Considerations for Site Selection for Engineering Plant Projects
Site selection is the first and most important factor for location of any Engineering Plant Project as they involve huge construction costs. An unsuitable or wrong project site can result in great loss and may also lead to delays or failure of the project.
Site selection involves measuring the needs of location of a plant, so assessment of various factors to make the plant functional are to be kept in mind. Site selection is the process of examining multiple options and assessing their relative advantages and disadvantages. After assessing advantages and disadvantages, the site for a particular ‘Plant Project’ is selected. The site selection process involves the four-phase task: Screening, Site work, Negotiation and Finalization.
Screening: The first step is to carefully plan decision criteria on the basis of which, the site of a plant will be finalized. For finalization of decision criteria, an experienced site selection team with representation from the project development team is required. Reconnaissance of the site is a must in order to arrive at the criteria. Assign weights to different criteria. Determine total weighted points to screen out unsatisfactory locations and shortlist the available sites.
Site work: Keeping in mind the location of sites, discuss with local people and local engineers/hydrologists to get an overview of the pros and cons for each site. We may sometime resort to on-site testing/exploration and select the best two sites out of the available ones.
Negotiation: Environmental Impact Assessment is carried out. After doing valuation of a site considering aspects such as transportation, incentives/ policies of the government etc, a final site for a plant is chosen.
Finalization: The plant is announced, constructed, commissioned, and made ready for operation.
Considerations for Site selection of Plants
Size of site: The size of site must be larger than the minimum requirements but it should not be significantly bigger than the required size as it may not be financially feasible. However, one should not forget to consider the probable future expansions, if any.
Availability of Raw Materials: Raw materials should preferably be available nearby. The source of raw materials is one of the most important factors influencing the selection of a plant site. This is particularly true if a large number of raw materials and choice of source for those raw materials permits the considerable reduction in transport and storage charges. Attention should be given to the purchased price of the raw materials, distance from the source of the supply, freight or transportation expenses, availability and reliability of supply, purity of the raw materials and storage requirements. It is advantageous to have a plant near the centre of demand for finished products. It is also dependent upon the type of industry: consumer industries like cycles, sewing machines, radio, televisions and other luxury goods etc. are preferably set up near the marketing centers, whereas producer industries like steel mills are located near the vicinity of the raw material.
Transportation facilities: The site should be accessible for bringing the equipment, material and product logistics to the site. The raw materials and end-products require an uninterrupted receipt and dispatch of facilities through good road construction, proper linking with ports and rail heads. The possibility of an implant rail side may also be looked into, depending upon the amount of raw materials and products to be handled.
Since freight charges of raw materials and finished goods are a part of cost of production, transportation facilities are the governing factor in economic location of the plant. Depending upon the volume of the raw materials and finished products, a suitable method of transportation like rail, road, water transportation (through river, canals or sea) and air transport is selected and accordingly plant location is decided. Overall, the cost of transportation should remain fairly small in comparison to the total cost of production.
Water, railroads, and highways are common means of transportation used by major industrial concerns. The kind and quantity of products and raw materials determine the most suitable type of transportation facilities. Careful attention should be given to local freight rates and existing railroad lines. The proximity to railroad centers and the possibility of canal, river, lake or ocean transport must be considered. Motor trucking facilities are widely used and can serve as a useful supplement to rail and water facilities. If possible, the plant site should have access to all three types of transportation and, certainly, at least two types should be available. There is usually a need for convenient air and rail transportation facilities between the plant and the company headquarters. In addition, effective transportation facilities are necessary for the plant personnel from residence to plant site. The connection with airports is important from the point of view of easy moment of professionals and this becomes all the more important, if foreign collaborations are planned for the plant.
Access to market: The location of markets or distribution centers affects the cost of distribution of the products and the time required for shipping. Proximity to the major markets is an important consideration in the selection of a plant site because the buyer usually finds it advantageous to purchase from nearby sources. It should be noted that markets are needed for both, by-products as well as for major final products.
