Case study

The Economics of Mezzanine Floors: Return on Investment (ROI) and Cost Benefit Analysis (CBA)

Firmly, yet independently stood, the mezzanine floor inserts extra usable floorspace above ground floor level, finding itself the least costly and simplest way to expand usable floorspace when compared to a building extension, additional buildings, or relocation.

A simple structure which is constructed within an existing building, there is much to gain from a mezzanine floor installation, providing it is designed and implemented to meet the needs of the business, so why is cost measurement so important?

It is prudent business practice to assess the viability of any investment before initiating the works, and this includes a mezzanine floor installation. A business would usually seek to gain valuable financial and operational insights to help guide informed decisions when it comes to planning, resource allocation, risk management and maintaining the financial wellbeing of the organisation.

Industrial mezzanine edge protection

When considering a mezzanine floor installation, the most effective way to perform a cost measurement would be to carry out a cost-benefit analysis (CBA) and a return on investment (ROI), both of which are methods used to determine the viability of a mezzanine floor installation……….

Cost Benefits Analysis (CBA) – A General Overview

A CBA is a method used to evaluate the overall feasibility when considering a mezzanine floor installation. It examines financial and non-financial factors including costs but also the benefits a mezzanine floor could bring, making it a comprehensive evaluation of quantifiable and non-quantifiable elements. Considerations include the impact on productivity and operational processes as well as intangible gains such as improved customer experience and staff morale. A CBA will consider the far-sighted impact of the installation concerning long term gains and then determine their merit in monetary value.

Cost Benefit Analysis

So, what are the cost benefits of a mezzanine floor?

  1. Uses empty overhead air space with functional intent – Unused space has no positive influence on the overall success of the business. In fact, it can be a significant hindrance if the business is operating within a limited area of a tall space, without taking the opportunity to operate more comfortably and effectively. With a mezzanine floor installation, the empty void above the operation becomes part of the operation and contributes to business performance just as much as the ground floor below it. Within the same space, two floors are better than one when it comes to fast growth and heightened activity!
  2. Avoids the costs associated with moving – A shortage of space in any business operation can become a significant hindrance. With less room to move, efficiency can become lost, productivity can slow down, and this will likely have a negative impact on the overall success of the business. The need to acquire extra space results in exploring various options including a building extension, additional premises elsewhere or relocation. The mezzanine floor solution is another option and providing there is sufficient vertical space within the building, it’s a very viable option which will cost far less than the others. Being an independent, yet robust structure, the mezzanine floor provides the extra hard floor surface area needed without having any effect on the original building. It is built within the existing space without the cost or disruption severity that comes with the other options.
  3. Long term energy cost savings – Because the mezzanine floor is constructed within the existing space, there is no additional footprint area to heat. By utilizing space vertically, the overall energy consumption is slighter and whilst there may be areas on the upper floor towards which a degree of energy needs to be directed, this can be less costly if those areas are smaller, well insulated or controlled with timers and sensors in terms of lighting.
  4. Lower costs achieved and competitive advantages gained – The improvements which follow a mezzanine floor installation include a more streamlined operation, enhanced space utilization, more resilience, improved customer experience due to productivity and cost efficiency. Further to the financial gains the business becomes more proficient, and this helps to strengthen its competitive position.

How much does a mezzanine floor cost?

As a purpose-built solution, the cost of a mezzanine floor will depend on its size, load capacity, accessories, and features, however one of the greatest cost benefits of a mezzanine floor installation is its affordability in comparison to acquiring a larger footprint area. In terms of benefits, the mezzanine floor is far less disruptive and has a much faster turnaround time than a building extension or relocation.

multi tier storage mezzanine floor

Return on Investment – A General Overview

ROI is specific to financial performance and profitability resulting from the mezzanine floor installation. This is an uncomplicated analysis which is solely concerned with financial worth. It calculates the potential financial gains from the mezzanine floor against the initial cost of the investment. The ROI is positive when the extra revenue driven by the investment becomes greater than the initial cost, in which case the project is likely to be accepted.

Return on Investment

Can a mezzanine floor really generate a positive ROI?

