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Construction of a new production site: Project organization
This is what matters when setting up a location
Are you planning a new production facility? A new production site is a comprehensive, strategic project and therefore presents many companies with challenges. Good organization is essential for a smooth project, from the decision on the location to the ramp-up. In the following, we would like to give you an overview of what is important when setting up a site.
The right project organization is essential for the success of your location project and minimizes operational and economic risks.
Dr.-Ing. Kai Philipp Bauer, Senior Manager
Three key questions at the start of site development
Expanding capacity, reducing costs and opening up new sales markets are just a few of the reasons for looking for a new production location. For many companies, it is also becoming increasingly important to secure their ability to deliver through local production, known as nearshoring.
With a project horizon of three to five years, the selection, construction and ramp-up of a new production site is a rare or even first-time project in the (recent) history of many companies. Without the right experience and the right methodological tools, such a project can therefore quickly stall or get out of hand.
Based on our project experience, we address the following questions in this article:
- What structure must a project organization follow?
- How should a project team be structured and who should be involved?
- How should the project plan be structured in order to maintain an overview of tasks, milestones and dependencies throughout the project?
The project structure
The foundation stone for the successful production set-up project
Once the project objectives and the profile of the new production site (products, quantities, processes, technologies) have been clearly outlined, the project must be initiated. To this end, it is necessary to determine which committees will be involved in the project, which responsibilities are to be assigned and how, and what form communication should take.
Typical site projects are organized on three levels:
- The steering committee consists of the most important stakeholders from management and the executive board. It sets the direction for the project through strategic decisions.
- Project management consists of the overall project manager and the Project Management Office (PMO). Their area of responsibility is the design and ongoing adaptation of the project structure, the management of tasks and deadlines and communication between the various project levels.
- The sub-project managers work on the individual subject areas of the project and are responsible for their respective specialist discipline. The project members are assigned to the sub-projects.
A clear project structure is essential as a starting point for the next steps.
Johannes Rauh, Consultant
Setting up the project team correctly
The difference between location projects and other operational projects lies in their strategic importance for the entire company. For this reason, the top management level is involved in the steering committee. In addition, many company processes and functions will be restructured at the new production site. For this purpose, sub-project managers from the various specialist departments must be integrated into the project team. We have therefore dedicated a separate paragraph below to the composition of the project team.
To ensure effective communication, fixed scheduling cycles should be agreed between the project levels:
- Short status updates on the specific task packages between the PMO and the respective sub-project teams every 1-4 weeks
- Exchange of information and clarification of general questions between the PMO and the entire project team at regular status meetings: Depending on the intensity of the project phase, every 1-4 weeks.
- Important decisions and questions from the project team as well as an update on the project status at the steering committee meeting. This typically takes place every 1-2 months.
Risks resulting from unclear or inadequate project structures are not only due to dissatisfaction on the part of company management, which can be caused by inadequate and irregular status updates or the overloading of project management due to insufficient distribution of tasks. Rather, there is a particular risk that cross-references and dependencies between different topics are not recognized in good time. This can lead to difficulties and, in the worst case, cause delays in the course of the project. One example of this is the impact of process changes in HR, which can lead to increased programming costs in IT.
The project team
The sub-project members decide on the success of the site development
A project to set up a new production site is typically divided into the following sub-projects:
- Building: coordination of construction, technical building equipment, office and social areas
- Production: Planning production systems and the production and assembly areas, managing machines and systems
- Logistics: material flow concept, warehouse planning, incoming and outgoing goods, fleet management
- Supply Chain Management & Purchasing: development of the supplier network and scheduling strategy, planning of production and order quantities
- Quality: development of the quality management system, certifications
- Product development: laboratories and other research facilities
- Legal & finance: founding the new company, setting up financial flows, protecting intellectual property
- Controlling: Business case and continuous project controlling; also possible as a staff position reporting directly to the project management
- Personnel: Recruiting, onboarding & training, involvement of the workforce at the existing production site, involvement of the works council
- IT infrastructure: Setting up the network at the new production site
- IT systems: Necessary adjustments in the most important ERP systems
- Communication: Marketing & communication of project progress internally and externally, involvement of local partners
- Sales: in the case of opening up new markets
- External partners: external support from, for example, personnel service providers and legal advisors on site who can assist you with their knowledge of local conditions
This list is a maximum enumeration. Not everything has to be relevant to your company. In addition, there are specific topics in each site structure that cannot be precisely assigned to a sub-project. In such cases, it is important to name clear contact persons outside the project team. If a sub-project is not or only insufficiently staffed, this can cause problems in the further course of the project: Neglecting the IT infrastructure, for example, results in the delayed commissioning of workstations and inadequate communication leads to the acceptance of the project being weakened at a local level.