Availability of Power: Power and steam requirements are many times very high in some of the plants, and fuel is ordinarily required to supply these utilities. Power and fuel can be combined as one major factor in the choice of a plant site. If the plant requires large quantities of coal or oil, location near a source of fuel supply may be essential for economic operation. The local cost of power, quality of power supply can help us to determine whether power should be purchased or self-generated.
Availability of Labour: Labour is needed for construction of plant and its operation. No doubt, skilled labourers, technically qualified and trained managers will usually be required to bring from outside but at the same time, there should be adequate pool of unskilled labourers locally available near/at the the site. Potential supply of requisite type of labour governs plant location to major extent. Some industries need highly skilled and qualified persons/labour whereas other need unskilled. The type, quality, and supply of labour available in the vicinity of a proposed plant site must be examined. Consideration should be given to prevailing pay scales, restrictions on the number of working hours per week, competing industries that can cause dissatisfaction or high turnover rates among the workers, and variations in the skill and productivity of the workers.
Climatic conditions: Adverse climatic conditions at the site will result in incurring more cost. Extremes of low temperature require provision of additional insulation and special heating for equipment and piping. Similarly excessive humidity/hot temperatures pose serious problems. The cost of construction will also be high, in case, the climatic conditions at plant site are harsh and location of the plant is in the vicinity of high zone of earthquake/wind. If the plant is located in a cold climate, costs may be increased by the necessity for construction of protective shelters around the process equipment and special cooling towers or air-conditioning equipment may be required if the prevailing temperatures are high. Excessive humidity or extremes of hot or cold weather can have the serious effect on the economic operation of the plant. So rainfall/snowfall, ambient temperature, humidity, wind velocity, influence of cyclones/storms/earthquakes should be given due consideration.
Climate is an important factor especially for industries such as agriculture, leather and textile. For such industries, extreme humid or dry conditions are not suitable for plant location.
Water supply: Water is required for processing, drinking and sanitary purposes. Investigation for quality and probable source of supply is important, since the cost of treating water is sometimes considerably high. Presence of dissolved gases and organic material etc. should be thoroughly investigated. In case of water supply form an external source such as municipality, dependability of the source, pumping and storage capacity for present and future demands should be found out.
Certain industries use large quantities of water for cooling, washing, steam generation, and as a raw material in the process. Hence, the plant must be located where a dependable supply of water is available. A large river or lake is preferable, although deep wells or artesian wells may be satisfactory if the amount of water required is not too great. The level of the existing water table can be checked by consulting the state geological survey and information regarding the location of the water table at different periods and the year-round capacity of local rivers or lakes should be obtained. If the water supply shows seasonal fluctuations, it may be desirable to construct a reservoir or to drill several standby wells. The temperature, mineral content, silt or sand content, bacteriological content, and cost for supply and purification must also be considered when choosing the water supply.
Waste disposal: In recent years, many legal restrictions have been placed on the methods for disposing of waste materials from the process industries. The site selected for a plant should have adequate capacity and facilities for correct waste disposal. In choosing a plant site, the permissible tolerance levels for various methods of waste disposal should be considered carefully and attention should be given to potential requirements for additional waste-treatment facilities.
Safety and Environmental measures: Many industrial plants are located along rivers or near large bodies of water and there are risks of flood or hurricane damage. Before selecting a plant site, the regional history of natural events of this type should be examined and the consequence of such occurrences is considered. Protection from losses by fire is another important factor for selecting a plant location. In case of a major fire, assistance from the fire departments should be available. Fire hazards in the surrounding area of plant site must not be overlooked.
Community factors: The proposed plant must fit in with the acceptance to local community. Full consideration must be given to the safe location of the plant so that it does not impose a significant additional risk to the community. The nature and facilities of a community can have an effect on the location of the plant. If minimum required facilities for the satisfactory living of plant personnel do not exist, it becomes a burden for the plant to subsidize such facilities. Cultural facilities of the community are important to sound growth. Facilities such as religious centers, libraries, schools, civic theatres, concert associations, and other similar groups do much to make a community progressive. The efficiency, character and history of both state and local governments should be evaluated. The existence of low taxes is not in itself a favourable situation unless the communities are already well developed and have the friendly attitude.
