By Phil Schneider, President, Schneider Strategy Consulting LLC
Site readiness programs have steadily progressed over the 20 years since their debut on the economic development and site selection stage, evolving from a unique competitive advantage to nearly an expectation. Programs of one type or another have been established in 36 states as a response to site selector’s ever-increasing need for speed, data accuracy/transparency, and gaining early insight into a potential site’s strengths and challenges. Greenfield sites with little or no previously completed due diligence require an increasingly unacceptable amount of time, effort and expense for companies in the site selection process. Therefore, the growing expectation is that properties submitted as potential candidates for a site selection project will come complete with a full set of site and supporting infrastructure data.
But as site readiness programs have become more ubiquitous, so has the discussion and debate amongst site selectors with regard to these programs’ effectiveness and even their meaning. What does “certified” or “shovel-ready” actually mean for any particular site selection project (spoiler alert: sometimes not much) and why does the meaning of certified or shovel-ready vary so much from program to program? Site selectors want to know: how will any given site readiness program actually apply to my project, its industry or function, or even within the geography where we are searching?
While site selectors may argue about these terms and the comprehensiveness of one program or another, site selectors do not question the value of quickly receiving a complete and up-to-date data package for the properties that they are reviewing for their projects, so few question the potential value that these programs could have to a company undertaking a fast-paced location search, and by extension, to the overall advancement of the economic development and the site selection craft.
In response to the increasing availability and popularity of site readiness programs, and the rising debate about them, the Site Selectors Guild recently hosted a forum to advance the discussion. For the first time, a select group of experts from organizations with active site readiness programs – state/regional/local economic development organizations, electric power utilities, and railroads – along with leading site selection firms and representatives from engineering and construction firms gathered together with the stated purpose of kicking off a formal dialogue between program creators/providers and the targets of these programs – companies and site selectors – and discussing the various approaches to and content of these programs, and to begin to identify common ground.
That forum, along with subsequent discussion and knowledge sharing, highlighted several critical areas to further explore to gain better understanding of what these programs should (and should not) do, shine more light on both program value and challenges, and how to develop common terminology and standards that can be applied to these programs across geographies. These include further defining site readiness program purpose and value, data and terminology consistency, levels of completeness, and moving towards a national standard.
Site readiness program users – site selectors – and program providers – economic developers – agree that the primary reason to have a site readiness program is to reduce the scramble to pull together necessary site and infrastructure data for fast-moving projects. This saves time and cost for all parties involved. For a site readiness program to have purpose and value for a site selection project, it must definitely and significantly reduce time and effort for the company and site selector involved. This means a response to an RFI regarding potential sites within a day or less, not days or a week.
Site selectors – whether companies or consultants – are more often than not working on fast-paced projects, but are no less risk averse and hungry for accurate data. When comparing site submissions, they need to know quickly whether or not the site has the right size, dimensions, and characteristics, and has the necessary supporting infrastructure for both the current project and future expansions. They want to quickly weed out sites with unacceptable flaws and focus their time on those where operational and development risks are low. When comparing candidate sites, they want to know which sites can get them in to construction and operation faster, without significant additional due diligence and where site flaws can be satisfactorily mitigated within the project time frame. Site readiness programs, when comprehensive and accurate, can provide this level of speed and transparency.
For economic developers, the value and purpose are nearly the same: saving time and effort and reducing the RFI response time. While developing these programs does indeed take significant effort and costs for certain necessary studies can be relatively steep, once complete, having well-understood and fully documented sites provides them with ready-to-go “product” to present to local expanding companies and to market to outside companies. Perhaps more important, it also greatly reduces the mad dash to respond to RFI’s and RFP’s by having complete site and infrastructure data already on hand, packaged and ready to send the day the RFI is received, if necessary. This in turn allows the economic developer more time to research and respond to other critical requirements that are less conducive to off-the-shelf preparation.
A common misunderstanding about site readiness programs that needs to be addressed when discussing future standards for readiness, is the belief that the objective and value of program is to identify flawless sites for companies. The fact is that all sites have at least some flaws depending on the industry, function, or specific company requirement. A site in a readiness program does not need to be flawless – that is likely unachievable – but the data provided for that site, including any possible flaws, must be transparent to the company reviewing the data. The objective is be able to provide as much site data as quickly and accurately as possible. Whether the site is acceptable for a project is up to the site selector to decide. But the ability to quickly supply a complete and transparent set of site data will save time and effort for both the site selector and the economic developer, and therefore will have inherent value to both regardless if the site is ultimately chosen for the project.
