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Week of 10 January 2022: Upside down thinking when it comes to capital planning

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Have you ever had a conversation like this? "I was going to by a car from Brand X because it is cheaper and has more features than Brand Y."

"Well, you obviously bought Brand Y. Why?"

"Brand X didn't have any in stock and didn't know when they would get any."

So, really, in the end, Brand X didn't mean anything because you could not get Brand X. Their price could have been twice the price or half the price of Brand Y, it just didn't make any difference.

You may find yourself in this place with certain pieces of capital equipment now. You may have to become a "satisfier" instead of an "optimizer."

Stated another way, logistics may override buying exactly what you want. If you can't get it, whatever "it" is, within your budget and schedule, "it" doesn't exist.

What does this mean in practical terms? You may end up with used refiners, motors (have them checked out), perhaps even used piping in small quantities. Items such as these are safe to buy in used condition if you have them thoroughly gone over. So are guillotines and gearboxes, same caveats apply.

In some cases, you may find suppliers on shore (in your country) are suddenly less expensive and more reliable than that off shore supplier when you throw in shipping costs and the potential delivery problems.

The point is this. If a project is urgent for any reason, executing it on schedule may be paramount and optimizing it may be secondary when it comes to getting it online. This is not how project engineers are used to thinking. In fact, up until recently, project engineers have not often thought about the logistics of their project at all, that was a semitransparent phase left to others to handle. No more.

There is another approach, and this may or may not involve getting in a three-way conversation with a supplier and their other customers. It is simply this: if you really, really, need a certain piece of equipment, can you buy it from someone else's order? Perhaps someone else ordered a "framascram" and it is sitting in their marshalling yard, waiting to be installed nine months to a year from now. Will they sell it to you and take your later spot in the delivery cycle? Will the supplier transfer the warranty to you?

It is time to get creative.

What you do not want to do in any of these cases is compromise safety. Don't buy junk and don't buy items that cannot be brought up to current safety standards. This would be the worst outcome of all.

Be safe and we will talk next week.


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