Investment Guide(USA)

When preparing for a new project in the United States, the primary consideration should be the location of the site. Each state in the U.S. has different incentive policies, and there is room for negotiation on specific incentive items. Therefore, it is essential to evaluate which state offers the most favorable investment conditions.

Key incentive items include sales tax refunds on construction materials and equipment purchases, as well as corporate tax reductions. It is crucial to assess the advantages and disadvantages of each incentive in detail.

Considerations Beyond Incentives

Availability and quality of the workforce within proximity to the plant site
Proximity to airports and height restrictions on buildings
Capacity and pricing of utilities, such as water supply and wastewater treatment facilities
Electricity supply capacity and pricing, including meetings with private utility companies
Union vs. non-union areas: In regions with strong construction unions, participation by general contractors may be restricted, leading to high labor costs
If the construction requires a high load-bearing capacity and stable ground, an indirect survey of the soil composition may be necessary

Organizations That Can Assist in Site Selection

Local economic development agencies
State or City/County governments
Korean state government offices in the U.S.

Plantech provides site selection services and on-site inspections in collaboration with clients.

For more details, please contact us through the website.

Once land negotiations are finalized, the first step is obtaining the necessary permits for construction.

Pre-Construction Permits – Air Permit

Air permits include the Title V Permit, New Source Review (NSR), and Prevention of Significant Deterioration (PSD).
Title V and NSR/PSD are classified as either Major or Minor, with NSR/PSD status determining the permit acquisition timeline. Major classifications require approximately one year, whereas Minor classifications take around 6–7 months from preparation to issuance.
Required data for air permits include types and total amount of emissions (24h/365 days at max load), process descriptions, emissions per equipment unit, Safety Data Sheets (SDS), and Piping and Instrumentation Diagrams (PID).
Since air permits fall under state jurisdiction, the details vary by state, necessitating collaboration with local permit consultants.
Air permits include both Minor Construction Permits (for breaking ground) and operational permits, requiring continuous follow-up.
Plantech assists clients with the effective acquisition of air permits by providing services such as bidding and RFP preparation for consultant selection, organizing required data, and coordinating between state governments and business owners.

Construction and Building Permits

Post-air permit construction permits are managed at the City or County level.
Construction on the permanent components of a building is restricted until the air permit is obtained, but grading work is permitted.
During air permit processing, collaborating with designers to draft basic blueprints and obtain a foundation permit allows for initial groundwork to commence.
After obtaining the foundation permit, structure, shell, mechanical, electrical, and fire suppression permits can be acquired sequentially during construction, with final approval granted upon obtaining the Building permit.
The coordination between designers, contractors, and City/County authorities is essential throughout the process.

Additional Pre-Completion Permits

Depending on the project, SPCC (Spill Prevention, Control, and Countermeasure) plans may be required, necessitating an SPCC consultant to create and validate the plan.
If radioactive equipment is used, a separate permit is required.

Certificate of Occupancy (CO)

The CO must be obtained before commercial operations begin.
Prior to issuing the CO, City/County inspectors may conduct unscheduled site visits, requiring modifications based on their feedback.
Final inspections check for worker safety (OSHA), egress paths, electrical safety, HVAC functionality, fire suppression systems, ADA (Americans with Disabilities Act) compliance, and legally required signage. Inspectors may issue a full or conditional approval or request reinspection.

Construction projects in the U.S. typically follow one of two models: Design-Build (DB) or Design-Bid-Build (DBB). No contractor provides a guaranteed maximum price (GMP) without a fully developed design, only offering Rough Order of Magnitude (ROM) estimates.

DB(Design-Build) Method

Commonly referred to as DB, the same company handles both design and construction.
More advantageous for shortening project schedules when time constraints exist.
Reduces the burden of construction management for clients since one company oversees both design and execution.
However, total project costs remain uncertain until at least 90% of the design is completed, and changes after subcontractor selection can lead to increased costs.
Contractor selection should consider past performance, reputation, fee structure, and preliminary cost estimates (LOM).

DBB (Design-Bid-Build) Method

This method separates design and construction contracts.
If the client has sufficient time to complete the design in advance or can use the air permit processing time for design development, bidding based on fully developed design documents is possible.
DBB allows for lump-sum bidding, in which contractors submit fixed-price proposals based on detailed drawings, work scope, and schedule, ensuring cost predictability at the project’s outset.
RFP (Request for Proposal) preparation is crucial to prevent unexpected additional costs due to missing work scope or design changes, so clients should allocate contingency funds.

