The greenfield factory journey: Phase 2

Executing your greenfield factory

Developing a greenfield site and bringing it online can take three to five years, so we’ve broken down the journey into four phases and 12 steps. When managing a large-scale manufacturing project, this second phase—executing—is key to keeping the overall greenfield factory project on time and on budget. Execution starts with sourcing and industrial procurement, as this enables all tangible activities through construction and commissioning. This second phase takes an average of 12 to 36 months to complete.

Step 4: Industrial procurement

Manufacturing organizations embarking on a greenfield factory journey may not appreciate the magnitude of the effort required to effectively execute and manage a large-scale project. Consider tapping into additional resources in these following areas.

Sourcing
To establish the new manufacturing capacity, a broad range of materials and supplies must be procured, from construction materials to industrial equipment to new consumables. A sourcing strategy can help address concerns, such as procuring long lead-time materials early, pursuing multiple sources to de-risk the supply and delivery of critical items, and using suppliers who are nearby, which may reduce costs and create goodwill with the local area.

Tapping into local service vendors is time-consuming and may require in-person meetings and field visits. If organizations want to onboard a new supplier, they must gather pertinent information and submit it for internal approval and system setup. Depending on the size of the greenfield project, its success may depend on supplementing the current workforce with additional resources who can handle multiple supplier onboardings.

Contracts
If an architect and/or a general contractor has been identified to build the factory, there is a significant effort required to negotiate a contract and perform a legal review to protect the company. When other new suppliers are identified to provide goods and services, a Master Services Agreement is usually written up. The process of writing these agreements and getting stakeholder approval can take a significant amount time, and organizations should supplement internal staff with contractors who can develop, review, and approve contracts quickly.

Funding
When building a greenfield factory, a high-level budget is usually locked in. However, every project and sub-project supporting the factory typically needs review and final approval. Depending on the processes for securing and approving capital expenditures (CapEx), there may be a significant amount of work required to build and approve requests. Bringing in outside help to facilitate this mountain of work may be necessary. It may also help to have an outside perspective to identify opportunities to streamline the CapEx approval processes so it doesn’t become a bottleneck to executing work. There may also be opportunities to leverage alternate financing options, such as federal grant funding.

Step 5: Construction

There are many things that can go wrong in the construction phase, from unrealistic expectations to long lead times for materials and equipment, to lack of skilled labor and availability of specialized equipment. Developing the right strategy will help mitigate risks and improve the project performance.

Design and build
An integrated design and build approach offers numerous advantages over a traditional waterfall or sequential method in which design is done first, then construction follows. Using the same firm for both design and build means you get the expertise, commitment, and availability of resources for construction, along with the skill sets of an architect and engineer for design. Benefits of streamlining this process include simplifying designing, planning, and building processes through a single point of contact; fewer disputes, interruptions, and delays, making it easier to stay on schedule; and lower overall costs.

Prefabrication and offsite construction
Another great time and cost savings approach is to identify opportunities up front where fabrication of subassemblies, sections, modules, etc. can be done offsite, then brought onsite for final installation.

One of the biggest advantages of prefabrication and offsite construction is the ability to reduce project timelines. Traditional construction methods often involve sequential tasks or processes that can lead to delays caused by logistics, weather, and many other factors. Reducing the labor onsite can drive significant savings, as this type of work can be done in a controlled environment where there are accommodations for workers and weather conditions have minimal impact.

Plus, the assembly process on the construction site is more efficient, as the prefabricated components are designed to fit together seamlessly with quicker install. This expedites the overall construction process, enabling projects to be completed in a fraction of the time it would take using conventional methods.

Project management
Another key to a successful construction phase is to have good factory project management and strong project governance. Successful project management is built on the fundamentals of planning and communicating.

A detailed project plan is important, but it is only as good as the data and assumptions used to build it. Building a successful project plan requires not only a solid understanding of the tasks, dependencies, and resources required, but also excellent communication and collaboration with subcontractors, trades, and procurement professionals to make sure each task is understood and grounded in lead times and required versus available resources.

This entails daily, hands-on interaction on the construction site. Project managers who work remotely or spend most of their time away from the manufacturing site will be too disconnected from the challenges and realities in the field. At a minimum, daily walkthroughs must be conducted to understand issues firsthand and drive accountability. Failure to effectively plan is mostly due to the lack of engagement with teams in the trenches.

How Deloitte can help the greenfield factory journey

With deep expertise across industries, Deloitte has helped many leading global companies develop a greenfield site. No matter where you are in the journey, we can help you get back on track and realize your ultimate greenfield goals, using new methodologies that reduce risk, improve performance, and save time and money.

As a strategic partner, our smart manufacturing team can also fill knowledge gaps across tax strategy, consulting, financial advisory, risk advisory, and business process transformation. Contact us today to learn how we can work together to bring your greenfield vision to life.