People Ask...
Should I Choose an Available but Less Ideal Location for My Project? Help Me in the Decision Making Process.
I have to deliver a Food and Beverage (F&B) project within a short period. I’m reviewing available spaces in a prominent shopping centre. The proposed location isn’t ideal, but it is available immediately. With a tight timeline and budget, I’m uncertain about the best way to proceed. Should I do a project in this location, or recommend looking for another? What is the decision-making process in such a situation?
This is a conundrum I’ve seen many project management professionals face, especially when helping the leasing and operations teams scout for locations.
When I worked in retail, there were times when the leasing team would sign up bulk locations in a shopping centre without fully considering their suitability for the brands or operational requirements. They often conduct high-level checks to suit the majority of operations, but there’s always that one odd space none of the brands want, and the late entry has to take that space.
In such situations, there are a few tools and techniques I highly recommend to aid in the decision making process. It is best to collaborate with your business development and operations team at this stage.
1. Feasibility Study
This is an important decision making technique that we use in project management. The purpose is to assess the viability of using the proposed space, considering factors like cost, time, and resources.
There are several tools that we use in this technique to provide comprehensive information to make an informed choice about proceeding with the project:
- Market Analysis: It helps to understand the demand for your F&B offering in the shopping centre’s location, competition, and market conditions.
- Technical Feasibility: It helps to assess the physical suitability of the space such as the size, layout, infrastructure, etc., through site inspections, technical assessments, architectural, and engineering evaluations.
- Financial Feasibility: Analyse the costs involved, including lease terms, fit-out costs, and operational expenses. Ensure that you include any kind of modification costs. For example, costs to modify the air conditioning system, smoke extract system, or adding a grease trap in a space not meant to operate as an F&B outlet. Compare these with your budget to see if it’s feasible.
- Legal and Compliance Feasibility: Check for any zoning laws, health regulations, and necessary permits for an F&B establishment in the proposed space.
2. Cost-Benefit Analysis (CBA)
This is a critical technique that will help us evaluate the financial implications of a project by comparing the expected costs against the anticipated benefits, aiding in the decision making process. In this case, we need to compare the benefits and costs of proceeding with the current space versus seeking another location.
Let’s examine this process:
- Identifying Costs: Lease costs for the retail space, modification costs, fit-out and renovation expenses, operational costs (staffing, utilities, supplies).
- Identifying Benefits: Revenue projections from the F&B outlet from operating in this high-traffic shopping centre versus the revenue from other potential locations, intangible benefits such as proximity to target customers, increased brand visibility, and customer base. Potential cost savings from immediate availability, as the space is available right away, reducing the time spent searching and negotiating for another space.
- Quantifying and Comparing: Using financial modelling tools to project the total costs and benefits over a defined period, and calculating the net present value (NPV) of the project.
- Making the Decision: Comparing the net benefits to determine if they exceed the net costs, and conducting a sensitivity analysis to assess how changes in key assumptions impact the results.
3. SWOT Analysis
This is another technique used in both project management and strategic planning. By using this decision making technique, we take a structured approach to identify and analyse the internal and external factors that can impact the success of our project. In this case, the purpose of using this analysis is to identify the Strengths, Weaknesses, Opportunities, and Threats associated with using the proposed space.
Here is a hypothetical analysis of this space using this technique:
- Strengths: Prime location with high foot traffic, immediate availability allowing quick setup, established infrastructure and utilities.
- Weaknesses: Potential high cost of lease, modification, and fit-out; tight timeline might compromise quality or increase costs; possible hidden costs or compliance issues.
- Opportunities: Capitalise on peak shopping seasons with early opening, increase brand visibility and customer base quickly.
- Threats: Risk of rushing and overlooking important details, budget overruns due to unforeseen expenses, competition from other F&B outlets in the same centre.
Risks and Considerations
1. Risks of Proceeding with the Current Space:
- Budget Overruns: Tight timelines can lead to expedited costs, higher contractor fees, and premium prices for materials.
- Quality Compromises: The rush to complete the project might affect the quality of the fit-out and finishing.
- Compliance and Permits: Rushed projects might miss critical compliance requirements, leading to legal issues or delays.
2. Risks of Seeking Another Space:
- Time Delays: Searching for another suitable space will take additional time, potentially missing key market opportunities.
- Additional Costs: New searches involve costs such as broker fees, holding costs, and potentially higher rental costs for less prominent locations.
- Lost Revenue: Delay in opening means lost revenue and market presence during the interim period.
Recommendation
Given the immediate availability of the proposed space and the constraints of time and budget, the decision largely hinges on the results of the feasibility study and cost-benefit analysis. If the financials are feasible and the space meets the technical and regulatory requirements, in this scenario, I would recommend proceeding with the current space. The SWOT analysis supports this, highlighting significant opportunities that can be leveraged by acting quickly.
However, ensure to:
- Negotiate lease terms to mitigate financial risks.
- Plan meticulously to avoid compromising on quality.
- Allocate a contingency budget to handle unforeseen expenses.
Reflect on the urgency of your timeline, budget flexibility, and the strategic importance of opening in the prominent shopping centre. If these align well, proceeding with the current space can be a beneficial decision.
Book recommendations:
If you are a new project manager I highly recommend you read,
If you are a mid or senior project manager I recommend you read, Shortcuts To Success: Project Management in the Real World by Elizabeth Harrin.
Looking for mentorship
You have come to the right place.
With over 20 years in the industry, I have plenty of experience in various projects. If you need guidance on a career decision, have issues with your projects, problems managing your team, or just want to bounce off ideas, I am happy to help.
Let’s catch up to discuss your challenges and get you back on track.