11 December 2015 //
by Matt Rose
Recently, we posted tips on how to avoid busting your budget in the beginning stages of a project that prompted some questions about budget management during the final stages. Here are the five most common budget-busting oversights that occur late in a project:
1. Test Sample Products and Materials
Sample products are needed at each stage of the project: engineering and testing; mechanical design engineering; and, for Factory Acceptance Testing (FAT) at the equipment manufacturer’s facility—which can take up to two pallets’ worth of product alone. Oftentimes, the samples used for testing have substantial value that is not accounted for in the overall new equipment budget. Likewise, the cost of required packaging materials such as shrink film, corrugate/hot melt glue is not considered and neither is the turnaround time to receive these materials. A delay in the delivery schedule could be costly.
2. Spare Parts Kit
Upon completion and approval of both mechanical and electrical engineering drawings, a detailed spare parts kit can be readied for the customer. These kits range in level of complexity from critical parts to equipment manufacturer-suggested parts to comprehensive long-term upkeep and will cost anywhere from $2,000 to more than $30,000. To avoid any surprises in content or cost, it is important to communicate to the equipment manufacturer if a spare parts kit is desired and how comprehensive of a kit is wanted.
3. Freight/Shipping Costs
Most specifications include verbiage regarding shipping and related responsibilities, but that doesn’t mean the costs were included in the original budget. Based on recent domestic shipments in the U.S., shipping can cost anywhere from $2,000 to $10,000 or more depending on the distance, required trailer type, and number of loads. By determining upfront how the machine is getting from the equipment manufacturer’s facility to yours or who is responsible for trucking/shipping and insurance will help you plan accordingly.
4. Installation and Commissioning
While the cost of installation and commissioning is not typically overlooked in the initial budget, it could be largely inaccurate in terms of dollars, time, and responsibility.
Packaging equipment, like other machinery, is adopting more complicated electrical systems. Installing and commissioning a system is no longer as simple as bolting the machine to the floor and plugging it in. Even routine installation and equipment commissioning, depending on the size and complexity of the machine, can present unforeseen challenges that cost anywhere from $5,000 to $10,000. Some demanding applications can exceed $20,000.
Having technical staff from the equipment manufacturer on hand during installation is critical to startup. While there are additional associated costs like travel, lodging, and meals/living expenses, it is still less costly than a failed installation.
After commissioning, it is common to schedule a couple days of on-site technical help or a follow-up visit to ensure staff is fluent in the machine’s operation and maintenance requirements. As with installation and commissioning, penciling in sufficient funds to cover training can help you budget accordingly.
Avoid costly additions to your bottom line. Contact us today for help with “big picture” project planning that takes every aspect of the job into consideration.