Projects that require an investment, even one that will ultimately increase profits, are being delayed as long as possible. Every employee, every square foot of real estate and every piece of capital is being used to the utmost before new investments are authorized.

Even in these circumstances, sooner or later many companies find it necessary to evaluate their location options, but the economic environment has led to a pattern of waiting until the last minute to start an analysis. It has also led companies to prematurely narrow their options to only those areas that are already familiar.

The time crunch is real, but creating and sticking to a strong decision-making process can actually save time and money. This is a process that takes weeks, not months, and can impact a decision that your company will have to live with for years.

If you are conducting the process yourself, try these steps to quickly move to a decision that delivers the best results for your company. If you are working with a consulting firm, make sure its approach covers all these bases.

A Simple Process

A site selection process need not be complicated, but success or failure depends on the details of how it is implemented. In general, most projects can follow the following steps:

* Create a set of location criteria,

including a timeline;

* Create a format for analysis;

* Gather data;

* Eliminate areas that fail to satisfy

successive tiers of criteria;

* Conduct on-site comparative

research of the remaining

short-listed areas;

* Enter into property and

incentive negotiations;

* Communicate results.

The best way to create a set of location criteria is to begin with a blank sheet of paper and design an “ideal” environment that would be best for the business. Once a site selection process begins, the flood of data can make it difficult to maintain focus on the purpose of the project.

Location factors that are easiest to measure often get more attention than those that are less quantitative, but more critical to the project.

Many projects, for example, try to use unemployment rates to measure labor availability, because it is a familiar, comparable statistic, even when companies know the right candidates are unlikely to be among the unemployed.

Existing locations also often serve as a point of reference for creating a list of critical factors, which can be very limiting.

Criteria and data are two different things. Criteria identify conditions that must be met, while data, be it statistical or anecdotal, measures how well those conditions are met.

Some of the questions to ask that will lead to the right criteria list are:

* What skills are crucial to our success and in what quantity?

* How many of our people will we transfer with the operation, and how many do we expect will be hired from outside the community we choose? A high proportion of transferring and/or nationally recruited employees make quality of life factors more critical because people have to be induced to uproot their personal lives.

* What are our financial constraints? Salary objectives, capital constraints, freight cost constraints, tax environments, etc.

* Who or what do we need to be close to, and how close is close enough? Customers, suppliers, research institutions, raw materials, airports, ports, etc.

* What physical environment do we require? Site and building requirements, such as size, shape, ceiling height, parking and surrounding amenities, and supporting infrastructure, such as location and capacity of utilities.

What circumstances do we need to avoid? These circumstances include the regulatory environment and weather/climate risks.

By developing criteria in this manner, a company is forced to challenge assumptions about what is required and what is merely convenient or familiar.

Examples of how this can play out in a location study include:

Airport proximity: Today, companies are considering a broader range of location options. Stories appear almost daily about companies that are establishing operations around the world, which requires more flexibility and longer timelines. At the same time, however, in U.S.-based searches, companies are often sacrificing cost-saving opportunities and recruiting advantages in order to maintain proximity to an airport for the convenience of a relatively small number of people.

Community size as a criterion: Defining the size of the skill base required, rather than immediately establishing a minimum population threshold, can lead to including some communities that would otherwise be overlooked.

Assessing the true value of economies of scale: This approach allows a company to identify combinations of criteria that may be at odds with one another, which often occurs in consolidation scenarios. Generally speaking, smaller communities often have lower wage scales, and the labor cost savings that can be achieved may outweigh the infrastructure required to maintain two smaller operations rather than one large one.

Avoid “As Soon As Possible”

Creating a realistic timeline is also an important part

of establishing the project criteria. Companies that impose time-related restrictions on a project, and then miss their own deadlines, often overlook great opportunities. This is typical of many projects where companies limit themselves at the outset to only places that have existing buildings available.

This restriction can cause a number of promising locations to be eliminated, when more often than not the decision is delayed until well past the time it would have taken for a new building.

To counteract the impulse to set an “as soon as possible” deadline, or force the process to finish by an arbitrary meeting date, ask the following questions:

* Is there a specific factor pushing us toward a decision date or an implementation date (lease expiration, customer requirement, etc.)?

