Why cutting construction costs without understanding lifecycle economics can become one of the most expensive decisions a cannabis operator makes.
The Cultivation Economics Series | Week 4 of 5
There’s a phrase that makes its way into nearly every construction project eventually.
“We need to value engineer this.”
After more than two decades in commercial construction and years spent developing cannabis cultivation infrastructure, I’ve heard it more times than I can count.
And there’s absolutely nothing wrong with value engineering.
In fact, good value engineering is one of the most valuable things a construction and design team can do.
But somewhere along the way, value engineering became confused with simply making things cheaper.
Those aren’t the same thing.
Removing unnecessary costs is value engineering.
Finding a more efficient way to achieve the same performance is value engineering.
Simplifying a design without sacrificing functionality is value engineering.
Removing infrastructure that the cultivation facility actually needs?
That’s not value engineering. That’s transferring construction costs into future operating expenses.
And eventually, the bill comes due.
The Cheapest Facility Isn’t Always the Least Expensive
Cannabis construction has historically been driven by a combination of aggressive schedules, limited capital, regulatory deadlines and pressure to get plants into production.
Understandably, ownership groups focus heavily on the initial construction budget.
But the construction budget only tells part of the story.
Once a cultivation facility becomes operational, the building begins consuming resources every hour of every day.
Electricity.
Water.
Labor.
Maintenance.
Replacement parts.
Equipment repairs.
And occasionally, the most expensive consequence of all: lost production.
A decision that saves money once during construction can create an operating penalty that repeats for years.
Consider a hypothetical example.
A project team identifies a mechanical-system substitution that reduces construction costs by $250,000.
On paper, that’s a substantial savings.
But what happens if that equipment consumes an additional $100,000 annually in energy and maintenance?
By the third year, the original savings have disappeared.
And the additional operating costs continue.
The initial investment was lower. The total cost of ownership was higher.
That’s the difference between evaluating construction costs and evaluating lifecycle economics.
“The cheapest cultivation facility to build can become one of the most expensive facilities to operate.”
Value Engineering Should Preserve Value
The word that often gets forgotten in value engineering is value.
A properly evaluated cost-saving proposal should answer more than one question.
Yes, how much does it save during construction?
But also:
- Does the substitution maintain the original performance requirements?
- What happens to energy consumption?
- Does it increase maintenance requirements?
- Does it reduce equipment redundancy?
- Will it shorten the expected useful life?
- Can the system accommodate future operational changes?
- What happens under peak cultivation loads?
- Does it increase the risk of crop loss or downtime?
And ultimately:
What does this decision do to the cost of producing a sellable pound?
If those questions aren’t being considered, we’re not necessarily value engineering.
We’re simply cutting costs.
Cannabis Facilities Are Not Ordinary Commercial Buildings
A conventional commercial building is largely designed around human occupancy and comfort.
A cannabis cultivation facility is different.
It’s a biological manufacturing environment.
Plants introduce substantial moisture loads through transpiration.
Lighting introduces significant sensible heat.
Temperature, humidity, airflow and vapor pressure deficit influence crop performance.
Mechanical systems often operate continuously, and their performance requirements change throughout the cultivation cycle.
That makes infrastructure decisions particularly consequential.
A less expensive HVAC unit isn’t a bargain if it cannot adequately manage the cultivation environment.
A simplified controls package isn’t cheaper if operators spend years fighting environmental instability.
Reducing mechanical redundancy may look attractive until an equipment failure jeopardizes an entire harvest.
In cannabis cultivation, construction decisions become operational decisions.
And operational decisions eventually become financial results.
The Most Expensive Problems Often Exist Between Scopes
Some of the most costly issues I’ve encountered on cultivation projects weren’t caused by defective equipment or poor workmanship.
They developed in the gaps between responsibilities.
The mechanical contractor believes an issue belongs to controls.
The controls contractor believes it belongs to mechanical.
The cultivation consultant assumes something was incorporated into the design.
The general contractor believes another party was responsible.
Ownership thought the entire issue was already addressed.
And suddenly everyone is defending their scope while the project struggles to function.
Cannabis facilities bring together numerous interconnected systems:
HVACD. Electrical distribution. Lighting. Environmental controls. Irrigation. Fertigation. Plumbing. CO₂ distribution. Building-envelope assemblies. Cultivation equipment.
Every one of these systems influences another.
Dividing contracts among multiple parties isn’t inherently a problem.
Dividing responsibility without coordinating the interfaces is.
Someone must understand how the entire facility is supposed to operate.
Who confirms that the mechanical design accounts for the actual lighting loads?
