Logistics Manager Magazine

The decision to invest in a new warehouse or extend an existing facility is often triggered by a specific problem – lack of space, limited access or a change in business patterns. However it should provide logistics management with a golden opportunity to take a considered view of the type of storage facility the business needs today and for years to come. You may not get another chance for a decade or more so it is vital to make the most of the opportunity.

While getting the warehouse you want involves a great deal of planning, discussion and investigation, the way in which the project is managed may make a big difference to the total cost – both capital and running costs – and the time taken to complete the project.

Over the past few years the architectural and construction industries have developed a number of different ways to organise the various trades and professions involved in providing a commercial building, known as Procurement Routes. No one solution is right for every circumstance but some will offer less risk than others.

The final decision will depend on cost, time and quality issues and on whether your project is relatively straightforward or requires specialist skills. The three commonly accepted procurement routes are Traditional Build, Professional Construction Management (PCM) and Design and Build.

It is vital from the start that the client sets out precise objectives, timescales and implementation procedures, so that the project can be evaluated against the stated targets. Whichever route is favoured the client should appoint either an in-house or outsourced executive responsible for the task, who acts only for the client. The chosen adviser should have the skills and experience to help deliver the project on time, on budget and to the right standard and specifications.

Traditional build

In this route the design team is appointed by the employer to manage the design and budget. Once the design is completed a main contractor is selected to carry out the work after tendering. Each main contractor offering a tender will in turn tender the majority of the work to sub-contractors.

This means that the building design must be completed before going out to tender, which extends the time before work can start.

Unfortunately this route may involve the client or employer in dealing with disputes and conflicts between various contractors, and deciding where the buck stops.

Managing construction

Originally developed in the US and Canada, the PCM route provides a more controllable route that involves all parties and is based on the appointment of a construction manager who works for you, the client. The construction manager works for a fixed fee, agreed beforehand, usually around 1% of the contract value.

Normally a professionally qualified company, the construction manager works with all the other disciplines and trades, so that the lines of communication run along traditional methods.

The company will probably supply its own project management team of architects, engineers and service designers, but working for you at all times. They will be able to accommodate specialist mechanical handling fit-out work within the agreement, alongside the other disciplines available.

PCM has proved particularly successful with complex projects where the integration of the structure with materials handling equipment such as mezzanine floors and automated high bay equipment provides a challenge to contractors who have limited experience in this field.

Design and build

A route that became very popular during the 1980s, design and build means buying a building from a single contractor who handles both design and construction. The designers work as sub-contractors to the main contractor, not the client. In this procurement method you will need the protection of an additional figure – the principal adviser, a building professional appointed to look after your interests.

This route has proved most effective in large scale warehouse or distribution projects where the client completes the subsequent fit-out directly.

Before tendering a design and build project the client needs to prepare a Brief and Employer’s Requirements. This will enable the main contractor to work with the design team, who as in the traditional route, will be subcontractors managed by the main contractor. While you are relying on the construction management skills of the single contractor, as soon as he undertakes the project design you will be committing 100% of the project’s funds, even though fundamental design aspects may remain undecided. Design and build contracts can be heavily amended however to enable the client to benefit from the experience of all parties.

Design and build has become an established and successful method, providing several advantages. As both the design and construction are in the hands of one person or group, clients can rely on a single point of responsibility for quality, cost and keeping to schedule, without the need to co-ordinate the work of the designer, main contractor and other parties.

As one single body is responsible for the project, there is additional motivation to ensure that the project is completed to the required quality standards. The building owner’s requirements are documented in performance terms, and it is the design and build company’s role to produce results to match the performance specification.

Working as a team, the design and build group have the chance to evaluate different materials and methods, to decide which provide the most acceptable performance, cost and time mix. Continuous value engineering can take place throughout the process, to find additional ways to control costs and ensure on-time completion.

External services

Projects can be delayed by organisations outside the client’s control, such as planning departments and utilities. The client may be well advised to select the design team through their principal adviser early to progress design and quotations for tendering to design and build contractors, while applications to outside bodies progress through their systems.

Tender documents

For design and build, these can be extensive, covering as a minimum the following items from the brief:

lProject description and building function.

lSchedules of accommodation.

lStandards.

lSpecial equipment and service requirements.

lProgramme.

lQuality and cost parameters.

lStatutory control requirements.

Working in partnership

The earlier the project team can identify both the procurement route and the selected contractor, the greater the opportunity to work in partnership to make sure that nothing is left out of the design. Any equipment or requirement which is not built into the developer’s specification from the start inevitably means extra cost and a potential delay to the building programme.

With experience in handling more than a million sq m of distribution property over more than a decade, sbh.uk’s project managers still find that a number of fundamental requirements of the modern warehouse are often overlooked including:

lThe warehouse floor: if the floor specification is not suitable for VNA equipment or the racking structure, remedial work and grinding to improve tolerances can be costly and may still not provide the standards required.

lProtect your staff, building and goods: so often walkway barriers, handrails, racking protection and other safety structures seem to be overlooked – until the Health and Safety inspector walks round.

lVehicles: it may be more economic and practical to provide fuel on site, in which case you will need to allocate space for refuelling islands. Ensure too that you consult with the relevant authorities well in advance about the storage and handling of diesel fuel. These facilities will require both fuel and rainwater separators, as will vehicle washing facilities.

lElectrical services: a standby generator or the facility to connect a portable standby generator may appear to be part of the fit-out, but will affect the developer’s works as they will need to supply the incoming main and the split between essential and non-essential services. Battery charging likewise will need to be identified early on for power supply requirements.

lLoading bay equipment: a critical element in any warehouse, so it is vital to identify key factors for both receipt and dispatch including type volume and frequency of deliveries and the goods involved.

lEnvironment and waste disposal: waste compactors need space, contractors need access and your staff should be able to transport waste easily from the warehouse to whatever waste disposal containers are appropriate.

lRisk management: the use of sprinklers, fire compartments and smoke ventilation systems will be influenced by the nature of goods stored. But you should also consider issues such as protected data links, whether the wall cladding used is favoured by insurance companies and site security, to counter theft, vandalism or even terrorism in the most extreme cases.

As the modern warehouse becomes ever more complex, so do the number of specialist contractors involved. For the executive in charge of the project responsible it can prove to be a demanding task – but very satisfying when it is completed on time, to budget and to specification. By providing this single point of contact and co-ordination, design and build is increasingly recognised as a highly effective form of construction procurement for the logistics industry. n

Laurie Sice is with distribution property specialist sbh.uk. Tel: 0870 606 0123.