Government derailed by spreadsheet errors

Government derailed by spreadsheet errors

The Deal EconomyDecember 28, 2012


The fiasco of the West Coast mainline rail bidding process has brought the potential pitfalls of spreadsheet reliance to national attention.

Quite apart from embarrassing the Department for Transport and the Government as a whole, the DfT announced last week that the cost to the taxpayer of the bidding scandal has now risen to £55m and counting.

Issues within the bidding process were revealed after Richard Branson’s Virgin Trains issued a formal complaint after missing out on the contract to continue running the line to First Group.

A subsequent investigation into the bidding process by a team of accountants from PWC revealed that the spreadsheet from which all calculations were derived was fundamentally flawed.

The discovery was made after officials explored a complex economic model — known as the GDP resilience model — which was designed by the Department of Transport to rigorously assess the risk attached to bids and the amount of money that should be put up as deposit.

PWC accountants found that the spreadsheet used was riddled with errors and double counting with some figures failing to take inflation into account. Furthermore, the wrong formulas were used to calculate variants such as future revenues and passenger numbers and there was no auditing in place to check the veracity of the process.

The issues highlighted by the West Coast rail debacle remain merely the tip of the iceberg

To compound these errors, a version of the flawed model was sent to train companies to devise their bids, which meant these crucial mistakes were disseminated throughout the bidding process.

In a statement to the House of Commons, minister of transport Patrick McLoughlin described the entire process as having a proliferation of ’serious errors’.

This incident comes as little surprise to Enable with much of our work involving the designing and deploying of bespoke software to replace chaotic spreadsheets that are or have become unsuitable for the purpose they were intended for.

In particular, Enable has undertaken many projects to replace spreadsheets to ensure organizations are providing quality data and avoiding the kind of data entry error, oversight and loss of data seen in the West Coast rail debacle.

In this scenario, Enable typically provides a web-based centralized system developed to the particular requirements of the organization to capture and report on key information, often across disparate sites.

But the issues highlighted by the West Coast rail debacle remain merely the tip of the iceberg when it comes to the risks associated with the extensive use of spreadsheets in business. Enable-developed systems provide a single version of the truth through centralized software as opposed to locally saved spreadsheets which provide an often confused patchwork of different versions to users.

With the high profile spreadsheet issues experienced by the Government’s rail service bidding process raising awareness of this risk, Enable hopes that companies will take this opportunity to ensure they are not leaving themselves open to error and mismanagement in this area.

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Government derailed by spreadsheet errors


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