Con­struc­tion Man­age­ment in Food - How do you do it?

Now that the market is generally in an upward spiral in economic terms, we see that many food companies are getting back to work with plans for new construction and/or renovation. Often initiated from the need to expand, optimize and/or improve efficiency. At the moment, alternatives are often being looked at from a (new) building that meets the latest food safety requirements and where you can make a better proposition to the customer with an optimal production and logistics process and thereby reduce the cost price. The advantage of new construction in this respect is that you can leave everything that has grown organically behind you and opt for a step forward towards the most optimal design and layout of the building.  

Various SME food companies have involved DAPP in their new-build plans to completely unburden them with regard to the preparation and implementation of their new-build plans, from idea to completion. How do we do that? In this article we provide an overview of the start-up phase with our specific DAPP approach. Once involved in a new construction project, DAPP works from a clearly defined step-by-step plan containing ten different steps. This step-by-step plan has been particularly refined by successively executing construction assignments for various customers in the food world. Time and again it proves that it can be a solid foundation under any new construction or renovation project.

In this article we limit ourselves to the first steps: laying the foundation for decision-making around the Go – No Go.  

The Startup

In line with the vision and mission of the client, the first steps consist of an external (what are the opportunities and threats in our market?) and an internal analysis (what are the strengths and weaknesses of the own organization?) . Bringing the two analyzes together (the IST situation) creates a so-called Confrontation Analysis. This analysis is in turn one of the input documents for a detailed and calculated Business Case and (a few phases later) for an Action Plan.

The choice for a (new) location.

When it comes to new construction, finding a good location is an absolutely important aspect. The criteria we apply when determining the new location are divided into several main groups:

• Construction engineering,
• Social,
• Infrastructural,
• Financial.

The above criteria are assessed at our request by each MT member/Steering Committee member with a weighting of 1-5. In this way we build up a joint shortlist of the ideal SOLL situation. It is important that in this phase of considerations there is always(!) a comparison with the current (IST) situation. In this way, everyone is fully involved in the most important choices and you ensure the maximum buy-in you need for the support of the final proposals. The result of this phase of location selection leads to either a preferred location or, if the differences are small, to a shortlist of possible locations.

The Business Case

Based on the results of the considerations for the preferred location(s), we can quantify the pros and cons. A Business case is created with the classification on three main lines:

1. The initial costs and expected depreciation.
   - The (temporary) double burdens as a result of the period in which you deliver from old buildings and at the same time are busy with new construction.
   - The Removal, delivery and (extra) license costs.
   - The Overall project costs (management) including the transition.
   - A fully external expert/engineering team (whether or not in collaboration with employees of the existing organization).
   - The Elaborations based on end-to-end chain producer to end user.
   - The post contingency (an experience percentage of the total costs).
2. The ongoing charges with the associated depreciation. This part is an elaboration based on the extensive inventory of the (internal) IST situation. Many of the estimated costs are passed on based on the employer's costs (eg personnel and resources). Other principles:
   - Combat or mitigate the (extra) costs as efficiently as possible (e.g. use the existing inventory and/or current processes where possible).
   - Estimated investments based on depreciation periods as currently applied to the existing organization.
   - The financial calculation of various scenario(s) based on rental, purchase or lease construction.
   - Estimating the quality level of the employees. Can they participate in the project themselves or do external parties need to be engaged in certain places.
   - What will be the interest charges + amortization period?
3. The proceeds or benefits of the entire transition.
   -We calculate with a financial margin over a well-defined period (eg one year).
   - We estimate the growth of turnover and/or estimate the margin.
   - We try to estimate the synergy and consolidation percentages to be achieved. When do these apply or not?
   - The same applies to an estimate of the Business Process Optimization percentage. When does this apply or not?

In working towards a Go – No Go, the Business Case is essential. The more solid the business case has been worked out, the easier it becomes to come to a decision. It is essential in the business case to separate main and side issues as much as possible.

Finally

On the basis of our instruments and documents, we are able to work towards the right decision-making. If the decision is a Go, we make a next step with the preparation of the construction process using a Program of Requirements/Assumptions.

We can imagine that you think the process described above comes across as labor intensive and time consuming. It is labor intensive. However, by deploying our experts in the various sub-areas with our flexible approach, we can complete this phase very efficiently and quickly. In less than 6 calendar weeks you will have insight into the business case, the design and the basic engineering, based on which you can decide to take the next step.

Do you have plans for new construction yourself? Talk to DAPP about it. A single conversation can be very enlightening for you.