Other Considerations for Project Execution Methods

Various execution methods exist beyond the two standard approaches.
The Open Book Basis method involves close collaboration with reputable contractors to determine the final construction cost transparently.
Integrated Project Delivery (IPD) unifies the client, design team, and contractors into a single organization for project execution.
Contract types include Cost+Fee, GMP (Guaranteed Maximum Price), and Lump Sum. Unlike in some other countries, Unit Price contracts are rarely used in the U.S., except in specific subcontracting cases.
The choice of execution method and contract type should be based on project characteristics, schedule constraints, location, and prevailing construction market conditions.

Plantech works closely with clients to select engineering firms and contractors, establish execution strategies, conduct concept design, compile contractor pools, prepare RFPs, manage the bidding process, clarify post-bid details, and oversee contract execution.

The design process in the U.S. differs from South Korea due to variations in structural calculations, fire safety codes, egress and OSHA regulations, and material specifications. As a result, it is advisable to limit the design scope to conceptual design, basic drawings, utility sizing, wastewater capacity and characteristics assessment, general arrangement, utility hook-up points, and performance specifications.

Additionally, permit submission drawings must include a Professional Engineer (PE) stamp, meaning all design documentation should be prepared locally.

What is PE Stamping?

PE Stamping can be seen as a kind of declaration stating, "I have designed this, complied with the Code and relevant laws, and carried out the design according to the engineer's conscience." In Korea, it is not common for a local PE to stamp a drawing designed by someone else.
Since the AHJ (Authority Having Jurisdiction) issuing the permit cannot verify that all design requirements have been clearly met according to the Code, Plantech interprets PE Stamping as a means to confirm compliance and rely on the engineer's competence.

In the design phase, strong language and communication skills are essential. Engineers must be capable of understanding the client's needs, incorporating them into the design, evaluating various alternatives, and proposing Value Engineering (VE) solutions to optimize costs. Having personnel with these competencies is crucial for effective design execution.

At Plantech, during the execution of KY’s L Project, we reviewed over $15 million in Value Engineering (VE) opportunities, successfully achieving cost reductions. It is essential to conduct comprehensive design reviews at the 30%, 60%, and 90% stages at an organizational level to ensure the overall direction of the design is on track.

At the 90% stage, collaboration with the operations team is particularly important to verify whether the plant can be operated efficiently and to assess if any additional modifications or changes are necessary.

To minimize impact, any change-related costs should be incorporated during the design phase. The cost variation can be significant depending on whether changes occur after bidding, before construction, or during construction.

Therefore, change management should be a key focus, as risk management in project management is largely about effectively handling changes.

Additional Notes: When designing in the United States, unit conversions must be carefully considered. Feet, inches, US Ton (which is different from Metric Ton), piping sizes, electrical cable specifications, and Celsius/Fahrenheit are all different, so prior learning and understanding of these differences are important.

Insurance

Construction insurance is a mandatory insurance that must be purchased to prepare for unforeseen circumstances. Construction insurance is largely divided into CCIP, where the contractor purchases insurance individually, and OCIP, where the project owner purchases insurance collectively. Even if OCIP is purchased, there are legal requirements that mandate each construction company to obtain separate insurance, so project-specific review and approval are necessary.

Since contractors may be reluctant to disclose the policy details, specific terms, and coverage, it is necessary to include these requirements in the RFP.

If there are materials or equipment provided by the project owner, transportation/cargo insurance should also be considered.

Legal Engineer Employment

A third-party inspector must be hired to oversee the quality of construction work outside of the contractor’s scope. This inspector is responsible for conducting inspections and reporting on soil compaction, concrete, structural welding, and other related aspects.

Owner-Supplied Materials/Equipment

Through the RFP, it is necessary to clearly define the scope of work for the contractor regarding unloading, transportation, storage, and handling conditions.

If the delivery of equipment or materials is delayed, it may become a claim issue, so strict management is required.

For delivered materials/equipment, a joint open package inspection must be conducted to mutually confirm the items and quantities.

Considerations When Construction Progress Exceeds 80%

A pre-established operations team must be formed in advance to prepare for the handover of mechanical rooms and electrical rooms.

In particular, the mechanical field is a specialized area, and a mechanical engineer with experience in operating large utilities is essential.

For electrical work, if high voltage is used, it is necessary to hire personnel with a license to handle high voltage in the local area.

