In the 70’s I had my first experience of a Hewlett Packard programmable calculator. It was a delight to use, beautifully made with a robust, solid feel to it. The reverse polish notation was more logical and seemed less prone to errors than my other calculator. The program functions were impressive, it also came with a thick manual of programs that solved complex problems. I used this all the way through university and still prefer it after 25 years of engineering problem solving.
It was said at the time that there was more computing power in this little calculator than on the first Apollo mission to the moon. I don’t know if that is entirely true but it did raise some interesting possibilities and opened the imagination as to what else might be possible with a tool as powerful as this.
Fast forward to the present and you are very unlikely to rely on a programmable calculator to make the journey to the moon and back safely. We have systems that are much more advanced to minimise the risks of such a journey.
So while a trip to the moon may still be planned and executed on a HP calculator (in a Hollywood feature perhaps), it would of course be foolish to do so.
Enter the spreadsheet
In the world of business systems there is a similar challenge. When they first came out, spreadsheets were seen for their potential as powerful tools that could organise information and perform calculations in a way that was more flexible and accessible than ever before.
The growth of Excel to practically dominate the world of spreadsheets in every respect has been based on the underlying power and ease of use of a spreadsheet. I love Excel for that reason.
Much like the HP programmable calculator, Excel has enough computing power to get you to the moon and back if used correctly.
In the world of business Excel can in theory handle the most complex of problems and serve as your only business system.
In practice however no-one would use a spreadsheet to run a modern business, in the same way that you would not use a calculator to get to the moon and back.
Modern business systems have now evolved to a level of maturity and sophistication that have seen them become pervasive in all companies. Why don’t nearly all of these companies run their financials on spreadsheets?
Spreadsheets and Project Controls – how far should you go?
In the world of project controls it is theoretically possible to run a complex project on a spreadsheet. Given the right level of skill and discipline; a spreadsheet can do all the cost calculations, forecasts, manage procurement and so on. And in some situations this is all that is required.
But in the absence of some of the enabling factors, spreadsheets can rapidly become unmanageable.
Because of their ease of use everyone becomes an instant “expert”. Your project control documents soon start resembling electronic scraps of paper rather than a streamlined business process. Formulas become overly complex and prone to errors. The logic becomes unwieldy and requires a specialist to unravel. Multiple copies and versions of the sheets themselves find their way around the company – there is no audit trail anymore and there is no single version of the truth.
The flexibility and accessibility of a spreadsheet soon becomes its own worst enemy as it spirals out of control to the point where the information becomes both unreliable and inaccurate. Soon you become dependent on Joe. Joe is the only guy who understands the spreadsheet model that is controlling millions in capital expenditure. And Joe is becoming increasingly dedicated to keeping his sheets under control, he has no time left to do his real work of project controls.
Most spreadsheets end up in the equivalent of a paper shredder, the ubiquitous recycle bin, or even worse they drift about on your corporate network in multiple versions that have no owner anymore.
Project Controls Systems
A properly designed system for project controls will eliminate electronic scraps of paper by ensuring that all data is stored in a central location. This central database becomes the one version of the truth.
A properly designed project controls system will ensure that the disciplines are followed in capturing data and in the underlying business processes.
A properly designed project controls system reinforces business processes through workflow that ensures that the right decisions are made by the right people at the right time with the right information.
A properly designed project controls system will survive the departure of key people like Joe; because the system has been designed and programmed in line with standards and recognised business processes that can be easily picked up by someone else.
I sometimes get asked why it is necessary to invest in a well designed software application when in theory it is possible to do “everything” in a spreadsheet.
My answer is along the lines of the trip to the moon, just because you can do it with a certain tool does not mean that this is the best choice for the job.
“But spreadsheets are cheaper than complex database systems”.
Think carefully about that statement. This is certainly not always true if a total cost of ownership is considered. Apart from the cost of maintaining your scraps of paper in terms of productivity, slow response, multiple versions, catering for the loss of Joe, handling data reentry errors, and the consequences of poor information for decision making – the cost of software goes far beyond the price of the software package.
When it comes to managing resources that do not belong to you (i.e. investors money), you want to use the best software tools that minimise the risks of errors. Electronic scraps of paper have their uses in early prototyping. But eventually the unavoidable happens, the investment in a proper system is necessary when measured against the potential chaos and poor decisions that could result from your stack of spreadsheets.
Project cost control systems are no different. Eigasoft has released several versions of Costrac that cater for the different information requirements for different project circumstances. From the smaller independent practitioner Costrac Desktop Edition provides the full power of the Costrac system in a format that runs on a single PC without an enterprise network. Consider this the next step up from a spreadsheet solution. Costrac Server Edition is ideal for the larger projects where there is an existing enterprise IT infrastructure through which information can be integrated, consolidated and reported on across an enterprise.
Costrac is the right tool for project cost control. I have seen our partners help clients solve the most complex project challenges. Except to get to the moon!
If you have any experiences with spreadsheets to control projects good or bad let us know. And if there are any suggestions on how to improve this article feel free to leave a comment.