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Fundamentals of the Location Decision Process

Although today's projects have shorter timelines and can benefit from a plethora of information available on the Internet, the fundamentals of site selection remain unchanged.

2012 Directory
There certainly have been many changes in the economic development and site selection world since I began my career in 1988 working for the state of Indiana's economic development agency, where I believed my degree in political science with a minor in economics would be put to good use. The agency would also expose me to the decision-making processes of small companies and large businesses.

Big Changes
Two of the biggest changes relate to the speed of a project from start to finish and the impact of the Internet on economic development and site selection. It is hard to believe how much was done by phone and "snail" mail in a process that relied on paper documents to gather information.

When I started my career, it was not unusual to see a "regular" project (i.e., no unusual site requirements, abnormally large in scope, etc.) take 12 months from start to finish for a location to be selected. For a large, complicated project, it could take 18-24 months for a company to make a decision as to where to locate a facility. In the "old days," paper RFPs would be sent out to many locations, several site visits would be made, and many rounds of economic development incentives negotiations would take place. The process of collecting information from communities, gathering real estate options, and summarizing data was much more labor-intensive, due to fewer analytical tools being readily available.

The second biggest change in economic development was the development of the Internet as a key tool for the site selection world. When I started in the industry, academia and the federal government were using the Internet as a tool. However, we did not have the ability to access public and proprietary electronic information on different geographic locations that could be used as a part of the process to narrow down sites and communities under consideration for a project. As a result, the quality and timeliness of the data was inferior to what is available to us in today's world.

Fortunately, we have come a long way in economic development and site selection in 20-plus years. None of us can imagine going back to those "caveman" days in our industry.

Opportunities and Challenges
In 2011, we have so much information available to us from a vast array of sources. However, this large amount of information creates some challenges (e.g., deciphering what is most pertinent to the project, summarizing the information in a way in which it can be digested, etc.). The quantity and quality of available information also presents some opportunities (e.g., eliminating locations from consideration, shortening the decision-making timeline, etc.). Although it sounds harsh, it is our job to eliminate locations from consideration - rapidly and based upon detailed analysis. Additionally, readily available, high-quality information greatly reduces the likelihood of any unpleasant surprises during or after the process. No one in our industry likes unpleasant surprises because they usually adversely affect our client companies.

In today's world, a "normal" project might take 4-6 months to complete, and a large project might take 9-12 months to complete. Why has the timeline shortened so quickly? There are a few key reasons behind this timeline change. Companies and site selection firms clearly understand that speed to market is critical. Whether it relates to getting products to market faster, tapping into a new geography for customers, or serving existing customers better, the old adage of "time is money" could not be truer than it is today. In addition, the need to access a new labor market, lower operating costs, or mitigate operational risks has also contributed to the need for projects to move more rapidly than years ago. At the end of the day, time can kill any project, and when this happens, it often leads to missed opportunities and costs businesses money.

For the most part, the Internet has been a tremendous boon for our industry. The ability to gather accurate, up-to-the-minute data allows us to use the highest quality information to complete analysis for our clients. In addition, the availability of electronic data has allowed us to significantly reduce the amount of time it takes to complete the process. The ability to gather, analyze, and transmit data electronically between site selectors and their clients has also allowed for more real-time dialogue and decision-making during the process.

The availability of so much information from public and proprietary sources is a great help to ensuring that a company has the best data available to make the most informed decision. But while the Internet has largely been a very beneficial tool to the economic development and site selection industry, it has also created a few dilemmas for site selectors. In some cases, we find conflicting data for the same topic (e.g., labor, real estate, utilities, etc.). When we find ourselves with data that is skewed in some manner, it is incumbent on us to dig deeper into understanding why there is conflicting data available. In these situations, we typically look for another data set to feed into our analysis; we often contact different organizations to discuss the data presented in order to understand how it was gathered and analyzed. In this way, we can make an independent judgment regarding the best way to interpret and present the data to a company.

The Process
How does the site selection team narrow down the potential locations for a project? Any successful site selection process begins with the development of a strong project team, an excellent set of assumptions, and a list of key decision-drivers. Without the right team and correct assumptions in place, the process cannot deliver optimal results. Some companies present us with a well-defined set of objectives and a team comprised of subject matter experts to work through the process. In other cases, we work closely with client companies to help put these things in place. The key is to assemble the team and define the company's objectives before launching the process.

We always start by using the company's assumptions and key decision drivers for the project. Then, in order to move the process forward to ensure the right decision, it is important to develop two checklists for the project. Checklist 1 focuses on the key milestones in the process. Checklist 2 identifies the key site selection factors that will be considered when making a recommendation. While the milestones are generally the same for most projects, the key factors considered in the decision-making process may be weighted differently, depending on the type of project, the company's culture, the required work force for the location, and other key objectives established by the company for the project.

A company must have a plan in place to optimize results for every project. As stated, it is very important for companies to identify their key criteria and objectives at the outset of the project in order for their site selection team to make a sound recommendation and the company to make the right decision. These decisions have long-term implications for company owners and their employees and customers. Passion and commitment are musts in the economic development and site selection world.

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