Project Management

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ProjectManagement
ApplicationtoOil &Gas upstream projects
Sommaire
ProjectManagement Costs 372

Processes 3
Time 417
Scope 18
Engineering 466
Interfaces 89
Procurement 498
Technicalcontracts 112
Construction 531
Organization 185
Precommissioningand
HSE 212 Commissioning 582
Quality 267 Collectiveknowledge 611
Risks 317 2
Project
Management
Processes
Theneed ofprocess groups
EnforcingprocessgroupsisaproventechniquetohelpProjectsmeettheir
objectives
Processgroupshelpbalancingthecompetingconstraintsof
Scope
Schedule
Budget
Quality
Safetyandenvironmentalprotection
Assuch,theycontributetomakesucessful Projects
4
Aninternationalreference
TheProjectManagementInstituteis
considered aleading international
reference fortheproject
managementprofession
Since1969,thisnonprofit
associationbasedintheUSAhasset
rules,standardsanddefinitions
commonlyappliedindiversfieldsof
industry,speciallytheOil&Gas
business
Theirknowledgeisgatheredinthe
PMBOKguide,usedasareference
throughoutthiscourse
5
PMIsfiveprocessgroups
Initiatingprocessgroup
Planningprocessgroup
Executingprocessgroup
Monitoringandcontrollingprocessgroup
Closingprocessgroup
6
Process groups
Projectmanagementprocessgroupsaresetsofinterrelatedactionsand
activitiestocreateaspecificresult
Allsuchprocessesoverlap,interactandtheirapplicationisiterative
Processgroupsarenotprojectlifecyclephases
Initiatingprocessgroup
Objectives
Defineinitialscopeforaprojectornewphaseofaprojectbyobtaining
authorizationtostarttheprojectorphase
Alignstakeholdersexpectationswiththeprojectobjectives
Setthevisionoftheproject
Inputs
ProjectBasisofDesign
Businessagreements
Outputs
Projectcharter/scope/Organization
Stakeholderregister
8
Planningprocessgroup
Objectives
Defineandrefineobjectives.Developcourseofactiontoachievethese
objectives
DevelopProjectManagementPlanandprojectdocumentstocarryoutthe
work
Delineatestrategyandtacticstoachievetheobjectives
Getstakeholdersengagement
Inputs
Outputsfrominitiatingprojectgroup
Outputs
Plansandprojectdocuments
Developriskregisterandriskmanagementplan
Planningisaniterativeprocess
Forcomplexprojects,
Planning severalloopsmaybe
requiredforadditional
analysis progressive
elaboration
Initiating Executing Asmoreinformationis

generated,additional
planningmayberequired
Stakeholderstobekeptin
Controlling therevisionloop
10
Competingprojectconstraints
Performance/
Quality
Cost Schedule
Resources Risks
11
Executingprocessgroup
Objectives
IntegrateandperformactivitiesinaccordancewiththeProject
ManagementPlan
Coordinatepeopleandresources
Maintainstakeholdersengagement
Inputs
ProjectManagementPlan
Outputs
Projectdeliverables
Projectrecords
12
Monitoringandcontrollingprocessgroup
Objectives
Continuoustrackingandreviewingofprogressandperformanceoftheproject
ImplementcorrectiveorpreventivemeasurestocomplywiththeProject
ManagementPlan
Inputs
Workperformancedata
Changerequests
Deliverables
Outputs
Approvedchangerequests
Qualitycontrolmeasurements
Workperformanceinformationandreports
13
Closingprocessgroup
Objectives
Processes toformally conclude theproject orproject phase
Inputs
Results ofallprevious process groups
Outputs
Closeoutreports
Formal documentationandcertificates
Contractual obligationsclosure (financial orwarranty claims)
Handoverprocedures orcertificates
14
Interactionsbetweentheprocesses
15
Knowledgeareas
PMIhasdefined10knowledge Forthepurposeofthiscourse,five
areas additionalareas,specifictoO&G
Integrationmanagement projectactivities,havebeenadded:
Scopemanagement HSEmanagement
Timemanagement Managementofcollectiveknowledge
Costmanagement Engineeringmanagement
Qualitymanagement Constructionmanagement
Humanresourcesmanagement Commissioningandstartup
Communicationmanagement management
Riskmanagement
Procurementmanagement
Stakeholdermanagement
Processgroupsapplytoeachof ThisconstitutestheProject
these ManagementBreakdownStructure
16
Managementprocesses
Managementprocessesdetailhowtheactivitiesaretobeconducted
Eachofthemcanbedocumentedwith:
Inputs
ToolsandTechniques
Ouputs
17
Scope
18
Scopemanagement
Foreword
Mainobjective
Defineprojectscopeindetail
Maintoolsandmeans
Evaluationstudiestobeselecttherightdevelopmentconcept
Identificationthedifferentstepstocarryandmeettheprerequisitesofeachofthem
ValidationandapprovalbytheProjectManagementteam
19
Scope
ProjectScopeManagementduring
Evaluationphase
20
ProjectScopeManagement
during Evaluationphase
Planpresanctionactivities
Determinetheobjectiveandcontentofpresanction
studiesandsequenceofexecution
Collectinputdataandrequirements
Performpresanctionsequenceofstudies
Validateconceptretainedforproject
21
Objectivesofpresanctionactivities
Confirmknowledge Reducerisks
Appraisal
Developmentschemesandconcept
Budgetandschedule
Executionprinciples
DossierforProjectdecisiontomovetonextphase
Note:Exploration, Discoveryareperformedseparately,andpriortoproject
22
Risk anduncertainties vs. time
23
Projectscopemanagementprocess
Remainingappraisalrequirements
Preliminaryscheme
PreliminaryStudy Technicalfeasibility
Appraise Development
Prelim.Schedule&costestimates
Potential
Screeningofalternatives
Confirmationoffeasibility
ConceptualStudy
Select BestConcept Keyparametersdefinition
Conceptselection
forDevelopment
Detailedevaluationofselectedconcept
Basisofdesign/SOR
Field/plantdevelopmentplan
Preproject(preFEED)Study Projectexecutionprinciples
ProjectexecutionEstimate
Develop Concept ProjectexecutionSchedule
Projecteconomics
Implementationandexecutionofall
thathaspreceded,uptofirstoilorfirst
BASICorFEED+EPCPHASE gas
24
Majorcostsavingsopportunitiesareatearlystages
CostSaving
potential
Keyideasandinnovationsthat
generatemostcostsavingsare
introducedatthisstage
Refinedlevelofdetailyields
additionalcostsavings
Time
Conceptual PreProject BasicorFEED Construction
Studies orpreFEED Engineering
25
Defineapplicableinternationalornationalrulesandregulations
Definecorporaterequirements
Definestakeholdersrequirements(communicationandLocalcontent)
Collectlessonslearntfromsimilarprojects
Identifynewtechnologiesapplicabletotheproject
26
Companyreferential
CompanyDocumentation
Projecttechnicalreference
DocumentsareInternalrules
andGeneralspecifications
27
ProjectStakeholders
Operator
Partners Management
NationalOil
Company
Authorities
CompanyProject
team
Local
communities
Contractors
Engineering
Companies
Vendors
28
Preliminarystudies
Conceptualstudies
PreFEED
FEEDorBasicEngineeringstudies
SanctiontheProject
29
Preliminarystudies
Objective:
Verifyinasimplifiedwaythatthefieldcanbedevelopedinaneconomicway
Methodhighlights
Refertopastexperienceandfindananalogintermsofdevelopment
AlternativelyuseaspecializedsoftwaretodefineOOMcostandschedule
EvaluationCriteria:
OrderofMagnitudeCosts
Schedule
Preliminaryeconomiccalculations
Safety&Environmentalissues
Risks(technical,economic)
Stakeholders,partners&authoritiesrequirements
30
Conceptualstudies
Objective:
Selectthebestschemeforfielddevelopmentandproduction
Methodhighlights
Listthepossibleschemes/concepts/scenarii tobestudied,basedon:
Overallknowledgeofthedevelopmentareaspecificrequirements
Commonsense
Brainstorming
Analogue,previousexperience
Twostepanalysis
1. "Screening"cases
2. Detailedanalysisoftheshortlistedcases
ConceptselectionCriteria:
Valuecreation Technicalinnovations
Costs Safety&environment
Risks(technical,economic) Stakeholders,partners&authorities
Experience,operability,flexibilityLocalcontentrequirements
31
Conceptualstudies
Maintechnicaloptions
WhenplanninganO&Gdevelopmentproject,thefollowingquestionsshouldbe
addressed:
Reservoirdepletionstrategy
Naturaldepletion?
Waterorgasinjectiontomaintainreservoirpressure?Artificiallift?
Productionprofile(plateaulevelandduration)
Phaseddevelopment?
Wells
Completionstrategy
Wellstrajectories
Surfaceorsubseawellsorboth?
Predrilling?Typeofrig
Production/treatment
Fluidtreatments
Safety:field/plantlayout,groupingorseparationoffunctions
Export:standaloneortieintoexistingexportsystem?
Constructionstrategy
Constructionyards/supportavailabilityinthearea
Projectexecutionschedule
Contractingstrategy
32
Example ofconceptual selection studies
Phasing options Fieldarchitecture Technology options
Sizeoptimization
BW : 15%
240 Kbopd
225 Kbopd
Oil decline
D PROJ 223 A
Y0 Y1 Y2 Y3 Y4 Y... Y20
33

Phasingoptions
Phasedapproach
Advantages:providesdynamicappraisal
ofthefield,reducesupfrontCAPEX
Disadvantages:generallyreducesproject
economics,longerdevelopmentperiod
FullFieldapproach
Advantages:earlyandhigherproduction
level,shorterdevelopmentperiod
Disadvantages:higherlevelof
uncertaintyonreservoirbehaviour
Comparisoncriteria
Reservoiruncertainties
CompanyCAPEXposition
Economics
34
Fieldarchitectureoptions
Optionsinvestigated(FullFieldoption)
FullsubseawithFPSO
Fullsubseawithsubseaboosting
Onesinglesurfacewellheadplatform
Onemainwellheadplatformwithtwowellhead
satelliteplatforms
OnemainWellheadplatformwithsubseawells
Comparisoncriteria
Productionprofile
Wellsfeasibility
Reliability,Availability,Maintainability
Costs(wellsandfacilities)
Planning
Risksassessment
HSEparticularconsiderations
35

Sizeoptimization
Objective:
Todefineaproductionprofilethatis
optimizedfromatechnicaland
economicalpointofview
BW : 15%
Parameterstobeconsidered 240 Kbopd
Productionprofile
225 Kbopd
Wellscharacteristics
Parameterstobeoptimized Oil decline
Liquidtreatmentcapacity
Oilplateaurate
D PROJ 223 A
Plateauduration
Y0 Y1 Y2 Y3 Y4 Y... Y20
Facilitiessizing(stepchangeeffecton
someequipment)
36
Technology options
Supportoptions
FPSO
Subseatechnologies
MultiFunctionalBarge(MFB)orPDQ
SPARconcepts
Otherconcepts
Selectioncriteria
Feasibility
Developmentlevel
Riskassessment
RAM
Cost
Schedule
Contractingstrategies
37
Conceptualstudies
Contentforeachscheme
ReservoirDevelopmentPlan* Preliminarysimplifiedlayouts
Technology(type,sizeselections) SimplifiedOperatingphilosophy
Materialbalances PreliminarySafetyconcept
Welldescription* (includingHazid)
PFDs,Blockdiagram Preliminaryconstruction
principles
Surfacefacilitiesdescription
Preliminarydevelopment
Siteselectionstudy schedule
Mainequipmentlist Costsestimate(Capex&Opex)
Economicevaluation
Nota*:ifapplicable
38
Preprojectstudies
AlsocalledProjectdefinitionstudiesorpreFEED
Objectives:
Studyinmoredetailthedevelopmentschemerecommendedattheendofthe
conceptualstudies.
Definethecostsandexecutionscheduleoftheselectedsolutionwithsufficient
robustness.
Presenthowtheprojectwillbeexecutedduringnext(FEEDorBASIC,EPC)phasesand
theexecutionstrategyapproachandoptions.
EstablishBasisofDesignorStatementofRequirementswhichwillbethereference
documentforthewholeProjectphase,
SpecifytheProject referential
AssessremainingrisksandtheirpotentialimpactfortheexecutionoftheProjectaswell
asduringthelifeofthefield/plant.
ThepreprojectwillallowprojecttomoveforwardtowardsProjectssanction
LaunchFEEDorBASIC
39
Validatingdesignresults
FormalizedesignparametersthroughSOR
Gettingstakeholderstechnicalapprovaloftherecommended
solution
40
Proposalforownerinternalvalidationprocess
Fabrication& Handoverto
Apraisal PreProject Basicengineering Detailedengineering Commissioning
construction Production
ProjectDevelopment FIDDossier
Equipmentdossiers
Plan ProjectExecutionPlan
Apraisalreport Materials
Statementof ProjectProcedures Commissioning
Maindocuments Valuationreport Constructiondrawings AsbuiltDossier CloseoutReport
Requirements Updatesofalldossiers Dossiercompleted
Feasibilityreport Commissioning
ReservoirMngtPlan issuedfrompre
Dossier
DrillingProgram Project
Risks,Finance,
ProjectCommittees Geosciences EP,COMEX Projectreviews Projectreviews Projectreviews Projectreviews
Technicaletc
Partnerinputs Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts
Approvefeasibility Approve Operations

Validation(GateProcess) FIDapproval Overallperformance
study developpementplan acceptance
Technicalreviews Yes Yes Yes Yes Yes Yes
Qualityreviews Review Review Review,audits Review,audits Review,audits Review,audits Review,audits
Hazop,Hazid,Hazan, Hazop,Hazid,Hazan, Hazop,Safetydossier Safetydossierfinal

