Conceptual Facility Planning: A Case Study
By Thomas A. Westerkamp
They needed a bigger and better facility to conduct business. What did they
do? Start tearing out walls? Well….
When a company in the metalworking industry forecasted that their growth
would exceed capacity, they applied a solution known as Conceptual Facility
Planning. This quickly helped them find possible options and answered the
questions: What labor resources would be needed? What equipment would be
required? What space? Where would they be located? What would it cost? How
long would it take? How would they get from here to there?
The metalworking company’s analysis showed that, soon, with their present
facilities, they would be unable to produce enough product to meet
forecasted sales. The after-study report defined several optional solutions.
It showed the selection criteria used, and identified the best option as a
combination of keeping one plant as is, but rearranging work flow more
efficiently, with the addition of more efficient equipment over time. It
also recommended adding equipment and space at the second location, which
had the land available. Total budget cost for executing the plan was
slightly over $3,000,000 U.S. Dollars. And an additional 78 employees would
be required as the peak year of the sales forecast was reached. Equipment
purchases totaling $2,400,000 would be phased in, and obsolete equipment
salvaged as production levels began to exceed current capacity.
The primary benefit of executing this plan would be that the company could
meet projected sales of over $6,000,000 annually. Other benefits that would
accompany implementation were: better labor productivity, higher machine
utilization, improved material flow, lower material handling cost,; and
better management control.
The study components included establishing objectives, developing a
study method and approach, developing a sales forecast, examining facility
options, and developing a transition plan, schedule, and cost.
The company met with the project team. If subject matter experts were
available, the team could have been comprised of in-house staff. In this
case, staff was fully utilized, and time was of the essence, so the decision
was made to use outside consulting resources.
The objective given to the consultants by management was: to recommend the
best conceptual configuration of existing and new facilities, labor, and
equipment to manufacture the company’s products. The consultants were to
analyze workloads, space demands, and other conditions, and present their
evaluation and recommendations for a conceptual facility plan. The study
required eight weeks to complete, using one consultant, a consulting manager
part-time, and a company program champion who provided liaison with
management and access to company data. At key milestones, management met
with the consultant in a Steering Committee to review progress and address
The Study Method Planning and Development
The conceptual facility plan started with an objective analysis of major
production operations. This analysis was performed in order to provide:
An accurate assessment of capacity at that time
Capacity deficiency that would arise based on comparison with the sales
Conceptual recommendations for a specific program to satisfy current and
forecasted facility needs
The following steps were employed during the study:
Use existing data, reports, interviews with supervisors and managers,
and tours through the facilities, determine the present situation
Determine present and projected workloads
Develop space modules for all work centers
Develop future space demands for expanded production levels
Develop optional combinations and criteria to evaluate and rank them
Prepare simple, conceptual block layouts
Collect the information and prepare conceptual recommendations for
future manufacturing facilities
During this preparation stage, a study program schedule, showing key
milestones, timing and duration, was prepared. This schedule was presented
for management approval, and when approved, was used to monitor program
By communicating with marketing and sales management, the consultants
developed a summary of current and projected production volumes, by major
product group. From this information, a detailed sales list by product and
plant location was prepared. This forecast was the basic premise used to
develop future facility requirements, including workload, equipment,
manufacturing space, support space, storage space, and facility optional
Modular Work Station Development
The sales forecast was converted into workload standard hours by work
center. The workload for a product equaled the number of units multiplied by
the standard hours needed to complete one unit. The workload by work center
was then converted into work modules in order to identify space
requirements. Each equipment item in each work center module was analyzed
for potential shortage, combination, or surplus. An outcome was the
recommended removal of many obsolete, depreciated, low-productivity machines
and replacing them with fewer, more modern machining centers. This would
increase machine utilization and reduce space and material handling
requirements. After practical combinations were made, space requirements
were adjusted to calculate final adjusted space needs in square feet.
A detailed report was prepared showing a summary of the progress logic flow
used and how actual numbers were derived. The data was provided in the study
report under Future Space Demands.
When the space demands were calculated, optimum facility configuration
was developed. In this study, thirteen conceivable options (see Figure 1,
Thirteen Options) were placed were on the table, each with low to high
potential to solve the problem.
Figure 1. Thirteen combinations.
Logically, all options but three were eliminated by the management steering
committee and consultant team for obvious reasons, leaving three remaining
high-potential solutions. A full discussion of the options was included in
the report under Alternative Expansion
The remaining three options were examined and rated against six evaluation
The Project Team defined each of these facility criteria in detail, using a
multi-factor approach, and the Steering Committee ranked them by importance
(See Figure 2. Ratings).
Figure 2 Ratings.
Note that Figure 2 shows a unanimous preference for Option 1. Further
examination of the alternatives resulted in selecting Alternative D,
Maintain Plant A as is, and Expand Plant B. Definition and rankings by
importance of each criterion were included in the study report under Option
Evaluation and Selection.
Applying the criteria to each option in turn yielded the final selected
Option I D, which best met all of the criteria. Once this selection was
approved, the transition planning began. Allocation of products to existing
and expanded facilities, space, new equipment, manufacturing support and
storage space was allocated to the two facilities, using the work center
modules previously developed. A transition plan and schedule was developed
showing how each of the components would phase into the selected optimum
solution. As the plan was developed, the Team calculated budget costs for
expanded space at one facility, adding support equipment, such as electrical
distribution, air compressors, purchase of equipment, movement of some
machines, phasing out some machines, and recruiting labor resources. As each
major step in the transition was planned, the cost was rolled up to provide
an overall transition budget.
The result of the Conceptual Facility Plan effort was a facility that would
meet the added production demands at a higher productivity level, lower cost
per unit of output, and higher profit margin for the business. Savings gains
offset costs, providing a breakeven point within three years.
While this Conceptual Facility Plan case study focused on a manufacturing
example, the same approach has already yielded impressive results with
healthcare, education, finance, government, and many other service
Thomas A. Westerkamp is a consultant, lecturer, and author of the
newly-published Maintenance Manager's Standard Manual 5th Edition and
AWARE.MPS, Maintenance Productivity Suite. He founded Productivity Network
Innovations, LLC (PNI),
www.pninc.com in 1986.
Tom has held positions of Partner and Director, H. B. Maynard and Company,
Inc., now a part of Accenture, and plant engineer and master mechanic in the
paperboard industry. He has written over 200 articles for Maintenance
Solutions, a publication of Trade Press Publishing, and for numerous trade
journals, and has presented maintenance management webcasts. He works with
clients in manufacturing, service industries and government to install
integrated performance management/CMMS and shop floor control programs in
single- and multi-facility maintenance operations in the U.S., including
Alaska, and in Aruba, Canada, and India.
Printed with permission Construction SAVVY May/June 2014.