Negotiating capital purchase

The area of capital equipment will at some time affect all core facilities whether it is at the beginning when such a facility is being set up or later down the line when existing equipment needs to be replaced. Although purchase of large i.e. expensive equipment is often under the jurisdiction of a specific Purchasing or Procurement Department, the end user i.e. the facility manager should be involved in this as they are in the best position to specify the exact requirements. The majority of purchases over a certain financial limit are generally put out to tender although this may vary geographically and politically. In all cases though, looking at a range of options and attempting to negotiate the best overall deal is important. Some of the considerations are:

• What is the list price and what discount would be available?
• Can extended warranty or increased service agreement be added?
• Is service insurance an option?
• Can equipment be leased?
• What is the manufacturers expected lifetime of the equipment?
• Are there new hardware developments planned and what is the policy towards upgrading existing equipment?
• Are there any potential hidden costs (for example paying for software upgrades)?
• (and probably most important!) Does the equipment do what you want it to do?

In all cases, negotiation at the quotation stage when buying new equipment is recommended.