Financial Control of Industrial Construction in Mexico 15 cost management Strategies every decision maker should implement when building an industrial facility By Rodolfo Valenzuela Industrial Construction Expert & Facilitator in Mexico
Contents • The Challenge for Industrial decision makers with expansion plans • 7 drivers for controlling financial resources • 5 steps to control Industrial Construction Finance • The 15 budget control strategies • Next Step: Get a Free Assessment • About Rodolfo Valenzuela & COPACHISA
The Challenge for Industrial decision makers with expansion plans How would you like to have a very cost-effective industrial building, not only at the design and build stage but also during the ongoing operation? As an industrial construction project manager, CFO or business decision maker for your manufacturing or distribution center in Mexico, you face financial challenges when you take your operations to any new country. Especially if you do not take control of the different factors that will have a direct impact on the cost of your project in Mexico: sometimes at the construction stage, sometimes at the ongoing operation stage. Would you like to remain in control of your financial costs for your industrial facility in Mexico from a construction standpoint? If so, this ebook was especially crafted for you. As a decision maker, you will be able to leverage on key lessons learned from the more than 400 construction success stories from Copachisa, Mexico’s leading industrial construction company. We have comprised the most important lessons learned from over 50 years of experience on this Financial Control of Industrial Construction in Mexico pathway. In the next section, we will cover 7 reasons why you need to control these 15 key budget savings strategies.
7 drivers for controlling financial resources How would you like to be certain that you: 1. Will find the most cost-effective land for your industrial building in Mexico? 2. Will be able to design a very functional and efficient industrial facility according to your specifications and local adaptation? 3. Will be able to start bringing in machinery and equipment into your facility without delays or surprises? 4. Will be able to have a building fully compliant with safety standards and local regulations that will allow you to operate as fast as you need to? 5. Will be able to bring in raw materials and get finished products out of the facility due to a well located and connected facility with transportation? 6. Will be able to save on the ongoing operation due to building efficiency construction from day 1? 7. Will be able to concentrate on the operation side of the business and not on the facility problem solving track, making your project a revenue center instead of a cost center? Of course, there are more than these 7 drivers that as a business decision maker you should care about. These are some of the reasons why an industrial construction partner in Mexico can be a great solution for you. In the next section, we will show you the path you have to follow that will help you to fulfill your expectations on these previous drivers.
5 steps to control Industrial Construction Finance There are 5 key stages in which you can make critical decisions that will determine the cost of your industrial construction project in Mexico: 1.Site Selection 2.Design 3.Construction 4.Beneficial occupancy 5.Operation Based on our experience, there are 3 key strategies on each stage that you will have to consider to remain in control of your finances for your industrial building in Mexico. Let’s get inside each stage to learn about those top 15 strategies to have a cost-efficient industrial construction project.
The 15 budget control strategies for Industrial Construction in Mexico Strategies & Case Studies
3 Finance Control Strategies at the Site Selection Stage 1. Strategy 1: Look for sites that have Access to all utilities. Water and power feed services may be expensive. 2. Strategy 2: Prefer sites where the land has good bearing capacities: avoid clay soils, so you can save on foundations. 3. Strategy 3: Look for accessible sites, both for labor and trucks. Now let’s see a Site Selection Case Study…
Site Selection Case Study The Challenge: • A food processing company was looking for a site in the Bajio area. The Process: • They had 3 different preselected sites, but one of them was the most economic of them. • They committed to it without the proper soil investigation. Utilities was note the problem as they were both available and sufficient, but the soil couldn’t support the loads. The final solution was to use piles 15 meters deep, four per footing. The results: • The final cost of the foundation was almost as expensive as the entire steam system. Lessons learned: • To avoid losing control of your expansion project, partner with a field expert that will apply the 3 strategies needed on this stage: Utilities, Bearings and Accessibility. Next Step: 3 Financial strategies at the Industrial Building Design stage
At the Design Stage 1. Strategy 4: Check that your specifications are set for Mexico’s weather (freezing is very rare here!). 2. Strategy 5: Try to be as specific as possible with your loads and utilities requirements. Oversizing costs everywhere! 3. Strategy 6: Try specifying all the things you need in the building for your production process, but let the designers work for you to get economical solutions in Mexico. Now let’s see a Design Case Study…