Despite the initial costs, a mezzanine floor installation does indeed have the potential to yield a positive ROI. This is generated through cost savings, the potential to increase revenue and its ability to improve the overall operation. Here’s a closer look at some of those factors:

  1. Improved Space Utilisation – Within the same four walls a business is better able to operate in line with growth after the implementation of a mezzanine floor which has been specifically designed to meet the needs of the business. The ability to accommodate more inventory or more employees mean productivity can be increased and this has a positive impact on revenue which can continue to grow, even long after the funds used to implement the mezzanine floor have been recouped through revenue.
  2. Operational Efficiency – A business can benefit more from the space post mezzanine floor installation without the higher rent costs or extra operational expenses. Within the same four walls, the business can operate effectively as it grows, and the cost savings contribute towards a positive ROI.
  3. Revenue Generation – If the mezzanine floor is used for product display, the platform directly enables sales and as the extra income generated from these sales adds up and this generates the ROI. If the mezzanine floor is used to accommodate more staff in an office for example, productivity increases, which has a positive impact on sales and revenue which contributes to ROI.
  4. Longevity – The mezzanine floor is a long-term solution, and this allows the ROI to be accrued over a long period of time. The consistent, reliable and substantial return over an ongoing period makes the initial investment worthwhile.
  5. Easy Adaption to Changing Market Trends – A mezzanine floor installation can become a critical factor when it comes to change. It gives the business the space needed to operate effectively even when faced with changing market conditions, new trends and economic factors and this advantage will influence the ROI in a positive way.
  6. Competitive advantage – With the extra space provided by the mezzanine platform, the business may enhance its ability to exceed customer expectations, manage higher inventory volume, grow its workforce, and streamline its operation. All of which can translate into higher revenue, market share growth and ultimately ROI.
  7. Improved Readiness – The mezzanine floor is a highly versatile solution which means it can support business needs as they change. With a safe load bearing incorporated, the platform can accommodate different business activities as the needs of the business changes. A future proof design also means that the mezzanine can be adapted in size whether extended or another level added without delay. Being better prepared will eliminate the need to find new solutions under pressure and instead allows the continuation of productivity.

What can jeopardise the ROI on a mezzanine floor investment?

The simple answer is not much! The key is to ensure that you source your mezzanine floor solution from an accredited and reputable provider. The reason for this is to ensure that the structure complies with UK regulations to avoid the cost and disruption of being forced to remove the structure or the structure causing injury. It also ensures a purposeful mezzanine floor design which will maximise the space and the potential to generate revenue that will result in a positive ROI.

Maintaining the structural safety of the mezzanine floor is another way to ensure long-term ROI is protected. Annual mezzanine floor inspections will help maintain the integrity of the structure so it can continue to serve its prosperous purpose. Whilst not a legal requirement, a mezzanine floor inspection is necessary if you are to maintain workplace safety and ensure compliance with related regulations. An unsafe mezzanine floor will put the ROI at risk and could cost you much more where finance and reputation are concerned.

Mezzanine floor staircase

Are you considering a mezzanine floor solution?

Incorporating a mezzanine floor solution can be a strategic investment that can save costs whilst enhancing functionality, safety and overall efficiency within a workspace that is better equipped to manage growth and change.

If you’re considering a mezzanine floor installation and want to explore the ways in which it could benefit your business operation, contact WSL today!  Along with a guarantee of the highest standards in quality and safety as a Full SEMA Member, we will design a mezzanine floor solution that will fit perfectly within your space whilst offering maximal benefits to your business. Once approved, our skilled engineers will manufacture your mezzanine floor in our on-site factory which is UKCA certified. Following this, the components will be delivered from our factory to your site where our professional installers will be ready to take the delivery before assembling the parts and installing the structure. We will involve UK Building Regulating Officers from the beginning and work with them throughout the project to ensure compliance with regulations is verified with all associated paperwork handed to you.

If you already have a mezzanine floor installation and want to maintain its ROI ability through a safety inspection, our inspections team can help here too!

Whatever you need, just call WSL today on 0113 2045350 or email sales@wslmail.co.uk

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