Site characteristics: The characteristics of the land at a proposed plant site should be examined carefully. The topography of the land and the soil structure must be considered, since either or both may have a pronounced effect on construction costs. The cost of the land is important as well as local building costs and living conditions. Future changes may make it desirable or necessary to expand the plant facilities. Therefore, even though no immediate expansion is planned, a new plant should be constructed at a location where additional space is available.
Taxation and legal restrictions: Some of the factories are located in a particular area just to develop that area. It may be due to State Government policies regarding workers, pollution and smoke control requirements, waste disposal rules for industries etc. State and local tax rates on property income, unemployment insurance and similar items vary from one location to another. Similarly, local regulations on zoning, building codes, nuisance aspects and transportation facilities can have a major influence on the final choice of a plant site. In fact, zoning difficulties and obtaining the required permits can often be much more important in terms of cost and time delays.
Concluding Remarks
The site selection for a plant is one of the critical decisions. Identifying a good site is of paramount importance as it determines the cost of getting suitable raw materials, processing of raw materials to finished products and further distribution of products to customers. A good site may minimize the cost of production and distribution to a considerable extent. That means, a plant should be located at a place where cost of production is low in order to have maximum profit. Such reduction in the cost of production helps in elevating either the competitive strength or the profit margin of the business.
It is of utmost important to select and agree the decision criteria and weights for each of the criteria. One should avoid developing a site plan too quickly. It is always recommended to develop one to three alternative site plan concepts for potential sites. With multiple site options, project priorities can be ranked with reference to cost, location, and size. Exploring more than one site option also makes clear to lenders and other funders that we are committed to building the best project possible. And analyzing alternative site plans allows us to compare costs and design features in a practical way rather than abstract way. The site selection team may find a site that is not ideal, but with a creative design plan can meet the requirements. Other considerations include verifying that adequate public utilities are available, determining that there are no environmental hazards on the site and conducting a geotechnical (soils) investigation if new construction is planned. When reviewing site options, use the Site Selection Criteria to assess the fit of the site, compare and contrast sites, and prioritize needs. The site should be free from zonal restrictions like from railways or civil aviation restrictions. Government policies sometimes play an important role in site selection.
The geographical location of the plant contributes a lot to the success of any venture. Besides utmost care and judgment, factors for feasibility of plant are required to be studied before implementation. The site should be ideally located where the cost of production and distribution can be at a minimum level. The site should be in a position to allow a good scope for future expansion in multiple phases. It shall also have a conducive environment, safe living conditions for easy operation. However, other factors, such as safe living conditions for personnel as well as the surrounding community are also important.
Site selection involves measuring the needs of location of a plant, so assessment of various factors to make the plant functional are to be kept in mind. Site selection is the process of examining multiple options and assessing their relative advantages and disadvantages. After assessing advantages and disadvantages, the site for a particular ‘Plant Project’ is selected. The site selection process involves the four-phase task: Screening, Site work, Negotiation and Finalization.
Screening: The first step is to carefully plan decision criteria on the basis of which, the site of a plant will be finalized. For finalization of decision criteria, an experienced site selection team with representation from the project development team is required. Reconnaissance of the site is a must in order to arrive at the criteria. Assign weights to different criteria. Determine total weighted points to screen out unsatisfactory locations and shortlist the available sites.
Site work: Keeping in mind the location of sites, discuss with local people and local engineers/hydrologists to get an overview of the pros and cons for each site. We may sometime resort to on-site testing/exploration and select the best two sites out of the available ones.
Negotiation: Environmental Impact Assessment is carried out. After doing valuation of a site considering aspects such as transportation, incentives/ policies of the government etc, a final site for a plant is chosen.
Finalization: The plant is announced, constructed, commissioned, and made ready for operation.
Considerations for Site selection of Plants
Size of site: The size of site must be larger than the minimum requirements but it should not be significantly bigger than the required size as it may not be financially feasible. However, one should not forget to consider the probable future expansions, if any.
