● Most construction companies still rely on spreadsheets for critical back-office functions.
● Spreadsheets present immense risks to your organization in areas like security, scalability, variability, and errors.
● Construction companies looking to win at digitization need the right back-office intelligence to promote front-office transformations.
According to research, 81 percent of businesses use spreadsheets daily, and construction companies are some of the worst offenders. Virtually every CFM uses spreadsheets during their day-to-day operations — with the majority of construction companies relying heavily on spreadsheets or spreadsheet-ERP combos to manage financials.
But do spreadsheets make sense in today's digital ecosystem? Even if we ignore the relatively complicated nature of spreadsheets (i.e., lots of mathematical formulas, tons of data entry, and a lackluster user interface), the role of spreadsheets needs to be questioned. In 2021, almost every construction company is hot-on-the-heels of digital transformation. And this front-office digitization doesn't always play nice with archaic back-office technology like spreadsheets.
Construction's Spreadsheet Issue
Yes, construction has a spreadsheet problem. For years, Excel has been a critical weapon in the construction data arsenal. But those formula-drenched monstrosities have trouble measuring up in today's rapid-fire data analytics ecosystem. Unfortunately, many construction companies still cling to old rituals and avoid ever-terrifying change management.
Spreadsheets have use cases. But they shouldn't be the heart or brains of your corporate strategy. Let's take a look at a few reasons why spreadsheets create friction and pain points in today's data ecosystem.
● Lack of collaboration: Spreadsheets are great at organizing data. But they're very poor at organizing data in a collaborative manner. One person can work on a spreadsheet at a time, and any data sharing has to take place in small bubbles — and never in real-time. Of course, sharing data in spreadsheets isn't always easy to begin with. Often, tribal knowledge consumes spreadsheet teams. Massive financial projection documents are often soaked in formulas, cells, and numbers. Unless you created the spreadsheet, you may not know how to decipher its secrets without significant effort and pour-over.
● Cybersecurity issues: Spreadsheets have very little built-in security. Beyond cell locking, most construction company spreadsheets are largely protected by a simple log-in password. That's a problem. A recent Forrester report suggested that 75 percent of AEC companies experienced a cybersecurity event in the past month. You need more than a single password to protect your company against multi-million-dollar blunders. To make matters worse, over 35 percent of finance and accounting departments primarily rely on spreadsheets for decision-making. This isn't industry-specific, and we would guess that construction rates are higher than many other, more digitized, industries.
● Manual data input: 90 percent of spreadsheets have errors. This shouldn't surprise anyone. We're sure you're all used to dealing with the occasional #REF! and #N/A. But what about all the improperly inserted data points that don't display errors? Those data points are now fueling decision-making, despite being incorrectly entered by employees. And to be clear, it's not their fault. The benchmark (across all industries) for manual data entry is a 1% error rate. Think of how many characters are in your average Excel document. Over time, these errors accumulate and disrupt the overall health of your decision-making process.
● Too much variability: No two spreadsheets are built the same. Each person uses Excel differently, and most construction firms operate without a standardized Excel process. This lack of standardization generates tribal knowledge, creates time burdens, and sows confusion.
● Lack of scalability: Anytime you need to add new data to a spreadsheet, you have two options. You can create a new spreadsheet or add data to an existing spreadsheet. Both have their issues. Every new spreadsheet you create adds a new burden to your data processing flow. Opening and sifting through a mountain of spreadsheets isn't exactly easy, fun, or insightful. If you attempt to continuously scale the same spreadsheet, errors start to compound, formulas start to increase in density, and complexity becomes a serious issue.
● Static data: Spreadsheet data is static. In the past, static data was fine; companies barely had any data to manage. But with the average mid-market construction company handling a massive 162.9TB of data, static data doesn't cut it. You need real-time insights.
So, we have this large bucket of issues. What's the solution? After all, one reason spreadsheets are so commonplace in construction is that they do work. They may not be perfect. But construction companies have, especially in the past, operated with spreadsheets successfully. However, things have changed. Thirty-three percent of construction companies are adopting drones, robots, and GPS-guided equipment to offset labor shortages, and 77 percent are adopting 4IR (4th Industrial Revolution) technology (e.g., IoT sensors, data analytics, etc.) Do spreadsheets make sense in the context of these digitally-soaked solutions that emphasize real-time data consumption?
The Role of CPM in Today's Digital Economy
Recently, PwC and Oxford Economics studied the impact of digital investments in AEC companies. Here's what they found:
● Digital investments have not generated value for many AEC players.
● Digital investments are not compensation for lack of skilled labor well.
● Digital investments have been a crutch in most companies — not an accelerator.
Sounds rough. But they also found the reason. There is "a critical misalignment of early digital and business strategies." Construction companies are rapidly investing in amazing technologies like IoT, but they aren't aligning digital investments with business strategy. In other words, does it make sense to have IoT tech but still use spreadsheets to understand finances, demand, and projects?
Digitization requires you to rethink your entire business. You need to align your digital execution with top-level strategy. CPM solutions help you align back-office requirements (e.g., financials, forecasting, WIP, etc.) with front-office investments (e.g., IoT, robots, drones, etc.) For example, Briq is capable of producing hyper-intelligent financial forecasts (based on thousands of data feeds), generating project-centric analytics, automating mundane tasks, and forecasting project requirements in half the time at triple the accuracy of other modern tools.
Unlike spreadsheets, Briq uses intelligence, AI, machine learning, and real-time data feeds to generate immensely accurate and instantly useful financial information. In turn, these forecasts help you understand project requirements, manage digital investments, and fuel digitization across your entire organization.
In other words, you can't half-digitize. To succeed at digitization and reap the immense rewards (i.e., average 15 percent productivity gains and 6 percent cost reduction), you need to bind every digital investment to strategy. And that requires ditching the spreadsheets and leveraging hyper-intelligent platforms that glue financials, project analytics, and automation to investment strategies.
Briq is a corporate performance management platform built specifically for construction financial professionals.
We join modern technology with hundreds of years of combined construction experience to give you deep insights into your business.
Briq unifies your financial workflows, making them more efficient, accurate and timely.
By automating workflows, consolidating financial data, and enabling real-time reporting, we allow contractors to make efficient and effective financial decisions.