CAPEX vs OPEX: budgeting an industrial project
The purchase price is only the start — budget the full capital scope and the operating costs it locks in.
This article covers how to split one project budget between capital and operating costs. If the question is whether to buy the asset or contract or lease the capability instead, see CAPEX vs OPEX: the ownership decision.
What belongs in the CAPEX budget?
Capital expenditure covers everything needed to deliver a working asset, not just the machine price.
- Core equipment and auxiliary systems
- Freight, insurance, duties and inland delivery
- Installation, utilities connection and commissioning
- FAT/SAT, training, documentation and initial spares
- Civil works, electrical and infrastructure upgrades
- Contingency — typically 10–15% for industrial projects
What belongs in the OPEX budget?
Operating expenditure starts the day the line runs and continues for its whole life.
- Energy, water, steam and compressed air
- Operators, maintenance staff and supervision
- Wear parts, consumables and planned maintenance
- Service contracts and emergency call-outs
- Insurance, compliance and recertification
How do you build an OPEX budget for a new line?
Build it from the operating plan, not from the quotation: start with planned hours and output, then cost each resource the line consumes per year.
- 1. Set the operating basis — shifts, hours per year, planned output
- 2. Cost utilities from rated consumption × hours × your local tariff
- 3. Cost labour — operators, maintenance and quality per shift
- 4. Add consumables, wear parts and planned maintenance from supplier data
- 5. Add service contracts, insurance and compliance
- 6. Ask every supplier for the same consumption and spares data in the RFQ so OPEX can be compared
Worked example: same price, different lifetime cost
Illustrative assumptions only, not market prices: two lines each quoted at USD 1,200,000. Line A needs USD 180,000 a year to run; Line B needs USD 140,000 because of lower energy use and cheaper spares. Over ten years, ignoring discounting, Line B costs USD 400,000 less to own — a gap the purchase price alone would hide.
Use the CAPEX, OPEX and TCO calculators linked below to replace these assumptions with your own figures.
How does the split change supplier choice?
Two quotations with the same purchase price can have very different lifetime costs. A machine with higher energy efficiency, better local service and cheaper spares can repay a higher CAPEX within a few years. This is why total cost of ownership — not headline price — should drive the comparison.
How does the split affect financing?
Lenders and investors look at both sides: CAPEX defines the funding amount, while OPEX defines whether the project can service debt. A bankable project document shows the full capital scope, realistic operating costs and the revenue assumptions that connect them.
How does CAPEX approval work?
Short answer: a CAPEX request usually moves from scope definition to a total-project-cost budget (installed cost plus contingency and working capital), then through business-case review and approval at the level your organisation's delegation of authority requires. Contingency should match how well the project is defined and be shown as a separate line.
- Define scope of supply, capacity target and site boundaries.
- Build the budget at three levels: equipment, installed cost, total project cost.
- Add contingency as an explicit line, with the reason for the chosen rate.
- Prepare the business case (OPEX, ROI/payback) and risk list.
- Submit for review and approval under your internal authority limits.
- After approval, issue the RFQ and track quoted, committed and actual costs against budget.
Checklist before submitting for approval
- Equipment quotation is not presented as the total project cost
- Freight, insurance, duties and taxes are included with the Incoterm stated
- Contingency rate is stated separately and linked to definition maturity
- Currency, exchange rate and its date are recorded
- Each cost line is marked estimated, quoted or committed
- Key risks (lead time, ramp-up, site readiness) are listed with owners
Educational guidance only; approval steps and contingency rates depend on your organisation's own policy.
Packaging lines, production lines and calculators
Global B2B Group's main line is packaging and production lines — for fish, shrimp, greenhouse produce and other agri-food products — plus custom machinery, for projects from USD 250,000 with human review before any supplier outreach.
Packaging and production-line guides
- How to compare food packaging line proposals
- Food processing line planning: hygiene, capacity, packaging
- Packaging automation ROI
- Fish & shrimp packaging line profile
- Special-purpose and custom machinery
- Industrial machinery and production lines
Estimate before you send an RFQ
Sector projects go to our specialist platforms
Sector projects such as cold rooms, hatcheries, fish farms, greenhouses or feed mills go to the matching specialist platform. Packaging lines, custom machinery, multi-sector projects, CAPEX planning and financing preparation stay with Global B2B Group, so each buyer has one route and the platforms never compete.
- ColdMatch Group — Cold storage, refrigeration and cold-chain infrastructure
- HatchMatch Group — Poultry farms, hatcheries and poultry infrastructure
- FishMatch Group — Fish farming, shrimp farming and aquaculture systems
- SeedMatch Group — Greenhouses, irrigation, protected agriculture and seed
- FeedMatch Group — Animal feed, ingredients and feed mills
Quick questions
Is installation CAPEX or OPEX?+
Under IAS 16 (Property, Plant and Equipment), costs directly needed to bring an asset into working condition — such as delivery, installation and testing — are part of its cost, so they are normally capitalised as CAPEX. Confirm treatment with your accountant.
How much contingency should an industrial project carry?+
Commonly 10–15% of the capital budget, higher for first-of-kind processes or uncertain site conditions.
Can OPEX be financed?+
Working capital facilities exist for operating costs, but they are separate from project CAPEX financing and are assessed differently by lenders.
What CAPEX and OPEX items matter most for a packaging line?+
CAPEX: machines, conveyors, change parts, controls, installation and FAT/SAT. OPEX: packaging consumables, energy, compressed air, labour, cleaning, spares and maintenance. Packaging materials often outweigh machine running costs over the line's life.
Summary
- CAPEX buys the asset; OPEX runs it — budget both before choosing a supplier
- Compare offers on total cost of ownership, not purchase price
- Financing decisions depend on a credible view of both sides
Global B2B Group is an independent, human-reviewed procurement channel — not a manufacturer, contractor or lender. Figures and methods here are general guidance; confirm project-specific details with qualified advisers.
Continue with our commercial resources
Hand-picked next steps for this topic — special purpose machinery and industrial project financing.