Transportation facilities: The site should be accessible for bringing the equipment, material and product logistics to the site. The raw materials and end-products require an uninterrupted receipt and dispatch of facilities through good road construction, proper linking with ports and rail heads. The possibility of an implant rail side may also be looked into, depending upon the amount of raw materials and products to be handled.
Since freight charges of raw materials and finished goods are a part of cost of production, transportation facilities are the governing factor in economic location of the plant. Depending upon the volume of the raw materials and finished products, a suitable method of transportation like rail, road, water transportation (through river, canals or sea) and air transport is selected and accordingly plant location is decided. Overall, the cost of transportation should remain fairly small in comparison to the total cost of production.
Water, railroads, and highways are common means of transportation used by major industrial concerns. The kind and quantity of products and raw materials determine the most suitable type of transportation facilities. Careful attention should be given to local freight rates and existing railroad lines. The proximity to railroad centers and the possibility of canal, river, lake or ocean transport must be considered. Motor trucking facilities are widely used and can serve as a useful supplement to rail and water facilities. If possible, the plant site should have access to all three types of transportation and, certainly, at least two types should be available. There is usually a need for convenient air and rail transportation facilities between the plant and the company headquarters. In addition, effective transportation facilities are necessary for the plant personnel from residence to plant site. The connection with airports is important from the point of view of easy moment of professionals and this becomes all the more important, if foreign collaborations are planned for the plant.
Access to market: The location of markets or distribution centers affects the cost of distribution of the products and the time required for shipping. Proximity to the major markets is an important consideration in the selection of a plant site because the buyer usually finds it advantageous to purchase from nearby sources. It should be noted that markets are needed for both, by-products as well as for major final products.
Availability of Power: Power and steam requirements are many times very high in some of the plants, and fuel is ordinarily required to supply these utilities. Power and fuel can be combined as one major factor in the choice of a plant site. If the plant requires large quantities of coal or oil, location near a source of fuel supply may be essential for economic operation. The local cost of power, quality of power supply can help us to determine whether power should be purchased or self-generated.
Availability of Labour: Labour is needed for construction of plant and its operation. No doubt, skilled labourers, technically qualified and trained managers will usually be required to bring from outside but at the same time, there should be adequate pool of unskilled labourers locally available near/at the the site. Potential supply of requisite type of labour governs plant location to major extent. Some industries need highly skilled and qualified persons/labour whereas other need unskilled. The type, quality, and supply of labour available in the vicinity of a proposed plant site must be examined. Consideration should be given to prevailing pay scales, restrictions on the number of working hours per week, competing industries that can cause dissatisfaction or high turnover rates among the workers, and variations in the skill and productivity of the workers.
Climatic conditions: Adverse climatic conditions at the site will result in incurring more cost. Extremes of low temperature require provision of additional insulation and special heating for equipment and piping. Similarly excessive humidity/hot temperatures pose serious problems. The cost of construction will also be high, in case, the climatic conditions at plant site are harsh and location of the plant is in the vicinity of high zone of earthquake/wind. If the plant is located in a cold climate, costs may be increased by the necessity for construction of protective shelters around the process equipment and special cooling towers or air-conditioning equipment may be required if the prevailing temperatures are high. Excessive humidity or extremes of hot or cold weather can have the serious effect on the economic operation of the plant. So rainfall/snowfall, ambient temperature, humidity, wind velocity, influence of cyclones/storms/earthquakes should be given due consideration.
Climate is an important factor especially for industries such as agriculture, leather and textile. For such industries, extreme humid or dry conditions are not suitable for plant location.
Certain industries use large quantities of water for cooling, washing, steam generation, and as a raw material in the process. Hence, the plant must be located where a dependable supply of water is available. A large river or lake is preferable, although deep wells or artesian wells may be satisfactory if the amount of water required is not too great. The level of the existing water table can be checked by consulting the state geological survey and information regarding the location of the water table at different periods and the year-round capacity of local rivers or lakes should be obtained. If the water supply shows seasonal fluctuations, it may be desirable to construct a reservoir or to drill several standby wells. The temperature, mineral content, silt or sand content, bacteriological content, and cost for supply and purification must also be considered when choosing the water supply.