Industrial Construction Design Case Study The Challenge. • An automotive German company solicited a bid based in a design made in Munich. The Process: • German engineers did take in account the weather conditions the design the HVAC systems, but not in the insulation design, since they use the common practices in Europe. The Results: • The result was a building way over budget. Once we were selected as the GC we reworked the specifications and the selected systems to have a final improvement on costs of almost 25% letting them more budget to invest their resources in better productive equipment. Lessons Learned • To avoid losing control of your expansion project, partner with a field expert that will apply the 3 strategies needed on this stage: climate specifications, adequate specification for loads, process oriented design. Next Step: 3 Financial strategies at the Construction stage
At the Construction Stage 1. Strategy 7: Always be clear that all prices are all inclusive. The money you are being charge for the construction of your facility includes risk management. 2. Strategy 8: Check that your contractor provides both bonding for your down payment and performance, and that they carry the right insurance to protect your property. 3. Strategy 9: Track the Social Security payments for your GC: you may be liable if they fail to pay! Now let’s see a Construction Case Study…
Construction Stage Case Study The Challenge • A US based company was establishing its second operation in Mexico. Therefore they thought they could manage the project by specialty. The Process: • We were invited for all trades and won the structural and civil scope. The electrical we were not assigned the job as they told us “you are higher than 50%” Two month later we were asked to quote the electrical installations for the productive equipment. The Results: • To our surprise much of the original scope of the shell building that we lose was also included. We asked why they were doubling that and they say it was not double, that the other contractor didn’t include all the electrical original scope, as some equipment were just furnished, not installed. Lessons Learned: • To avoid losing control of your expansion project, partner with a field expert that will apply the 3 strategies needed on this stage: construction costs estimates, bonding and insurance from contractor, social security for construction workers. Next Step: 3 Financial strategies at the Beneficial Occupancy stage
At the Beneficial Occupancy Stage 1. Strategy 10: Check that all equipment complies with the submittals delivered to you during design. 2. Strategy 11: Review that all the maintenance manuals includes the direct vendors’ warranties for all equipment. 3. Strategy 12: Take your time to make only one punch list, but ensure it is solved in an expedite manner. Now let’s see a Beneficial Occupancy Case Study…
Beneficial Occupancy Case Study The Challenge: • We were building a new facility for an automotive stamping group. The project included a scrap recovery tunnel and 4 stamping presses foundations. The Process: • At the time of closing the contract, BO was established 5 months after signature, and Substantial completion in 6 months. The Owner requested us to confirm this timing, and we did so. 5 months later, in the BO date, the walk thru took place, and the tunnel, bases and building were completed. But the Owner, due to a previous experience with another contractor, did not believe we would comply. So he scheduled the equipment and installation crews to arrive a month later! The Results • He said that it was the worst mistake of his entire career as a director! We have expanded two times his building since, but now he schedule his following steps according with our schedule. • Lessons Learned: • To avoid losing control of your expansion project, partner with a field expert that will apply the 3 strategies needed on this stage: machinery and equipment submital on time, review maintenance and warranties manuals, make one single check list to review your plans. Next Step: 3 Financial strategies at the Ongoing Operation stage
At the Ongoing Operation Stage • Strategy 13: Always keep track of your potency factor. Big bills can be delivered if you do not complies with the Power Company requirements. • Strategy 14: Before the general warranty expires, make an appointment with your contractor, to review the building, and solve any issue before you release his warranty bond. • Strategy 15: Follow the maintenance and operation procedures delivered in your facilities’ manuals, so you can take preventive measure instead of corrective actions. Now let’s see an Operation Case Study…
Operation Case StudyThe Challenge:• A bottling company has a hose fire protection system which included a diesel driven pump.The Process:• As the installation was FM approved the pump was set to test itself automatically in a weekly manner. It also included a low water level in the tank. But the maintenance crew disconnected the low water level alarm my mistake. Two years latter during maintenance service to the water line the tank was empty and the pump tested itself and burn.The results:• The warranty was available but the manufacture did not cover as the fail was related to an improper use of the pump. A new pump was reorder and installed with an additional cost to the owner.Lessons Learned:• To avoid losing control of your expansion project, partner with a field expert that will apply the 3 strategies needed on this stage: potency factor, warranties and building preventive control manuals. Next Step: Request a Free Assessment and Consultation Call
Will You be our Next Success Story?You will get a committed partner toyour success in Mexico at all stagesof your construction project.Let COPACHISA help:• Get Site Selection Assistance• Get a Free Desing & Build project Assessment• Get a Construction proposal Go to: http://ConstructionHelp.COPACHISA.com Or contact us personally: By Phone: +52-614-439-3906 By Email: email@example.com