To Build or Renovate?
A Five-Point Plan for Decision Making

Every year businesses of all types and sizes decide whether to build a new facility or improve either their existing space or an available property. Few companies, however, have a ready-made methodology to determine whether to relocate or renovate.

Ralph and Robyn Deger, president and vice president, respectively, of Bushman Equipment, Inc., shared their own well-structured plan with us. They have kindly allowed us to share it with you, too. Based in Menomonee Falls, Bushman is a leading manufacturer of overhead crane related material handling equipment, including jib cranes, rotating crane hooks, sheet lifters and drum handlers.

1. Identify Your Company's Goals

Begin by defining your long range goals as specifically as possible. Are there new markets you want to penetrate? New products you want to produce? New relationships you want to develop? Is there an image change you want to achieve?

Bushman's answers to these and other questions began to define its building needs: manufacturing headroom, crane lifting capacity, and a clean, dry, flexible manufacturing space; new machinery; flexible electrical service; and a new computer system to integrate front office, engineering and manufacturing operations.

When you've defined your company 5 goals, explore the role each of the following will play in achieving your objectives: location; space; capabilities; image; and access.

2. Conduct a Critical Analysis of Your Current Facility

Evaluate your building's assets and liabilities, essential and incidental, in terms of its location. Points to consider include: nearness to employees' homes, parking, and availability of new labor; transportation facilities (highways, buses, rail, airports, etc.); proximity to key suppliers and customers, postal facilities, hotels, restaurants, and incidental shopping. Consider your location's image and any mailing address concerns.

Assessing your building's renovation possibilities should encompass: space allocation between office and plant; improvements required for primary systems, including painting, electrical, HVAC and lighting; and amenities such as locker rooms and lunch facilities.

Consider the available land and building space, zoning and building code restrictions. Environmental issues include the effect of prior use of your land and adjoining property, and potential restrictions; and the cost and ramifications of a Phase I environmental audit prior to purchasing land.

Another key issue is whether the neighborhood will support an investment in renovation and a good resale value for your property.

3. Evaluate the Impacts of Remodeling

Besides the direct financial implications of remodeling, you need to ask:

• Can your existing systems (mechanical, electrical, plumbing, roofing, etc.) support additional requirements, or will they have to be upgraded, and at what cost?
• How do those costs compare to new construction?
• What kinds of disruptions will there be to your workflow, and for what periods of time?
• How will this impact sales, productivity, and profits?
• Will changes be required for shipping and receiving, or customer service?
• Will you be able to shut down some operations for certain periods of time, if needed?
• What kinds of accommodations can your contractor provide?

4. Consider Existing Properties

Among the key criteria on which to focus when investigating an existing property for renovation are: the property's fit with your operational needs; environmental concerns and the Phase I audit; the renovations required and their cost; and the operating costs in a used facility.

Bushman Equipment found that the compromises and costs required to renovate the facilities the company investigated were too high compared to new construction costs. While environmental issues clouded most opportunities, other problems included inadequate insulation, substandard electrical service, and heating and air conditioning costs.

5. Specify Your New Building Requirements

If renovation proves unworkable, specify your basic requirements for new construction, including land acreage, intended land use relative to zoning and local ordinances, and access to transportation: highways, buses, railways, airports, etc.

Establish your geographic parameters, learn the market and identify your viable alternatives. Contact realtors, city development departments and industrial parks to assist in your search for available land.

Evaluate the various design, preconstruction and construction services available: design/build, general contractor, and construction management; and select your architect and builder with care.

Whether your company decides to build or renovate, adhering to these guidelines should help facilitate the process, resulting in fewer problems and greater satisfaction.