In the world of industrial real estate development, every project presents its own challenges. What may seem like a straightforward task of building a new factory or plant is in fact a highly complex process that presents project owners and contractors with significant challenges throughout. Based on our experience, we have identified five critical areas where projects most commonly encounter difficulties. The good news is that, with the right expertise and preparation, these problems can be avoided.
1. The complexity of the permitting process
While few would consider obtaining a building permit to be merely an administrative task, many still underestimate the complexity of the process and the time and effort it requires. Obtaining a permit for industrial facilities requires compliance with specific environmental, fire safety, occupational health and safety, and numerous other regulatory requirements. Preparing the necessary documentation, liaising with the relevant authorities, and arranging expert assessments can take months.
A poorly planned permitting process can have severe consequences, including delayed start-up, cost overruns, loss of investor confidence and even project suspension.
Early planning is key. All regulatory requirements should be identified at the outset of the project, and a professional permitting team should be assembled. According to experts at Lakógép Kft., this phase should take at least 6–8 months. For instance, during the site selection phase of a Hungarian investment by a South Korean electronics giant, the permitting considerations were already included, enabling the subsequent process to proceed smoothly.
2. Ignoring ground conditions and foundation issues
Due to Hungary’s geographical and geological characteristics, challenging ground conditions are common in many locations. Projects that begin without a thorough geotechnical survey often encounter unexpected difficulties, such as high groundwater levels, weak load-bearing soils or environmental contamination.
If contractors do not pay sufficient attention to assessing ground conditions, the result can be dramatic cost increases, delays to the schedule, or even a complete redesign of the construction concept.
A detailed geotechnical investigation must be carried out before every project and the results must be incorporated into the execution plans during the design phase. A common issue is that designers base their calculations on insufficient samples. As a result, foundations are sometimes designed in an insufficiently defined manner, creating unnecessary additional costs for the client. Lakógép Kft. highlights these issues to clients after assessing the conditions. For a domestic biorefinery project, for example, Lakógép’s team identified the soil’s special properties early on and adapted the foundation technology accordingly, thereby avoiding potential problems further down the line.
3. Cost planning and change management control
During industrial projects, change requests during construction are almost inevitable, leading to major cost overruns, investor dissatisfaction and cash-flow problems. All too often, these requests are handled on an ad hoc basis, without transparent cost control, leaving clients to discover the true cost of the project only at the very end.
It is therefore essential to implement a transparent project management system that tracks costs and changes in real time. Every modification must be approved in advance, with the associated cost and schedule impacts clearly defined. For instance, during the construction of a Japanese automotive supplier’s plant, weekly cost reports enabled the project team to manage finances effectively, resulting in the investment closing with a deviation of less than 2% from the planned budget.
4. Coordination between stakeholders in buildings, infrastructure and production technology
Building an industrial facility requires the involvement of many different trades, including building services, electrical systems, technological equipment, IT infrastructure contractors and more. A lack of coordination between these parties can lead to conflicts, rework and delays. This can result in missed deadlines, quality issues, increased costs, commissioning difficulties and, in extreme cases, the demolition and rebuilding of structural elements and structural safety problems.
This is why coordination is crucial: every discipline must be able to see the work of the others, so that potential conflicts can be identified early. Nevertheless, thorough technological knowledge, robust clash detection and the presence of a lead (general) designer remain indispensable.
For example, in the case of a battery factory project for a Korean investor, all the specialist designers communicated via a shared platform, which enabled Lakógép’s experts to identify and minimise conflicts early during construction.
5. Challenges of technology integration and commissioning
Many investors only plan up to the point of building completion, yet the real challenges often arise during the operational start-up. Critical stages such as integrating production equipment, conducting trial runs and training personnel can lead to numerous unexpected problems.
Close cooperation with technology suppliers and the future operations team is essential from the design phase onward. During construction, the delivery and installation of equipment must be continuously coordinated. In one project for a Hungarian alternative dairy processing plant, Lakógép’s project team involved the technology partner halfway through construction, ensuring a smooth trial run.
The devil is in the details
With proper preparation, experience and expertise, these obstacles can largely be prevented — they are not inevitable. Lakógép Kft.’s team has decades of experience in many areas of industrial real estate development, and we take pride in consistently delivering our clients’ projects on time and within budget.
Success lies not only in avoiding problems, but also in proactively managing them. From the outset of a project, every potential challenge should be anticipated, and all work should be based on that preparation.
