What is CapEx procurement?

It differs from day-to-day purchasing because each event is high value, infrequent and difficult to undo. A poorly specified machine or a weak contract can cost a company for a decade.

How the process usually runs

1. Business case and budget approval. The requesting team justifies the asset and finance approves the spend, usually as part of the annual CapEx plan.
2. Technical specification. Engineering, operations and procurement agree what the asset must do, which standards apply and how performance will be tested.
3. Supplier pre-qualification. Shortlist suppliers on capability, financial health, references and after-sales support, not price alone.
4. RFP or RFQ. Issue a structured request so bids are comparable line by line, including installation, training, spares and service.
5. Negotiation or reverse auction. Once bids are technically equal, competitive bidding on the commercial terms often delivers the largest saving.
6. Contract and delivery. Payment milestones tied to delivery, commissioning and acceptance tests, with warranties and penalties written in.

Where CapEx procurement goes wrong

• Specifications written around one preferred supplier, which kills competition.
• Total cost of ownership ignored in favour of the lowest purchase price.
• Long approval chains that run over email, so nobody can see where a project is stuck.
• Change orders during delivery that quietly erode the negotiated saving.

A sourcing platform that holds the specification, bids, auction and contract in one place removes most of these problems. Procol's strategic sourcing software and auction software are built for exactly this kind of event.