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Saturday, July 3, 2010

Spreadsheet estimating portrays data relationships graphically

What is Spreadsheet
Spreadsheets have been used by accountants for hundreds of years. But computerized or electronic spreadsheets are of much more recent origin.
A spreadsheet is a computer application that simulates a paper, accounting worksheet. It displays multiple cells that together make up a grid consisting of rows and columns, each cell containing either alphanumeric text or numeric values.

Uses of Spreadsheet
This program used for managing, analyzing, and presenting information. Spreadsheets allow information to be sorted or displayed in a chart or graph as well as perform calculations on data. Simply, we can say, it usually provides the ability to portray data relationships graphically.

Helpful for decision making
In the accounting world a spreadsheet was is a large sheet of paper that lays everything out for a businessperson. It spreads or shows all of the costs, income, taxes, etc. on a single sheet of paper for a manager to look at when making a decision.

What is Estimation
Estimation is the calculated approximation of a result which is usable even if input data may be incomplete or uncertain. In project management (i.e., for engineering), accurate estimates are the basis of sound project planning. It is the process of using sample data to provide a single best value for a parameter (such as a mean, proportion, correlation, or effect size), or to provide a range of values in the form of a confidence interval. So “Estimation” is very important for running a successful business.
Benefits of Spreadsheet estimating
Management accountants who are involved in the accounting of retirement benefits can make their work easier by relying on computer spreadsheet technology. Projections from spreadsheets allow management accountants to incorporate magnitude and cost-timing uncertainties that are inherent in retiree benefits plans in the accounting process. As a result, a wide range of potential values for cash flows can be generated.

Usefulness of advanced spreadsheet
Advanced spreadsheet software can be used to replace traditional capital budgeting tools in predicting the likely performance of capital investments. The most common tools, including the compounding formula, the internal rate of return and net present value calculations, assume that their variables are fixed or known numbers and do not allow for variability to incorporate uncertainties, which typify capital investments. A better alternative to these traditional tools is the spreadsheet, which performs sensitivity analysis to help financial managers deal with uncertainty. Through probability distribution, these spreadsheet tools can predict the future performance of capital investments more accurately because it reflects the actual situation more closely.

Reasons for moving to Excel or other spreadsheet estimating:
Many contractors are moving to Excel or other spreadsheet applications instead of database, assembly driven estimating software.
There are many reasons for moving towards MS Excel, including:
• Virtually any estimating process can be automated through an Excel spreadsheet.
• Unlimited flexibility – if you can think it, Excel can often do it.
• Ability to set up an Excel template to your way of estimating or to a company standard.
• Large user base. Excel is currently taught in college and many high schools.
• Training is readily available and affordable.
• Easy to move from a paper spreadsheet system to an electronic spreadsheet. You will not change how you initially build and think through the estimate.
• Excel is more powerful and user friendly than previous spreadsheet applications. You can even link open databases to Excel spreadsheets.
• Lower cost and often higher value.
• Easier to build mathematical and logical formulas.
• Clear audit trail of how the numbers are generated.
As a conclusion we can say in a sentence, with great-looking templates, easy-to-create formulas, and dynamic tables and charts, spreadsheet estimating makes perfect sense to run your business just successfully.

Anurupa Roy
The construction estimating service

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