Project $2$: Semicon Expansion Program

Background

You have been asked to advise Semicon, one of the nation$$s fastest growing private hi$-$tech

companies, on the best way to accomplish its expansion program. You know the following

information:

Program Description

Semicon$$s expansion program consists of two specific projects. In order to meet accelerating

demand for its latest product, Semicon wants to build a new production facility on a site adjacent

to its current facility in New Hampshire, located $45$ miles from Boston, Massachusetts. Semicon

also wants to consolidate its work force $($currently housed in $4$ different office buildings in various

suburbs of Boston$)$ into a new $300,000$ square foot office to be built in downtown Boston.

Project Drivers

Semicon has advised you that it needs to have the production facility completed as quickly as

possible. Money is no object, since the margins on its product are so high that it is making

$$bushels$$ of money every day the plant is operating. It also believes that it has a $6-$month window

before any of its competitors will be able to develop a comparable product. Wall Street analysts

have been advised of all this and are expecting the production facility to be up$-$and$-$running to

enable Semicon to maintain its competitive advantages. The facility is extremely complex, using

advanced clean$-$room technology and specialized mechanical and electrical equipment and control

systems. Semicon advises you that this facility will be a $$one$-$of$-$a$-$kind project$$ and nothing like

its other facilities. Successful completion of this facility will largely be dependent upon the

completion of several objective performance tests that measure the ability of the project to meet

production needs.

The office complex, on the other hand, does not pose any significant technical challenges. Its

development is complicated by the fact that build$-$out of the space will be phased, based primarily

on how quickly Semicon can terminate its long$-$term leases on its current space. In fact, it is

possible that $100,000$ square feet of the space will not be completely built$-$out and occupied until

two years after the shell is completed.

Owner Characteristics

Semicon is run by young entrepreneurs who are unfamiliar with construction, but they are quite

savvy in dealing with Wall Street and the finances of the company. Management does not want to

disappoint analysts and needs to demonstrate that it can competently handle this aggressive

expansion program. Its facility department has basically spent the last three years managing the

tenant build$-$out of office spaces to meet the demands of an increasing work force. The facility

department typically hires a single third$-$party general contractor for this work, although on some

smaller build$-$outs, Semicon will directly hire the trade contractors without a general contractor.

Nobody in the facility department has ever built a new office building or a new production facility.

Management fully supports the program, but is skeptical of the capabilities of its facility

department to handle something this complicated. Management has demonstrated a willingness to

use outside consultants for a variety of business issues. You have found out, however, that the

$8$

President of the company has a $$hands$-$on$$ style and frequently likes to have the power to control

even the smallest issues that the company faces.

Marketplace Considerations.

The construction market in both Boston and New Hampshire is booming and all major A$/$Es and

contractors are quite busy. There are several design$-$build firms that have the technical capability

and interest in performing this work. However, none of them has ever worked in New Hampshire,

and only one has worked on a project in Boston.

Your Assignment

Semicon$$s president expects you to provide a recommendation on the most appropriate way to

structure the delivery for its expansion program, including selecting the project delivery approach

and the procurement procedure to select the prime contractor. Make sure to identify any issues and

assumptions, including characteristics of Semicon, which could affect your recommendation.

Remember to address the following when answering the questions for this project:

$1)$ Collect additional information you may need from other resources and$/$or RFIs

$2)$ Summarize the project and the facts of the case

$3)$ Discuss your major decision points, any risks you have identified that justifies your

selections and describe any assumptions you might have

$4)$ Provide your conclusion based on the case study and the assignment requirements

$5)$ Discuss the procurement procedures used to select a contractor in the project delivery

method chosen