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Chapter 5: Spreadsheet Engineering

The Art of Modeling with Spreadsheets

S.G. Powell and K.R. Baker

© John Wiley and Sons, Inc.

PowerPoint Slides Prepared By:Tava Olsen Washington University in St. Louis

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Spreadsheet Engineering

Builders use blueprints or plans Without plans structures will fail to be effective

Advanced planning in any sort of design can speed up implementation

Spreadsheets are no different from other arenas of design Engineering and advanced planning aids

effectiveness

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Spreadsheet Design

An efficient process minimizes time spent An effective process yields results that meet

users’ requirements Good design helps analysts spend the

majority of their effort improving decisions, rather than building and fixing models

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Spreadsheet Errors

Many, perhaps most, spreadsheets contain internal errors Errors multiply with use

A variety of empirical studies have been performed All show spreadsheet errors to be common Users are overconfident

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The Phases of Spreadsheet Modeling

Designing Building Testing

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Designing a Spreadsheet

Plan Modularize Start small Parameterize Design for use Keep it simple Design for communication Document important data and formulas

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Plan

“Measure twice, cut once” Will decrease time spent correcting mistakes Turn computer off and think before beginning Begin with a sketch

Physical layout of major elements Rough indication of calculation flow

Anticipate model’s ultimate uses

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Modularize

Group like items and separate unlike items Separate

Data Decision variables Outcome measures Detailed calculations

Influence diagrams aid with this design Formulas should generally reference cells above

and to the left

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Start Small

Sketch full design but do not build all at once Isolate one module then build and test that

module Local mistakes much easier to detect than

when part of the global model

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Parameterize

Place parameters in a single location away from calculations

Formulas should only contain cell references, not numerical values

Assists in: Identifying parameters Sensitivity anlysis Documentation

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Design for Use

Anticipate who will use spreadsheet What type of questions will be asked?

Make it easy to change common parameters Make it easy to find key outputs

Group in one place Include graphs of outputs Record numerical values of base case outputs

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Keep It Simple

Complex spreadsheets: Require more time and effort to build Are much more difficult to debug

Keep formulas short Decompose complex calculations into

intermediate steps

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Design for Communication

Spreadsheets’ lives are often longer than expected

Use visual cues that reinforce model’s logic Use informative labels Use blank spaces Use outlines, color, bold fonts, as appropriate

Split windows can aid in viewing

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Document Important Data and Formulas

Record source for important parametersExplain important formulasUse Cell Comments to describe cell

contentsConsider a separate module to list

assumptions

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Cell Comments

Insert – Comment to add documentation to a cell Tools – Options – View gives different display

options Comment & indicator – permanently display comment Indicator – red triangle indicates comment, display when

cursor in cell None – neither comment nor indicator visible

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Workbook Design

Use separate sheets to group similar kinds of information

Design workbooks for ease of navigation Protect workbooks from unwanted changes

during use

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Use Separate Sheets to Group Similar Kinds of Information

Makes model easier for outsider to use Isolate technical details of model Bring assumptions and results to the fore Users should only interact with a few, easily

recognized, sheets

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Design Workbooks for Ease of Navigation

Any form of structural help for users is beneficial

Use revealing names for individual sheets Double-click on name tab at bottom of

spreadsheet to edit name

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Protect Workbooks From Unwanted Changes During Use

Lock cells not to be changed Use worksheet protection Use data validation

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Locking Cells

To lock all cells Select entire worksheet Select Format – Cells – Protection and check the

box for locked To unlock variable cells

Select desired cells Select Format – Cells – Protection and uncheck

the box for locked

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Protecting Worksheets

Tools – Protection – Protect Sheet At top of Protect Sheet window check box for

Protect worksheet If check only Select Unlocked Cells

User will be able to only select and modify unlocked cells

If check Select Locked and Unlocked Cells User will be able to select any cell but only modify

unlocked cells

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Data Validation

Controls input values Highlight cells then click Data – Validation Three tabs

Settings: Restrict inputs (e.g., range of cell values)

Input Message: Create message when cursor on cell

Error Alert: Alert for invalid entry

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Building a Spreadsheet

Follow a plan Build one module at a time Predict the outcome of each formula Copy and paste formulas carefully Use relative and absolute addressing to simplify

copying Use the Function Wizard to ensure correct syntax Use range names to make formulas easy to read Use dummy input data to make errors stand out

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Copying and Pasting Formulas

Copying (rather than retyping) reduces the potential for typographical errors

Copying can also be a source of bugs e.g., wrong range copied

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Relative and Absolute Addressing

Necessary for efficient copying An address such as B7 is relative

In cell A6, B7 represents one row down and one column to the right

If copied, new formula will refer to new cell that is one row down and one column to the right

An address such as $B$6 is absolute Cell will not change if formula is copied Use for parameter values

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Function Wizard

The button fx brings up the function wizard

Contains a complete list of all Excel functions

Selecting a function will bring up a window showing needed inputs

Function value will be shown in window automatically

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Range Names

Any cell or range of cells may be named Name or cell reference may be used in formulas

Names easier to debug and use Require extra work to enter and maintain Select Insert – Name – Define to assign a name Pull-down window at top left of spreadsheet

Shows all named cells for workbook Can be used to enter individual cell names

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Testing a Spreadsheet

Check that numerical results look plausible Check that formulas are correct Test that model performance is plausible

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Check That Numerical Results Look Plausible

Make rough estimates Check with a calculator Test extreme cases

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Check That Formulas Are Correct

Check manually Display individual cell references Display all formulas Use the auditing tools Use error checking

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Checking Formulas Manually

Visually audit formula each cell at a time Most effective when range names used Tends to be tedious

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Displaying Individual Cell References

Press F2 or double-click on cell of interest Reveals formula with color-coded cell

references Stronger visual clues than manual checking

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Display All Formulas

Hold down control key and press tilde key All formulas are displayed Makes for easier scanning Aids in detecting deviations from patterns Reverse by repeating Control – Tilde

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Using the Auditing Tools

Identifies predecessors and successors of cells Select Tools – Auditing – Show Auditing Toolbar

to display auditing toolbar Trace Precedents

Colored arrows to predecessors

Trace Dependents Colored arrows to successors

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Error Checking

Tab under Tools – Options Available in Excel 2002 and later versions Equivalent of grammar checking in word

processing Cells with possible errors are flagged with

colored triangle

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Errors Checked Under Automatic Error Checking

Evaluates to error value Text date with 2 digit years Number stored as text Inconsistent formula in region Formula omits cells in region Unlocked cells containing formulas Formulas referring to empty cells

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Test That Model Performance Is Plausible

Model should react in a plausible manner to a range of inputs

The user should be content with trends in output based on varying inputs

Sensitivity testing (Chapter 6) is an important tool to test plausibility

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Summary

Spreadsheets deserve careful engineering Most spreadsheets contain errors Users are over confident about their models

Rules for spreadsheet modeling Designing a spreadsheet Designing a workbook Building a spreadsheet Testing a spreadsheet