Facility Planning: Knowing What You Don't Know

For three years our firm had participated in off-and-on discussions with an Ohio-based snack food manufacturer. Originally, the discussions centered around design and construction of a new 250,000 sq. ft. production plant to replace an aging existing facility, which was about the same size. However, when the phone call finally came, it was not what we had hoped; in fact, it was more of a bad news / good news conversation.

The bad news was that corporate management had elected to postpone moving forward with the new facility for five years. At that time, they planned to make a decision about either building a new plant and renovating the existing plant for warehouse and office space, or else fully-renovating the existing manufacturing operation.

Unfortunately, the client had invested very little capital in the existing plant over the prior three years in anticipation of their new “Plant-of-the-Future” becoming a reality. Maintenance was deferred, wherever possible, and replacement of major mechanical and electrical equipment postponed, even though the equipment was well beyond its useful life. Furthermore, there were plenty of retrofits needed to support a growing production schedule for the next several years.

The good news was that the client had decided to commission our firm to conduct a fast-track five-year facility plan to identify the scope of work needed, a schedule for completion, and a budget for the renovations and upgrades.

Based upon the expedited schedule and amount of work required, we developed the following framework:

Facility Condition Assessment (FCA)
– Survey of the existing facility to identify all the deferred maintenance items as well as upgrades needed to bring the building into conformance with current SQF, Life-Safety, and ADA codes. We also agreed to look at energy-reduction retrofits that could realize a payback of fewer than five years.

Brainstorming – Meet with all the department managers within the plant to identify all the facility projects required to meet upcoming production, quality, and employee welfare requirements. Special emphasis would be placed on prioritizing renovations necessary to minimize the risk of plant shutdowns due to equipment failures or safety incidents.

Draft Facility Plan – Develop rough scopes and budgets for each of the identified projects. Ultimately, several projects were combined while others were separated into multiple phases. Some projects had to be split into study and implementation phases, as the solution was not readily-apparent and budget projections could range widely until a better investigation of existing conditions and possible solutions were completed.

Finalize Facility Plan – Part of the response to the plan by the occupant managers was to set aside about a third of the projects whose payback period would go beyond Year 5. These projects would be reconsidered if the long-term decision was to renovate the existing building rather than build a new one. Some projects were added, including those that had longer paybacks because they would be needed whether the facility continued as a manufacturing site or was converted to house warehousing and offices.


Unsurprisingly, of the 95 projects that were identified through the Brainstorming process, all but 20 proposed by the building occupants also appeared on the list from the initial FCA walk-through.

Our final report presented a schedule and budget for renovations over the next five years, and the estimated cost in Year 6 to fully update the plant. The latter cost would become a benchmark of comparison as part of the decision-making process on whether or not to construct a new replacement facility.

How would the cost of extending the life of the existing plant by ten years compare with the all-in costs of building a new plant? The total renovation budget in the plan exceeded our client’s initial projections. This result likely hinged the long-term decision on the impact to the production schedule of renovating a building in phases during operations while maintaining SQF standards, or moving and re-calibrating production and testing equipment.

When the client began this process, they didn’t know what they didn’t know. However, through the combination of a Facility Condition Assessment and Brainstorming with occupant managers, we were able to develop a five-year facilities plan that filled in a lot of the blanks, including budget and schedule, ultimately providing more detail to corporate management to have confidence when making their decision on whether to build new or renovate.

Questions about Facility Condition Assessments or Facility Strategic Planning? Contact Josh Millman at 717.434.1570 or email him at jmillman@nutecgroup.com.