Spreadsheet Errors
- 1. Spreadsheet ErrorsDesigning Financial Models That WorkDmitry Stechny
- 2. Error RatesConsultants claim that based on practical experience 20-40% of all spreadsheets contain errors
- 3. Coopers and Lybrand in England found that 90% of all spreadsheets with more than 150 rows contained errors.
- 4. High error rate in spreadsheets consistent with data on human error rates from other work domainsTypes of ErrorsLogic errors – are errors in fundamental reasoning. Usually caused by incorrect assumptions made at the beginning.
- 5. Mechanical errors – typically data entry typos and wrong cell references
- 6. Omission errors – something is left out.What causes errorsTime deficiency- about 18% of projects are rushedOverconfidence- Brown & Gould study discovered that most of the “very confident” spreadsheet developers made at least one error when they were asked to build three models. Overall 63% of spreadsheets had errors.Lack of comprehensive corporate policies for spreadsheet development- only a small percentage of companies has rules when it comes to spreadsheet development
- 7. Techniques to minimize spreadsheet errorsSet corporate standard and guidelines for spreadsheet development and framework for all users.
- 8. Set procedures for data entry
- 9. Always ballpark number to check for obvious mistakes
- 10. Double-check your spreadsheet. Have others check your work.