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Cost Tracking

Six Pitfalls of Excel in Commercial Real Estate Cost Tracking

Spreadsheet software Microsoft Excel recently celebrated its 30th birthday, and for the majority of its existence, has been the industry standard in addressing businesses’ statistical, engineering, and financial needs. However, its capabilities remain limited, and the software wasn’t originally designed to perform for today’s tremendous collaboration—an environment in which the commercial real estate and construction industries thrive.

Many companies turn to Excel for the simple fact that it is the industry standard and because most users have a working knowledge of the program. According to data from Microsoft, more than 1.2 billion people use the Microsoft Office Suite—one in seven people on the planet.

But should it be the standard for bid management, cost tracking and reporting processes, which involve multiple players, frequent updates, and the need to manipulate data?

Good project management—especially cost tracking—requires meaningful and timely reporting, and if data is misrepresented, incomplete, inaccurate, or doesn’t represent the needed business case to move a project or decision forward, it can easily delay a project.

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Here are six pitfalls when it comes to using Excel to project costs, level bids and report results: 

1. It silos information

Real estate decision makers need to be able to analyze collected, centralized data to come to faster, better, and more complete conclusions. Excel often isolates this data. Data is hard to access and very difficult to compare.

2. It’s susceptible to human error

Good project reporting requires accurate financial information. From typos to misaligned rows and forgotten negative signs, it’s easy to miss an inaccuracy in Excel, especially when there are sheets upon sheets of data. The result can range from a small delay in selecting a vendor to a consequential misunderstanding of the risk involved in the project.

No software can prevent all human error, but many are designed to automatically call attention to deviations and inconsistencies. Your team cannot be expected to check every cell in a spreadsheet with the same level of diligence.


Don't miss this: Quickbase highlights how even one mistake in a spreadsheet can cost a company millions of dollars.


3. It’s time consuming

Without proper organization, Excel can slow down all aspects of project management. Sheets may be copied and end up with wrong formulas or inaccurate data; it’s often difficult reconciling multiple versions of the same spreadsheet; and you must wait for everyone to take turns making revisions.

4. It requires impeccable organization

Managing multiple versions of a spreadsheet requires standardized procedures, including naming and numbering. And you have to make sure all team members are following that procedure—not an easy task, and one that grows more difficult with a larger team.

5. Customization requires deep knowledge

Creating complex Excel spreadsheets is comparable to developing custom software. You must have someone with a deeper understanding of Excel to create such customization, which costs money to develop and maintain. What if that person leaves the company—does someone else understand the concepts used to create the customized spreadsheet?

6. Security is limited

While it’s possible to password protect a worksheet or workbook elements, IT consultant Susan Harkins points out that it doesn’t prevent users from accessing confidential or sensitive data in willful abuse situations. There’s also a threat of losing copious information if the spreadsheet is hacked into, hit by a virus, experiences data corruption, or isn’t properly backed up in the instance of computer failure.

For the commercial real estate and construction industries, it's critical to find a software option that offers the familiar capabilities available in Excel, but address many of its limitations as well. For instance, Honest Building has the technology to centralize project cost tracking and procurement activities, automate workflows, standardize reporting, and build a searchable and secure system of record across owners' portfolios. There are systems in place to prevent versioning problems, as well as protect intellectual capital. Whatever steps you’ve taken within the software, the team is notified—so everyone’s on the same page, whether a team member is in the office on a laptop, on the field with a tablet, or on a train with a smartphone.

 Download The Fundamentals of Cost Tracking [GUIDE]

 

Pauline Nee

Written by Pauline Nee

Pauline is the head of content for Honest Buildings. For over twelve years in the commercial real estate industry, she has held diverse roles focused on product development, digital marketing, user research, web design and arts programming.