Cost Estimating with Microsoft Excel Is a Bad Idea

6 reasons why estimating with Microsoft Excel isn’t optimal

In the world of software, there’s hardly any tool that is more hated and loved at the same time as Excel. Some think it’s great because of its functionalities, others despise it for just the same. Most will agree it’s easy to learn but hard to master. In this blog, I won’t take sides. I’ll just point out why Excel isn’t suitable for estimating project costs, falling behind the capabilities of dedicated cost estimation tools. Of course, Excel has a number of direct advantages. It is readily available in every organisation and almost everyone has a basic knowledge on how to work with it. It also allows for a completely custom setup to suit the person who needs to work with it.

1. Small errors can cause major problems

Although its limitless flexibility can be considered an advantage, the way Excel is set up can lead to a small typo in a nested formula somewhere on the twentieth sheet having a major impact on the end result of your cost estimate. There’s no easy checking of errors or mistakes, and fixing something is hard when you don’t know where to look. Using dedicated cost estimating software like Cleopatra reduces the risk of errors dramatically by using predefined cost models and calculations. Furthermore, if you accidentally enter some incorrect figures, the reporting tool along with cost breakdown structures and hierarchical cost levels will enable you to quickly restore the mistake.

2. Lack of automation

The never ending drive for efficiency and cost reductions lead us to pursue automation of tasks at every level of the organization, including cost estimating. Unfortunately, Excel lacks the capability of importing i.e. material take off sheets into an existing estimate, without the use of large databases which slows it down dramatically, especially if the used wording is not exactly as expected. Or how about alteration of certain parts of your estimate with strong interdependence? Combining predefined cost models based on real parameters? Sure, there’s VBA. But that’s hardly entry-level usage and requires quite some programming skills. Luckily, there are software systems that do support automation.

3. Limited learning abilities

What I mean by that, is that no project stands on its own. Rather, you’ll probably have multiple projects within your company every year. Your cost estimators will always have to learn from previous projects, which ensures ever increasing efficiency and accuracy of your estimates. But how do you implement that learning cycle in an Excel based estimate? Other than used placing two Excel sheets next to each other and doing a simple comparison: you won’t. There’s no cross section analysis, nor core value evaluation or any other analysis that goes beyond the obvious. Therefore, rather than estimating with Microsoft Excel, make sure to use software that enables you to analyse past projects and implement gained knowledge in the next project so that don’t waste what you’ve got.

4. It was never meant to handle large amounts of data

Ever tried to run some formulas in a spreadsheet containing a massive amount of data? No matter what kind of super computer you’re using, Excel will eventually slow down to the point at which it comes up with an all too familiar notice: “Excel has stopped working”. This is not because it’s not well-designed; it was simply never meant to be a database tool. However, once you realize that the increasing complexity of the projects we try to estimate causes the number of components in an average estimate to exceed tens of thousands of items, you’ll understand you are going to need a dedicated tool that is designed with this challenge in mind.

5. Reporting in Excel is time-consuming

Sure, Excel can be used for reporting. You can draw up some graphs and diagrams with sometimes surprising aesthetic features. But how many hours have you spend on the appearance of a spreadsheet, and had to do it all over again for the next? And when you have large amounts of data, you don’t want to spend many hours on a report that you’ll have to adjust every time the data itself gets an update. And let’s be honest, a pie or bar chart might simply not do the trick anymore. Not only will you benefit from a software solution that simplifies reporting and saves you a lot of time, it will also benefit the managers who have to make decisions based on these reports.

6. You’ll never work alone

As a main solution for small projects, Excel might work great. However, you hardly ever run a project alone. And we all know how hard it can be to share a document and keep track of all changes. Dedicated cost estimating software like Cleopatra Enterprise have been built with your team in mind. It not only allows you to share from local to worldwide, but also incorporates a workflow tool which helps to automate version control. Cleopatra Enterprise uses a centralized database system. This eliminates the scores of local files out of the grasp of your security and maintenance guidelines. Imagine the consequences of unauthorized access to your calculations. With Cleopatra Enterprise you know your knowledge is safe and well-guarded.

Are you still using Excel for estimating project costs and are you curious about how Cleopatra Enterprise can be advantageous to your organization? Feel free to contact us or request a demo.