Sateyreviews
PRA PI&Dreview,QRA update issue
41
StatementofRequirements
SORrecordsandmaintainuptodatekeyparametersoftheproject
SORwillbeusedtocheckthattheprojectremainsinlinewiththeCorporate
organizationrequirements, andrecordmainchangesagreedduringthe
projectexecution.
SORwillbeupdatedatkeystepsduringthecourseoftheproject:
InitialSORestablishedwhenstartingthepreliminaryevaluationstudies(Owner)
Updatedpriortostartingtheprojectexecutionphase:detailedengineering,
procurement,construction,installationwhentechnicalcontentoftheprojectdefined
andexecutionstrategyfirmedup(OwnerorContractor)
Signedbyhighlevelresponsiblepersonsintheownerorcontractor
organizationtoensurethatallpartieshaveunderstoodandagreeduponthe
fundamentalchoicespertainingtotheprojectorprojectphase.
42
ProjectSORcontent
Projectpurposeorjustification
Measurableprojectobjectivesandrelatedsuccesscriteria
Highlevel(hostcountryandCompany)requirements
Assumptionsandconstraints
Highlevelprojectdescriptionandboundaries
Highlevelrisks
Summarymilestonesschedule
Summarybudget
Listofstakeholders
Projectapprovalrequirements
ResponsibilityandauthorityoftheProjectManager
43
DefinitionofProjectobjectives
1. HSE
Respectandprotectthelocalsocioeconomicenvironmentandcommunities
Minimizeimpactandmaintainriskstoacceptablelevel
MeetHSErequirements,duringexecution,andforthelifeofthePlant
LocalContent:complywithregulationsandobjectives,contributetolocalactivities
development
2. Technicalobjectives
Complywithalldefinedtechnicalrequirements,includingauditsandreview,
performancetest
ImplementapplicableQApolicyandQCsystem,achievealltests,and3rdpartycontrol
Avoid,orlimitchangestotheminimumnecessary
Ensurealltechnicalinterfacesrequirementsaresatisfied
3. Projectduration
ComplywiththeProjectschedule,avoid,orlimiteffect,ofslippageanddisruption.
Achievetimelyprovisionalacceptance
4. Projectbudget,andcosts
CompletetheProjectwithintheapprovedbudget
Controlallcostoverrun,andchangesfrominitialobjectives
5. Projectstakeholders
Identifyandconfirmrolesandobjectivesofeach/allparticipatingentities
Promoteeffectiveandopencommunication.
44
Ensuringdecisionquality
Identifykeydecisionsinatimelymannerandframepossiblealternatives
Studiesperformedtodefinethedecisionandsupportthe
recommendations
Outcomesfromstudiesarepackagedtogether(DSP:DecisionSupport
Packagesorreports)toprovideahighqualityofinformationonwhichto
basethedecision
Decisionisreviewedandchallengedincontextofpotentialimpactsto
overalldevelopment
Appropriatepeopleareinvolvedindecisionprocessanddecisionsare
endorsedbyconcernedmanagementteams
Audittrailisprovidedforfuturereference
45
Developmentconceptselectionanddefinition
Conceptscreeningshouldbeaswideaspossibleasitwilllargelydetermine
theprojectbudgetandeconomics
Innovativeideasshouldbeintroducedattheconceptualstageprovided
theyarematureenough
Theoperabilityaspectshouldbeoneoftheconceptselectioncriteria
(inputfromproductionpersonnel)
Theconceptselectionshouldresultinasingledevelopmentscheme
SmallorrecurringprojectscouldbesanctionedattheendofthepreFEED
studies(i.e.beforebasicengineering)
Butlarge,complexandexpensiveprojectswillbesanctionedafterBasic
engineering,receiptandevaluationoftheEngineering,Procurement,
ConstructionandInstallationtenders
46
Scope
ProjectScopeManagementduring
Definition phase
47
during Definition phase
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscopechanges
48
Scopemanagementplan
Defineshowthedetailedscopestatementwillbedefined
Establishesphasetophaserelationships
DefinestheprocessthatenablesthecreationoftheWBS
EstablisheshowtheWBSwillbemaintainedandapproved
Definesacceptancecriteriaofcompleteddeliverables
Defineshowrequestsforchangestothedetailedscopewillbeprocessed
49
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscopechanges
50
Owners requirements
Appraisal andDevelopment studies ononesideandDefinitionstudiesonthe

otherside(bethemBasicEngineeringoraFrontEndEngineeringDesign)are
usuallycarriedoutbydifferentteamswithintheOwnersorganization
Suchmoveoccursbetween
a conceptualengineeringteam
andaprojectorganization
Asaresult,responsibilityalsoshiftsfromoneteamtoanotherandthelatter
teamhastoreviewandvalidateresultsobtainedbytheformerone
OwnersrequirementsarestatedinProject technical reference documents
such as
Internal rules
Generalspecifications
51
HostCountrysrequirements
Worldwide,HostCountriesareincreasingLocalcontentobligationsin
Developmentprojects
Theseobligationsaregenerallyveryambitious:
Intermsofobjectives:
NationalPreference
Spendingasapercentageofinvestments,
Workedmanhours,
Transfersoftechnologies,
Maximizationoflocalworkforce,
Andintermsofimplementationspeed
Moreandmoretheprojectfaceslegalobligationsbearingstrongconstraints
(withpossiblepenalties)
52
LocalCommunitiesrequirements
Localcommunitiescouldrequest:
Employment
Sanitaryfacilities
Roads
Electricitysupply
etc.
Localcommunitiesexpectationsarelessformalthangovernmental
expectations
Butlocalcommunitiescouldslowdownorstoptheprogressofworks
e.g.Nigeria,Yemen
53
Localcontentmanagementplan
Identifyandgatherallthedatafrom
theProductionShareAgreement(orContractorParticipationOperatingAgreement)
relevantlawsandregulations
Thisdatamostlyconsistsin
Mandatorydocumentsorcertificates,sourcingrules,recruitmentandadvertisingrules,
buildingcapacity
Butitcouldalsofeature,ifapplicable,thefollowing
MandatorymetricsRulesforestablishingthevendorlist
RulesforcomparingofferswithregardtotheLocalContent
Rulesforassigningacontractorsubcontracttoalocalsupplier
Moregenerally,allobligationswithregardtotheLocalContentandthathaveanimpact
ontheProjectstrategy
54
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscope
55
Work BreakdownStructure
Projectcomplexityrequiresahierarchicaldecompositionofthetotalscopeof
workintosmaller,moremanageablecomponentstoaccomplishproject
objectivesanddeliverables
Thelevelofdecompositionisguidedbythedegreeofcontrolneededtoeffectively
managetheproject
TheWBSisdefinedbytheProjectManagerandtheprojectteam
Auniqueidentifieristobeassignedtoeachworkpackageforhierarchicalsummationof
costs,schedules,andresourcesinformation
WBSdefinitionmaynotbepossiblefordeliverablestobeproducedfaraway
inthefuturebeforethesaiddeliverableisagreed
Excessivedecompositioncanleadtononproductivemanagementeffort
56
Componentshierarchy
TheWBSisgenerallybuiltwitha
topdownapproach
1
Informationisrolledupwitha
bottomtopapproachtoproducean
Overall
Project
overallpictureoftheproject
2
3
Partof
Project
57
WorkBreakdownStructure
TheWBSrepresentswhatistobedone
Andreflectsthegeographicaland/orprocesssplitofwork
Area,Unit,Platform,Function,etc.
Onshore/Offshore
Project
ProcessUnits Utilities Offsites
Fractionation SteamProduction
Compression Electric.Generation
Subsea
Project
ColdSection
HotSection Rigid Flexible Umbilical
58
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscope
59
Definitionphase
BasicengineeringorFrontEndEngineeringDesign
Scope:
Developthetechnicalschemeapprovedattheendofconceptselectiontoalevel
allowingtheexecutioncontractstobeplacedandtheFinalInvestmentDecisiontobe
made
Developtheprojectexecutionstrategy
IdentifyandpreparebiddingofLongLeadItemsnecessarytoachievetheproject
schedule
Developthecontractualandtechnicaldocumentationnecessaryforbiddingthe
executioncontracts(detailedengineering,equipmentandconstructioncontracts)
CompilethedossierrequiredforFinalInvestmentDecision(FID)
Objectives:
Developdesigntoasound,optimized,clearandsuitabledefinitionlevelinlinewiththe
contractingstrategy
DefinearobustProjectExecutionstrategy,costandschedule
Accuratecontractualandtechnicaldocumentstolaunchtheexecutioncontracts
60
Commitmentsduringthroughouttheassetlifecycle
Investment
100% Potentialcommitment
through Det.Eng,Proc
technicaldecisions Basic &Construction Onsite
engineering operations
Conceptual Preproject
Preliminary studies
50% Actualcommitments
studies
towards
contractors/suppliers
0%
Definition Time
DISCOVERY Conceptualization DECISION PRODUCTION
Visualization TO STARTUP
DEVELOP
Reservoirdevelopment
61
Prerequiredreferencedocuments
ProjectDevelopmentPlan
BasisofDesign
ReservoirManagementPlan
Drilling
Architecture
SafetyConcept
Budget&Schedule
PreProjectorpreFEED
StatementofRequirements(SOR)
GoverningAgreement(s)
HazardIdentificationandAnalysis(HAZID)andHAZOPNo.1
EnvironmentBaseLineStudy(EBS)andpreliminaryEnvironmentImpactAssessment
(EIA)
TechnicalGeneralspecificationsandCompanyRules(Referential)
Approvalsofabovedocuments(asrequired)byOperator,PartnersandAuthorities
62
Mainactivities during thedefinition phase
1. Developmentofthetechnicalpackagewithalevelofdetailsconsistentwith
theexecutionstrategy
2. DefinitionoftheProjectExecutionstrategy
3. Preparationofthecontractsupportdocumentation
4. Preparationoftheprojectsanctiondocumentation
63
1.Developmentofthetechnicalpackage
Objectives
Comprehensivestudybyeachengineeringdiscipline ofthetechnicalsolution
establishedduringpreproject
Identify,assessandmitigateprojectrisks
Preparetechnicalspecifications
General,specific,licensing,BOD,certificationspecifications
Preparedocumentation
QA/QC,HSE,SafetyCase
IssueApprovedForDesigndocuments
drawings(layouts,P&IDs)andequipmentspecifications
Identifypackagestobecoveredbyalicense
IdentifyrequirementsforLongLeadItems
Preparethetechnicaldossiersfor
LongLeadItems
Licensors
Executioncontractstobeawardedthroughacallfortenders
64
Technical packages content
Indepthsafetyandenvironmentstudiesanddeliverablestosupportthe
SafetyConceptor SafetyCasefortheProjectlifecycleandtheEnvironmental
ImpactAssessmentinadherencewithOwnerspoliciesandlocal
requirements
Specificstudies/deliverablesforAuthorityEngineering
i.e.tomeetProjectCountryregulatoryrequirements
ReviewandintegrationoflicensorsBasicEngineeringPackages
65
Finalization ofthetechnical dossier
Thetechnicaldossiershallbeenhancedthroughsystematicworkshops
attendedbybothparties
Theowneranditspartners
Basicdesigncontractor
QualityofthetechnicalpackageisessentialforProjectsuccessfulexecution
sinceitprovidesthebasisfor
Planttechnicaldefinition,scopeandrequirements
DevelopmentofDetailedDesignbytheselecteddetailedengineeringcontractor
QuotationbyexecutionContractor(s)
inparticularinthecaseofLumpSumcontracts
Contractualdocumentationtobeusedduringtheexecutionphase
ProjectCAPEXestimateandProjectSchedulesupportingtheFID
ThefinalisedtechnicalpackageshallbereviewedandapprovedbytheOwner
(anditsPartnersasrequired)andwillformthebasisfortheexecutionphase
66
Typical deliverables
Foreachfunction
Engineering Typicalcontent
Process
Safetyrequirements
Thermal
Equipmentandtanks Designandconstructionstandardsand
Corrosion/Piping specifications
Civil/Buildings Constructionparticularrequirements
Infrastructure P&IDiagrams
Electrical Interfacerequirements
ControlsandInstrumentation Temporaryconstructionfacilities
Procurement requirements
Contracting Precommissioningandcommissioning
Construction requirements
SafetyandEnvironment
Commissioning
Quality
ProjectControls
67
3Dmodels
3DModelsarepreparedduring
FEEDforoffshorefacilities
Platforms
FPSOs
Theyareusuallynotpreparedfor
onshorefacilities,unlessnecessary
tostudyin3Dthelayoutof
particularareasorformodulesin
caseofhighdensityareas
68
2 CompanyandContractorProjectExecutionPlans
AProjectExecutionPlanisestablishedbyCompanyaspartoftheFEEDphase
Itisbasedonthecontractingstrategyadoptedfortheproject
ItisapartofthedocumentationrequiredforProjectsanction
Itisalsonecessarytostartdiscussionswiththehostcountry,especiallyintermsoflocal
contentobjectives
ContractorswillalsoestablishaPEPaspartoftheirresponsetotheInvitation
ToTender
ThePEPstructureisthesameasCompanysPEPbutwithspecificdetailsofContractors
offer
ItwillinparticulargivedetailsabouttheLocalContentproposedfortheproject
TheCompanysPEPwillbeupdatedtoreflectallprojectexecutiondetails
onceallcontractswillhavebeenawarded
69
2.DefinitionoftheProjectExecutionstrategy
ContentoftheCompanysProjectexecutionplan
General:
Administrative:
ProjectBackgroundandDescription
DelegationofAuthoritiesand
ProjectObjectives Responsibilities
ProjectManagementOrganization ChangeManagement
ProjectCommitteesandReviewsand IdentificationandManagementof
StakeholdersManagementPlan Interfaces
ContractingStrategy ReportingandActionTracking
Localcontentmanagementplan Insurance
Schedule Permitsandconsents
Budget
Policyimplementation:
Procedures: RiskManagement
Quality Projectprocedures Health,Safety,Environment,
DocumentManagement SecurityandSustainable
Training Development
70
ContentoftheCompanysProjectexecutionplan
Projectdescription Humanresourcesmanagementplan
ProjectOrganization
Communicationmanagementplan
Definitionofprojectphases
Contractingstrategy:Outlinecontentof Stakeholdersmanagementplan
eachphase IPProtection
Referencedocumentsandtechnical
referentialfortheproject Flawless ProjectDelivery
Scopebaselineandmanagement Projectcontrol
principles
Schedulebaselineandmanagement Interfacemanagement
principles Splitofscopeofwork
Costbaselineandmanagement
principles Warranties andGuarrantess,
HSEmanagementplan performanceTests
Qualitymanagementplan Licensors andrely upon information
Riskmanagementplan Preapproved subcontractors
71
MainContractorsprojectexecutionstrategyhighlights
ContractorExecutionStrategyaddressesallkeyaspectsoftheprojectexecution,asper
andforitsscopeoftheproject
Projectdescription,objectives,globalenvironment
Contractanditsrequirements
HSE&QAhighlevelobjectives,plan
CoordinationwithCompany
ExecutionandOrganizationstrategy(Partners/NominatedContractorsrolesand
responsibilities;organizationcharts,splitsofwork;communicationandProjectsystems)
ProjectSchedulekeysequences,milestones,criticalactivities,constraints
UseofLocalresources
Engineeringspecificandkeyaspects
Procurement,Logistics/T&Istrategy
Fabrication/Constructioncontractsstrategy
SiteConstruction/Commissioning/HandOverstrategy
Interfacesandtheirmanagement
Projectrisksmanagement
72
Projectproceduresgeneraltopics
ProjectManagement: Engineering
Generalprojectmanagement Engineeringorganizationand
procedures management
HSE Engineeringqueriesanddeviation
Quality requests
Procurement
ProjectControls: Procurement
Personnelmanagementandtraining Materialcontrols
Delegationofauthorities Logisticsprocedures
Contractingprocedures Construction
Reporting Constructionprocedures
DocumentManagement PermittoWorkprocedures
Commissioning
Commissioningprocedures
Handoverprocedures
Performancetestsprocedure
73
TheimpactofProjectlocation
Maindriverstobeaddressed:
FinalSitelocationremoteness,specificnewinfrastructuresuchas:Artificial
Islands,PermanentPort,Jetties,MOF,LocalPermanentBases,NewAccess
Roads,Camps
Incountryavailability/qualificationofConstructionContractors,Construction
supervisionworkforce,ConstructionMaterialsmaynotbesufficient,andmay
requireuseofcontractors/workforcesfromabroad,modularizationand
fabricationatyards,fabricationandintegrationoffloatingsupportsand
integrationatthesite
Transportationlogisticsmaybeverycomplexduetoquantities,worldwide
procurementsources,anddependingondistancesfromfabricationworksites
whichmayrequirespecialtransportationmeans
Climate/oceanometeo conditions,andinlimitedwindows
74
Constructability
TheProjectConstructabilityreviewwillbeanimportantcontributortothe
ProjectExecutionPlan
ConstructionandCommissioningInputsintotheEngineering
TCFareas
Trafficatsite(equipmentandpersonnel)
Accessesforequipmentdelivery,constructionequipmentandrigging/heavylifts,lay
downareas
Accessesformodulesdelivery,liftingorrollinginsitu
Accessesandlaydownareasformaintenance
SIMOPs
Prefabricationplans
Modulefabrication/delivery/integrationplanforoffshorefacilities
75
Localcontentmanagementplan
DefinesanddescribesthemeansbywhichtheProjectteamaddressthe
provisionofLocalContentwithintheprojectphase
Itwillbebasedonlegislativeandcontractualrequirementstogetherwith
CompanyPolicyGuideline
TheLocalContentManagementPlanprovidesthetools,proceduresand
referencestoquantify,monitor,recordandreporttheprogressoftheProject
LocalContentprogram,relativetoestablishedandagreedtargets
References:
Rules,decreesandregulationsofthehostcountrywheretheProjectisprovided
AgreementsbetweentheHostCountryandtheCompany(PSA,CPOA,etc.)
76
3.Preparationofthecontractsupportdocumentation
FEEDcontractualandprocurementactivityinput
PreparethecontractualpartofthecallfortendersforLLIandEPC
Issuethetendersevaluationprocedures
LaunchthecallfortendersforearlyworksandLLI
Evaluateresultsandpreparerecommendations
LaunchthecallfortendersforEPC
77
3.Preparationofthecontractsupportdocumentation
FEEDmaindeliverablesContracting&Procurement
Prequalificationquestionnaires
Listofprequalifiedcompanies
TenderingProcedures
CFTforEPCICContracts
CFTforLLIs
CFTforEarlyContracts
TenderEvaluationReports
Procurementrequirementsfortheexecutionphase(forEPCCFT)
Purchasing,Inspection,Expediting,Traffic
ApprovedVendorslist
78
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscopechanges
79
FEEDprojectmeetings&reviews
ProjectMeetings
KOMglobalandbydisciplines
Weeklymanagement,disciplines;Monthlyprogress;adhocmeetings
ProjectReviews
DesignReviews
PFDs(Licensors,Contractors)
PIDs(Licensors,Contractors)
PlotPlans
SafetyReviews
HAZOP,HAZID
SILorIPF(eventually)
ConstructabilityReview
ValueEngineeringReview
CompanyOwnReviews(PTR)
80
Projectsanctiondocumentation
ProjectsanctionistheFinalApproval,fromupperManagement,Company
Operator,PartnersandAuthorities,toproceedwithprojectexecution
Thisdecisionisalwaysformalized
Economicstudieswithrelevantrisksevaluationandsensitivityanalysishave
tobeprovidedaspartoftherecommendationtoapprovetheProject
TheFinalInvestmentDecision maytakeplacebefore orafter theFEEDor
BasicEngineeringphasedependingonthetypeofproject
Conventionalprojects(e.g.wellknownprocessunits,inawellknownenvironment):
sanctioncantakeplaceBEFOREBasicEngineeringorFEED.
Complexprojects(large&megaprojects,remote,newenvironment/technology,deep
water,HPHT):sanctiontakesplaceAFTERFEEDorBasicEngineeringandoftenafter
evaluationofmaincontracttenders.
81
TypicalprojectorganizationforFEEDphase
ProjectManager
OperationManager HSEQMgr
HSESeniorEng QA&EDMS
Commissioning Construction ProjectControl Engineering