Who coordinates irrigation strategy with anticipated transpiration?
Who verifies that environmental controls communicate properly with HVACD equipment?
Who owns building-envelope penetrations?
Who coordinates condensate management?
Who confirms equipment can be maintained after installation?
Who verifies that the completed building performs as intended?
If the answer is, “I thought someone else was handling that,” there’s probably a problem.
“The most expensive words on a construction project may be: ‘That’s not in our scope.'”
Commissioning Shouldn’t Be an Afterthought
Another area where construction budgets frequently come under pressure is commissioning.
Equipment gets installed.
Systems get started.
Temperatures are checked.
Controls respond.
The project is considered complete.
But an empty cultivation room and a room approaching peak flower are two very different environments.
Once plants enter the building, the mechanical systems encounter biological loads that weren’t present during initial startup.
Plants transpire.
Lighting generates heat.
Irrigation schedules influence humidity.
Crop density changes airflow.
Environmental demands shift between lights-on and lights-off periods.
A system that operates perfectly in an empty room may struggle once production begins.
That’s why cultivation facilities benefit from commissioning strategies that consider actual operating conditions.
Not simply whether the equipment turns on.
But whether the integrated systems can maintain the environment they’re expected to provide.
A facility should be evaluated under the conditions it was designed to support.
That may require performance verification after the building becomes operational—not just before the first crop arrives.
Temporary Decisions Have a Way of Becoming Permanent
Here’s another familiar scenario.
Ownership is trying to reduce the initial construction budget.
Someone suggests installing a less expensive system with the intention of upgrading later.
It sounds reasonable.
Get operational.
Generate revenue.
Make improvements when cash flow allows.
But once the facility is producing, replacing major infrastructure becomes considerably more complicated.
Rooms may need to be taken offline.
Equipment access may be restricted.
Mechanical and electrical systems may require modification.
Production schedules have to accommodate construction.
The upgrade that would have been relatively straightforward during initial construction can become disruptive and expensive inside an operating cultivation facility.
That’s why serviceability, equipment access, replacement strategies and future expansion deserve attention during design.
Some of the most valuable construction decisions are the ones nobody notices until years later.
Good Engineering Doesn’t Mean Spending More
I want to make an important distinction.
None of this means the answer is to build the most expensive cultivation facility possible.
Quite the opposite.
Sometimes good engineering identifies equipment that is oversized.
Sometimes it eliminates unnecessary redundancy.
Sometimes it simplifies mechanical distribution.
Sometimes it reduces building square footage.
Sometimes it allows infrastructure to be phased rather than installed immediately.
And sometimes the smartest recommendation is not to purchase something at all.
The objective isn’t to maximize capital expenditure.
It’s to deploy capital intelligently.
That requires understanding both the immediate construction requirements and the long-term operating objectives.
Spend money where it creates value. Eliminate costs where it doesn’t.
That’s real value engineering.
The Industry Needs a Different Construction Mindset
For years, cannabis development was largely a race.
Secure the license.
Find the property.
Get through permitting.
Build the facility.
Start production.
Capture market share.
Speed often outweighed long-term efficiency.
But the economics have changed.
Wholesale price compression and tighter margins mean operators can no longer assume that production volume will compensate for inefficient infrastructure.
Today’s facilities need to be designed for durability, adaptability and cost-efficient operation.
That requires a different approach to construction.
One where cultivation strategy informs engineering.
Engineering informs construction.
Construction supports operations.
And operations ultimately support the financial model.
Not five separate conversations.
One coordinated strategy.
Build It Right Once
Every cultivation project eventually faces decisions about cost.
That’s unavoidable.
The important question is how those decisions are evaluated.
Before removing infrastructure, understand its purpose.
Before accepting a substitution, understand its operating impact.
Before separating contracts, understand the interfaces.
Before eliminating commissioning, understand the risk.
And before calling something value engineering, make sure you’re preserving the value.
Because the most expensive cannabis facility isn’t necessarily the one with the highest construction budget.
It’s the one you have to fix twice.
Build for Performance. Not Just Opening Day.
At McCormick CEA Solutions, we approach cultivation facilities with an understanding of both commercial construction and the operational demands of controlled-environment agriculture.
From early design coordination and preconstruction through HVACD strategy, construction and facility optimization, our focus is on infrastructure that supports long-term performance.
Whether you’re developing a new facility, expanding an existing operation or evaluating a troubled project, the right time to understand your infrastructure decisions is before they become expensive problems.
McCormick CEA Solutions
Design • Build • Optimize.
Built for Yield.
