Construction estimating and purchasing executives are aware of the various issues involved with negotiating large equipment purchases. On fixed price contracts, the ability to negotiate purchases on major equipment contracts affects profitability, schedule, project risk and overall project success. The key is understanding the specification and ensuring that the focus is on complying with it. Assuming that the specification is not defective, the first step is to speak with specified vendors and confirm the extent to which they can meet the specified requirements. This begins the negotiation dance with the vendors.
A detailed comparison (between potential vendors) should be made for all attributes of the pending purchase including (but not limited to) lead time, delivery, acceptance criteria, installation labor, standby labor, interface with existing or planned work (and systems) and required supervision by manufacturer’s representatives.
Emphasis should be placed on TOTAL installed cost and not just the initial purchase and delivery cost of the equipment. MFG REPS can add impact costs significantly as can testing and commissioning.