Mgr Mgr Mgr Mgr
AreaManagers
SitePreparation
Mgr
82
FEED contracttypes(pros&cons)
83
FEEDtypicaldurations&manhours
FEEDContractorProjectTeammayincludemorethan200personsinthemaincentre
+otherteamsinothercentres
84
PlanScopeManagement
Collectrequirements
CreateWBS
Definescope
Validatescope
Controlscopechanges
Managingchangestothescopebaseline
85
IntegratedChangeControlprinciples
Anymodificationtotheagreedscopemustbestrictlycontrolled
Eachchange(orconfigurationstatus)isacceptedorrejectedbyanindividual,
generallytheProjectManager
AChangeControlBoardmaybeestablishedtomonitortheprocess
Approvedchangerequestsmayinducerevisedcostorscheduleestimates
Alogofchanges(approvedandrejected)shouldbemaintained
ApprovedchangesmayrequireadjustmenttotheProjectManagementPlan
ortoprojectdocuments
Configurationauditsmaybeinitiatedtoensurethattheproject's
configurationitemsareinconformancewiththeapprovedplan
86
SORsmodifications
SORmodificationsareonlytobemadeinaverycontrolledmanner
ThedesignparametersintheSORarecategorizedasfollows:
Fixed:Noalternativetobefurtherinvestigated.Nochangepermittedwithoutformal
approvaloftheS.O.R.Signatories.TheS.O.R.changeprocedurewillapplyincaseof
change.
S.C.N.*required:Basecase+acceptablealternativeoptions.Thedecisiontofreezethe
designrequirestheformalapprovaloftheS.O.R.Signatories.TheS.O.R.changenotice
procedurewillapply.
Nonfixed:Basecase+acceptablealternativesoptionstobefurtherinvestigatedduring
FEEDorotherwise.ThedecisiontofreezethedesignistheresponsibilityoftheProject
Manager.
*SCNstandsfor:S.O.R.ChangeNotice
87
Summary
Theprojectscopemanagementcoversprocessestoensurethattheproject
includesalltheworkrequired,andonlytheworkrequiredtoachievethe
projectobjectives
Basicengineeringstudiesscope(orFEED)furtherdevelopstheconcept
selectedattheendofthepreFEEDstudieswiththeobjectiveof:
Providingsufficientdetailtoenabletheexecutioncontractortoprepareanoffer
Minimizingrisksofchangesduringprojectexecution
Sanctioningtheprojectonasoundbasis
Basicengineeringactivitiesalsocoverthepreparationofcontractual
documentationfortheexecutionphase
LongLeadItemshavetobeidentifiedduringthisphaseandtheInvitation
ToTenderlaunchedasrequiredtoprotecttheoverallexecutionschedule
AProjectExecutionPlanispreparedtodetailexecutionplans
88
Interfaces
89
Interfacemanagement
Foreword
Mainobjective
Minimizetherisksassociatedwithinterfaces
Maintoolsandmeans
Astructuredsystemtomanagethedifferenttypesofinterfaces
Adedicatedorganizationtomanagetheinterfacesbetweendifferentcontracts
90
Interfacemanagement
Aboutinterfacemanagement
Identifyinterfaces
Controlprogress ofinterfaceresolution
Organization forinterfacemanagement
91
Interfacemanagement
Aninterfaceisthepointofexchangebetween
Twodifferentparts(e.g.piecesofequipment)
Twodifferentparties(e.g.entities)
Twoprocesses,moregenerally
Itisimportanttoimplementastructuredsystemallowing
Anexhaustiveandcorrectidentificationoftheinterfaces(interfacematrix)
Identificationofthebatterylimitsbetweendifferentscopesofwork
Followupoftheresolutionoftheinterfacepoints
Interfacesrepresentanimportantsourceofrisksfortheproject
OptimumsolutionfortheprojectmaybedifferentfromtheOwnersandContractors
perspectivesandbetweencontractors
Conflictresolutionprinciplestobeagreedbeforehand
92
Interfacemanagement
Identifyinterfaces
Controlprogressofinterfaceresolution
Organizationforinterfacemanagement
93
Differenttypesofinterfaces
Internalinterfaceswithinacontract
Tobemanagedbythecontractor
Interfacesbetweendifferentcontracts
Nodirectcontractualrelationshipbetweencontractors
Theowneristobeimplicatedinthemanagementandresolutionoftheinterfaces
Interfacesbetweenthirdpartiesandtheproject
Tobemanagedbytheowner
Impactonprojectscopetobemanagedthroughthechangemanagementsystem
94
MainInterfacesbetweendifferententities
Internal/externalinterfacesforOnshore/Offshoreprojects
Disciplines
Client,Partners
and3rd Parties
Engineering
Vendordata Specifications
Drawings
3DModel
etc. Procurement
Fabricationand Equipment,bulkmaterial
Construction deliveries
Trades
95
MainInterfacesbetweendifferententities
Internal/externalinterfacesforaSubseaproject
Disciplines
Client,Partners&
3rd Parties
Engineering
Methods, Specifications
Fleet Procedures,
Management etc.
Procurement
Fabrication
RigidorFlexiblepipes,
Installationphase Umbilicals
Structures,Equipment
96
MainInterfacesbetweendifferentcontractors
Contractual relationship Contractual relationship
CONTRACTORA
Client,
CONTRACTORB
Interfacepoints
Disciplines Disciplines
Engineering Engineering
Specifications
Specifications
Vendordata
Vendor/ Vendor/ Drawings

