A company experiencing continuous growth, planned to invest in a new production plant, on its existing site, in an effort to align with its growth strategy. 

However, during the concept phase, it became apparent that the initial investment costs for the planned new building would significantly exceed its budget. This prompted the need for another planning loop to compare the planned demolition and new construction with upgrading the existing building structure. 

In both scenarios, integrating new machine technology and future technologies was guaranteed.

Achieving the goal
The company’s objective was a reduction of the initially calculated investment costs by about 40%. To achieve these reductions, there are a number of approaches to take, including:

1. Analyze the current building fabric and evaluate the necessary investment costs for partial demolition, upgrading, and measures of the building envelope.
2. Comparison of the investment costs for demolition and new construction versus upgrading the existing structure.
3. Identify limitations due to the existing building structure and their influence on the planned machine technology and efficient production processes.
4. Feasibility and risk assessment of the two variants regarding production processes, technologies, and automation.
5. Creation of a step-by-step plan that enables the implementation of demolition and new construction. Development of this plan will help reduce investment costs.

Customer benefits/results
There are a number of benefits that can be achieved. For instance, the comparison of the calculations showed that upgrading the existing building structures does not bring any significant investment savings.

Thanks to the step-by-step plan developed, the investment costs could be reduced to such an extent that demolition and new construction are economically feasible. The necessary competencies could then be transferred to the new location step-by-step. Administration and peripheral areas will remain at the existing location. Later, expansion options and evolutionary stages are retained and can be installed during ongoing production.

The step-by-step plan ensures maximum flexibility and customization options. The company's strategic development will remain secure for the next 5-10 years.

Results:

• The comparison of the calculations showed that upgrading the existing building structures does not bring any significant investment savings.
• Thanks to the step-by-step plan developed, the investment costs could be reduced to such an extent that demolition and new construction are economically feasible.
• The necessary competencies will be transferred to the new location step-by-step. Administration and peripheral areas will remain at the existing location.
• Later expansion options and evolutionary stages are retained and can be installed during ongoing production.
• The step-by-step plan ensures maximum flexibility and customization options. The company's strategic development will remain secure for the next 5-10 years.

Source: Cornelius Timmermann, senior consultant at Lignum Consulting, provides expert guidance to enhance operational efficiency and growth. He can be reached at c.timmermann@lignum-consulting.