Caterpillar makes it easy for you to build an RFP or RFQ with a Life Cycle Cost component. When you capture total cost information from every bidder, you enhance decision-making and improve your ability to budget accurately, avoid surprises, manage long-term spending and reduce risk.
Build Your RFP Online
Save time and money by using RFP Builder to easily create your next RFP or RFQ. Simply pick and populate the sections you want to include, save the document and email a copy to yourself.
Life Cycle Costing
The concept of Life Cycle Costing has been endorsed by the National Institute of Governmental Purchasing (NIGP), the National Association of State Procurement Officials (NASPO) and other governmental associations. It's a simple calculation that lets you compare options from a total cost perspective.
To estimate Life Cycle Costs:
- Begin with the initial purchase price (less trade-in value for old equipment).
- Add scheduled maintenance costs.
Find information in Operation and Maintenance Manual.
- Add expected repair costs.
Information comes in form of quote for warranty or extended warranty.
- Add fuel costs.
To improve data accuracy, share application information with all bidders and request fuel consumption data from historical records or on-board technologies.
- Subtract residual value.
Be cautious with guaranteed buy-backs as they are only exercised if you buy your next piece of equipment from the vendor offering it.
Initial Purchase Price - Trade-in + Maintenance + Repairs + Fuel - Resale Value = Life Cycle Cost
This calculation can be customized to include other factors such as productivity, uptime and downtime. The more factors you include, the more confident you can be in the evaluation process.
Points Award System
Points Award System helps you evaluate heavy equipment purchases by incorporating the actual cost of the machine as well as dealer and manufacturer support capabilities. Additional evaluation criteria include:
- Life Cycle Costs
- Conformity to Specifications
- Warranty Coverage
- Vendor Locations
- Parts Pricing and Availability
- Shop and Field Service
The rating and weighting functionality allow you to customize what is most important to you as you build your "Value Score Card."