Drawings
Procurement 3DModel
3DModel Procurement
etc.
etc.
Fabricationand Fabricationand
Construction Construction
Equipment,bulk Equipment,bulk
materials materials
Trades
Trades
deliveries deliveries
97
Interfacesbetweencontracts
Performs tests
Witnesses Tests
98
99
Interfacebetween topsides anddeck
100
101
Difficulties toidentify allinterfaces
Someinterfacescanbeidentifiedrightfromthestartoftheproject
Contractualinterfacesorinterfacesbetweenpackages
Interfaceswiththeexterioroftheproject
Butalsosomewillappearduringprojectexecution
Technicalinterfaceswhichcouldnotbeforecastduetolackofdefinitionatproject
sanction
Duetoprojectchangesorexternalinfluences,etc.
102
Engineeringinterfacemanagement
RecordingofactivitiesandacceptancebyeachpartytoconstitutetheInterface
register
Allinterfacesneedtobe
IndividuallyidentifiedandnumberedasanIPSInterfacePoint,whereSisasuffixthatcanbe
addedtoidentifytherelevantdiscipline
CforCivil;PforPiping;EforElectrical;IforInstrumentation;TforTelecom;BforBuilding,etc.
listedonanInterfaceList
describedonInterfaceDrawingsandrepresentedwithadedicatessymbol
TheInterfaceListandDrawingsshallshowforeachconcernedparty
Theirresponsibility
Theirscopeofwork
designdata,supply,construction,testing
Actionsrelatedtoeachinterfacemustbeproperlyidentifiedanddocumented
Actionsbyeachcontractortobeformallyagreedthroughapprovaloftheinterfaceregister
Resolutionofeachinterfacetoconsideroverallscheduletoavoidcreatingdelaystoother
contractors
103
Interfacemanagement
Identifyinterfaces
104
Interfacemanagement
Progresscontrol
Forprojectswithnumerousinterfaces,aninterfaceprogresscontrolsystem
shouldbesetup,featuring
MatriceswithnumberofinterfacesdocumentspercontractorandperdisciplineinIFD
andIFCstatus
AnEngineeringInterfacemanagementSchedulelisting
interfacedocumentsandtheirplannedandactualdatesofresolution
IFDandIFCissues
progresscurvesforplannedandactualIFDandIFCissues
Reportingtobefeaturedin
monthlyprogressreports
monthlyInterfaceReviewMeetings
105
Risksattachedtointerfaces
Interfacenotidentified
Theproblemwillbediscoveredduringconstructionorinstallationandmightgenerate
Delays
Additionalcosts
Interfaceresolutionoutofsequenceforoneofthecontractors
Theresolutionmightdelayconstructionorleadtorework
Disagreementbetweencontractorsaboutthesolutiontobeputinplace
Oftenrelatedtobudgetmatters
ArbitrationbyCompanywiththeriskofhavingoneofthecontractorsissuingachange
order
106
Interfacemanagement
Identifyinterfaces
107
Interfacemanagement
Companyorganization
Formajorprojects,anInterfacemanagerisnominatedandreportstoProject
Managerortoworkpackageleader
AssistedbypackageEngineers
PreparesInterfaceManagementProcedures todefinerelevant
Scope(splitbetweenthetwoparties)
Responsibilities
Organization
Communication
Activityschedule
Overallmanagementprinciplesandworkprocess,etc.
ParticipatesinContractorsinterfacemanagementmeetings
Coordinatesinterfaceresolutionbetweendifferentcontracts
Assistsforresolutionofmajororconflictualinterfacesandifnecessary
performsarbitrationbetweenconflictingpositions
108
Engineeringinterfacemanagement
Contractororganization
Formajorprojects,anInterfacemanagerisusuallynominatedandreportstoEngineering
Manager
Forsmallerprojects,theEngineeringManagerisusuallyinchargeofengineering
interfaces
AssistedbyLeadDisciplineEngineersfortheLeadingContractor/Partnership
Prepares,withLDE'sassistance,InterfaceManagementProcedures todefinerelevant
Scope(splitbetweenthetwoparties)
Responsibilities
Organization
Communication
Activityschedule
Overallmanagementprinciplesandworkprocess,etc.
Manages
ThepreparationbyLDEsofinterfacedrawingsanddocumentsfortheirdisciplinesandthepreparationof
GeneralInterfaceAreasdocuments
PreparationandupdateoftheInterfaceList,withtheassistanceoftheLDEs
TheformalagreementbybothPartiesoninterfacesdrawings/documentsthroughexchangeof
communication/numberedcorrespondence(emails)and/orthroughinterfacereviewmeetings
TheissuingoftheAFD/AFCinterfacedrawingsanddocuments;suchinterfacesmightbeshownon
supportingengineeringdocumentsand/oronspecificinterfacedocuments
109
Example ofinterfaceorganization chart
110
Summary
Interfacesrepresenthighriskforprojectobjectivesintermsof
Budgetincrease
Scheduledelays
Theyrequirespecialattention
Aninterfaceregistershallbekepttologallinterfacesandtheactionsattachedto
eachofthem
Aproperorganizationshallbesetuptomonitortheinterfaces
Companyandcontractorsshallworkjointlyoninterfacemanagement
ConflictsbetweencontractorsshallbearbitratedbyCompany
111
Technical contracts
112
Technical contracts
Foreword
Mainobjective
SelecttherightcontractingstrategybetweentheCompanyand
Itscontractors
Itsvendors
Maintoolsandmeans
Prosandconsofthevarioustypesofcontractsintermsof
Contractperimeter
Remunerationmethod
Mainstepsinthecontractingprocess
Understandingofhowcontractorsbuildupaproposal
113
Technical contracts
AboutContractingactivities
PlanningContractingactivities
Selectingcontractformat
Contractingprocess
Bidpreparationbytenderers
Contractorselection
114
Contractingstrategy
EveryProjectneedsaspecificContractingStrategy
Inotherwords,thefollowingshallbedefined
Projectbreakdowninto
TechnicalContracts(nottobeconfusedwithPatrimonialContracts)
Purchaseorders
Scopeforeachofthese
Theirremunerationmode
115
Contractingstrategyatowner(globalproject)level
Whatdoesitmean?
HowtodividetheProjectintosubprojects.
Wheretoplaceinterfacesandhowtominimize/optimisethem?
Whichcontractperimeterwillbeused:
E+P+C,EPC,EPCIC
Whichtypeofremunerationprincipletobeimplemented:
LumpSum,PriceList,Reimbursable,Cost+Fee
Severalkeyaspectshavetobetakenintoaccount
Legaletlocalrules
Projectsize
Availability,qualification,experienceandmanagementofpotentialcontractors
Availabilityoffabricationyards/T&Iequipment
Company/Contractorrisksharingprinciples
ContractStrategyisacriticalaspectoftheproject:costandschedulecanbe
badlyaffectedbythecontractingstrategy
116
FundamentalDefinition
AContract isamutuallybindingagreementbetweentwoormorepartiesby
whichtheycommitthemselvestofulfildefinedobligations
Acontractisthetoolbywhich,undercertainconditions:
Thecontractoragreestocarryoutactivitiesrelatedtotheperformanceoftheproject
Theowneragreestocompensatethecontractorforcarryingoutsuchactivities
OwnerandContractordefinehowtosharetheprojectrisksbetweenthem
117
MaindifferencesbetweenContractsandPurchaseOrders
CONTRACT PURCHASEORDER
Includes in general several disciplines: For an equipment or materials issued from

engineering, fabrication standard fabrication
May be performed at several sites including Fabrication will take place at suppliers
the final project site premises
Contract documents are based on The purchase order is based on suppliers
Companys detailed requirements definition, accepted by the buyer
The result of the work will be checked at the The result of the supply will be agreed upon
Owners site delivery with a warranty period
Overall responsibility of the Work, liability Responsibility limited to the supply and
could be very large. i.e 100% compliance with the specification.
Payment can be by unit rates, time rates, Using milestone payment is the normal
progress, milestones procedure
May be used for packages (several equipment
May endorse several orders from the owner
for a specific process )
118
Technical contracts
Contractingprocess
Contractorselection
119
Flowdiagram ofcontracting activities

Client Contractor
IssueProjectManagementPlan
DefineContractingstrategy
Prepareprequalificationexercise Respondtoprequalificationrequest
Preparecontractdocumentation Organizesitevisitsifnecessary
Selectbidderslist
IssueInvitationToTender(ITT) Reviewtenderdocumentation
Issueclarificationrequests
Respondtoclarificationrequests
PrepareresponsetoITT
Contractclarification Participatetoclarificationmeetings
Contractorselectionandaward Updateproposalasrequired
Contractorselectionandaward Contractexecution
120
Input
Scopeofwork/WBS
Projectschedule
Riskregister
Resourcerequirements
Localcontentrequirements
Toolsandtechniques
Output
121
Input
Toolsandtechniques
Projectteamanalysis
Expertjudgment
Lessonslearntfrompastprojects
Marketintelligence
Stakeholdersinput
Output
122
Anexemple
123
Input
Toolsandtechniques
Output
Contractingplan
Contractsscopesofwork
Interfacesdefinition(contractualandtechnical)
Projectorganization
Contractdocumentation
124
ExampleofContractingStrategy
CaseofaDeepOffshoreProject
FPSO Wells Drillingrigs
Umbilical
Flowlines
andrisers
Subsea
Production
Systems
125
CaseofaDeepOffshoreProject
SubseaProductionSystems Umbilicals FlowlinesandRisers FPSO
Wellheads Subsea
Offloading Gasexport Control
and control Manifolds Jumpers Umbilicals Flowlines Risers Mooring Hull Topsides
terminal pipeline system
Xmastrees system
Basic
Engineering
Company
Tendercycle
Detailed
Engineering
Procurement
SPSEPCContractor UFREPCIContractor FPSOEPCContractor
Fabrication&
onsh.commiss.
Transportation
Drilling
Installation
Contractor
Hookup/Tiein N/A
Offshore Cy with Cr
Company with UFRContractor assistance FPSO Contractor with Company assistance
commissioning assistance
Startup Company with Contractors assitance
Operations Company
Wellequipment Procurement byCompany
DrillingRig Drilling Contractor
126
CaseofanOnshoreProject
ALLFACILITIES
OnesingleFEEDContract
LIVINGCAMP CENTRALPROCESSINGFACILITIES
Engineering,
ANDGATHERINGNETWORK
Procurement,
Engineering,Procurement,Construction,
Construction,
Installation,Commissioning,Startup
Commissionning
SITEPREPARATION,ROADS
Engineering,Procurement,Construction
127
Technical contracts
Scopeperimeter
Remunerationstructure
Contractingprocess
Contractorselection
128
Selectingtherightcontractsperimeters
Multipleseparatecontracts
ContractingStrategyleadingtoseparatecontracts
Combinedcontracts:
EP:forEngineering,Procurementandusuallyconstruction&commissioningassistance
orsupervision
EPC:forEngineering,Procurement,ConstructionuntilReadyForCommissioning(RFC)
EPCC:forEngineering,Procurement,Construction,CommissioninguntilReadyForStart
Up(RFSU)
EPCIC:forEngineering,Procurement,Construction,Installation,untilReadyForStartUp
(RFSU)
EPCm:forEngineering,Procurement,Constructionmanagement.
T&I:TransportandInstallation
TurnKeycontracts
ProjectManagementContract(PMC)
Particularcontracts:DesignCompetition
129
Differentcontractscopes
Separate contracts EPCm EPC EPCC Turn Key
Pre-FEED, FEED, EPCI Pre-FEED, FEED, EPCI Pre-FEED,FEED,

PRE-FEED PRE-FEED PRE-FEED PRE-FEED PRE-FEED
BASIC or FEED DESIGN BASIC or FEED
PROCUREMENT SERVICES DESIGN
BASIC or FEED BASIC or FEED DESIGN BASIC or FEED DESIGN FOR LONG LEAD ITEMS
PROCUREMENT PROCUREMENT SERVICES FOR PROCUREMENT SERVICES FOR
LONG LEAD ITEMS LONG LEAD ITEMS LONG LEAD ITEMS DETAILED ENGINEERING
DETAILED ENGINEERING
PROCUREMENT
DETAILED ENGINEERING DETAILED ENGINEERING DETAILED ENGINEERING PROCUREMENT
PROCUREMENT PROCUREMENT PROCUREMENT ASSIGNMENT
LONG LEAD ITEMS
SUPPLY SUPPLY
OTHER EQUIPMENT OTHER EQUIPMENT SUPPLY SUPPLY LONG LEAD ITEMS
BULK MATERIALS CONSTRUCTION MGT ASSIGNED L.L. ITEMS

OTHER EQUIPMENT OTHER EQUIPMENT OTHER EQUIPMENT
BULK MATERIALS
CONSTRUCTION CONSTRUCTION
CONSTRUCTION
INSTALLATION BULK MATERIALS BULK MATERIALS
CONSTRUCTION CONSTRUCTION
COMMISSIONING COMMISSIONING COMMISSIONING COMMISSIONING COMMISSIONING AND START UP
130
Particularconsiderationsrelated
toTransport&Installationcontracts
Definitionofresponsibilitiesandbatterylimits
Provisionofequipmentandservicesbythirdparties(incl.CPY)
Liquidateddamages(latemobilization,removalofkeypersonnel,late
completion)
Bookingfeemayberequiredtosecureequipmentavailabilityandinstallation
schedule
Installationwindowsnotificationmechanism
Weatherstandby
Criteriaforstandbyduetooperationalfailures
Standbyrates
Conformancedefinition
131
Interimcertificatestobeissued
ReadyforLoadOut
ReadyforTransportation
ReadyforInstallation
MarineSpreadRelease
ReadyforCommissioning
ReadyforOperationalTest
ReadyforHandOver
132
Generalevolutionofcontractingstrategies
ExampleofaPipelineProject
1970s 1980s 1990s 2000s 2010s
SeveralSeparate SeveralGrouped Grouped Global Several
Contracts Contracts Contracts Contract EPC
EPCC Contracts
Studies Studies Studies Studies
Pipes Pipes Pipes

Pipes
Coating Coating Studies Coating
Storage Pipes Storage
Storage
Coating
Coating Storage
Laying Laying
Storage Laying
Tieins Laying Laying Tieins Tieins
Tieins Tieins Hydrotests
Hydrotests Hydrotests Hydrotests Burying Hydrotests
Burying Burying Landing
Burying Landing Burying
Landing AsBuilt surveys
AsBuilt surveys AsBuilt surveys Commissioning
Landing Landing
Commissioning
AsBuilt surveys AsBuilt surveys
Commissioning Commissioning Commissioning
133
1 Separatecontracts
Advantages
Ownerhasfullcontrolofallphasesofactivities
Disadvantages
Manyinterfacesbetweencontracts,morecontrolrequired
Largemanagementteamtoawardandtosuperviseallcontracts
LongerdelayforallcontractstobeapprovedbyPartnersandAuthorities
134
1 Separatecontracts
Exemple NKOSSAFPS(floatingproductionbarge)
Owner: ELFCongo
Location: GuineaGulf OffshoreCongo
Completion: 1996
AnchoredproductionBarge(NKP)240mx46m
TotalWeight: 100000tons
ConcreteHull: 70000tons
Topsides: 30000tons
Oilproduction: 120000bpd
Gasdehydr./extract.: 13millionScm/day
Condensate: 1300T/day
135
1 Separatecontracts
Example NKOSSAcontracts
EPCm Contractor
BasicanddetailedengineeringoftopsidesProcurementservices
Assistanceduringconstruction,installationandcommissioning
Finaldocumentation(operatingmanual,maintenancemanual)
Bargeengineeringanddesign
BargeFabrication
ModuleFabricationat3yards(France,Italy,Netherlands)
6gascompressionmodulesweighingupto5000tons
Transport&InstallationtoMarseille
Integration,HookupandCommissioningatyard
136
2 EPCm contract
EPCm ContractWHYandWHEN
Scope:limitedtoE,P*andConstructionmanagement only
Advantages
Flexibilityforprojectchanges:bettersuitedforProjectswithnovelaspectsorparticular
executionuncertainties
AllowscloservisibilityandProjectgovernancebyOwner
ShortenstheglobalProjectschedulebyshorteningthetenderingperiod
Disadvantages
LargerOwnersriskonProjectpriceandschedule
*ThescopemayincertaincasesbealsolimitedtoProcurementservicesonly
137
3 EPCcontracts
EPCcontractsWHYandWHEN
Advantages
Limitsthenumberofcontractsandapprovals
LimitstheOwnersrisk
Reducesinterfacesbetweenengineering/procurement/fabrication/constructionphases
ReducestheOwnersupervisionteam
Disadvantages
Limitedcompetitionamongcontractors
AlargepartoftheProjectgovernanceisdelegatedtotheContractor
LimitsthecontrolonDetailedEngineering,ProcurementandConstruction
PotentialhighclaimsbyContractor
138
3 EPCcontracts
RemainingrisksfortheOwner:
Preparationofplantdefinition
DefinitionofplantperformancecriteriatobemetbytheContractor
InterfacesbetweentheFEED,EarlyContractsandLLIs(iforderplacedbyOwner)and
theplantasdesignedbyContractor
Generally,anendorsementoftheFEEDresultsbytheContractorisputinplaceto
reduceaboverisks
Limitedflexibilitywithrespecttolatedesignmodificationsregardlessofthe
justificationofthedesignmodification
Amorelimitedcompetitionwithuncertainprices:
Thenumberofcontractorsabletoworkincertaincountriesand/ormasteringparticular
technologies(e.g LNG)withintheframeofamajorprojectissometimesrestrictedtothreeorless
TheOwnerneedstoinvestigateasearlyaspossiblethewillingnessofpotentialcontractorsto
compete(prequalification)
139
4 EPCCcontract
EPCC(i.e.untilRFSU)ContractWHYandWHEN
CommissioningisincludedinthescopeoftheContractor
ThisispossiblewhentheContractorhasenoughknowledgeofthetechnologyusedand
theoperatingprinciples
ForthesamereasonsasfortheEPC,reasonsforchoosingthistypeof
contractaretoreducetheOperatorsrisk
EPCCisonlypossibleiftheperformanceoftheplantcanbemeasured
withoutuncertainties;shouldtheperformancebedependantofexternal
factors,thensuchtransferofresponsibilityisachallenge
140
GuaranteesinanEPCCcontract
Constructionand Startupand warrantyperiod

