Workbench Blog

Spreadsheets are great but are they costing you money?

[fa icon="calendar"] 26-Jul-2019 13:35:56 / by Justin Gardner

Justin Gardner

ProjectFinance

"There is a point at which a project gets too big to manage via spreadsheets."

This could be due to a number of factors :

  • Duration - a project that spans months or maybe years
  • Complexity - the level of detail to break down and manage costs becomes unmanageable
  • Collaboration - a number of people may need to access / view / update the project information and spreadsheets are notoriously bad for doing this.

When a project gets out of control the first thing that normally suffers is an accurate reported position of where the project is at.

This often directly affects how much money you are invoicing to your clients. Most businesses bill at the end of the month, one of the fundamental measures of what to bill is understanding where you are at in your project.

Costs against budget, hours to date, materials received these are all important measurements of progress and an important guide when invoicing. 

By moving data back and forth through spreadsheets, a lot of the time the right areas don’t get updated simultaneously.  Corrections don't get addressed and often formulas and data entry mistakes go unnoticed, often for long periods of time.

The first type of job this happens to is cost reimbursable jobs. When you on-charge all your inputs to your client than it is imperative that all costs are in at the end of the month so they can be billed.

Have you ever used a subcontractor that sends in their timesheets a month late, or they update them a few weeks later without letting anyone know? Often in a manual system the first thing that happens is those timesheets will not be billed ever! On the next month you will be billing for the next months costs and those timesheets will potentially sit there, unbilled. 

Even if you do regularly reconcile your spreadsheets often there is debate over what is the right source of truth. Accounts will be reporting a number but you can be sure that the project manager will be adamant that his spreadsheet is correct. So now you have a problem with what the company is reporting and what is being reflected on your projects. At this point alot of businesses find it too hard to sort this out so they just continue on hoping it will magicly resolve itself.

Unfortunately this is not normally the case. You may choose to review a bad project once it is completed and you will probably find numerous issues, costs not billed, variations not captured etc. Unfortunately  once the project is over the client is not interested in your problems and you will wear any of these additional costs.  Or they may never be found as the Finance Team simply can’t figure out how the spreadsheets work as Project Managers tend to morph their spreadsheets into something only they can understand.

Great software captures data efficiently and manages it for you so you can focus on managing issues, it ensures the data makes it to the correct areas in real time. So even if the subcontractoris late in submitting the timesheet in Workbench, it will appear in the next billing cycle and you will be able to get paid for the work that has been done. This is so basic, yet you will be amazed how common not billing the work you have done can be. Don’t let it happen in your business.

 

Special thanks to Melbourne Consultant Simon Skowronski for contributing this artice.

Topics: Cost Management, Construction Industry, Management, Accounting, Workbench, Spreadsheets

Justin Gardner

Written by Justin Gardner

Senior Workbench Consultant based in Melbourne Australia.