The Most Expensive Spreadsheet I've Seen

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The age of excess. We were at the end of a decade long economic boom. The massive growth was underpinned by gigantic resource contracts. Mining start ups were floated making their owners overnight mining magnates, without having dug anything out of the ground. The median house price had tripled in some capital cities, and engineering salaries had increased across the board.

In the midst of this, I was running an invited tender for an engineering firm. We needed a way to forecast the cost of projects whose assets alone run into the tens of millions of dollars. Three engineering consultancies submitted bids, one bid in particular changed the way I see business forever.

Just a Spreadsheet

This particular company met with me in person. A senior partner and an engineering manager came to our head office in Melbourne to talk about the tender. They had already done this exact same job for another company in New Zealand. Their forecasting tool was written a few years ago and was still used today. Getting our job done was going to be low risk, because they already had the expertise. They had also worked on so many engineering projects that they had access to very detailed historical cost information that could populate our forecasting tool.

I was excited. Here was this large engineering firm that had taken the time to visit, and had already done the job before. None of the other invited companies saw us in person.

Then I read their proposal.

Their description, which spread over many pages, boiled down to a spreadsheet that would be populated by a junior engineer, and checked off by the senior engineer. They would not provide detailed costs to populate the forecast and instead use some more generic ones they had access to.

I was a little disappointed.

Looking back, I am not sure what it was that I was expecting. But I thought that maybe it would be something more permanent than a spreadsheet made by someone fresh out of uni.

But that isn’t what changed my view of business forever. It was their price.

$200,000

Plus an amount equivalent to $60,000 per year to keep it up to date with the latest in industry trends.

I thought, “Surely if they can ask for so much money for this work, then any competent person would make a killing”. Within three months I resigned and started my own consultancy.

That time was a turning point in Australia. It was the tip of a very high peak. Since that point growth has been slow. Engineering consultancies have cut staff and the lucky remaining engineers get paid 9 day fortnights. Council and government consulting jobs are few and far between.

What would they quote now for that same spreadsheet?

But that isn’t the point

When I left those years ago, I was sure that the moral of the story was that clients didn’t want a spreadsheet. It was unprofessional for them to offer us such a tool written with VBA code. Clients wanted a real database with a beautifully designed front-end. Not so.

They couldn’t care less. So long as it works as advertised.

You see, the point wasn’t that we are spending $200k on a spreadsheet. It was the data inside that was valuable all along. A graduate could whip up a database + front-end in less than a week. But who would have the knowledge and experience to fill it with cost estimates for equipment whose costs are so high that you cannot even ring for a quote?

Anyone can create a polished looking product, to win real contracts, you need to know your trade.

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