Hemp Projects: Stage Gate Approach

Hemp Projects Pre-Development and Development Stage-Gate Approach.

A stage-gate approach is a phased project management technique where a specific list of tasks and engineering is performed sequentially with a gate, or decision gate, at the end of each phase.  At that point, a decision is made to stop, move forward with the scope, schedule, and budget, or to refine the plan further to reduce costs or meet other needs.

Commonly used during the engineering and construction development portions of project implementation for many types of projects, the stage-gate approach is especially relevant and valuable in pre-development hemp and cannabis project phases as well to determine correct milestones for decision making of development, construction, and business projects/expansions.

There are many nomenclatures for a stage gate approach including Front End Loading 1,2,3; FEL 1, 2,3, 4;  Phase 1,2,3,4; etc.  The steps in any of the systems are basically the same. Below is an example of a generalized stage-gate approach for a hemp project:

Phase 1 – 1% engineering with a +/-50% estimate of TIC (Total Installed Cost)

Phase 2 – 10% engineering with a +/-30% estimate

Phase 3 – 25-50 % engineering with a +/-10% estimate – this is for budget authorization

Phase 4 – 100% engineering to provide Issued for Construction documents for final construction services bidding.

Phase 1 is to understand the business case and scope of the project in fairly general terms to get a basic understanding of project costs early and to make a decision to move to Phase 2 or not without spending an inappropriate amount of dollars on engineering. Each following stage gate is similar, to be able to get the best understanding and alignment of scope, schedule, and budget between all stakeholders and then making appropriate decisions to move forward or not to the next phase.

Pre-development and Phase 1 may include:

• Understanding how much equity/cash on hand the company can contribute to the project is a gate that helps determine how much potential lending can be obtained.
• The equity/debt/cash determination establishes total financing for the project which leads to a decision on a potential design-build and what the size and scale of the building/structure/project will be.
• Based on the size of the facility, determine what vertical integration components can be incorporated into the building and at what size, for example: cultivation, extraction/isolation, manufacturing, distribution, retail, delivery, etc.

The hemp project pre-development stage-gate approach supports iterative feedback loops – for example after determining what business integrations to incorporate, the company should revise its design-build plan.

Large renewable energy and biochemical consulting firms certainly have experts in biofuels and renewable biofuels like bio ethanol, biodiesel, and renewable diesel, and the more common areas like biomaterials, biomass, biomass power, feedstocks, and biotechnology.  In these larger consulting groups, one will also find energy consultants in some specialty areas like other biofuels like algae biofuels, aviation/biojet fuels, ethanol, cellulosic ethanol, advanced biofuels, biodiesel, renewable diesel, renewable natural gas, renewable and biochemicals, biogas, syngas, biochar, bio coals, biobutanol, pyrolysis oil, producer gas, and wood pellets.  They will also have experts in hemp and cannabis as these industries continue to grow.

Lee Enterprises Consulting is the world’s premier bioeconomy consulting group, with over 150 highly qualified experts serving in all these areas.  Look at our experts and the services we provide.  Most of our experts are also available to advise and serve as expert witnesses in bioeconomy litigation matters.  For the larger projects, we specialize in putting together full service, interdisciplinary teams with one point of contact.  See video about LEC here.  Call us at 1+ (501) 833-8511 or email us for more information.  See also:  Cannabis & Hemp Experts.