precommissioning Commissioning performance 18months
tests or24m
Readyfor
Commissioning Readyfor Provisional Final
(mechanical startup acceptance acceptance
completion)
Performanceguarantees(capacity,products,utilities,globaloperability,possiblysomepackagesand/or
equipment)
Scheduleguarantee(possiblyseveraldeadlinesand/ormilestones)
Cost(globalTotalInstallationCost)
Whateverthecontracttype,EPCContractorsliabilitieswithrespecttowarrantees(cost,schedule,
performance,mechanicalguarantee)willbelimited,generallyinproportiontotheContractPRICEfor
Contractor
LiabilitiesarehencehigherforanEPCLSthanforanEPCm contracts.Companywillalwaysbearrisksbeyond
thosebornbyContractor.
141
LargeEPCCcontracts
Examples
UsuallyusedforlargeandmegaProjects(includingstartupassistance):
Onshore:mostLNGProjects,GasPlants
Offshore:FPSOsandDeckPlatformprojects,byanEPCContractor,in
ConsortiumwithaYard
142
5 TurnKeycontracts
TurnKeycontractsWHYandWHEN
Advantages
Limitsthenumberofcontractsandapprovals
NointerfacestobemanagedbytheOwner
VerylimitedOwnersupervisionteam
Disadvantages
Limitedcompetitionamongcontractors
CompleteProjectgovernancedelegatedtotheContractor
NocontroloverDetailedEngineering,ProcurementandConstruction
PotentialhighclaimsbyContractor
143
6 PMCcontracts
InPMCcontractstheContractor
PerformstheFEEDstudies
AssiststheOwnertoorganizeandsplittheProjectintolargeWorkPackages
PreparesCFTforWorkPackagesonEPC,orEPandCbasis
ManagesandControlstheexecutionbyWorkPackagescarriedoutbysubcontractors
TheOwnerkeepsdirectcontractswithallsubcontractors
Examples:
Offshore/OnshoreLargeFieldDevelopments
Kashagan FieldDevelopment
NWLibyaFieldDevelopment
NorthWestShelfFieldDevelopment
OnshoreLargeFieldDevelopment
Hawyiah GasFieldDevelopment
144
7 Newapproach:designcompetition
InsteadofbiddingafixeddesignbasedontheresultsofaBasicEngineering,
thecontractorisrequestedtobidtheirpreferreddesignfulfillingfunctional
requirementsdefinedbytheproject
Examples:Girassol,Dlia andPazflor UFR,CLOVFPSO,SPS,Gasplants,LNGplants
Advantages
Contractorcanprovideadesigntheyhavealreadystudied:costreduction
Contractorcanprovidetheirowninhousedesign
Opentoinnovativedesigns
Difficulties
Technicalfollowupofthedesigncompetitioncanbemoredifficult:moreresources
needed
ConsistencywithCompanyrulesmaybeproblematic
Comparisonoftheresultingsolutionsmaybemoredifficult
145
Example:designcompetitionforarisersystem
ProposalN1 ProposalN2
ProposalN3
146
ProcessofDesignCompetitionandCallforTenders
Companys Projectteam Each Potential Contractor Each Potential Contractor Companys Projectteam
under Companys supervision
produces produces proceeds to proceeds to
Functional Adjusted Analysetheir Comparison ofthe

specifications specifications subcontractorsoffers different concepts
Technical Conceptselection Offer evaluations and
specifications clarifications
GeneralGroup Contract writing
specifications negotiation
Contract draft Issuea
Recommendation to
Award
inorder tolaunch inorder tolaunch inorder tosubmit inorder toaward

Designcompetition Quotations Offers Contract
possiblerecycling
147
Selectingtherightremunerationmode
LumpSum
Pros:cleardefinitionofthework,finalpricefixed,Contractorsresponsibility
Cons:longtenderingperiodbeforecontractaward,rigiditypossiblyleadingto
confrontationalattitudesbetweenOwnerandContractor
ReimbursablewithorwithoutIncentives,withorwithouttargetprice,Open
Book
Pros:quickcontractaward,globalprojectscheduleshortened,flexibility
Cons:finalpricenotfirm,largeOwnersupervisionteam,maybeassistedbyaPMC
(ProjectManagementConsultant)
Paymentforandonbehalf:Purchaseordersandsubcontractsplacedby
ContractorarepaiddirectlybyCompany
Pros:quickcontractaward,globalprojectscheduleshortened,flexibility
Cons:CompanydirectlyexposedtoSubcontractorsandVendors
OpenBook(seenextslides)
148
Risk/Reward contracts
Anexample Reward/penaltyfor
performance
Dead band: -C%, +D% of Target metric
Profit at risk = A (M$)