Data and Terminology Consistency
Today, there is little consistency across geographies and programs, frustrating consultants and companies, and even the creators and managers of readiness programs. While there may be similarity between program requirements, in fact, because there is no accepted standard, almost no two programs are alike. Across the country, and sometimes even within the same state, there are widespread inconsistencies in terminology, the type and amount of data collected, and the freshness of that data. Where one state’s program may require detailed documentation for scores of data points, the next may require far fewer, and yet both will call their sites certified or shovel-ready.
For these programs to have consistent value and recognition, there needs to be consistency in data provision. While any agreed standard will need to recognize and allow for variations in programs to reflect local market norms and industry differences, most site selectors will agree that there are certain necessary site data categories and factors that must be included in any site readiness program for it to have value to the site selection process, such as:
- An established asking price (“negotiable” is not an acceptable answer);
- Contact information for the site owner/representative, economic development organizations marketing the site, and the various utility providers (and in the case of rail-served sites, rail providers) serving the site;
- Description of the site’s geographic location and its nearby surroundings, such as size and dimensions, plans, maps, photos, drawings, current and past uses, zoning, restrictions/covenants, and permitting approval processes;
- Utility data (electric power, natural gas, water, wastewater, storm water, and telecom/fiber/broadband), including current location relative to the site, service access, and capacities or service levels;
- Transportation access, such access and distance to highways, air service, and rail and ports if necessary; and,
- Site documentation and studies, such as: title, survey, environmental assessment, geotechnical/soil studies, flood plain designation, wetlands delineation, air attainment status, along with historical use and endangered species assessment where required.
A large part of the inconsistency problem lies in the name of the programs themselves. Calling a program “Certified” or “Shovel-Ready” is problematic and a source of the debate about the value of these programs. It immediately begs the question, “Certified for what”? For which industry or function is the site Certified or Shovel-Ready? Project requirements, even within the same industry, can vary wildly and they vary tremendously between industries and functions. A site may be certified, in that it is well-documented, but that doesn’t mean it will meet the needs of any particular project. And while sites may be “certified” for specific industries and functions, even that does not ensure that it will meet the needs of the next project that comes along in that very industry. Terms such as “Document Ready Sites” or “Fully Documented Sites” may be better alternatives for a future agreed standard, though even those terms raise questions, as fully-documented for one project may not be nearly enough for another.
Levels of Completeness
Most certified or shovel-ready site programs require that a site admitted to the program provide every data item that the program prescribes, including all 3rd party studies (e.g., Geotechnical/Soil Survey, Phase 1 Environmental Assessment, etc.). Yet, most site selectors will agree that even if some studies are incomplete, having the ability to review sites where a large percentage of data are documented and verified does still have good value in the site selection process; even if some studies are yet to be completed, having the rest of the core data may still pique enough interest for the company or consultant to seek more.
As the site selection and economic development industry seeks common ground on site readiness programs, a key debate will be the concept of different “levels” of readiness. Site selectors and companies have different requirements for different types of projects – different industries and functions have more or less need for site acreage, utility usage, transportation access, soil bearing capacity, and so forth – and economic developers may have different objectives for their site readiness programs. While there should be baseline data expectations for site readiness programs as outlined above, there is no right or wrong level of completeness. While a site that is up-to-date with 100 percent of all data points provided and may have more value to a site selector and project, that is not to say having 85 percent of the data has no value. If a site with a less complete data set has a particularly strong attribute that may be a critical need for a given project – very robust utilities or transportation access, for example – that strength may be enough for the site selector to include that site in further due diligence, and for the company to take on some additional due diligence effort and cost to fill in the data or study gaps. As long as the data that are provided in the program are accurate, the process transparent, and any data gaps clearly identified, the program still has value. The site selector has a set of accurate data to assess – albeit not 100 percent complete – and can decide whether and how to move forward.
