Getting a quote for a piece of process equipment sounds simple enough – and it is.
Call a sales rep, tell them what you want, and you’ll get a price. Call five different reps and you’ll get five different prices, all over the place in dollar amount, performance, and scope of supply.
But getting the right price for the right performance and the right scope is a little tougher.
Ultimately, the objective of the pricing, or bidding exercise, is to buy a piece of equipment. Buying the right unit requires pre-planning, basic engineering, asking good questions, and comparing and evaluating the contenders until a clear winner stands out.
The Initial Proposal for Equipment Pricing
The initial proposal consists of information that should be requested from the vendor. The following is a generic overview of what this initial proposal should include.
Confirm Unit Performance Data
Just because performance requirements were given to the vendors via the Business Unit Specification (see previous section), that doesn’t mean they can meet those requirements. It’s always a good idea to ask them to re-state the performance specifics to confirm the proposed unit meets or exceeds the minimum requirements.
The vendor has been told what’s available, and now they need to indicate how much of each utility is required. This could lead to changes, increases, or additions to the facility’s utility infrastructure to support the equipment operation.
Description of Operation
The vendor should provide a brief description of the equipment operation so the end user better understands the equipment and operator/technician interaction, and to make sure its operation meets the facility’s expectation.
Description of Construction
Not all equipment is created equal.
It’s imperative to understand the construction of the equipment being proposed, otherwise a meaningful comparison between vendors cannot be made.
The proposal should include specifics such as:
- Materials of Construction: carbon steel, stainless steel, alloys, plastics, etc.
- Coating Systems: paint, galvanized, etc.
- Total Shipping Weight: this can give an indication of robustness
- Details on Components: component manufacturers, nozzles, flanges, sensors, limit switches, safety devices, controllers, communication requirements (I/O, protocols such as 4-20, Ethernet, Asi, etc.)
- Dimensional Information: ideally this is in the form of a vendor cut sheet or preliminary equipment drawing
- Motors: TEFC Premium efficiency, explosion proof
Equipment Scope of Supply
The scope of supply includes only what is inside the suppliers battery limits – or ISBL.
As discussed previously, a piece of equipment generally does not work by itself; it typically needs a pump, or an agitator, or supply/discharge conveyor, etc.
Some vendors will include these ancillary components in their proposals even if not requested, so it’s extremely important for the vendor to describe the battery limits of their proposal and detail each component so an accurate comparison can be made.
Another factor that can vary from vendor to vendor that could affect the installation cost is the degree of shop assembly vs. field labor required to assemble the unit. Although not a physical ISBL item, it certainly can make a difference in cost.
An example is with chain-type drag conveyors. Some vendors will install paddles on the chains prior to shipment, some will pre-install the drive on the head section, some might even pre-install chain with paddles in the casing sections—all reducing the amount of field labor, but likely increasing the delivered price.
Non-Equipment Scope of Supply
Some equipment is straightforward – for example, a pump – but others can be complex, like an evaporator system or an ion exchange system. With complex systems it’s sometimes wise to ask the vendor for support in addition to the actual equipment supply.
This support can come in the form of start-up assistance, user training, engineering assistance, and many others. This will be a case by case decision based on the nature of the equipment being considered.
Obviously, the overall purpose of the proposal is to get pricing. But, the way the pricing is presented in the proposal is also important.
One vendor may lump the main piece of equipment and all options into one price, while others may not even provide options.
This can make proposal comparisons nearly impossible. To avoid this scenario, the pricing format should be made very clear in the early stages. The following detail should be requested as separate line items:
- Base Price: Price of the main component or components FOB manufacturer’s location
- Itemized Pricing for Ancillary Items
- Itemized Pricing for Options
- Freight Cost: Freight can get complicated for large equipment that does not fit over the road
- Spare Parts: Recommended list and itemized pricing
The delivery date is obviously important, but there are other dates and timelines that are equally important, such as:
- Approval Drawing Delivery: typically referenced ARO (after receipt of order)
- Fabrication/Assembly Time
- Ship Date
- Transit Time
- Arrival on Site Date
Terms and Conditions
The supplier’s terms and conditions of sale are very important to understand, and can have legal consequences. The following are some items that require some attention:
- Down Payment
- Progress Payments
- Final Payment
- Dispute Resolution