The Total Solution for Expansion Projects
by Paul Hedin


Business is doing well. Almost too well! The company is producing more than ever before and you do not see any let up in the growth. But you have a problem. . . Your current facility is just not able to efficiently handle the increase in business. Everything and everyone is maxed out and it’s actually starting to hinder your ability to bring in new clients, maintain quality and cost effectively compete in the market.  

Something needs to be done with your facilities. You need to either expand, lease, grow, construct, buy, renovate, rent. . . Something needs to be done! But how, what and when do you accomplish this growth while at the same time running a business that is busier than it’s ever been?  

At Lobar, we have developed the “Total Solution” program specifically to assist our clients analyze, select and manage expansion projects properly. The following are items to consider as you embark on any expansion project.  

In-House Needs Assessment: The first priority is to establish exactly both the current and projected needs of the company. Department heads and staff input can assist in gathering the core information necessary to accurately assess growth requirements. It is important to look at not only internal but also external factors that may impact growth.  

Establish A Program: A program establishes the space and relationship requirements of a facility. “Accounting has 4 people, in 3 years will need space for 2 more, and it needs to be located next to Administration and near Data Processing.” Establishing a solid program facilitates the creation of a “schematic floor plan” that begins to define the ultimate layout of the facility.  

Establish Budget: As early as possible it is critical to establish a realistic budget for the project. A pro-forma needs to be developed that accurately accounts for all costs, both hard and soft, that can be anticipated for the project. Some examples of costs to be included in the pro-forma budget include: land acquisition costs, land development costs, legal and professional fees, design costs, financing costs, due diligence items such as soil studies, wetlands delineation, environmental surveys, engineering costs and construction costs.  

Define Location: How and where to locate a facility is a major decision of any project. It is important to take time to analyze all options available and the long term cost/benefit effects on your business. Options to consider include renovating and/or expanding your existing facility, purchasing or leasing an existing building and renovating it to meet your requirements, or acquiring a new site and constructing your facility on the site. Items to consider include timing of delivery, impact of existing operations and long term value of the facility.  

Lease or Own: Lease? Own? Lease to Own? These are business decisions that need careful consideration depending upon your situation. There are various delivery methods such as “lease to own” which should be investigated.  

Financing: If required, financing should be investigated as soon as you are comfortable with your pro-forma. Please note that most financial institutions have some flexibility on a project to project basis. Items such as required debt coverage ratios and cap rates can possibly be adjusted depending on the strength of your financial status.  

Permitting: Today it is imperative to investigate the process required to obtain permits. Many projects have been adversely impacted due to inattention to the permit process. Local municipalities are enacting stringent requirements. Labor & Industry no longer accepts “walk-in” plan reviews. These requirements ultimately result in a better environment, orderly growth for communities and provide safer facilities.  

Design & Construction: Proper design that thoughtfully incorporates the needs of the user along with the budget is critical for a successful project. Accurately assessing construction costs and schedule early on in a project are also critical. Many projects have been derailed by inaccurate early cost estimating. Input from contractors early in a project can be beneficial in correctly predicting cost and schedule duration. Designers and contractors can also review the project, utilizing their experience to conduct constructablity and value engineering reviews. These reviews can help maintain quality and aesthetic value while operating within project budgets.  

As you can see, managing a successful development project can be quite technical and complex. In essence, you are a conductor leading an orchestra of professionals, advisors, contractors and consultants. Choosing the correct team can mean the difference between your orchestra playing “Ode to Joy” for a successful project or “Requiem” for a failure.  

Paul E. Hedin Jr. is President of Lobar Properties, Inc., and has been with Lobar for the last 10 years. Paul has a degree in Architectural Engineering from the Pennsylvania State University. He is married with 3 children and resides in Lewisberry, PA.

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