Another point of debate is the variability in local market expectations and requirements. For example, some states will require that studies such as archeological/historical use and endangered species evaluation be completed before industrial or larger scale commercial development can occur. For those states, these studies would be a requirement for the site data set to be 100 percent complete. But other states do not require these studies or follow the basic federal guidelines instead, and therefore industrial and large commercial developments do not typically undertake these studies.
Should sites in those states be penalized or receive a lower rating in a site readiness program even though the studies are not required? Likewise, in some markets it is uncommon for site developers – public or private – to proactively pay for the Phase 1 Environmental Assessment or geotechnical soil survey, particularly for sites that have never been developed previously. If these sites have all other requisite data and have solid industrial or heavy commercial development potential (and perhaps a nearby relevant geotechnical comp study) should the lack of these studies eliminate them from a site readiness program? In these cases, a “level” indicator for data completeness, or a point system would more accurately reflect their capability and adjusting a future national standard to better reflect local market conditions is likely needed for these programs to be comparable across state boundaries.
Towards a National Standard
If site readiness programs are going to have common meaning and reach their potential value as table stakes in economic development offerings, questions about the type, quality and validity of the many variety of site readiness programs need to be answered. How much and what type of data are truly needed for these programs? How do these programs address the vastly different types of projects, from heavy manufacturing, to light manufacturing, distribution, and back office? How much is enough and how does that change by project and local market conditions and expectations? How fresh is fresh enough? While economic developers have made valuable advancements in providing site data more quickly and transparently, clearly much more needs to be done before these programs reach their full potential to advance the site selection process. So where do we go from here?
As a start, standard terminology needs to be adopted so that site selectors and companies understand what program names and ratings mean, and what they can expect with regard to data robustness and applicability to their industry and project. A common terminology and set of standards for different levels of site documentation and readiness would increase the value of these programs, improve their effectiveness and enhance the overall site selection process.
While much more needs to be done, to date, some methods of standardization under discussion and debate include:
- Levels of Readiness: Designating sites as Platinum, Gold, Silver; Tier 1, 2, 3; or other similar scale of readiness to indicate the amount and type of data that have been collected and verified.
- Industry Readiness: Developing a standard for the type and amount of data typically required by different types of industry, such as heavy processing or manufacturing, large scale assembly, light manufacturing, data centers, distribution and cold storage and back office.
- A Point Scale: Developing a point scoring system that indicates how much, what type and the freshness of the data so that a company or consultant can quickly gauge how much and what has been collected and verified, and then apply that to the type of project and the requirements they are working on. In theory, a point system could be developed for different types of industry or function, and/or to differentiate site size, utility capacity and transportation access and capacity.
- More formal discussion between leading site selectors, economic developers, and other firms involved in the site readiness documentation process is needed – and already underway – to seek common ground on site readiness terminology, base level data requirement levels, dealing with differing expectations of industries and functions, and accounting for local market norms and differences. While getting to an agreed standard will not be easy, creating and adopting a common site readiness standard and system will go a long way in reducing the confusion and inconsistency currently inherent in these programs, enhance their usage and value, and ultimately meet the original program objectives: creating data ready sites for new and expanding projects, and saving precious time and cost for both the site selector and economic developer during the relentlessly accelerating pace of the site selection process.
About the Author: Philip Schneider, President, Schneider Strategy Consulting LLC
Mr. Schneider has over 30 years of management consulting experience in the fields of corporate global location strategy, site selection, incentives negotiation, and economic development strategy. Phil spent seven years with Fantus Consulting, followed by 18 years with Deloitte Consulting’s Strategy & Operations practice where he led their Location Strategy and Global Expansion Optimization (GEO) practice. He is currently the President of Schneider Strategy Consulting LLC, where he continues to provide strategic location advisory services. Mr. Schneider is a Board Member and past President and Chairman of the Board for the Site Selectors Guild, the professional association of the world’s leading site selection consultants.
Prior to creating Schneider Strategy Consulting, as a Director with Fantus Consulting and as a Partner with Deloitte Consulting, Phil conducted nearly 400 engagements across industries and corporate functions, from heavy manufacturing, to high technology, headquarters, R&D, call centers, and shared services. For his corporate clients, Phil:
- Develops corporate location strategy and selection decision process
- Screens and analyzes countries, states, and cities to identify locations; meeting specific company and project criteria;
- Conducts field due diligence to inspect sites, labor markets, infrastructure, support services, living conditions, and other business conditions and costs;
- Develops operating cost and business conditions benchmarking models; and,
- Creates negotiation strategy and leads negotiations for government incentives and real estate acquisition.
