Avoiding Expensive Pitfalls During the Site Selection Process
Selecting a new site for a company's facility involves a considerable amount of time and money, but a thorough, expert site investigation is well worth the investment.
Alexandra Segers, General Manager Southeast, SSOE Group and Jeff Caldwell, Program Manager, SSOE Group (July 2011)
A lot hinges on finding just the right site for a facility. The search and selection must be based on long-term business goals and objectives rather than flashy incentives and tax breaks that don't consider the true "lay of the land" and the long-term operating needs of the facility.
The individuals charged with conducting the company's location search - and those individuals and organizations that they employ - must not only be capable of performing the site search, but they must also follow an approach that focuses on understanding the business and matching the chosen location to its goals.
A Job for Pros
It's critical to be able to recognize the considerations that must be addressed. Sad but true, not every resource that raises up a hand to offer site selection services has the knowledge and skill to do a smart, thorough job. Like those responsible for this snafu:
The company, an international automaker that was opening a plant in the United States, had a site, a plan, and a project deadline. Its first site glitch was the discovery, during construction, of a creek that had to be rerouted. The next "oopsy" was when the bulldozers encountered a rock bed that had to be blasted out of the way. The final blow was finding that its chosen site was home to an endangered species.
This was not a case of bad luck. These were three costly oversights that could have been avoided. The company's site selection team should have conducted the appropriate studies to identify any and every body of water. This would have necessitated testing the soil not only for rock, but also for other characteristics, and a thorough investigation also would have revealed if there were endangered species occupying the property.
Who Should You Trust?
As a long list of unfortunate individuals who sunk too much money into site preparation would be eager to point out, a "commercial real estate company" is not always synonymous with "qualified site selection firm." Let's talk about some key differences between the two.
Real estate brokers make money on commission. They are likely to be biased for one site over another for reasons that have nothing to do with the client company's needs. The best ones may offer basic information about zoning, access to utilities, and possibly permits. That leaves a lot of sinkholes they simply don't look for.
Those responsible for helping with a company's location decision should instead employ qualified organizations that can leverage architectural, engineering, and construction management expertise, using a detailed checklist of attributes in determining the suitability of a site. These attributes include environmental considerations, access to transportation, access to utilities, soil conditions, amount of cut and fill required, air quality, various codes, and permitting (federal, state, and local) requirements. Companies lacking in-house staff who are experts on these topics should hire consultants who have such expertise. The only bias these consultants should show is toward the client company's best interests.
Seeing the Big Picture
Compare these checklist items to running a battery of medical tests. If you want to interpret the results correctly, you have to know a lot about the patient. In the same way, you have to thoroughly understand what the company is going to do with the site in order to evaluate it fairly. Site selection firms operating with the client's needs in mind start the process by studying the client's business and what it has planned for this particular parcel of land - down to the details. That puts them in a position to determine the "must haves" and "nice-to-haves" of a site.
Transportation is a good example. In one instance, a firm conducted a search and recommended its client purchased a site in a hilly region in the northeastern United States for its new production facility. However, a hilly terrain and rugged winter weather was a bad combination for a company whose "must haves" included reliable truck access. It's obvious the site selection team that recommended this site forgot that it needed to support the function of the facility. Tunnel vision is the enemy of site selection, i.e., the macro level (does the site need to be near an airport?) is equally important as the micro (will the two-lane road be wide enough?).
What kind of in-house expertise does a firm need in order to properly perform a location search? Can you provide an example of a company that called in expert consultants after undertaking the process themselves and realizing they did not have the expertise to perform the due diligence? How did this affect the site search process and results?
Many problems can arise if a site search isn't started by an experienced team or if they get involved too late in the process. More
- Alexandra Segers, General Manager Southeast, SSOE Group