Badge’s Clint Aird outlines the basics of facility expansion.
Do you need to physically build more capability into your business? When looking to expand your food or beverage processing facility, building works are frequently required.
The world of construction can be a confusing place, however, with its numerous layers of legislation and regulation, combined with the commercial risks of latent conditions and other unforeseen costs.
If you’re about to embark on a building journey, it is important to consider a whole range of factors, and while condensing them into a single article isn’t possible, here are several key issues you should consider well before you turn any dirt.
Strategy
Knowing where you and going and how you are getting there is an important area that is frequently overlooked.
The idea of developing a strategy around procuring building works seems strange, but we are not talking about digging holes and pouring concrete here.
List out your key drivers for the project to get a clear picture on what is really crucial.
Time
Is time mission critical? Will finishing your new production line late by a week introduce penalty clauses under a key supply contract?
Working backward from your end date is the way to begin.
Rushing early activities to hit milestones might keep management happy and provide short term gains, but being able to demonstrate a clear plan long term will bring you best results.
Giving a builder two weeks to tender a project also means you will likely miss out on competitive quotes from quality subcontractors who are busy quoting work in their own tender pipeline.
Scope
The clearer you can define your scope, the better the results you will achieve.
Work backwards from what you need to achieve in terms of things like outputs, rates and volumes per hour.
Engage with your internal stakeholders to clearly define what you need.
Changes to scope are far easier to make on paper, so get your consensus early on key decisions.
Successful process buildings integrate tightly with process operations – if your process needs to be developed then you will benefit from engaging the right consultants or constructors to oversee this.
Cost
With your scope set out, get input from the right people to form project budgets.
Beware of square metre rates for an insulated panel box.
Fire protection, mechanical services, egress lighting, drainage, cleaning stations and a myriad of things are scope that the local concreter may not consider when quoting figures for your feasibility.
Finding out your business case has fallen to pieces after going to tender is not a good outcome.
Talk to reputable builders with food and beverage experience, or look for a cost planner who has a track record of working in food and beverage to get good advice.
Commercial engagement
If you undertake building works yourself, you will need to have a good understanding of legislation and regulation including OH&S and Building Code, while if you decide to use a builder, issues such as latent conditions, inclement weather, delay costs, liquidated damages, extensions of time and more need to be understood and set out in the contract.
Don’t be afraid to ask your potential builder for guidance on all of these issues.