Waste disposal: In recent years, many legal restrictions have been placed on the methods for disposing of waste materials from the process industries. The site selected for a plant should have adequate capacity and facilities for correct waste disposal. In choosing a plant site, the permissible tolerance levels for various methods of waste disposal should be considered carefully and attention should be given to potential requirements for additional waste-treatment facilities.
Safety and Environmental measures: Many industrial plants are located along rivers or near large bodies of water and there are risks of flood or hurricane damage. Before selecting a plant site, the regional history of natural events of this type should be examined and the consequence of such occurrences is considered. Protection from losses by fire is another important factor for selecting a plant location. In case of a major fire, assistance from the fire departments should be available. Fire hazards in the surrounding area of plant site must not be overlooked.
Community factors: The proposed plant must fit in with the acceptance to local community. Full consideration must be given to the safe location of the plant so that it does not impose a significant additional risk to the community. The nature and facilities of a community can have an effect on the location of the plant. If minimum required facilities for the satisfactory living of plant personnel do not exist, it becomes a burden for the plant to subsidize such facilities. Cultural facilities of the community are important to sound growth. Facilities such as religious centers, libraries, schools, civic theatres, concert associations, and other similar groups do much to make a community progressive. The efficiency, character and history of both state and local governments should be evaluated. The existence of low taxes is not in itself a favourable situation unless the communities are already well developed and have the friendly attitude.
Site characteristics: The characteristics of the land at a proposed plant site should be examined carefully. The topography of the land and the soil structure must be considered, since either or both may have a pronounced effect on construction costs. The cost of the land is important as well as local building costs and living conditions. Future changes may make it desirable or necessary to expand the plant facilities. Therefore, even though no immediate expansion is planned, a new plant should be constructed at a location where additional space is available.
Taxation and legal restrictions: Some of the factories are located in a particular area just to develop that area. It may be due to State Government policies regarding workers, pollution and smoke control requirements, waste disposal rules for industries etc. State and local tax rates on property income, unemployment insurance and similar items vary from one location to another. Similarly, local regulations on zoning, building codes, nuisance aspects and transportation facilities can have a major influence on the final choice of a plant site. In fact, zoning difficulties and obtaining the required permits can often be much more important in terms of cost and time delays.
Concluding Remarks
The site selection for a plant is one of the critical decisions. Identifying a good site is of paramount importance as it determines the cost of getting suitable raw materials, processing of raw materials to finished products and further distribution of products to customers. A good site may minimize the cost of production and distribution to a considerable extent. That means, a plant should be located at a place where cost of production is low in order to have maximum profit. Such reduction in the cost of production helps in elevating either the competitive strength or the profit margin of the business.
It is of utmost important to select and agree the decision criteria and weights for each of the criteria. One should avoid developing a site plan too quickly. It is always recommended to develop one to three alternative site plan concepts for potential sites. With multiple site options, project priorities can be ranked with reference to cost, location, and size. Exploring more than one site option also makes clear to lenders and other funders that we are committed to building the best project possible. And analyzing alternative site plans allows us to compare costs and design features in a practical way rather than abstract way. The site selection team may find a site that is not ideal, but with a creative design plan can meet the requirements. Other considerations include verifying that adequate public utilities are available, determining that there are no environmental hazards on the site and conducting a geotechnical (soils) investigation if new construction is planned. When reviewing site options, use the Site Selection Criteria to assess the fit of the site, compare and contrast sites, and prioritize needs. The site should be free from zonal restrictions like from railways or civil aviation restrictions. Government policies sometimes play an important role in site selection.
The geographical location of the plant contributes a lot to the success of any venture. Besides utmost care and judgment, factors for feasibility of plant are required to be studied before implementation. The site should be ideally located where the cost of production and distribution can be at a minimum level. The site should be in a position to allow a good scope for future expansion in multiple phases. It shall also have a conducive environment, safe living conditions for easy operation. However, other factors, such as safe living conditions for personnel as well as the surrounding community are also important.
NBM&CW, August 2023
