Editor’s Note: This article is the second part in a series on data, technology, and manufacturing facility operations. Read part one on the impact of ineffective technology and data gaps.
Technology is helpful, but it can’t solve all our problems. We’ve talked about the gap technology can leave if we try to use it as a catch-all solution. We also covered how knowledge gaps left by bad data can hinder a facility’s ability to operate effectively. But what does this problem look like in the real world? From operations to renovations to higher costs, the consequences of patchwork technology solutions are tangible, measurable, and, most importantly, avoidable.
A Real-World Problem
A manufacturer had a big opportunity and a big problem. It was 2018. Their 250,000 sq. ft. campus—built in 1942 and remodeled in 1982—was due for another update. While everyone sincerely loved the crushed velvet and team toilets, the facility didn’t meet current health and safety codes. At the same time, the manufacturer had taken on a new client who planned to double their demand by 2027.
The facility needed revamped processes and new production areas, including a new floor. They sought competitive bids from general contractors, budgeting $14M for the additions, buildouts, and subsequent changes to processes and equipment. Upon reviewing the contractor bids, they noticed a wild lack of consistency across pricing: One contractor asked $20M, another $15M, and the rest ranged from $12M to $14M. All the contractors were reputable and working from the same bid scope, so why the discrepancies?
A Solution Identified
After polling the bidders, the manufacturer realized that, amid the renovations and day-to-day changes made to piping, walls, and infrastructure, every contractor had added a layer of “guesswork padding.” No one knew what they were up against, and all had made comments in the bid response: “Subject to change orders and additional funding based on outdated or unreliable CAD information.”
No problem. The manufacturer found a map-digitization company that could consolidate their CAD information to their master files for $85k and digitize those same files for ease of use and collaboration for an additional $75k. The justification? The updates to their CAD files were on track to save them $1M in project costs and time, making it worth the upfront investment.
A Problem Revisited
The maps come back in CAD form and are completely usable—in perfect condition. The manufacturer sends out the bid with the updated CAD files included. Two companies rebid the project at $15M, maintaining identical language surrounding change orders. The third company held their quote at $20M, with no language around change orders or additional funding. The third contractor had worked with the manufacturer before and was the preferred vendor on this project. But how could this contractor simultaneously be the most expensive and the most confident?
At the manufacturer’s request, the third contractor gave a formal proposal and presentation to provide insight into the $5M discrepancy. The contractor explained that, because of their prior experience, they knew the digital mapping misrepresented the site, citing numerous inaccuracies on the new digital maps. Immediately, questions arose:
- From the VP of Operations: “I spent $150k on maps that aren’t accurate?”
- From the VP of Procurement: “I just spent $150k to update maps and no one looked at them first?”
- From the VP of Engineering: “You just spent $150k digitizing maps that we should have asked maintenance to confirm first?”
- Finally, from the VP of Maintenance: “Do you really think we have time to trace and measure all of our pipes, valves, robotics, and everything else we alter on a regular basis?”
A Solution Revisited
What now? The manufacturer needs accurate maps. The solution: 3D-scanning the whole facility—which only costs $100k, will accomplish the goal affordably, and the results of which can be overlaid on the existing digital map. Two months later, the 3D scan was delivered and layered on top of the digital map, in perfect form.
Bid packets go out again; six responses are returned. The first five bidders came in between $12M and $15M, all of which still included change order language. The preferred, experienced contractor comes back at—you guessed it—$20M.
What’s the deal? The contractor explanation was not what the manufacturer wanted to hear after a $250K+ investment and a major project still on the horizon:
I’ve been in your plant for the past 15 years. Half the equipment documented in your mapping project is antiquated, doesn’t work, or isn’t compliant with current codes. A quarter of your plant has asbestos—I’m going to have to remediate it to build. And the pipefitters you brought in for the last renovation did a terrible job; I’m going to have to redo all the plumbing in your west wing. The roof has been redone at least five times. It’s going to require a small army to pull it off and build the facility up.
The problem is, I know your plant. I know what technology can’t tell you, and it’s what I’ve laid eyes on time and again. My bid is my bid, but I’d hate to lose this and see you pay even more in change orders when all is said and done.
Lessons Learned
Hindsight is 20/20, but let’s dial in what we can learn and apply from this situation. In most cases, this scenario doesn’t play out so simply and transparently. All too often, the bids come in, the numbers are evaluated, and the PO gets cut. What happens after is up to chance. But it shouldn’t be.
Due diligence doesn’t belong only to the business or the contractor…it’s on everyone. Forethought and preparation correlate with the best possible pricing and system performance. Missing information dramatically impacts success and drives up costs.
We throw technology at projects or processes, and that technology can enable businesses to accomplish more with greater efficiency. But technology alone can’t fix current state problems. Your goal should directly connect to the root cause of your problem. Dig deeper, know your problem and desired outcome, and determine when and how to incorporate technology into your solution.
Stay tuned for the final installment in this series to connect real-world, hands-on analysis with digital tools to maximize impact.
Ready to learn more about how HydroCorp can support your facility with as-built piping schematics and comprehensive water management programs?
