While there are many ways that a computer can help you to run your business more efficiently, computers should not be viewed as more than the business tools that they are. For some reason, computers have been viewed by many as almost mystical beings that can do no wrong. How many times have you heard someone say, "the computer says...so it must be right"?

There is a danger in putting too much faith in "what the computer says", because, the computer really only says what we tell it (directly or indirectly) to say. The computer is no substitute for sound business judgment, and if your judgment tells you the computer is wrong, it could be.

The computer is no substitute for sound business judgment...

In our software business many customers often ask why we don’t supply the unit prices of the materials listed in the estimating program. They state that it would be much easier for the computer to simply plug in the prices for lumber and other items than it is to call up a vendor and check the price. On that point we agree. It certainly is easier for the computer to "pop" prices into your estimate, but let’s think about the validity of those prices.

There are several factors to take into account with any price / cost database.

• Time passes.
• Prices change.
• Prices differ by region.
• The "list" price may not be the price you pay.

With those factors in mind, how could you trust any of the prices to be accurate for your company’s specific situation. Taking the points listed above in order;

1. You don’t know how long ago the price list was compiled. It could be several months old.
2. If it is old, chances are high that most of the prices have changed. Building materials prices are volatile, and will change many times in a year.
3. If the price list was written in the north of the country how accurate will the prices be for southerners? Shipping can be a large portion of the final cost you pay for materials, so where you are affects your price.
4. There are also regional supply and demand forces that affect prices in one area but not another. Regional disasters such as floods and hurricanes can raise prices for the region while other areas experience little or no price increases.
5. There are many factors that figure into your final price. While the price list may list wholesale prices for materials, you may actually buy from a "full service" vendor. With this vendor your prices will be considerably higher because you are also paying for the services that the vendor provides such as take-offs or free delivery to job sites.

A final point to consider is human error. The prices in a computer database or a price book could just be wrong. There are literally thousands of items in a construction estimate, and it is not inconceivable that someone could make a mistake entering the prices.

With these thoughts in mind, always use your personal judgment when deciding whether to trust the "opinion" of any business tool that you use. While it is true that Unit Cost or Square Foot price lists can save you time, we all know that they can’t be accurate for each different builder. There is no prize for finishing your estimates in 15 minutes with a bogus bottom line. If your price is too high, you’ll get no customers, if it’s too low, you’re headed for trouble.

While ... Unit Cost or Square Foot price lists can save you time, ...they can’t be accurate for each different builder

As business people we must not let the ease that computers bring remove us from the driver’s seat. We have the ultimate responsibility for our own businesses, and therefore we must each decide on where and when to defer to the computer.

Add-Vantage Software Inc.   PO Box 173   Medway, MA 02053   tel: 800-768-5636   fax: 508-533-5266   e-mail: info @ addvantage.com