Question

The controller of a construction company used a spreadsheet to develop a bid on a multi-million dollar office complex. At the last minute he made a change and included $254,000 for overhead expenses he had forgotten about earlier. He inserted this number at the top of a column of numbers. Unfortunately the $254,000 was not included in the final total and the contract was underbid by that amount. The construction company was awarded the contract and was forced to make good on its unrealistically low estimate. Seeking to recover its losses, the construction company took the software vendor to court. Should the construction company "win" its lawsuit against the software vendor? Why or why not? What was the probable cause of the error?

Answer 1

Construction company will lose the lawsuit against the software vendor as the probable cause of error involved in the above mentioned incident is "Human Error". Human Error is something which was not desired by the person, however he made the error unintentionally for which there can be many reasons such as inadequate review, doing things at the last moment etc.

A spreadsheet is a software which is used world-wide by many types of users. If used correctly, spreadsheet would not have caused this problem. Since the number was entered at the last moment in a hurry and on the top of a column of numbers, the person entering the number might have input the number into the cell but forgot to include that cell in the SUM formula used in the spreadsheet and hence that number was left out of the total entered in the bidding process causing a loss of 254,000$ to the construction company because of their own fault.

Hence it is a human error and the software company is not liable for any damages at all. Such big contracts should always be reviewed before bidding and such a simple error would have been found out in the proof reading had the construction company not entered the amount at the last moment.