* Are we pushing for a decision date so far in advance of our likely implementation date that the analysis itself may become stale?

* How much financial leverage are we willing to trade off for an earlier decision?

Create a Format

For Analysis

Information in a location study comes from a variety of sources, and often in very large quantities. By creating a framework at the outset for the factors that will be used to evaluate the criteria, you will be able to focus the data gathering efforts.

Some companies and consultants assign weights for various factors, award scores and rank communities according to their total scores.

One potential shortcoming of this approach is that it often makes it difficult to distinguish a requirement from a competitive advantage. If a port is required, for example, it is unnecessary to gather data and score a community that does not have a port on other factors.

It is also important to establish a threshold for any factor that is important. If a community or site has sufficient utility service, it should not necessarily receive a higher score than a community that provides more than sufficient service.

An alternative approach organizes location factors into tiers, according to how critical they are in moving the project from one phase to the next.

The first tier could consist of pass-fail criteria. For example, surveys often identify access to an interstate as one of the top five location criteria. These results are absolutely accurate, but misleading.

The reality is that when access to an interstate is required, only those areas with that access make it to the search list. After that condition is met, however, it is no longer useful in making further judgments about which communities to eliminate or retain.

Subsequent tiers are then designed to successively raise the bar that areas must meet in order to survive to the next round of analysis, moving from factors required for the project, to those preferred for the project, and finally, to those that fall into the category of “all things being equal.”

Gather the Data You Need, Not All the Data Available

Databases and economic development organizations have proliferated to such an extent that gathering statistical data is in some ways the easiest part of a location analysis, and it is a key part of working through the process of elimination.

Demographic and salary databases are available for purchase, state and community Web sites provide a variety of input, and calling a development organization directly will result in a flood of information sent via every means possible.

One of the most important tips to keep in mind when gathering data is to be aware of the averages.

Comparing average wages is sufficient for a first-tier elimination, but at later stages in the process it is far more effective to focus on prevailing wages for two or three companies that would be direct competitors for labor.

The same is true for average rental rates, average tax rates, average education rates and other factors.

Eliminate Areas that Fail to Satisfy Tiers of Criteria

Taking the tiered approach to screening out communities creates a strong audit trail, which is especially helpful in tracking specific failings or strengths of internal candidates or subjective favorites. By eliminating communities in successive rounds of screening, it also becomes easier to spend more time evaluating the strongest candidates.

Conduct Detailed Comparative Research of the Remaining Cities

A tremendous portion of the research to this point in the analysis can be conducted without visiting, or perhaps even contacting the community.

The relative ease of accessing statistical databases makes it tempting to try to reduce the process to a mathematical equation. Once the first- and perhaps second-tier criteria have been satisfied, however, it is important to augment the statistical comparisons with qualitative and anecdotal analysis.

Statistical databases, consultants, real estate professionals and economic development organizations provide quick responses to project inquiries, but some of the best information can come from people and places that may not be able to drop everything and respond to your timeline.

Enter Into Property and Incentive Negotiations

In most cases, it is wise to take the time to enter into negotiations with at least two alternatives, preferably in different communities or different states.

If the selection process has proceeded in an organized fashion, the final two candidates are often close enough in their ability to satisfy the project requirements that the outcome of the negotiations will influence the final decision.

Negotiations work best when property and incentive negotiations are co-coordinated, preferably with the same point person working on behalf of the company. The local landlord or landowner and the local economic development organizations should be motivated to act together to create a competitive offer.

Communicate Results

Once a decision has been made, the company should retain control over how and when the information is communicated internally and externally.

Internally, communicating a decision without immediately answering the personal concerns of affected employees invites disruption during the period between announcement and implementation.

Externally, allowing a community to participate in the public announcement and be recognized for support they have offered is a wise move for a company that will be a long-term corporate citizen, and will raise the local profile for future recruiting.

In today’s site selection projects, no one has time to waste. Economic development organizations are so eager to provide assistance and data is so abundant that the site selector’s most important job is to create a structured process that reflects the individual needs of each project, and keep the focus on the fundamentals that deliver the best possible results.

Kate McEnroe is president of Kate McEnroe Consulting, an Atlanta-based company that focuses on site selection and economic development consulting. She can be reached at (770) 333-6343, or via e-mail at kmcenroe@mindspring.com.