Constructing the Case for Managed Risk in Overseas Facilities Development

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Under heavy pressure to capture new consumers in emerging global markets, where economic and population growth is rapidly rising, they are faced with a dilemma. They can continue down a strategic path that appears sound, and ignore the significant risks that accompany access to these new markets. Or, they can devise a plan to significantly mitigate substantial exposure.

So far, undaunted, businesses are charging headlong at the opportunity. Since 2012, global corporations have invested more in emerging markets than in the core economies of the U.S., Europe and Japan, and growth of the middle class in these regions is expected to continue through 2050.*

Driving this surge is an intense determination to exponentially improve revenue results, which is commendable. But risks must first be identified and negated.

* World Investment Report of UN Conference on Trade and Development, 2013

“Innovation, speed and bold action are all associated with risk. So if you're avoiding risk, you're avoiding some of the very qualities your organization needs to excel or perhaps even just survive.”Steven J. Thompson, CEO, Johns Hopkins Medicine International

Intelligent risk management is a necessary element for ensuring return on investment. So while some risks are by their nature unpredictable and unmanageable – such as geo-political unrest – facility development executives must focus on what they can control.

Controlling risks, especially in underdeveloped global markets is a strength of Butler Manufacturing™, the leading global provider of building solutions. Corporations that partner with Butler have found that engagement in the early planning stages has lead to better on-site performance, shorter construction schedules, lower long-term maintenance, and more importantly, mitigation of risk in the supply chain.

Butler® relieves the stress of uncertainty through leadership and experience

Promoting proactive market growth and rapid return on investment in locations that are inherently risky and unstable is why company executives are now ranking contractors on their risk management competency. It’s the only way to achieve outcomes that will enable companies to overcome obstacles and out-smart competitors.

Failure to properly identify risks at the bid stage is a primary cause of underperforming projects. However, collaboration with Butler in a design-build approach helps in identifying risks sooner. This interactive partnership enables Butler and their corporate customers to define and enhance frame and building envelope material requirements, which leads to reduced project schedules, improved safety, and enhanced opportunities for cost savings.

Risk Factors While Doing Business in Emerging Markets

The chart illustrates the extent of risks by various emerging market regions. Butler has already overcome the majority of these potential threats or impediments to success for a long list of Fortune 1000 companies in thousands of projects in all parts of the world.

Butler has decades of global experience. In addition, Butler’s single-source responsibility, worldwide manufacturing facilities, reliable value chain, and integrated services provide unparalleled levels of risk relief.

Another advantage is the essential relationships Butler has forged with key local building entities, including design institutes in China, architects in India, and contractors in Mexico. This allows corporate customers to concentrate efforts on the critical path to getting their facility operational, rather than worrying with deciphering foreign codes and rules of construction.

“More than three-quarters of executives and construction project managers admit to the presence of underperforming projects, with the prime causes being delays, poor estimating processes, and failed risk management processes. Companies also suffer from poor subcontractor performance and design errors and omissions.”KPMG 2013 Global Construction Survey

Key factors supporting Butler risk mitigation

When partnering with Butler, a company offering true global reach and a design-build approach that features value-engineered building systems, the risk in “design and materials” becomes managed risk. This differentiates Butler and its international network of local construction providers from the typical construction procurement process, because the primary advantages are delivered at pre-construction.

Valuable benefits of doing business with Butler include:

  • Single Source Responsibility – in the design-build approach with clear systems construction communication lines and accountability
  • Faster Schedule – up to 30% reduction in construction critical path
  • Reduced Total Cost of Ownership – where early materials considerations, together with a systems construction approach, provide for the best return on investment over the life of the building
  • Sustainability ROI – $6 potential return on every $1 invested in energy efficiency

10-Second Survey

Which of these motives would most influence your decision to build a new facility?

Accumulated results of surveys will be compiled and shared in a future summary report.

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“You don’t concentrate on risks. You concentrate on results. No risk is too great to prevent the necessary job from getting done.”Chuck Yeager, USAF Ret. Brigadier General

Remove the risks and concentrate on results

The global economy will continue to present robust growth opportunities for corporations with the capacity to exploit them. However, that capacity will likely be tested as new risks present themselves in each new market.

For organizations that plan to make multiple investments in a variety of markets, aligning with Butler in a strategic collaboration creates additional savings benefits through efficiencies, along with the personnel and infrastructure needed to standardize the approach and track continuous improvement across multiple engagements.

Without a proven design-build partner, like Butler, risk identification and prioritization are only part of the challenge for executives responsible for these projects, especially as the financial results of taking on additional risk come under increasing scrutiny in a volatile marketplace.

Relieve the risks and uncertainties of international facilities expansion. Ask a Butler Corporate Accounts Manager about advantages of early design-build collaboration. For more information or to schedule a meeting, complete this simple form.

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