At this time of year, many food processors are planning next year’s capital expenditures, which often means piecing together budgets for upcoming food plant construction projects. It is important to create the most accurate budget possible: a tricky task. Frequently, food processors prepare budgets without the assistance of an experienced design-builder. By doing so, they make assumptions that can skew their entire budget.
The key to forming an accurate budget is being attentive as early as possible, and constantly throughout the process. Many food processors try developing budgets internally, usually based on square footages from past projects, thinking they will accurately reflect the costs of the new project. This doesn’t work for several reasons. Costs vary based on factors like:
- Location—For example, a facility built in Chicago will have different costs than a facility built in Charleston.
- Size and scope—Unit costs from a large greenfield facility are quite different from those for an interior renovation project.
- Production—What’s being produced at the facility (meat, dairy, frozen foods, etc.) factors into how long plant production will take, in addition to accompanying costs.
- Timeframe—Around-the-clock construction in a tight plant shutdown window is more demanding than an expansion project with a flexible timeline.
Important details to consider
It’s beneficial to engage a design-builder thanks to its industry expertise. However, this doesn’t mean it’s a simple handoff—you still play an integral role. By providing your design-builder with key information on the front end, you can facilitate a much more accurate budget:
1. Facility use
Different end-products require different environments; your budget will be impacted by the following:
- Operations—First and foremost, what’s the facility’s purpose? Is it a processing facility? If so, what will be processed? Is it a distribution center? If so, what are its storage requirements? Before you start honing in on smaller details, you’ll need an idea of how big a building you’ll be constructing.
- Product requirements—Room temperatures and humidity settings vary significantly depending on what’s produced in the room. This has a big impact on mechanical and refrigeration equipment and will influence your budget.
2. Food safety
While food safety governing bodies like the United States Department of Agriculture, Food Drug Administration and Food Safety and Inspection Services, among others, have similar regulatory policies, there are slight differences that must be taken into account before the building process begins.
Non-compliance fines can be very costly, so it’s important your design-builder is aware which rules apply to your facility.
You should also consider sanitation methods:
- How will rooms in the facility be cleaned?
- Will the floors, walls and ceilings need to be cleaned regularly?
- Cold water, high-pressure hot water, chemicals, and other sanitation methods call for specific materials, which will factor into the cost of your project.
Utilities affect just about everything in a food processing facility. A utility matrix can identify specifics like electrical load and cut sheets on equipment, which provide your design-builder with a good idea of its power and utility needs. Utilities involve:
- Mechanical processes
- Refrigeration settings
- Room temperature settings
- Electrical usage
If it’s a remodeling or renovation project on an existing facility, be sure to provide details about air and electrical capabilities. At Stellar, we ask our clients for a year’s worth of electrical and utility bills (natural gas, water, etc.) to get a better idea of what kind of load the facility currently supports and what modifications must be made.
4. Soft costs
Soft costs are any fees that fall outside the realm of direct construction costs. Various additional soft costs require attention, as well, though most forget to consider them.They include elements like:
- Pre-construction permitting fees (who will carry the permitting costs?)
- Utility connection fees
- Testing processes — third-party inspectors
5. Plant technology (now and later)
At Stellar, we’ve noticed clients continuously forget several technology-related factors when they approach us for budget developments.
While they’re smaller considerations, they are necessary details to get ironed out.
- Low-voltage systems—Who is responsible for handling the costs of the fire alarm, security, paging, phone/data, RF/Si-Fi systems? An IT budget always seems to be left out, but its infrastructure takes a great deal of planning.
- Emergency generator—Is there a need for one? If so, do you want it to back up just life-safety systems, critical plant operations, or the entire plant?
- Redundancy—Consider your philosophy on this matter and how it will affect building designs and costs.
- Future advancement—Are you setting up your facility for future modifications? Planning utility infrastructure for future growth in advance costs a little more up-front, but can provide significant savings when compared to upgrading that infrastructure in the future.
- Automation—How extensive do you want your plant’s automation capabilities to be?
Construction budgets for food processing or manufacturing plants take a lot of time and careful planning. The earlier you get started on gathering the necessary information, the easier it will be to construct an accurate budget. Don’t hesitate to reach out to your design-builder with questions. They are best equipped to help you develop the best budget possible for your project. Do your part by preparing the above details before you start planning your food plant budget to make the process as efficient as possible.