Project proposal to build a new TPO single-ply roofing manufacturing facility

Abstract

This project involves a decision for GAF Material Corporation on whether to build a new single-ply roofing manufacturing plant, and where to geographically locate the plant based on the analysis of a financial model. The scope of the project includes identifying options for manufacturing equipment and operating locations, selecting an option based on the financial model, and conducting preliminary engineering as required to deliver a +/- I 0% cost estimate to complete the project as well as detailed timeline for construction, hiring, and start-up of the new facility. After identifying multiple geographic options and potential sites for the facility, the field was quickly narrowed to two locations: Mount Vernon, Indiana and Gainesville, Texas. Further financial analysis indicated that the Gainesville option offered a better return on investment due to freight savings to the southern portion of the country, particularly the southwest. Engineering was conducted to secure a +/- 10% estimate of a project cost of $26.8 million to build the Gainesville facility, with an Internal Rate of Return of 29% and a Net Present Value of $28.6 million. Completion of the project is 17 months from approval. Based on the data, GAF senior management has accepted the project and authorized the project to move forward with a completion date of September 2007.