The final review of the SPCC Plan and the completion of construction inspections must be conducted to ensure that there are no operational issues.

For elevators, cranes, or other equipment that require third-party or government inspections, it must be confirmed whether these inspections have been properly completed.

Hiring a Maintenance Contractor

After the completion of the plant, hiring a maintenance contractor may be necessary depending on the situation. The following are examples of key maintenance service providers:

Chemical treatment supply and dosing
Mechanical maintenance, including HVAC filters and various mechanical equipment
Compressor system maintenance
Electrical maintenance services
Specialized contractors for overhead crane operation and maintenance (if applicable)

Procurement of Various Repair Parts

In the case of a lump-sum contract, necessary maintenance parts can be specified in advance in the contract terms, and the contractor can be required to purchase them.
Various essential items for plant operations need to be purchased, including lighting fixtures, HVAC consumables, consumables required for production equipment, and overhead crane wires. Additionally, a certain quantity of tiles and ceiling finishes should be procured for replacement in case of defects or damage.
Preparations should be made for the capitalization and acquisition of the completed building.

A Cost + Fee contract does not mean that a contractor applies a fee to all hired personnel and materials as the name might suggest. The (Labor + Material) + Fee method is called Time and Material, which should be avoided as much as possible in construction contracts.
In a Cost + Fee contract, the agreement between the project owner and the main contractor follows a Cost + Fee structure, whereas the main contractor subcontracts work to subcontractors under a lump-sum contract.
Therefore, the total cost paid by the project owner to the main contractor consists of the subcontractor’s lump-sum contract amount + the main contractor’s fee, which is typically a fixed percentage.
The Cost component includes General Conditions, which cover the main contractor’s labor costs, as well as a contingency to account for unforeseen circumstances.
Although this contract structure may seem unfavorable at first glance, it provides stability for the contractor by shifting risk to the project owner, while the project owner benefits from the ability to negotiate a lower fee for the main contractor.

At Plantech, we support the project owner in negotiations with the main contractor to achieve the best possible outcome, minimizing contingency costs and reducing unfavorable contract terms.

Unlike Korea, the U.S. does not have universally applied construction contract laws, unit prices, or standard cost estimation systems between project owners and contractors. (Although RS Means exists, it is not widely applied like Korea’s standardized pricing system.) Each contractor has its own unique construction contract format based on its characteristics and execution methods, and project owners cannot unilaterally impose a specific construction contract.
The concept of unit pricing is weak, and most costs are handled on a lump-sum basis, including pricing for change orders.
Labor costs are high, so equipment is actively used to maximize efficiency in construction.
When construction workers are hired from long distances, additional wages called Fringe Benefits are paid on top of the base labor cost.
Due to the booming construction market, securing labor is challenging, and specialized trades may experience long-term workforce shortages.
Unlike in Korea, many contractors operate a direct-hire construction system, which allows for more stable workforce management. Choosing a contractor with direct-hire capabilities can improve labor availability.
Hierarchical relationships similar to those in Korea (e.g., "superior vs. subordinate") can create significant difficulties when dealing with contractors. Yelling, scolding, or treating construction staff disrespectfully can quickly lead to official warnings or lawsuits. The foundation of U.S. construction culture is mutual respect, and the relationship between the project owner and contractor is contractually equal.
Except for a few formal documents, most correspondence is conducted via email. Official letters are only used for critical matters. Documents related to costs and changes are often signed, scanned, and sent via email, or signed electronically using Adobe Sign, DocuSign, or similar platforms.
When a change occurs, the cost is negotiated first before construction proceeds. Unlike in Korea, where cost adjustments are often settled in a final lump sum at the end, this practice is rare in the U.S..
Since there is no strict quantity-based payment system, progress payments are typically made according to predefined milestones or consolidated by the main contractor before invoicing the project owner. If a significant overbilling occurs, negotiation can be used to adjust the payment.
Many contractors strictly adhere to their own official document formats, so forcing them to use a specific form has little practical benefit. Instead of specifying a fixed format for weekly and monthly reports, it is more effective to agree on the required contents as part of the management process.

Investment Guide(USA)

Investment Guide

(USA)

Site Selection and Incentive Negotiation

Permit

Understanding Project Execution Methods and Contracts

Design Phase

Construction Phase

Understanding Cost + Fee Contracts

Construction Culture Differences Between Korea and the U.S.