Mitigating Site Risks for Industrial Projects
Date Posted: August 13, 2024
Posted In: Discussion, Projects,
From Area Development: With the many decisions that confront site selection teams, worries about hidden or subsurface threats can be easy to ignore. But teams that fail to include comprehensive site testing can end up with millions of dollars in expenses to mitigate unforeseen conditions. In worst-case situations, projects may be deemed unviable or be delayed for extended periods. Fortunately, new technologies, along with improved planning and preconstruction workflows, greatly assist in identifying and effectively addressing site issues.
Greenfield space—especially in topographically ideal locations—is becoming rarer. At the same time, industrial construction projects are getting bigger. We are in the age of “megaprojects,” defined by the U.S. Department of Labor as construction projects spanning more than a year and having a value of at least $25 million. Megaprojects involve multiple parties and complicated logistics, and they also require much larger sites and more intensive resources than was common just a few years ago. Another factor placing pressure on the real estate market is the proliferation of new industries that require large initial investments in facilities, such as electric vehicles, semiconductors, data centers, and clean energy.
The news for site selection teams is not as bad as it may seem. By utilizing new technologies, implementing robust preconstruction processes, and involving knowledgeable engineering, environmental and testing firms, general contractors, and other building partners early, most impediments to development can be identified and overcome without a dramatic impact on cost or schedule. While these initial investments will involve some additional effort and cost, that cost is generally limited to $50,000 or less, compared to the millions of dollars that can be lost due to severe delays or excessive mitigation efforts. Additionally, the costs of site analysis may be offset by tax incentives, grants, or low-interest loans. Expenses associated with site remediation may also be rolled into initial land deals.
Site surveys and ecological assessments are nothing new, and many site selection teams may feel they are already performing with due diligence. Experienced contractors can attest, however, that they’re too often coming on board to projects only to find assessments that have been performed in a cursory way, missing important details or outright misrepresenting existing conditions. When putting together the site selection team, owners must commit to collecting and analyzing an adequate amount of data, and what is “adequate” may vary by site.