By: Jacob Read

For a Cost Segregation (CS) study, timing is important. The analysis cannot be completed until the construction work is complete and the total cost of the construction work has been finalized. And, ideally, the CS should be done before the tax filing for the year the building is placed in service. This results in a maximized cash flow for the facility owner, by realizing their tax savings as soon as possible. That is not to say that a CS should not be done after the first tax year of the building being operational. Carry-forward costs allow the property owner to realize unclaimed tax deductions that they may have missed in the years since the building was placed in service. However, these savings are slightly lower than they would have been if they had completed a CS at the time the building was placed in service.

A similar situation is true for our Business Solutions Services (BSS) studies. When planning the operations of a facility, the greatest opportunities for cost savings occur during the facility planning stages. This is because the difficulty and cost of altering the layout of a facility or relocating a facility is extremely high. Using detailed information about daily operating procedures to guide the facility design process can help minimize operating costs over the long-term. Even if a business is past the facility planning stage, there are still several other ways that BSS can help reduce costs. Besides the layout of the facility, significant opportunities for savings can lie in material handling, process improvements, inventory and production control policies, workstation design, and more.

For example, in the facility planning stages, a facility planner can determine the optimal locations for various departments within the facility, as well as the various machinery and workstations within each department, to minimize the distances that materials flow throughout the facility. However, once a facility is under full-scale operation, it can be difficult and even costly to halt production to reorganize the layout for optimal material flow. Non-optimal material flow leads to additional labor costs and can drive down throughput over the life of the facility. Although, as difficult as it may be, reevaluating facility layout can still be beneficial in terms of reducing costs once the facility has become fully operational.

Whatever stage your operation is in, a CS or BSS study can help you find savings you may not have known existed. The earlier these savings are realized, the more long-term benefit will come from them. With the increased cash flow that these studies generate, you can improve your businesses substantially and jump ahead of the competition.

Study Timing