Weighing the risks and rewards of early equipment ordering

Aug. 29, 2016
Take all the relevant factors into account and ensure adequate planning for contingencies.

Long delivery times easily can imperil plant projects and maintenance. Specialized equipment may have relatively few reliable manufacturers — and, thus, involve lengthy lead times. Meanwhile, industry consolidation has reduced the number of capable suppliers for some types of commonplace equipment (pumps, for example), again impacting the speed of delivery. So, ordering equipment before a plant knows exactly what’s needed may offer advantages. However, early ordering comes with tradeoffs.

Early ordering has the greatest value and, thus, is most compelling when it’s the only way to adhere to the project’s schedule. If multiple procurement, shipping, manufacturing and assembly steps are required in sequence, as they often are, schedules may be impossible to compress beyond some point. Many projects recognize this by identifying specific items with long-lead-time delivery. Major machinery — e.g., large compressors, solids handling and other equipment requiring precision moving parts — frequently falls into this category. Delivery of these items may stretch to 24 months or longer after order.

If you must order equipment early, take steps to minimize risk. Have contingency plans in place. Plans should cover three areas:

  • capital exposure;
  • process changes; and
  • manufacturing and shipping reliability.

To learn more, read "Processing Equipment: Does Early Ordering Make Sense?" from Chemical Processing.

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