16 Jan 2021, 10:30 — 7 min read
A greenfield project is defined in Wikipedia as "In many disciplines, a greenfield project is one that lacks constraints imposed by prior work. The analogy is to that of construction on greenfield land where there is no need to work within the constraints of existing buildings or infrastructure." As mention, many disciplines mean there can be software, manufacturing, engineering, or any project that has no prior infrastructure readily available are considered as greenfield projects. Well, all crazy ideas that are basically 'not done yet' may also consider as greenfield projects.
There are two segments we can specifically determine for this discussion, one; those who are having an up and running business (in the is same industry or other industries), and the second; those who are just stepping in, i.e newbies. Business units need greenfield projects for their advantages, however, greenfield projects also have their disadvantages too. A startup that is technically involved in new projects. It may be beneficial to have to work on a greenfield project only. We can consider 'software' startup companies as greenfield projects, where these companies are leveraging technology for innovation and advancement to save cost and deliver a better customer experience.
Greenfield projects will have an impact on your business on many fronts; the profound and noticeable impact it will have on finance & funds. Well, there are organisations if 'money is not an object' there will be an impact on time. One important thing in project management especially in green projects is to really understand the time-line. It will definitely have an impact if the preparation is not made at the 'micro-level' on both attributes mention above. Even if everything is good the time-line and required funds can be less. In fact, if the time & funding is in the comfort zone it means the project planning is not done correctly. The financial impact of a greenfield project is considerable, these types of projects need investments.
We will talk about the advantages and disadvantages in this article later. Business units must have deep pockets or they must be able to fund the projects as per the timeline. Financing the greenfield project is also a separate and elaborated work where the business plan and profitability with break-even analysis are addressed in detail.
In a literal way, if the project is a manufacturing plant and a new building/set-up needs to be installed, the process of land acquisition will take place. Regional and local population settings are required. Socio-economic impact on the social structure where the project has to implement. The planning has to do along with Government agencies to analyse the social impact.
For a new area and a new type of setup, political willingness, and support is always advisable. A good relation with political policies as per the regional or local area. Political issues may get complicated depending on the location and ethnicity and geopolitical issues of the regional and local areas.
Every project where new construction needs to build, or sensitive chemicals are involved, governmental, social, and ethical constrain are associated. There will be many environmental clearings from the government side for any approval for the project.
These projects will have local as well as global impacts. Greenfield projects come with various consultants, contractors, and vendors. The expansion of your business will have a strategic impact if you are exploring new territories.
The advantages & disadvantages are an integral part of greenfield projects. If planned correctly one may leverage advantages in a better way over the disadvantages. Let's address these investments perspective of projects.
There are many advantages for greenfield projects most important are mention here,
High return on investments
Business can be in control at the detail level, a high level of business control is possible
High level of quality control
High level of control over branding and staffing without influence
Marketing, R&D, and production can be achieved with economic scale & scope
Bypass trade restriction and the traditional way of business
Creating employment and business opportunities
High market entry cost
Regulation from the government may hamper the project
High fix cost involve in greenfield projects
The project needs a definite start and end date. Most projects start on a date but the end date is a debatable topic for many of us reading this article. Indeed; it is a continuous process of evaluation and improvements. It must start with the objective, purpose, and goal. Along with a solid reason to start a greenfield project.
You need expert consultants for your project. For a greenfield project since everything is new various consultants are required at different stages.
Two aspects of this project without which it is impossible to be achieved are planning and implementation. It says that more than 90% of the projects are at the planning stage only. Implementation of the project is so important, and you need to have funding for your project or arrangement of the funding even before you start the project. Most of the great projects die out just in the need of funding. Micro-level planning must be done along with a consultant for your projects. There are many tools and techniques that are used for the planning stage. The methods like critical path method (CPM) and program evolution review technique (PERT) are very common for project planning.
There have been many projects in history that humans have achieved, even projects that were impossible were made a reality by us. There are thousands of projects going on in the world right now, and there will be thousands in the future.
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Posted byRahul Ingle
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