Fixed profit = B (M$)
Slope = F% of savings
Reimbursible
Reimbursible
project
Contractcosts
costs
Cost
= E% of Target Metric
A
Incasethecostofthe
projectisbelowbudget, Incasethecost oftheproject
thegainissharedbetween is above budget,apenaltyis
Theownerandthecontractor applied uptothelimit ofprofit
atrisk
Project Metric
(Safety, Environment, Cost, Schedule, Quality)
149
OpenBookscheme
Incaseoffailuretoorganiseapropercompetitionduetothelackofbidders(for
variousreasons)onesolutioncouldbetoenterintheprocessofanegotiatedbidor
OpenBookbiddingexercisenegotiation,fortheMainOnshoreEPCCcontractwith
theonlycontractinggrouppreparedtobid
Principles:
Onecontractoristrulyinterestedinperformingthejob(theymighthaveperformedtheFEED)
Thebidwillbepreparedinfulltransparencytowardstheclient
TheobjectivewillbetoagreeuponaLumpSumpriceforallorpartofthescopeofworkandto
signthecontractonthisbasis,withtheobjectiveofrevertingtothestandardschemewiththe
usualresponsibilitiesofanEPCCcontractoratalaterstage
Incaseoffailuretoagree,schemesminimizingtheresponsibilitiesandriskstakenby
thecontractorcouldbeimplemented(cost+fee,withorwithoutincentives)
150
Openbookscheme
ThedecisiontoenterintoanOpenBooknegotiationhastobeapprovedbyall
partnersinvolvedintheProject
ShareholdersaregenerallyencouragedtosecondpersonnelintotheEvaluationTeam
andtoparticipateintheTenderEvaluationassessmentTeam,tobeabletomonitor
theOpenBookprocessascloselyaspossibleandthentobeinvolveddirectlyinthe
recommendationsoftheEvaluationteam
AnOpenBookevaluationprocessenablesaprofoundTechnicalEvaluationofthe
Contractorsproposal(morethanforanormalcompetitiveTender)butassuch
requiresfullengineeringsupport
Whilstthereisonlyonetechnicalproposaltoreview,thesameeffortwillberequired
asthatfor2or3competitiveproposals:facetofacediscussionsovertechnicalissues
aremorethorough
Tobenotedasproblematic:
ThereislimitedincentivefortheBiddertooptimisetheirtechnicalproposalwitha
viewtominimisingEPCcost
151
OpenBookExerciseOrganization
InadditiontothestandardITTdocuments,theCallforTenderwillincludethe
followingdocuments:
BiddingAgreement
OpenBookRules
OpenBookCoordinationProcedure
TheoperatorprojectteamhastodevelopandsubmitforPartnersapproval
anEvaluationProcedurefortheOpenBooktenderevaluation
KeyfeaturesoftheBiddingAgreement
Bidderwouldbecompensatedforsubmittingacommercialoffer;
BidderwouldhavetoendorsetheDesignPackage andsubmitproposalsforCompany
EarlyContractassignment;
IfsuccessfultheBidderwouldnotbeentitledtothecompensation;
CommitmentbyBiddertomaintainitsteamforbeingresponsivetoCompanys
clarificationrequirement
152
ExamplesofOpenBookTenders
Stockman Onshore
IchthysOnshore
Moho North TLP
153
Importanttopicstobeaddressed
FEEDendorsement
ForanEPCcontractalltasksregardingtheFEEDareundertheresponsibility
oftheOwner,unlessaFEEDendorsementisperformed
TheendorsementprocessoftheFEEDbytheContractorhastoimplemented
withtheContractorpreferablyattheearlieststage,i.e.duringthetendering
phase
However,toshortentheProjectglobalschedule,itmaybeagreedthatthe
endorsementbeperformedatthestartoftheEPCphase,allowingdesign
discussions/changeordersatProjectstart
154
LLIs,CriticalequipmentandCSI
LongLeadItems,CriticalEquipmentandCompanySelectedItemsselectionhastobe
basedonverystrictobjectivecriteriaandlimitedto:
EquipmentthatcannotbedeliveredontimeatsiteifselectedandpurchasedatEPCContract
time(possibleexamples:LNGTanks,largerotatingequipment,MCHE,extraheavyvessels,
pipelinesmaterials)
Equipmentrequiringrapidspecificdesignfinalizationtofittherequirementoftheproject
(possibleexamples:aircoolersforanaircooledmodularizedLNGPlant)
OrequipmentthatOwnerdesirestoselectbeforeEPCContractAwardforstandardization
purpose(example:controlsystems)
ForanEPCcontractalltasksrelatedtotheprocurementandtheinitialstepsofthe
supplyoftheLLIremainundertheresponsibilityoftheOwner,unlessendorsedby
theEPCContractor
TheendorsementprocessoftheLLIandCriticalEquipmentbytheContractorhasto
implementedattheearlieststagewiththeContractor,i.e.duringthetendering
phase
Note:LLIandCriticalEquipmentwillbefurtherdescribedintheProcurementchapter
155
Endorsementofprocesslicensorspackages
TheProcessLicensesContractsareusuallycontractedbytheOwnerduring
theearlyphasesoftheProject(preFEEDorpossiblyFEED)
ForanEPCcontracttheProcessLicensorContract(BEPandperformance
guarantees)remainundertheresponsibilityoftheOwner,unlessendorsed
bytheEPCContractor
HoweverEPCContractorsarereluctanttoendorsetheProcessLicensors
Guarantees
156
Technical contracts
Contractingprocess
Contractorselection
157
AcomplextenderingphasetoawardanEPCContract
Contract Strategy/Plan
Scope/Split
Tenderissueperiod
Tenderers complete CFT,
clarificationsnoticesissued
Coordinationmeeting
Award type/Schedule
Tenderevaluation
Unpriced/Priced evaluation
Prequalification
Identificationof
suitable Tenderers Recommendation to
award
Bidders list Ranking andselection
Tenderers
selection
Approval
Contract initialling
Prepare CallForTenders
ExactTerms &Conitions and
Scope
158
Prequalificationoftenderers
Prequalificationofthepotentialcontractorsisareviewofcontractors
experienceandorganization,possiblywithavisitofcontractorsfacilities
Verificationthatcontractorshavesufficientcompetenceandresources
availablefortheProject
Forlargeprojects,findingenoughcompetentcontractorstoensure
competitionmightbeaproblem
Tendererswithcompetenceindifferentareas,mayformajointventureora
consortium;theymayalsodosoinordertolimittherisksassociatedwith
largeProjects
Prequalificationmightbeperformedthroughapublicadvertisement(an
obligationinseveralpartsoftheworld)
159
Pointstobeinvestigatedduringprequalification
Contractorhasunderstoodcompanyneeds
Technicalcapabilitiesforthework
Risksassociatedwithawardingthecontracttothisentity
Levelandqualityofmanagementandtechnicalresources
Proposedtechnicalapproachesforthework
Acceptanceofwarrantiesforthework
Financialcapacity
Productioncapacity
PastperformanceforsimilarworksincludingHSEperformance
Referencesforsimilarjobs
Intellectualpropertyrightsfortheworkprocessesorservices
Proprietaryrightsforworks,servicesprovidedfortheproject
160
ObjectivesoftheCallForTendersprocedure
Toensureafairandequitabletreatmentofalltenderersinordertogive
themsameaccesstotheinformation
Toselectacompetentcontractorafteranopencompetitionsothatthe
ownerobtainsthebestacceptableconditions
Toensurethatthesuccessfultendererwillhaveacompleteknowledgeofthe
dossierandwillnotpleadignorancetodisputethevalidityofthecontract
partlyortotally
Itispossibletoorganizeaprebidconferenceduringwhichallpotential
contractorsaregatheredandreceivethesamelevelofinformationthrough
presentationbytheOwnerandquestionssessionswiththecontractors
161
CallforTenderdocuments
CallforTender=
Instructionstotenderers(introduction&instructions)+Agreement&annexes(terms&
conditions)+Exhibits(scope&requirements)
EXHIBITS(Scope&Requirements)
Exhibitsshould atleast covermandatoryCompanysrequirementssuchas
ScopeHSErequirements
ScheduleofPrices
WorkTimeSchedule
PerformanceGuarantees
DesignDossier
ParticularConditions
Quality
CompanyItems
Theycouldalsogivespecificrequirementsandinformationsuchas
CoordinationProcedure
Subcontractors&Vendors
ContractorsexpectedOrganization
162
Contractpaymentterms
Paymentscanbeeitheronaprogressbasisoronamilestonebasis
Onaprogressbasis
Thecontractorisusuallypaideverymonthonthebasisoftheprogressofthework
whichhasbeenachievedduringthemonth
Onamilestonebasis
Thecontractoriscompensatedthroughalimitednumberofpayments,eachbeing
conditionaltothesatisfactionofpredefinedcriteriaoreventsinrelationwiththe
performanceofthework
Onboth
163
Progresspaymentandmilestonespayments
164
Contractremuneration Paymentonprogress
Advantagesoftheprogressmethodfortheoperator:
Thecontractorisencouragedtopayaseriousattentiontothemeasurementandto
submitrealisticprogressfigurestolimittheriskofpaymentdelay.
Thecontractorispaidinaccordancewiththeworkperformed.
Theapprovedmonthlyprogressfiguresquicklyallowatanytimeanestimateofthe
valueoftheworkperformedincaseofworksuspensionorcontracttermination.
Thisallowstheoperatoramoreefficientmonitoringoftheworktimeschedulethrough
thecheckingofthecomplianceoftheperformanceoftheworkwiththereferences
curves.
Itonlyrequiresagoodprogressmonitoringwithoutneedinganarmyofquantity
surveyors.
165
Contractstenderingtypicaldurations
PrequalificationofpotentialTenderers
4to8months Preparationofthecallfortenders(byOwner)
Conditionsfortenderpreparation&issue
Contractconditions(clauses,prices,etc.)
Scopeofworkandspecifications
3to6months Tenderspreparation(byTenderer)
Issuetenderbulletins Requestforclarifications
Pricepreparation(criticalpath)
TechnicalandUnprizedcommercial
PricedCommercial
3to6months Tendersanalysis(byOwner)
Receiptandformalopening
Comparison
Clarificationmeetings
Additionalsubmissions
Evaluationandrecommendation
??
Decision
166
Tenderperiod
Areasonabletenderingperiodshallbeallowedtakingintoaccountthe
projectscheduleandtheamountofworkofTenderersarerequiredto
performtocompletetheCFT
Anyextensionrequestforthetenderingperiodshallbesubjecttoapproval;if
suchextensionsaregranted,allTenderersshallbeinformedbymeansofa
Tenderbulletin
TenderingcostsincurredbyTenderersinconnectionwiththebiddingprocess
shallnormallybebornebytheTenderersandthisprinciplemadeclearinthe
CFTdocuments;however,theprojectmayconsidercompensating
unsuccessfulTenderersforthecostoftenderingincertaincircumstances(e.g.
inthecaseofmajorEPCContracts)
167
Technical contracts
Contractingprocess
Contractorselection
168
DriversforContractorstobidasagroup
ContractorsareinvitedtotenderbyOwnersaccordingtotheircapability
versusProjectrequirements,theirinterestintheProject,resultsofpre
qualificationbyOwner,etc.
OwnersometimesshowstheirinteresttoseesomeContractorsgathertobid
ForsmallandmediumProjects,Contractorsmightbidalone
ForlargeandmegaProjects,Contractorsusuallygatherinorderto
DevoteanacceptableportionoftheirresourcestotheProject
ShareProjectriskswhenLumpSuminareasonableportionvstheirrevenue
Provideanofferwithaworksplit,whichcoversProjectrequiredareasandbrings
requiredqualificationsandpastexperienceintermsoftechnology,requiredscope,in
countryknowledge,knowledgeofOwnerprocesses,pastsimilarprojects,etc.
ForOil&GasProjectstheymaygroup
InJointVentures(e.g.LNG,LargeGasPlants)
InaConsortium(e.g.offshoreProjectrequiringaconstructionyard)
WithaNominatedSubcontractor(e.g.constructioncontractor)
169
Proposaltasks&proposalcontent
WhentheCFTisstructuredperinternationalpracticeformajorprojects,
othertasksinclude:
FEEDreview/endorsement;CFTreview
Preparationofclarificationrequests(followformatandwatchdeadline)
BulksMTOsandestimateofMTOallowances
PreparationofrequisitionsandinquiriestoVendors,technical&commercialevaluation
ProposalExecutiveSummary
170
Proposaltasks&proposalcontent
TechnicalOfferpreparationwith,ingeneral:
FEEDendorsementreport
ProjectExecutionPlan(Engineering,Procurement,Construction,Commissioning,Project
Controls,MaterialsControls,Systemsetc.),Schedule
Technicalqualifications
ProposalForms
AmandatoryprincipleistostrictlyanswertorequiredproposalformatsintheITT
CommercialOfferpreparationwith,ingeneral:
PricesandPricebreakdowns
Unitpricesandrates
PaymentConditions
Commercialqualifications
BidBond
CFTAgreementreviewandLegalqualifications
And,ifrequired,financingproposal
171
Majorcomponentsofthebidresponse
Programofworkandlistof
Productsupport
deliverables
Limitationofliabilities
Schedulebaseline
Feesandretainer
Performancereporting
Penalties
Organizationcharts Rolesand
responsibilitiesofthekeypersonnel Incentives
Contractorplaceofperformance Insuranceandperformance
bonds
Pricingformat
Subcontractorsselectionand
Paymentterms
controlprinciples
Placeofdelivery
Changerequestshandling
Inspectionandacceptancecriteria
Terminationclausesand
Warranties proceduresforconflictresolution
172
CAPEXestimate&estimatemethodologygeneral
ContractorCAPEXestimateispreparedaccordingtotheWBS.
Desiredaccuracyis0%+5%.
Constructioncostisthemostimportantcostitemandthemostdifficultto
estimate.
CAPEXestimatepreparedwithamemorandumunderlyingassumptions,
estimatingmethodology,uncertaintiesandrisks.
ACAPEX risks analysiscanbedone(basedonprobabilistic MonteCarlo
methods)toestimatethe probability oftheCAPEXestimate.
Estimatingmethodologyprinciplesarepresentedonnextslides.
173
Costestimatebybidder(1/2)
174
Costestimatebybidder(2/2)
175
Cost&pricedevelopmentTKcontract
Allowancesareaddedtoquantitiesfor:
MTOallowance dependingonmethodsupportingdocumentsusedfortheMTO
Projectgrowth ,i.e.whatisnotshownonavailabledrawings
Extraworks whicharerequiredbyconstructioncontractorsworkingwithunitratescontracts
Vendorsquotationsarecomparedandtechnicalcontingenciesand/or buyouts
assessed.
Arisksanalysisisperformed.Thecostpreparationmustbeathoroughlycontrolled
processasthereareestimatingrisksassociatedtoFEEDcompletenessandquality,
validityofpricessubmittedbyVendorsandContractorsetc.
Contingenciesareconsideredforprojectrisksanduncertainties
Performancerisk
Schedulerisk
Otherrisks
Paymenttermsareanalysedversusplannedexpensesandexposureriskassessed.
PricereviewmeetingsareorganizedwithContractorsand/orJVPartners
Management.
Profitisaddedontopofthecalculatedcost.
176
Technical contracts
Contractingprocess
Contractorselection
177
Openingofthetenders
TwophilosophiesexistforTendersopening:
Sameopeningdatefortechnicalandcommercialtenders
Technicaland Updatedtenders
contractual
Analysis,clarifications,confirmations Recommendation
Commercial
Twodifferentopeningdatesfortechnicalandcommercialtenders Commercial
Shortlist
Updatedtenders
Technicaland Analysis,clarifications,technical
Lowestbid
contractual confirmations
selected
178
Tenderevaluationprocedure
ResponsestotheCFTshallbeassessedtechnicallyandcommerciallyagainst
previouslyestablishedcriteriabyateamofrepresentativesofthetechnical,
contractualandcommercialfunctions,coordinatedbytheOwnerorPMC
ItmaybeappropriatetoincludePartner/Shareholderpersonnelwithinthe
TenderEvaluationTeam
OrganizationandcriteriaoftheTenderevaluationmustberecordedand
approvedinacontractspecificTenderEvaluationProcedurewhichshall
containdetailsontheevaluation
Projectshouldgivecarefulconsiderationtoopeningonlythetechnical
packagesfirst,inordertoidentifyanddiscardtendersthatarenottechnically
acceptable
179
Clarificationmeetings
ClarificationmeetingsallowtheOwnertoreviewandclarifywitheach
Tenderer
TheContractexecutionplansubmittedbytheTenderer,includingtheworktime
schedule
ThequalificationsandthealternativesthattheTenderersubmittedwiththeirtender
TheirreactiontotheacceptablequalificationsorsuggestionsmadebyotherTenderers
Theirpositionvisvistheendorsement oftheFEEDandoftheLLIs
Theclarificationmeetingwillenable
TheOwnertoappreciatetheunderstandingandmotivationoftheaTenderer
TheTenderertoimprovetheirunderstandingoftheOwnersposition
TheOwnertoimprovethegeneralqualityofthedossierbytakingintoaccountthe
relevantcomments
180
LocalContentevaluation
Tendercontent
IdentifyproposedLocalcontent
Foreachpackage,checkthatthecontractorclearlyindicatesindedicatedtablestheLC
quantities(Tons,manhours,etc.)
ClarifyandquantifyLCduringtenderevaluation
CompileLCdossiersineachpackageextractedfromdatasuppliedintechnicaltender
submissions
EstimatethecostdifferentialbetweenLCpriceastenderedandcomparablemarket
priceforequivalentscope
Undertakegapanalysisintermsofcost,scheduleandrisksinordertoallocate
committedlevelofLCintotheoverallassessmentprocedureofthebidders
ConfirmtheviabilityoftheLCplanincludedintheEPCcontractthrough
organization,sitevisits,manpowerassessment
181
Normalizationoftenders
Thecommercialevaluation(pricedproposals)mayincludethefollowingtasks
ArithmeticalverificationoftheLumpSum,ProvisionalSumsandOptions
NormalizationofTenders,takingintoaccountsuchcostitemsas:
CompanysupervisiondifferentialcostduetoremotenessofTendererworkingsites
CompanyestimateforitemsnotquotedforbyTenderers
CompanyestimateofpossibleexclusionsorlimitationspresentedbyTenderers
CompanyestimateofcostdifferentialduetodifferentTendererschedules
ComparisonwithCompanycostestimates
Thecomparisonbetweentenderswillthenoccurbasedontheinitialcontract
pricewithnormalization,unlessspecifiedotherwisebytheOperating
Agreement
182
OpeningoffinaltendersandselectionoftheContractor
Afterhavingcheckedthateachtendererhasaccepted(byinitiallingevery
page)Contractconditions,theOwneropensthecommercialproposals
Theselectionismadeinprincipleonthelowestpricebasis
Ifitisnotthecase,theOwnerisusuallyrequestedtodocumenthisdecision
(e.g.bypresentingthedetailedscoredevaluations)
Acceptingalastminuteuncontrolledpricereductionbyonecontractoroutof
thenormalcompetitiveprocedurewouldbe
UnfairtotheotherTenderers(andcounterproductiveforfollowingproject)
Risky,astheContractorwillprobablytrytorecoversuchreductionduringtheexecution
oftheContract
183
Projectcontracting
Contractingstrategydefinitionisbasedonathoroughanalysisoftheproject
scope,markets,availableresources,risksandstakeholdersrequirements
Acontractdefinesnotonlytheprogramofworkandthefinancial
remunerationmechanismsbutmostimportantlyhowtherisksareshared
betweentheparties
Theprequalificationexerciseshouldeliminatecompaniesnothavingthe
requiredcompetenciesorresourcesforthework
Incaseofinsufficientcompetitionorcomplexscopes,anopenbookcontract
schemecanbeconsidered
Thecontractevaluationcriteriaandweightingfactorsmustbeestablishedby
theOwnerpriortoissuingthetender
Thecontractingstrategywillgenerateinterfacesbetweendifferentcontracts
whichrepresentasignificantriskarea(costandplanning)
184
Organization
185
ProjectOrganization
Foreword
Mainobjective
Todefinetherightstructuretoorganisetheteamthatwillcarryouttheproject
Maintoolsandmeans
Typicalorganizationcharts
186
Projectorganization
Organizationalinfluencesinprojectorganization
TypicalOil&Gasprojectsorganizations
SpecificaspectsforlargeEPCprojects
Theprojectmanagercompetenceandskills
187
OrganizationalinfluencesonProjectManagement
1. Projectcultureandmanagementstyles
Anyorganizationhasitsowncultureandthisinfluenceshowprojectareorganizedand
executed
E&Pprojectsmostofthetimeinvolveseveralorganizationswhichhavedifferent
cultures
Contractingindifferentcountries
Jointventuresorpartneringagreements
Toconductmajorprojects,organizationswillpartlyrelyonexternalresourcesintegrated
intotheirteams
Contractorscomewiththeirownculture
2. Typicalorganizationstructures
Functionalorganization
Weakmatrixorganization
Strongmatrixorganization
Projectized organization
188
Typical organizational structures
Functional organization Projectized organization
ChiefExecutive ChiefExecutive
Functional Functional Functional Project Project Project

Manager Manager Manager Manager Manager Manager
Staff Staff Staff Staff Staff Staff
Projectcoordinationappears inorange
189
Typical organizational structures

Matrixorganizations:weak, balanced andstrong
ChiefExecutive
Functional Functional Functional Functional Managementof

Manager Manager Manager Manager ProjectManagers
Staff Staff Staff Staff ProjectManager
ProjectManager Staff Staff Staff ProjectManager

Influencesoforganizational structuresonprojects
Organization Matrix
Structure
Functional WeakMatrix Balanced StrongMatrix Projectized
Project
Characteristics Matrix
ProjectManager's Lowto Moderateto HightoAlmost

LittleorNone Low
Authority Moderate High Total
Lowto Moderateto HightoAlmost

ResourceAvailability LittleorNone Low
Moderate High Total
Whomanagesthe Functional Functional Project Project

Mixed
projectbudget Manager Manager Manager Manager
ProjectManager'sRole Parttime Parttime Fulltime Fulltime Fulltime
ProjectManagement
Parttime Parttime Parttime Fulltime Fulltime
AdministrativeStaff
HowwouldyoudescribeyourCompanyculture?
Source:PMI 191
Organizationalmodelselectioncriteria
1. Factorstobeconsidered
Thestrategicimportanceoftheproject
Thetechnicalcharacteristicsoftheproject
TheOrganizationsbackgroundinprojectmanagement itsownmanagementsystems
andhumanresources inprojectdisciplines
Theprojectcontractingstrategy
Thegeographicallocationoftheactorsoftheprojectduringthevariousphasesofthe
development
2. Organizationprinciples
Organizationandcontractingstrategyaredeeplyinterdependent
Theorganizationmustevolveallalongthemainprojectphasesasdetailedbefore.
Theorganizationmustsuittheresponsibilitiesoftheactorsoftheproject(Company,
Partners,Contractors,suppliers)
192
Projectorganization
193
Companyprojectmanagementteam
CompanyProjectManagementTeamislocatedatthecentreofgravityofthe
activities
MaincontractorHomeOffice
ThenConstructionSite
AstheMainContractorManagementTeamalsomoveswiththecentreof
gravity
Typicallyat80%ofengineeringprogress
EachWorkPackageManagerandhisteamislocatedatorascloseaspossible
totherelevant
WorkPackageContractorHomeOffice
thenpossiblyatSite
194
Worklocations ExFPSOpackage
TurboGenerators
Hull
TurboCompressors
Detail
design
Mgt,Services
SiteWorks
Topsides
195
Typicalorganizationcharts
Fourtypicalorganizationchartsarepresented.Theyareinnocaseexhaustive
butindicateframeoforganizationsfrequentlyusedinprojects
Thesizeoftheprojectdrivesselectionofpersonnelintegratedfulltimeinthe
projectteamorworkingparttimefromitsbasicorganization
QA,HSE,specialists,services,productionrepresentatives
Thescopeoftheprojectorganizationcanincludesubsurfaceactivities
GeosciencesandDrilling withanintegratedprojectorganization
Forsurfacefacilities,theprojectorganizationmaybespliteither
Byfunction:typicallyengineering,procurement,construction
Orbypackage:e.g.platform,pipes,FPSO
Choicetobemadewithconsiderationtonumberofmaincontractsand
contractorslocation.
196
Typicalorganizationsmall&mediumprojects
SplitperActivities/Disciplines
ProjectManager
SafetyEngineer QAEngineer Headof HeadofProject Headof Headof