The project team is the heart of the new production site. The sub-project members are largely responsible for the success or failure of your project.
Dr.-Ing. Kai Philipp Bauer, Senior Manager
The project plan
Overview of all tasks and dependencies for the construction of the new production site
For optimal planning of the further project procedure at a detailed level, it is advisable to draw up a project plan (e.g. in Microsoft Project) together as a team. This includes the most important milestones as well as the necessary subordinate tasks, including responsibilities, timelines and cross-references or dependencies between them. The resulting clarity is particularly helpful for site projects due to the long time horizon in combination with the diverse project tasks. In the worst case, an inadequately drawn up project plan can lead to important tasks being forgotten or cross-references between work packages being disregarded, resulting in costly changes later on in the project (example: effects of different system types on the ventilation concept).
The project plan is structured in several steps. The first step is to define the most important project milestones at a higher level. In the case of new site construction, this typically involves selecting and acquiring the right plot of land or property, obtaining the most important permits, starting and completing the construction phase and commissioning the building.
A project plan is an important tool for managing tasks and responsibilities and identifying dependencies between individual subject areas.
Johannes Rauh, Consultant
Detailed planning: Derivation of individual steps and cross-links between work packages
The steps required to reach the various milestones should then be recorded in more detail. For example, the construction phase consists of obtaining the building permit, the ground-breaking ceremony and the subsequent foundation work, the construction of the building and the installation of the technical building equipment (TBE). These intermediate steps are also made up of individual tasks and can be broken down. This can be repeated until the individually desired level of detail has been reached.
The timeline of the project should also be recorded in the project plan. This is done either forwards from the start of the project or backwards from the start of production. To this end, initial estimates should be made of the work required for individual work packages and responsibilities should be defined in the form of the respective sub-projects. Depending on the specific project, the construction phase can take around 6-12 months, of which a large proportion of 2-3 months can be accounted for by the foundation work.
Finally, possible cross-connections between work packages should be noted in order to become aware of potential obstacles at an early stage. The project plan can also be used during the course of the project to track the project status and manage the project team accordingly. For example, the various functional areas(production, logistics, but also social areas and offices) and the technical building services must be planned before an environmental impact assessment can be initiated or a building application submitted.
Collaborative management of the project plan in Microsoft Teams
Project management in a familiar environment
MS Project allows you to optimally integrate the management of your project into the familiar team environment. This means you always have an overview of deadlines, tasks, responsibilities and progress and can make flexible adjustments that are forwarded to the project members in real time. Tasks can be assigned directly to those responsible, deadline changes can be entered and dependencies can be tracked. This allows you to recognize at an early stage which tasks have priority, where conflicts may arise and to initiate countermeasures immediately.
Teams has become a collaboration platform in many companies. Together with Planner, complex project plans can be developed in an agile way and tasks can be managed collaboratively.
Johannes Rauh, Consultant
Summary
The following key aspects can be summarized:
- The construction of a new production site is an extensive project with high strategic importance for the entire company. Accordingly, projects should be based on a well thought-out, clear structure to ensure a smooth process and high leverage for project management. An effective structure is particularly important when it comes to planning a production site.
- A good project structure includes regular communication between the various stakeholders – starting from the PMO with the steering committee and the project team.
- The project team should be as large as necessary but as small as possible and be made up of experts from the various specialist areas.
- A project plan is a practical tool for maintaining an overview of tasks, status and cross-references between work packages in a project.
Dr.-Ing. Kai Philipp Bauer
Senior Manager
Talk to us!
Would you like support with the realization of a location project? With our expertise, we will be happy to help you set up a robust project organization and support you as a competent partner during implementation.
Johannes Rauh
Senior Consultant, Frankfurt
Among other things, he has already supported projects in the areas of global footprint, site search, factory and logistics planning. His focus is on the business areas of production and logistics, for which the topic of sustainability is particularly relevant.
Dr.-Ing. Kai Philipp Bauer
Senior Manager, Hamburg
Kai Philipp Bauer studied mechanical engineering with a focus on production technology and has been working in consulting for over 15 years. He advises his clients in particular on issues relating to strategy development, operations management and digital transformation.
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