Phil’s past corporate location clients include Allen-Bradley (Rockwell), American Axel, American Express, Amgen, A-Mold Wheels, Andersen Window, Apple Computer, Armour Swift-Eckrich, Ashland Inc., AstenJohnson, Baker & McKenzie, Bank of America, Bank of New York, Barney’s of New York, Batesville Casket, Blue Cross Blue Shield, Bosch, Bridgestone/Firestone, Bridgestone Metalpha, The Capital Group, Caterpillar, Cliffs Natural Resources, Concentrix Solar, Crown Equipment, Deloitte, Diebold, Elkhem Solar, The Gap, Genentech, Grainger, Hager Companies, Hill-Rom, HP, Hyundai, Jo-Ann Stores, John Deere, Johnson & Johnson, Kellogg, Kennametal, Kmart, Kimberly-Clark, Lake Erie Screw, Land’s End, Mannesman, Mattel, McDonnell Douglas (Boeing), Meldisco Footwear, Metalpha, Michelin, MillerCoors, Morgan Stanley, Mine Safety Appliances, Nestle, nVidia, Paypal, Peugeot, Pitney Bowes, Pittsburgh Glass Works, Potlatch, Pratt & Whitney, Q-Cells Solar, Raflatac, REC Silicon, REC Solar, Republic Steel, Soitec Semiconductor, Sherwin-Williams, SMA Solar, Spectrum Brands, Stryker, Synthes, Sun Life Financial, ThyssenKrupp, TriMas (Masco), and Toyota.
Mr. Schneider has conducted site selection projects throughout the US and the world. In addition to conducting location screening and business cost/conditions reviews of nearly all industrialized countries in the world, Phil has conducted on-the-ground field due diligence and government incentives/grants negotiations work in:
- Americas: US (and Puerto Rico), Canada, Mexico, Brazil, Chile, Columbia, Costa Rica
- EMEA: England, Wales, Scotland, Northern Ireland, Ireland, France, Spain, Belgium, Netherlands, Germany, Switzerland, Iceland, Norway, Denmark, Sweden, Poland, Czech Republic, Slovakia, Hungary, Turkey, United Arab Emirates, South Africa
- AsiaPac: China, India, Korea, Japan, Singapore, Malaysia, Australia
- Mr. Schneider has also conducted many strategy assignments for economic development and investment promotion agencies including:
- International: Invest in Iceland, Hungary Investment Promotion Agency, Investment Support and Promotion Agency of Turkey (ISPAT), Ministry of Economic Development Italy (Sviluppo Italia), Cadilla Special Economic Zone (India), Invest Northern Ireland, Invest Hong Kong, Invest in Denmark, Japanese External Trade Organization, Enterprise Cape Breton Nova Scotia, Enterprise Saint John New Brunswick, The Greater Halifax Partnership, Ontario Ministry of Economic Development and Trade, Silicon Border (Mexico)
- US: Wisconsin EDC, Milwaukee 7, Creative Alliance Milwaukee, Oshkosh Wisconsin, Wisconsin Regional Leadership Council, Xcel Energy, Michigan Economic Development, Georgia Power, Public Service Indiana, Northern States Power, Colorado Springs, Fairfax Virginia, Hampton Roads Virginia, Washington County Virginia, Fort Worth Alliance, Greater New Orleans, Jefferson Parish Louisiana, Tulsa Oklahoma, San Antonio EDF, San Antonio CyberSecurity Council, Portland Oregon, Business Oregon, Hillsboro Oregon, Gresham Oregon, Clinton Iowa, Gulf Power, Ameren, Xcel Energy, Northern Kentucky.
Mr. Schneider has authored numerous articles and white papers on the topics of corporate location strategy, site selection, foreign direct investment, and economic development, and regularly speaks at conferences and forums and facilitates round tables focused on these topics. Newspapers and business publications frequently interview him as a subject matter expert in these fields. Mr. Schneider earned both his BA and Masters degrees from the University of Wisconsin after serving six years in the US Navy.