Engineering Control Construction Commissioning
Contract/Proc.
Engineer Commissioning
Engineers
ProjectEngineer ProcessEngineer PlanningEngineer
Specialist Specialist Supervisor*** Supervisor***

Engineer** Engineer** CostEngineer
Accountant
ITEngineer
197
Typicalorganizationchartsmall&mediumprojects
SplitperWork Packages
ProjectManager
SafetyEngineer QAEngineer WorkPackageManager1 HeadofProject Headof

WorkPackageManager2 Control Commissioning
SpecialistsEngineers
Contract Engineer
ProjectEngineer ProjectEngineer Planning Engineer
SiteRepr. SiteRepr. CostEngineer
Supervisor Supervisor
ITEngineer
198
Typicalorganizationlargeprojects
SplitperActivities /Disciplines
ProjectManager
Engineering Project Construction Operator Commissioning Safety

Manager Control Manager Representative Manager Manager QAManager
Manager
Interface
SrProject Cost QA/QC Manager Commissioning Safety
Engineer SrCostEngineer QA
Engineer Engineer Coordinator Engineer Engineer
Project
Engineer CostEngineer
Commissioning
SrContract Engineer
SrProcess Engineer
Engineer
Process Contract
Engineer Engineer Headof Headof
HeadofOnshore Installation HeadofHookup
SrPlanning. construction Fabrication
Engineer
SrUtilities
Engineer Planning
Engineer Construction Site Site Site
Utilities Superintendent Representative Representative Representative
Engineer SrProcurem.
Engineer
Procurement Senior Senior Senior Senior Senior Senior Senior Senior
Engineer Supervr** Supervr** Supervr** Supervr** Supervr** Supervr** Supervr** Supervr**
SrSpecialist Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor
Engineer*
ITEngineer
Specialist
Engineer
Document *SpecialistDisciplineEngineersdependonprojecttypeandimportance
control
**Supervisorsnumberdependonprojecttypeandimportance
*incaseofintegratedProject
199
TypicalOrganizationlargeprojects
SplitperWorkPackages
ProjectManager
QAManager Safety ProjectControl SurfaceManager Operator Drilling Subsurface

Manager Manager Representative Manager* Manager*
Interfaces
SrCost manager
Engineer
CostEngineer
WordPackage WordPackage WordPackage Commissioning
Manager1 Manager2 Manager3 Manager
SrContract
Engineer SrProject
Contract Engineer Project Project Commissioning
Engineer Project Engineer Engineer Engineer
Engineer
SrPlanning
Engineer Specialist SiteRepr. SiteRepr.
Planning Engineers
Engineer
SiteRepr.
ITEngineer
Supervisor *incaseofintegratedProject
200
Projectmanninglevelcurve
Anexample
450
400
350
300
250
200
150
100
50
0
Au Se No De Fe Ma Au Se No De Fe Ma Au Se No De Fe Ma Au Se No De Fe Ma Au Se No De Fe Ma Au Se
Jun- Jul- Oct- Jan- Mar- Apr- Jun- Jul- Oct- Jan- Mar- Apr- Jun- Jul- Oct- Jan- Mar- Apr- Jun- Jul- Oct- Jan- Mar- Apr- Jun- Jul- Oct- Jan- Mar- Apr- Jun- Jul-
g- p- v- c- b- y- g- p- v- c- b- y- g- p- v- c- b- y- g- p- v- c- b- y- g- p- v- c- b- y- g- p-
11 11 11 12 12 12 12 12 12 13 13 13 13 13 13 14 14 14 14 14 14 15 15 15 15 15 15 16 16 16 16 16
11 11 11 11 12 12 12 12 12 12 13 13 13 13 13 13 14 14 14 14 14 14 15 15 15 15 15 15 16 16 16 16
Plan 39 44 66 102 154 202 240 277 329 345 367 392 427 427 427 427 427 427 427 427 393 358 331 317 284 253 217 177 103 94 62 55 45 19 16 15 16 12 12 12 11 8 6 6 6 4 4 4 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Actual 39 44 66 252
Forecast
201
Projectorganization
202
ProjectsKeyfigures
LargeProjectsquantities(OrderOfMagnitude)
TIC(TotalInstalledCost) >1GUSD
Engineeringmanhours >1Mmhrs
Constructionmanhours >10Mmhrs
MegaProjectsquantitiesareseveraltimesthesequantities
(e.g.50Mconstructionmhrs)
203
ProjectsKeyfigures
204
Managementofmulticompanyorganizations
Somelargeandcomplexprojectsrequirelargeengineeringandconstruction
managementteamsandworkforcesandassociationsofContractorstobring
allskillsrequiredfortheproject;theMainEPCContractororganizationwill
consider:
AssociationinaJVorConsortiumwithaglobalmanagementoverallorganization
ensuringasingleresponsibilitytowardsCompany,theDirectorate
ParticipationofseveralMainEngineeringOffices,OperatingCenters,andSatellite
Offices forengineeringandprocurement
And/orsplittingtheProjectintosubprojectscorrespondingtoworkpackages
205
Examplemulticompanyorganization
206
Contractor organizations
Forsmalltomediumsizeprojectscontractorsorganizationsaresimilartothe
Companyones
Organizationbydisciplineorbypackagedependingon:
Thephaseoftheproject
Thestrategicimportanceoftheproject
Thetechnicalcharacteristicsoftheproject
TheOrganizationsbackgroundinprojectmanagement itsownmanagementsystems
andhumanresources inprojectdisciplines
Theprojectcontractingstrategy
Thegeographicallocationoftheactors
Theprojectorganizationandwillalsochangeastheprojectmovesfromthe
engineeringtotheconstructionphase
207
PMCcontractor
AProjectsplitintoaPMCManagementContractandExecutionContracts
accordingtotheProjectContractingStrategy
ExecutioncontractsonEPorEPCbasis
APMCManagementstructure,with:
ADirectorate,globalmanagementlevelforProjectmanagement
ManagementTeamsatofficesofExecutionContractors
Asiteorganizationwithacommonconstructionandcommissioning
organizationforEPcontracts
TheDirectoratemovestotheProjectCountry/sitewhenthe centreof
gravityoftheProjectmovestothesite
208
Projectorganization
209
Projectmanagercompetencesandskills
KnowledgeaboutProjectManagement
AbilitytodeliverwhileapplyinghisPMknowledge
Demonstratepersonalandinterpersonalskills
Leadership
Teambuilding
Motivation
Communication
Influencing
Decisionmaking
Politicalandculturalawareness
Negotiation
Trustbuilding
Conflictmanagement
Coaching
210
Summary
Variousmodelsexistforprojectorganizations.Thechoiceforagiven
projectdependsitsnatureandsize,itslocationandtheCompanyproject
culture
Organizationandcontractingstrategiesarecloselyinterrelated
Theprojectorganizationmustevolvethroughoutthemainprojectphases
Theprojectmayhaveeitheranintegratedorganizationincludingallits
ownfunctions,oramatrixorganizationrelyingonsupportfromthe
corporateorganization
Multicompanyprojects(JVorconsortium)requireaspecialmanagement
organizationwithadirectoraterepresentingtheinterestsofeachcompany
Theprojectmanagerplaysakeyroleintheprojectsuccessandmust
demonstrateanumberofpersonalandinterpersonalskills
211
HSE
212
HSEmanagement
Foreword
Mainobjective
Oil&GasProjectsshallbecarriedoutwithnoaccidentsandnofatalities
Oil&Gasfacilitiesshallbedesignedinawaythatnoaccidentsorfatalitiesduringtheir
operation
Maintoolsandmeans
HSEindesign
Hazardidentification
Safetyprogramswithinnovativeapproaches
MeasurementofHSEperformance
213
HSEmanagement
AboutHealth,Safety andEnvironment
PlanningHSEdesignactivities
Conducting HSEstudies
Planningoperational HSEactivities
HSEreporting
HSEperformanceimprovement
214
TwoaspectsinHSE
HSEindesign
Operational safety
215
HSEindesignmainpurposes
Tocreatesafeandsoundfacilities,indesign,duringitsconstruction,andfor
futureoperation,throughthelifeoftheplant,by
Identifyingthehazards
Eliminatingthem,orreducingtominimumpotentialeffect
Permittingeffectivecontrol,avoidingunprovenconditions(technology,procedure...)
SelectingandimplementingthegoverningReferences,Norms,RulesandStandards,the
relevantCompanypoliciesandobjectives
Mainareaofapplication
Safetyofpersonnel
Protectionoftheenvironment
Protectionofassets
Minimizationofdamagetocompanyimage
216
Mainterms&definitions
Health:Stateofbeingfreefromillnessorinjury(commondictionary),
achievedthroughacombinationofphysical,mentalandsocialwellbeing
(addedbyworldhealthorganization)
Safety:stateofbeingSafe(commondictionary).Beingprotectedfrom
eventthatcauseslosses(healthoreconomical)
Security:degreeofprotectionagainstactionsofpeopleattemptingtocause
destructionorcriminalactivity
Environment:surroundingofanobject(commondictionary).Thetotalityof
circumstancessurroundinganorganism,orgroupoforganisms.
217
Designchallenges
Soundandrealisticsetofreferences,policiesandgoals(Zeroriskdoesnot
exist)
Reliableriskassessingprocesses(databanks,calculationmodel,accurate
data,confirmedprocedure,provenconcept,newitemstesting,etc.),
Experiencedpersonnelforspecificanalysis(ex:QRA,EIA)toprevent
under/overdesigningrequirement
218
Mainterms&definitions
HAZARD
Existingpotentialofacompound(e.g.toxicH2S)orworkingpractice(workingat
elevatedplace)tocausedamage/losstopersonsand/orenvironment(SEVESOII
directive).
RISK
Potentialaccidentduetohazardsituation
RISKlevel:probabilityofanaccident,ofitsgravity(ISO/CEI51)
RISKvalue=ProbabilityxConsequences[SeverityofGravity]
219
Health,SafetyandEnvironment
Technologicalrisks
Generatedbyflammable,toxic,
explosivessubstances
Risksconcernindividuals,environment,
integrityofinstallationsand
production,surroundingselements
Occupationalrisks
Injuriesorfatalitiescausedbythe
hazardsoftheworkplaceandthe
natureoftheworktoworking
personnel,orsurroundingspopulation
220
HSEmanagement
HSEreporting
221
Referencedocuments
NationalRegulations
Safetycase
SEVESO
Internationalstandards
API
NFPA
EN
BS
IMO
SOLAS
InsuranceCompanyrules
Certificationandclassificationbodyrules
Companyspecifications
222
SafetyStudiesduringprojectlifecycle
PREPROJECT PROJECT PRODUCTION
DETAIL COMMIS START

STUDIES SOR BASICorFEED &CONSTRUCTION SIONNING UP
HAZID HAZID
HAZAN HAZAN
S.O.R P&ID DEROGATION
CHANGE REVIEW REQUESTS
HSE SAFETY
CASE/REPORT DOSSIER
TECHNICALSPECIFICATIONS HAZOP1 HAZOP2 HAZOP3 POSTSTART

UPAUDIT
PTR1 PTR2 PTR3 PTR4 PTR5
6months
Feedback afterS/U
223
HSEdesigntools
Safetystudies
HAZID
HAZAN
Safetyreviews
HAZOP
Audits
PTR
SIMOPS
Environment
EBS
EIA
Risks
PRA
QRA
224
SafetybyDesign:strategy,tools,results
Processcontrol
PREVENT HAZID,HAZOP Processisolation
Decreaseprobabilityofrelease Safedesign,Frequencyanalysis Overpressureprotection
Materialselection
Layout&Zoning
Ventilation
CONTROL HAZAN(consequence)analysis, Insulation
Avoidaccidentalignitionofrelease SafetyDistances Electricalisolation
ESDuponGasdetection
Dispersion
Drainage
Layout
Consequenceanalysis Firedetection
MITIGATE ESD&EDP
Escalationanalysis
Mitigationofconsequences Bunding&Drainage
Riskassessment
Blastproofing
ActiveFireprotection
Passivefireprotection
EVACUATE Escape,Evacuation,andRescue Layout

study Protectionofevacuation
Provideforescape,evacuation,rescue
routes&means
Alert
Emergencyroom
225
ConceptualandPreProjectStudies
Environmentprotection
Environmentalmanagementoftheproject.Threeessentialtools:
EBS(EnvironmentalBaselineSurvey):analysisoftheinitialstatusofthesite(reference
statusforfurthercontrolscomparisons)
EIA(EnvironmentalImpactAssessment):detaileddescriptionoftheimpactsofthe
projectedactivitiesonthesiteandmitigationmeasuresforreducingtheseimpactstoa
levelaslowaspossible
EMP(EnvironmentalManagementPlan):essentialtooldedicatedtotheEnvironment
preservationduringconstructionandoperations,(includingOilSpillContingencyPlan,
WasteManagementPlan,ChemicalsManagementPlan,BiodiversityManagementPlan,
Monitoring,etc.)
OtherEnvironmentalRiskAssessmentand/orModellingtools:
DREAM:riskanalysisforOperationalReleases(watereffluent,chemicals)
Various3DOilSpillContingencyandResponsemodels
Variousatmosphericdispersionmodels
226
Safetyfilters
ManagementSystems
Workonthe
JobSite
WorkingConditions
HumanBehaviors
Incident!
227
Safetyfilters
Incidentexample
Workingwith
Corrosive WorkingConditions
Chemicals Poorfittingeye
protection
HumanBehaviors
notwearingeye
protection
ManagementSystems
nosafetytraining Eyeinjury!
nowrittenprocedure
228
HAZID(HazardIdentification)
Identificationofhazardsmethod:
UseofGuidewordandprompterslist
helicopterviewrequired,zoominasnecessary
ReviewplantHAZARDS(e.g.blast),fromthefacilitiestotheneighbouringenvironment
ReviewExternalHAZARDS(natural,otherindustries,surroundingconditions)ontothe
facilities
Done,andrecorded
Normallyonce,beforeendofpreproject
CanbecomplementedbyspecificHAZIDsoncomplexsubjects
Keyattitude:openness,rigorousness,thoroughness
229
HazardIdentification
Examplesofguidewords
FIRE DROPPEDOBJECTS
Risers,livingquarters Crane,anchor,subsealines
(protectionofpeople) COLLISION
EXPLOSION Truck,vessels,boatlanding,
Sourcesofignition,release FPSO/loading,marinechannel
duration AIRCRAFT
TOXICITY Landingpath,landing
Flareswitchoff,vent,blow procedures
out... FISHING
SMOKE Trawlers,nets
Fireinventilatedarea,
Dischargedwater
230
HAZID(HazardIdentification)
HAZIDWORKSHEET
CARINAARIESOFFSHOREHAZID#1STUDY.
PriorityCategories:1.Mandatory(Immediateaction);2.Recommended(ShortTerm
action);3.Tobedeveloped(LongTermaction)
N SYSTEM/ UNIT/ GUIDEWORD CAUSE POTENTIALDEVELOPMENT SAFEGUARDS/ ACTIONS/ PRIORITY

