Ten Rules of Cost: Rule #1

Rule #1 – It’s Gotta Add Up

Sounds simple, right?

Make a list of numbers. Add them up.

How hard can it be?

My first cost gig was an oil refinery fire repair project, located a couple of hours north of the middle of nowhere. Every day of downtime was revenue forever lost. We worked outside of most normal corporate processes. I hung on for dear life.

Armed with Lotus 123 and a reporting add-in, my computer guru and I assembled our numbers for the weekly cost and forecast reports. Then, we laid them out for the client and management team to do client and management team things.

One week, we got the summons to the office of the Big Cheese. “Something’s not adding up.”

Gulp.

Fraud? Misspending of funds? Forecasts outside of expectation? The ‘no-cost-for-you’ team lobster party had snuck into the project costs?

No. Literally, the totals didn’t match the details on our report. And it was quite a substantial discrepancy. It turns out we assumed one list would always equal another. We assumed wrong.

Fortunately, aside from a dent in egos and reputation, no cost engineers were harmed in that error.

I wish I could say I discovered Rule #1 that day. Unfortunately, it wasn’t the first time I had bashed up against the can’t-see-how-it-adds up rocks.

But, I did finally learn Cost Rule #1 that day.

The simplest way for people to understand your system, or report, or spreadsheet, is to show them how to do the math themselves.

The lesson was simple. Lay it out cleanly. Let everyone see the numbers in a way they can play along at home. If they want to.

Are you building cost control software for construction? Make sure there’s a way for people to understand what’s behind the numbers, and do the math themselves if need be. Your users, and your software team, will really appreciate it.

Are you authoring a cost report? Structure it with simple lists, with subtotals literally summing the items vs being calculated somewhere else, not relying on other data they can’t see.

Are you building a spreadsheet? Build the smarts into figuring out what data should appear where, but then make the columns and rows simply add up.

The consumers of your product will love you. Or, at least they will understand you, which is a great start.

There’s Cost Rule #1 in a nutshell. It’s gotta add up. Show them how it adds up. Make it easy for people to do just that. But, it does beg the question – what is the “it” being added up?

We’ll discuss that next time with Cost Rules #2 and #3 .