How to prepare a budget for overhead crane purchase

By Marc-André Martineau
Manager & Partner at Premium Industrial Group

Do you really know what an overhead crane will cost you beyond the price of the product ?  
Have you considered the hidden costs that have a major impact on your investment, such as maintenance, for example ? Neglecting these aspects could lead to unpleasant surprises and financial losses.

Indeed, investing in a lifting project involves more than just the price of the overhead crane itself. Other costs need to be calculated to determine the investment in the short, medium and long term.

Would you like to obtain a budget price for lifting equipment before starting the project? 
Or are you a business manager looking to estimate the investment budget for the service life of your overhead cranes?

This article will serve you as a comprehensive guide for your overhead crane purchase. After reading it, you'll be able to prepare an accurate budget for your project in the short term, but also determine the long-term costs, i.e. for the entire service life of the equipment.

In this article, you'll discover :

• All expenses over the service life of a piece of equipment
• How to calculate a budget price for an overhead crane project
• How to evaluate the investment over the service life of your overhead cranes

Let's start by establishing all the costs that need to be considered when purchasing an overhead crane.

What costs should I consider when buying overhead cranes?

When buying overhead cranes, it's not just the price of the product that needs to be considered. If you want to know the real investment, you have to consider all the costs related to this purchase over the service life of the lifting equipment (see the box "What is the service life of an overhead crane?"  in our article on overhead crane classifications.)
Here are all the cost elements to evaluate the real investment your project will represent :

1.  Products (Overhead crane, structure, etc.)
   
2.  Transport of the products to your plant 
3.  Installation and commissioning of the products 
4.  Rental of lifting equipment, if not included in installation (scissor lift, aerial work platform, etc.) 
5.  Load tests (if not included in installation) 
6.  Weights for load tests
7.  Operator training 
8.  Equipment inspection and maintenance 
9.  Spare parts for maintenance 

Some of these expenses will be paid all at once when you purchase your equipment and are included in the budget price. Others will be recurrent over the lifetime of the overhead cranes.

So there are 2 types of budget you might be looking for: the budget price at the outset of your project, and the investment you need to plan for over the entire lifetime of your equipment.

Lets start with the budget price.

Steps to establish an overhead crane budget price

Calculating the budget price for your project involves 2 main steps : determining the equipment you need and calculating the acquisition cost.

Step 1 – Selecting the right equipment for your application

To begin with, you'll need to choose your equipment. To make the right selection and avoid mistakes, we recommend that you consult the 2 following articles :

•    Need an overhead crane: Where to start?
•    What are crane and hoist classifications? How do they affect you?

This will help you determine the type of equipment best suited to your application. 

Step 2 – Calculate the cost of purchasing your equipment

Once you've identified the products best suited to your needs, you can determine the acquisition cost to establish your short-term budget. This cost is calculated by adding up the cost of the first 6 items provided in the list above. You'll find the prices of these items on the page How much does an overhead crane cost? But in concrete terms, here's how you can proceed :

Product pricing

1. On the pricing page, go to the Equipment prices section.
2. Select the appropriate tab based on your selection in step 1 :
   1. " Overhead crane " tab if you need single or double girder overhead cranes.
   2. " Other equipment " tab if you need jib cranes, monorails, gantry cranes, etc.
   3. " Structures " tab if you need a structure on which to install your overhead cranes.
3. Note the price for each piece of equipment. We recommend that you use the highest price in the price range, especially if you are purchasing a single piece of equipment.
4. Multiply these amounts by the number of pieces of equipment you need for each type.
5. Enter this amount in a spreadsheet.

You now have the product prices for your budget.

Prices for delivery and installation/commissioning

1. In the same table, you'll find on each line the delivery and installation price for each product.
2. Note the delivery price for each piece of equipment. We recommend that you use the highest price in the price range, especially if you are purchasing a single piece of equipment. 
3. Multiply these amounts by the number of pieces of equipment you need for each type. 
4. Do the same with installation 
5. Enter this amount in your spreadsheet. 
   

You now have the price of transport and installation, as well as equipment rental for work at height or other, and load tests, which are included in Premium's installation. 

Load test prices

Normally, the price of load tests should be included in the installation price. If this is not the case, don't forget to add them, as they are mandatory before you can use your new lifting equipment.

Rental of weights for load tests

Some companies already have loads in their factories that represent the capacity of their new overhead cranes at 100% and 125% of their rated capacity. If this is your case, installers may be able to use them, saving you the trouble of renting them.

But if not, here's how to add them :

1. In the " Service prices " section of our pricing page, you will find a " Load test " box in which the price of weights for load tests is shown. 
   
2. Select the appropriate price for your project. 
3. Multiply these amounts by the number of pieces of equipment you need for each type. 
4. Enter this amount in your spreadsheet. 

Rental of installation equipment

Some people prefer to rent their own installation equipment, for various reasons (proximity, price, etc.). If this is your case, be sure to check with your supplier to find out what he'll need before asking for your price, whether it's a scissor lift, an aerial work platform, a crane, a lifting table, etc. Then add these amounts to your spreadsheet.

Calculate your total

Once you've collected all these amounts, combine them to obtain your total. You'll have a good idea of the budget you'll need to get your project started.

Here's an example of a table including all this calculation.

EXAMPLE OF BUDGET PRICE CALCULATION

But once the equipment is in place, other costs will be involved throughout its lifetime. Would you like to know how much you'll have to invest?

How to evaluate the investment over the lifetime of your overhead cranes

Calculating the costs you will have to cover over the entire service life of your equipment is more complex, as it is very difficult to :

1. Determine the service life of a piece of equipment
   
2. Determine the maintenance that will be required in your situation (parts and labor). 

However, your lifting specialist can help you determine an estimate for these items. Once you have this data, you'll need the following information :

1. The price of the following items, available in the section Service prices of our pricing page :
   1. Prices of training
   2. Prices of inspections
   3. Prices of main spare parts
   4. Prices of service calls
2. Estimated purchase frequency for each of these items
3. Estimated service life of your lifting equipment

You can then use the following formula for each item. 
The total of each, added to the previous budget price, will give you the investment you need to plan for over the lifetime of your equipment. 

The following table illustrates this calculation of the investment over the service life  :

Example of lifetime investment calculation

(estimation for 20 years)

Set your own budget and investment

Now that you know all the costs involved in your project, you can avoid unpleasant surprises. As we've seen, the price of the product is only one element to consider. What's more important is the overall cost of the project and the long-term investment. It's only natural to want to be well prepared by knowing the real costs of your investment.

What can you do now? Make a concrete assessment of your own project with a lifting specialist. This will ensure that your data is solid for your calculation.

Once you have your budget price in hand, you'll probably need to establish a schedule for your project. The article " Overhead crane delivery times: What influences them? " will help you plan your deadlines.

Do you have an upcoming project and need a budget price? At Premium Industrial Group, we can help you with this strategic step. If you wish, you can contact us by clicking on "Contact a specialist" at the bottom of this page.