hoc system that works for us - perhaps a materials database with average and regional costs; project management software for planning and scheduling; spreadsheets to create estimates; more spreadsheets to track construction project costs, invoicing, change orders and purchase orders; accounting reports to reconcile to our project reports, and a variety of other applications that we might use to report on all of this.

Even if we are aware that technology exists that could make this process much easier, we often struggle along with what we know. Let's admit it, when faced with the choice of purchasing and implementing a new construction project software solution or keep doing what we've been doing - we'll usually put off that necessary decision to find and implement new software. It's human nature - we are creatures of habit.

The problem is that having so many vital construction project cost management activities spread over so many applications makes for an inefficient process, costing us valuable time and effort. Add to this the cost of maintaining all this information in so many different systems, and it's easy to see that sticking with our familiar ways may be a costly decision. We tend to evaluate the purchase of new or different construction project software on whether the investment of time and cost to implement it is worth it. What we also need to consider, however, is whether continuing with our old system is worth the productivity lost.

How to avoid the mistake -
Look for technology that addresses your pain

Once we get past our reluctance to adopt a new technology, what's our next step? Well, a good first step is to evaluate your process as a whole, and identify what your pain is, where your weaknesses or gaps are. For many companies, believe it or not, one of our most beloved business applications is also an application that can result in bottlenecks and weaknesses in your project cost control management. You got it - spreadsheets.

Managing complex construction project estimates requires a lot of information like project resources, current rates, suppliers, subcontractors, customers, change orders, purchase orders, invoicing, etc. Trying to do all of that in a spreadsheet with all the information required is simply trying to do more than what it was intended for. Spreadsheets are fantastic for short-term data storage and creating complex analyses. What they are not - and what many project managers have attempted to turn them into - are dynamic, interactive, scalable project tools.

What you need are tools that you can easily use to create and replicate estimates, track construction project costs quickly and accurately, prepare essential project reports on progress, variance, earned value metrics, and more. Spreadsheets can, of course, do all of these things - but not easily and not without a great deal of programming and effort. And the more programming you put into your spreadsheets, the greater the risk of error. According to research done by the University of Hawaii, "Audits done shows that nearly 90% of the spreadsheets contained serious errors. Code inspection experiments also show that even experienced users have a hard time finding errors succeeding in only finding 54% on average."

The solution to this is in evaluating and acquiring the right software for the right processes in your project management system. Construction project estimating and cost control software that allows you to centrally manage your project information will end up saving you money in two ways - improved estimating and cost control in your projects, and less time spent compiling and manipulating data in your spreadsheets.

Mistake 2 - Estimating at the Wrong Level  Mistake 2 - Estimating at the Wrong Level

1. Panko, Raymond R. What We Know About Spreadsheet Errors, Spreadsheet Research (SSR. 2 16 2009, University of Hawai'i, 27 Feb 2009 http://panko.shidler.hawaii.edu/ssr/Mypapers/whatknow.htm.
 
Home | Issacons | PM Glossary | Papers & Books | Max's Musings
Guest Articles | Contact Info | Search My Site | Site Map | Top of Page