It’s a good time to build
Lower labor and material costs make it a good time to build a new food plant or distribution facility. Yet most post prospective greenfield facility owners often don’t plan enough time to develop an accurate and detailed project schedule.
Here’s a behind-the-scenes look at construction trends to help you make the best informed decision. First, let’s briefly look at costs. Remember that global demand for steel and oil affect the costs of these materials in any food distribution center or processing facility project. With steel we’re talking about building steel, storage racks, refrigeration piping and equipment, more piping for sprinklers and plumbing, HVAC duct work and equipment, dock levelers, reinforcing steel and other products. Meanwhile, oil costs figure into roof membrane materials, floor and roofing insulation, insulated panels and even paint and carpet.
Most importantly, we saw steel costs stabilize during 2011. And although average union wages rose slightly in 2011 from the previous year, the overall impact of increased labor costs generally has had a negligible impact on construction costs.
Our customers can benefit from another factor. A slow work environment is prompting subcontractors to price work more competitively. In many cases, marginal subcontractors have left the marketplace. Those who remain are pricing more aggressively to maintain and retain their trained workforce.
YOU’LL NEED TIME … TO WAIT
Land acquisition is the first step in any project development. Unfortunately, the saying, “They’re not making any more [land],” could not be more true.
Most importantly, we saw steel costs stabilize during 2011 … [ and] subcontractors … are pricing more aggressively
No owner, builder or developer needs to be reminded that the approval and land entitlement process gets longer, more complicated and more expensive with each day.
We typically encounter three barriers to development: municipalities, whose understaffed and inexperienced planning and zone departments are swamped by the sheer number of permit applications; the Army Corps of Engineers, which sometimes goes to unreasonable lengths to protect water resources; and community associations, which seek to limit development.
Expect road blocks in the site acquisition process. They will occur. Be sure your project schedule accounts for some measure of extra time.
Most companies looking to undertake a greenfield project will underestimate the length of time to get through the regulatory environment. You may hear one thing when state, county or city officials lure you to invest in their community. However, more times than not, those parties have departed once the property is secured. Then we encounter a more “business as usual” approach. This is when outside factors come into play and often delay construction.
By Brad Barke
Barke, President of ES/ Constructors, has 30 years of experience in upper management, estimating, and sales for food and industrial facilities.