How to Save Money When Buying water treatment equipment manufacturer

Introduction

Water and wastewater treatment is an essential aspect of any community or industrial operation, ensuring that water discharged into the environment or used for drinking water meets regulatory standards and poses no harm to public health or the environment. However, water treatment can be a significant financial burden, requiring careful budgeting and financial planning. In this article, we will discuss the key considerations and strategies for budgeting for water and wastewater treatment expenses.

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Understanding Water and Wastewater Treatment Expenses

Before delving into budgeting, it’s essential to understand the components of water and wastewater treatment expenses. While these costs can vary significantly based on the scale of the operation and regulatory requirements, they generally encompass the following:

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1. Infrastructure Costs: This category includes the construction, maintenance, and repair of treatment facilities, such as treatment plants, pipelines, and pumping stations. Don’t forget the basics like buildings, roofs, doors, fences, and paving. It’s important to note that some of these elements can be substantial expenses, requiring thoughtful, long-term planning.
2. Operational Costs: Operational expenses encompass day-to-day costs, such as labor, energy, chemicals, and equipment maintenance. These costs can be further categorized into fixed and variable expenses, which fluctuate based on changes in the flow or loading. For operations, the labor is typically fixed but should be adjusted by using the Consumer Price Index for labor in the area where the facility is located. Equipment maintenance can vary widely from facility to facility, but facilities with strong preventive maintenance programs usually have a much better understanding of the needs, resulting in lower costs when compared to facilities that follow a “fix it when it breaks” approach. Energy and chemicals will vary as the flow or loading to the system changes. Chemicals and utilities are critical to operation – how and when you buy these items can materially impact the budget. Some chemical costs are volatile and buying in bulk can make sense. If you don’t have bulk storage, consider capital upgrades to control operational spending or additional upgrades, like blower control using Dissolved Oxygen (DO) probes to optimize your utility use.
3. Compliance Costs: Meeting regulatory requirements entails testing, monitoring, and reporting to ensure treated water or wastewater adheres to environmental and regulatory standards. It’s also vital to anticipate future changes in the treatment process, potential new tie-ins with municipal plants, future shifts in waste streams, and forthcoming regulatory adjustments. With proper planning, regulatory deadlines and compliance milestones can be met in a controlled and managed way. Adequate budgeting should account for these aspects to prevent rushed and costly responses to compliance challenges.
4. Capital Expenditures: Capital expenditures involve the replacement or upgrades of equipment and infrastructure, typically on a longer-term cycle. Consider the age of your treatment facility – how long was the design life? Is there equipment that has challenges or difficulty from a maintenance perspective? Would equipment upgrades reduce operating costs or optimize operations? Capital spending is one of the more difficult budgets to manage and understand as these are typically measured by the Return on Investment (ROI). When presenting the ROI for a capital project, be sure you have considered all the costs or cost reductions because they can make or break the project. The decision to spend capital typically lies in the senior leadership of the organization, and taking the time to lay out a clear, concise, and measurable ROI will often get the attention of leadership. Remember that they are not “in the weeds” of your project so showing them how you will optimize costs, reduce or eliminate spending, or improve efficiency is important. Perhaps the most important thing is showing exactly how you will measure the success in a way that is clear and understandable. Ambiguity in an ROI proposal is a shortcut to the no go line of capital projects that are presented to leadership.
5. Contingency Funds: Setting aside a portion of your budget for unexpected repairs or regulatory changes is essential. The level of contingency should be determined based on the depth of your research and understanding of potential unknown conditions. The more you know the less contingency you need. If you have done little to no research and do not have a clear understanding, consider a 50% contingency as a starting point. As you begin to define project elements, you can reduce this in small increments as you proceed. Once you get to 10%, you should consider that you will never know everything and hold there unless you know there is little or no chance of change affecting the project. For maintenance contingency, you must assess your preventive maintenance program and decide if you have a strong or weak program. With a strong program, 10%-15% would be typical for contingency. With weaker programs, 25% – 40% would be more appropriate as repair and replacement costs can quickly escalate, especially if you subcontract the repair or installation.

