Spreadsheets are a great tool, but they can lead to expensive mistakes. PAUL WALLBANK
By Paul Wallbank
In these days of email and the web, we forget that the humble spreadsheet was the original killer app that put computers into businesses. The spreadsheet remains one of the most powerful business computer tools.
But like all powerful tools, incorrect use can be costly and damaging. Particularly when you do things in a hurry.
Barclays Bank learned this the hard way during the recent sale of Lehman Brothers assets in New York. An overworked junior lawyer working for Barclays made a small formatting mistake in an Excel spreadsheet and lumbered his client with a 179 unwanted financial contracts.
The lawyers are now working frantically in the courts to unwind the mistake. This is an expensive and embarrassing situation for everyone concerned, but mistakes like this aren’t unusual.
The worst example I’ve seen was a hotel construction project in Thailand where the winning tenderer managed to exclude the lighting system from the total. This was a 673 million baht mistake, or $35 million at the prevailing exchange rate.
Of course they won the tender, as they were $30 million cheaper than the next guy.
A friend of mine in the building industry claims nearly half the successful tenders he sees won are because someone missed something in the total, usually because of a spreadsheet error.
Thankfully I’ve never personally made mistakes of those magnitudes, but I’ve been caught out when I’ve made last minute changes and a line item has been missed in the totals.
One common problem is the GST line manages to wriggle out of the total, giving the customer an inadvertent 9% discount.
So check your spreadsheets carefully, and try to avoid doing them in a last minute rush. Particularly if you haven’t had a good night’s sleep.