How to avoid scope creep when expanding bakery operations

by Nico Roesler
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construction planning
When preparing for an expansion, bakers should outline their needs and thoughtfully examine each.
 

The scope of a bakery project can be intimidating. From finding the right location to managing the actual construction, a minefield of setbacks, delays and extra costs often emerges. But realizing a concept while minimizing complications is possible. All it takes is proper planning from the day the dream of a new facility emerges.

Some larger bakeries are used to big construction projects. Other mid-size and smaller wholesale bakers are not, and the idea of building a new facility or adding a line is a daunting thought. For many, it means possibly stopping production for a prolonged period, which means lost revenue.

Bakers should ask several questions during the conceptual stage of a construction project. For Just Desserts, San Francisco, those questions included: Do we build or lease? What are the optimal geographic areas to locate? What will the optimal site footprint look like? How does this facility need to be initially established to support our five-year plan? What ¬external resources would we need?


“In our case, due to our rapid growth, we needed a site with more production capacity and a footprint that would allow for further growth in the future,” said Michael Mendes, chief executive officer, Just Desserts.

The company opened a 75,000-square-foot renovated brownfield project on seven acres in Fairfield, Calif., in 2015, just six weeks after closing its previous Oakland operation. The dessert manufacturer could achieve its goals for the facility thanks to strong organization and leadership. Mr. Mendes said Just Desserts established the scope of the project early and stayed on track with the established timeline.

“If we plan well, there is a very small gap between our vision and the reality of the plan,” he said.

Jim Kline, president of The EnSol Group and contributing editor for Baking & Snack, said bakeries must consider three factors when planning a new project: scope, timeline and cost. Companies often get to control two of the three factors, but rarely do they set all three.

“Typically, a pinch point is going to the be dollars, and it’s going to be time,” Mr. Kline said. “If there’s any variability that you can have, it’ll be the scope.”

In the end, the vision for a construction project can be realized partially, if not completely. It’s just the road to the realization of that vision often includes twists and turns.

Just Desserts Construction
The baking and depositing production area of Just Desserts was up and running just six weeks after the move from the company's former facility. 
 

Starting on the right foot
When a company decides to expand or relocate to meet production demand, it’s important to accurately establish what those needs are, now and into the future. That identification of need and what it will take to fulfill that goal becomes the initial concept for a project.

The American Institute of Architects divides any construction project into five phases: schematic design, design development, construction documents, bidding and permitting, then construction. Different firms call these phases by other names, or combine two or three of them into one phase, but ultimately, more than half of the work on a new facility is completed before construction ever begins. Sticking to a plan established in the design development phase avoids any type of scope creep.

Mike Pierce, president, The Austin Co., said that along with the initial concept, companies must develop this scope so that a cost can be developed, which then allows them to calculate what the R.O.I. will be.

“Then you get into the real process where you start fine-tuning all the decisions and all the variables until eventually you reach an optimal solution,” he said.

The leadership team at Just Desserts recognized the danger of allowing the scope of its project to grow beyond its needs. Mr. Mendes said scope creep can stretch out a project’s timeline and increase both the direct and indirect costs of a project.

“In our case, we were looking to move the entire production facility and augment or replace our core mixing, depositing and baking infrastructure,” he said. “To really understand the financial impact, we developed an entire pro forma budget, assuming all the cost and benefits, and then forecasted future years so we could determine the impact on maintenance budget and staffing.”

He added that Just Desserts strives for a two-year payback or better on most of its capital projects.

To establish the R.O.I. year over year in the early stage of design, A M King prices out options in today’s dollars and project costs up to 10 years in the future. Utilities such as water, gas and electricity remain the largest expense to consider in terms of infrastructure with a new plant.

“The initial, most critical element is understanding the desired throughput, both now and in the future, so that the building can be right-sized and the proper size of site can be ascertained,” said Stuart Jernigan, preconstruction executive, A M King.

At The Austin Co., an internal site location group examines the R.O.I. factors of location on behalf of its clients. The process includes identifying sites in three to four states in a region chosen by the baker. Then The Austin Co. communicates with state and city officials to discuss appropriate locations. Often, states and cities offer competitive incentives to attract the company.

“What they get, oftentimes, can have a huge impact on R.O.I.,” Mr. Pierce said. “A lot of times, they will offer free land, tax incentives and local community college training for technical resources they may need. When companies are thinking up that project, they need to be thinking about the location not just as a piece of real estate, but also all the attributes that go along with it.”

After ascertaining the location, businesses can then look within the walls of their facility to establish what essentials will meet their production needs.

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