Steps to Budgeting for Water and Wastewater Treatment Expenses

1. Assessment and Planning
   Know Your System: Understand the treatment system in place. Determine its age, condition, and capacity.
   Regulatory Requirements: Familiarize yourself with local, state, and federal regulations governing water and wastewater treatment. Compliance is non-negotiable.
   Forecast Growth: Consider any potential changes in your operation’s size or capacity, which may require adjustments to the system.
2. Cost Estimation
   Historical Data: Review past expenses to identify trends and anticipate future costs.
   Consult Experts: Seek advice from water and wastewater treatment experts or consultants to get a more accurate estimate.
   Request Bids: If you plan to undertake capital projects, request multiple bids to ensure competitive pricing. Don’t forget contingency.
3. Create a Detailed Budget
   Line-Item Budget: Break down your budget into specific line items, including infrastructure, labor, maintenance, compliance, and contingency.
   Allocate Funds: Determine the percentage of your budget allocated to each category based on historical data and expert advice.
   Account for Inflation: Factor in inflation when projecting costs for future years.
4. Long-Term Planning
   Capital Improvement Plan: Develop a long-term plan for infrastructure upgrades and replacements, ensuring that you spread costs over several years.
   Savings and Reserves: Establish a fund for capital expenditures and emergencies to avoid sudden financial strains.
5. Efficiency Measures
   Reduce Energy Consumption: Implement energy-efficient technologies to reduce operational expenses.
   Minimize Wastage: Optimize chemical use, reduce water consumption, and improve treatment processes to cut costs.
6. Monitoring and Reporting
   Regular Assessments: Continuously monitor expenses and compare them to your budget.
   Compliance Tracking: Keep detailed records of all regulatory compliance efforts to avoid costly penalties.
7. Public Communication
   Transparency: Communicate with stakeholders, whether they are residents, shareholders, leadership teams, or governing bodies, to build trust and potentially gain financial support.
8. Periodic Review and Adjustment
   Quarterly Reviews: Every quarter you should compare your actual spending versus the predicted spend and then adjust budgets to compensate for over or under runs.
   Annual Review: Review and adjust your budget annually, considering any changes in your system or regulatory environment.

Conclusion

This guest blog comes to us from Megan Ray Nichols of Schooled by Science. 
Not every procurement officer has to deal with the water treatment industry on a daily basis. That’s why it can be useful to have some reminders of the practical (and even visual) issues that you can solve with the right piece of equipment. Some of the other reminders here have more to do with your company’s culture and your mission, and how you can come to the best decision possible for all parties involved.

1. Break Down the Costs Strategically
Water treatment systems and new equipment and projects influence several other facets of your company, and possibly even all of them. There are utility costs to consider, plus maintenance costs over the equipment’s lifecycle, contract costs associated with your vendor’s services over time, the labor for supporting personnel and more.

Many companies and municipalities who are strategic with their spending choose to engage in what’s called a “hybrid procurement approach.” This is where companies or governments use more than one delivery type according to what best fits each phase or project. The advantage can include faster delivery times as well as a more strategic way to transfer risk.

2. Include Facilities Personnel in the Decision-Making Process
When you’re tasked with buying water treatment equipment, it’s not just the cost of the equipment that concerns you. You also need to know what kind of service value is included in those costs.

You may find yourself making a choice between two differently priced but otherwise similar pieces of equipment from two different vendors. You need your facilities managers and maintenance personnel to make their voices heard in the decision-making process. They’re better positioned than anybody to tell you whether the service value of one company justifies the price.

What do we mean by “service value”? It comes down to two things: which provider looks better prepared to support your own people? And which one looks more committed to consistency in all of your required benchmarks, with the guarantees to back up their claims? Trust your people not to steer you wrong.

3. Don't Assume Flat-Rate Water Treatment Is More Economical
Most of what we discuss here today relates to purchasing water treatment equipment. But what if you’re buying services or leasing equipment from a water treatment vendor instead? How does the mission change?

It’s possible you’ve heard about flat-rate water treatment services and wondered if they deliver a better deal overall. This is something you should be skeptical about, under many circumstances, for the same reasons you’d be skeptical about a fixed-rate electricity delivery plan.
There are some things a supplier can control. Other things are beyond anybody’s control, such as production fluctuations and the number of high-degree days.

Both of these impact how much water is needed for cooling and other industrial purposes and the cost to maintain the equipment. Keep your spending low (and your supplier accountable) by holding budget reviews quarterly and annually with your provider, whether they provide services, equipment or both.

4. Target Your Solutions to Known Problems
If your existing water treatment equipment isn’t solving 100 percent of your problem, it’s probably costing you money. But you need to be smart about how you apply your probably too-small procurement budget. That means beginning with known problems, rather than being sold a product that solves an ill-defined problem.

Think of deposits and foam in mixing tanks as one example. When surface aerators can’t deliver the controlled agitation over the volume of water you require, “dead zones” are the result. Dead zones are areas where vertical aeration creates localized areas of deposits, odors and foam. Your equipment is working harder in the long run than it should be and getting less done.

One way to avoid this is to replace inefficient and poorly-designed aerator systems. You’re procuring water treatment equipment for a reason. When you’re looking for a supplier, pay attention to how well they listen and how well they define the problem before they propose a “solution.”

5. Evaluate Your Vendor’s Expertise and Staying Power
There are a few other practical matters to consider while choosing and purchasing water treatment equipment and service providers and performing diligent research on their vendors. They are these:

• Find suppliers with industry-certified components.
• Be sure you’re dealing with suppliers and vendors with a regional presence. You don’t want to be left waiting for a part located a few states away.
• Evaluate your suppliers’ talents for re-engineering existing parts when appropriate, but also how well they keep up-to-date with emerging water treatment technologies and trends.

This is another natural place to solicit feedback from the people in your company who have their hands on these systems on a daily basis. But it also means finding partners with strong roots throughout the region and good-looking business histories.

A Team-Based Approach to Water Treatment Procurement
You should feel a little better prepared to watch your procurement team come together with your maintenance team and other facilities specialists in pursuit of a common goal. You may also have a better appreciation for how many other systems and departments this kind of decision might touch upon.