NODE LOCATION &CONSEQUENCES CONTROLSINPLACE CONTROLSTOBEINCORPORATED
12 SUBSEA SUBSEA EXISTING Construction Potentialdamageorruptureof Nospecificprotectiontosubsea Anchor pattern to be submitted to TA 2

ITEMS PIPELINES HIDRA activities/pipes Hidraexistingpipelines. existingpipelines. marine Dept for approval.
SUBSEA laying/barge Physical&electronicsurveystobe Operating procedures to be issued by
PIPELINES anchoring performedonsitetolocateandmark contractor and validated by project.
existingpipelines. Work permits to be used when works
are carried near live installations.
(distances to be defined by TA)
SpecificHAZIDtobecarriedoutwith
TAoperations(McDermott).
13 TOPSIDES ONSHORE PROXIMITYTO Crossingof Potentialpipesdamagesor Surveyandmarkingofexistingpipes Onsitecheckingofpipesmarkings. 2

PIPELINES TRANSPORT onshorepipes ruptureandgasrelease. carriedout. Insuresafeclearancebetween
ARRIVAL CORRIDOR existingandnewpipes.
Shutdownanddepressurizationof
existingpipeswhiledrillingnewpipe
tunnel.
TAoperations(McDermott).
14 TOPSIDES ONSHORE PROXIMITYTO Crossingof Potentialpipesdamagesor Safedistancerequiredbetweennew Landfall and pipes route to be agreed 1
PIPELINES HOTEL onshorepipes ruptureandgasreleasecloseto pipesandhotelasperonshorepre by TA as per safety concept
ARRIVAL FACILITIES hotelfacilities. project. requirement with offshore and
onshore project teams.
TAalongwiththeonshoreproject
duringbasicphasepriortoEPC
award.
231
HAZANandPRA
I.HAZard ANalysis
II.PreliminaryRiskAssessment
Consistsinconsequence (PRA)
study/modellinginordertoobtain:
Thissemiquantitativeanalysisis
Safetydistancesasaresultsof:
specifictothescenarii based
Accidentalevents(credibleandmajor
releases) methodanditaimstoselecta
Continuous/emergencyoperations(e.g. limitednumberofmajorscenarii
flare,combustioneffluentsdispersion) fordetailedriskquantification:
Safetydistancesobtainedon
deterministicholesizesandeffect
thresholdsvalues.
232
RISKassessment
BYFrequency(Probability)ofoccurrenceversustime,suchas:
1peryear,1per1000years,1per10000years,1per100000years,1per1million
years,1per10millionyears
Bytype,nature,suchas:
Riskofdeathfor5hoursspenttogomountaineeringeachweekend
Riskofdeathintheindustrialactivitiesathighrisks(mines)
Riskofdeathbyroadaccident
Riskofdeathinanaccidentatworkinanindustrialactivityatlowrisk
Riskofdeathinafireoranexplosionduetoagasleakathome
Riskofdeathbylightning
Assessment:
Bymatrixranking,foraPRA,
ByQRA,quantitativeevaluation,basedonstatisticrecord
233
RISK Rankingmatrix
Likelihoodofoccurrenceofthescenarios(frequency)
101
Likely
102
(firstpriority)
Unlikely
103
Veryunlikely (tolerableif
104
ALARP)
Extremely
unlikely
105
(acceptable)
Remote
106
Moderate Serious Major Catastrophic Disastrous
Severityofconsequences
234
RISK Rankingmatrix
Impactofriskreductionmeasures
101
Likely
102
(firstpriority)
Unlikely
103
Veryunlikely (tolerableif
104
ALARP)
Extremely
unlikely
105
(acceptable)
Remote
106
Moderate Serious Major Catastrophic Disastrous
Severityofconsequences
235
HAZOP(HAZARDandOPERABILITY)
Objectives:
Identifyreactionofplantduringabnormalprocessconditions
(Malfunctionormisoperation)thatcouldcauseahazard
Checkifdesignadequatetopreventhazardoccurring
Checksafetyinterfaceswithotherinstallations,surroundings
Recordallcorrectiveactions,remedies,orremaininghazard(atanaccepted
level)
236
HAZOPreview
GUIDEWORDS MEANING TYPICALDEVIATIONS
Noflow.
Operationnotperformed.
NOorNOTorNONE NegationofIntention Operatorerror.
Operationstopped.
Noreaction
Flowgreaterthandesign.
Temperaturehigh.
Pressurehigh.
Toomuchmassofparticularmaterial.
MOREorHIGHorHIGHER QuantitativeIncrease Increasedmechanicalstress.
Highstaticcharge.
Highreactionrate.
Morereactiontime.
Lowflow.
Lowtemperature.
Lowpressure(possiblynegativepressure).
LESSorLOWorLOWER Quantitativedecrease Lowmass.
Lowreactionrate.
Lossreactiontime.
Transfertowrongaddress.
AQuantitativedecreasewith Failuretotransferallcomponents.
PARTOF onlypartofthedesigner's Failuretoachieveallobjectivesofan
intentionsbeingrealized. operation.
Misidentificationreaction.
237
PTR(ProjectTechnicalReview)
Interdisciplinaryindependentteamreviewsofthemaindocumentsor
studies,preparedbytheprojectandrelatedtoSafetyandOperationsuchas:
HAZID,ConsequenceAnalysis
Flare,ventradiationanddispersion
SafetyConcept,SOR
Hazardousareaclassification
Fire,Gasandlowtemperaturedetection
PressureProtectionandRelief
EmergencyShutdownandEmergencyDepressurization
ActiveandPassiveFireProtection
Layout
EscapeEvacuationandRescue
238
Safetydossier
Objectives
Assembleallsafetyrelateddocumentsforapermanentreference
Givetotheoperatoraclearandtraceableviewofsafetydesign
Haveasafetybasisforpossiblelargemodifications/extensions
Content
SAFETYCONCEPT(updating&revisionsincluded)Summaryincludedifneeded
HAZOP#1,2,3
PTR#1,2,3,4
Derogationrequestsandsupportingdocuments
Listapprovedsafetyrelateddocuments
Safetydocuments&studies
239
SafetyConceptReport
MainPurpose
Tostatecompanyrequirementsfortheprotectionofassets&personnel
protection
Toindicatesafetyrequirementsforimplementationinplantdesignand
engineering,operation
Toidentifyderogationtoreferencedocument(Companygeneral
specification,certification,etc.)
Tohandouttooperationsteamacomprehensivedocumentonsafetydesign
oftheirfacilities
Tohaveadocumentwithstandardcontentthatcanbeauditedandeasily
updatedbybasicanddetailedengineering
240
SafetyConceptReport
Typicalcontent
Bases:siteconditions,meteooceano,surroundings,applicable
references
Risks,identificationandpreventionprinciples
Systemisedlist
Layout
Hazardousareas
BuildingsVentilationPressurization FOREACHITEM
Safetysystemgoal
Blastprotection
Companydecision
Electricalpower(UPS,Lighting) Safetysystemperformance
Fire&Gas Applicabledocument(Spec,
ESD Derogation,)
Blowdown&relief Basicengineeringdevelopment
Detailedengineering
Drainage development
Activefirefighting Operatormodification
Passivefirefighting
Personalprotection
Actionstobeperformedlaterbybasic,detailed,operators
241
SafetyConceptReport
Detailedsafetystudiesperformed:
HAZIDStudyupdate,
P&IDReviews,
HAZOPStudy,
ConsequenceAnalysis,
ProjectTechnicalReviews,
SpecificSafetyStudies,i.e.FireandExplosionRiskAnalysis,Evacuation,Escapeand
RescueAnalysis,VesselCollisionAssessments
242
HSEmanagement
HSEreporting
243
Typicalhighrisksituations
Traffic
Downgradedsituations
Changeinprocedures
Inadequateordamagedtooling
Lifting
Workonpoweredsystems
Confinedspaces
Workatheight
Simultaneousoperations
244
SafetyrelatedtoConstructionphase
Constructionchallenges:
Riskofspecificaccidentalevent(topersonnel,equipment,etc..),with
ExperiencedContractorsselection,andyardsstartup,
QualificationofPersonnelhiredbycontractors
EffectiveCompanyandContractorseffectiveintegration,developmentoftheprojectHSE
culture
IdentificationofparticularriskslinkedtoConstruction
DefinitionofConstructionactivities,
IdentificationofpotentialSIMOPS,
DevelopmentofSafetyManagementSystem,
DevelopmentofProjectHSEPlan,
DefinitionofProjectHSEtargetsforHSEPerformance,
SelectionofContractors,reviewoftheirsafetypolicyandgoals,
ProvisionofHSEResources personnel,budgets,equipment,trainingrequirements.
245
HSEmainchallenges
Constructionchallenges(Cont):
Bringingtogetherofhundreds/thousandsofworkerslargelyunknowntoeachother,
Inanewyard/locationwithnumerousuniquehazards,
CommunicationofHSErequirements,
Trainingoflargenumbersofpersonnelinashortperiod,
Ensuingsafesystemsofwork,basedongoodpractices,
Supervisionofconstructionactivities,
Ensuringriskidentificationtoolsareproperlyandcontinuouslyused,
UsingHSEtargetsasincentivesforsafeactivitiesoftheprojectmaybediscussed.
246
Trafficaccidents
247
Inadequateordamagedtooling
248
Liftingoperations
249
Workinconfinedspaces
250
Working atheight
251
Working atheight
252
KeyaspectsinHSEmanagement
Procedurespreparation HAZID/procedurereview
&review Possibleexternalinfluencingfactors(SIMOPS)
Competencyassessment
Selectionofpersonnel Trainingofpersonnel
Toolboxtalk
Prejobmeeting Changemanagement
Permittowork(ifapplicable)
Jobauthorization SIMOPS
Levelofsupervision
Jobsupervision Compensatorymeasures
FeedbackandHSE Incidentreporting
reporting
253
HSEmanagement
HSEreporting
254
HSEreportinginprojects
ReportingcoversallactivitiescalledforbyHSEpolicyandprocedure,in
detection,classification,notification,recordandfollowupofincidentand
accident,withthefinalaimtoreducethem,anddevelopAWARENESS
Reportingisnecessarytoinformprojectparticipantsaboutthesafety
performance(company,authorities,contractors)butalsoneededinorder
to:
Toidentify,andrecord,particularproblems(recurringincidentoraccidenttypes)
Takecorrectdecisionswithregardstoremedialactions,implementthem
Tobeusedasfeedbackexamplesandlearningtoolsfortheworkforce&management,
aswellasinCompanystatisticsandrecord
Comparethespecificperformance(withothersorcontractualobligationsetc.)
AsaKPI(KeyPerformanceIndicator),withgiventarget,andmonitoring
255
HSEinprojectreporting Definitions(1)
Example of incident: the load falls into the water

256
HSEinprojectreporting Definitions(2)
Consequences
Events
Type Field
FirstAidCase(FAC)
MedicalTreatmentCase
(MTC)
Accidents
Injury
RestrictedWorkDayCase Human
(RWDC)
Incidents
LostTimeAccident(LTA) LostTimeInjury(LTI)
FatalAccident Fatality
Media
Environmentaldamageincident(ED)* Damagetoenvironment Environment
Material/ProductionLossIncident(ML)** MaterialorProductionLoss Mat/Prod
NearMissIncident Any Any

* ifhumanrealseveritylevelis 1 andmaterial/productionrealseveritylevelislowerthanorequalto
environmentalrealseveritylevel
** ifhumanrealseventylevelis 1 andenvironmentalrealseveritylevelislowerthanmaterial/productionreal
severitylevel
257
Reportingperimeter
258
Injuryrates
TotalRecordableInjuryRate
10

Accidentswithandwithoutlosttimeper
millionhoursworked
LostTimeInjuryRate
10

Losttimeaccidentspermillionhoursworked
259
Safetypyramidsexamples
260
HSEmanagement
HSEreporting
261
Majorfactorsinincidents
HUMANFACTOR:
Amajorfactorinincidents
Examplesofincidentcausesintheupstreamfield
Other
16%
Presumed
Weather HumanFactor
9% 55%
Equipment
10%
Design
10%
262
ABCforsafeorunsafebehaviour
Identifiesacts,conditionsor Reportsonresultor
systemsthatcouldcause consequenceof
incidents: Behaviors loss/accident:
Predictive Reactive
Preventive Corrective
EXAMPLES
#HazardIDsaddressed
EXAMPLES
#LTIs
#Nearmissreportsshared
#Medicaltreatments
#Safetymeetingsattended
Spillreports
#Safetyauditscompleted
Loss/Damagereports
%atriskbehaviors
Injuryfrequency
Actionstakenontheproactiveindicatorscan
beusedtochangebehaviors.
263
Reducingthefrequencyofincidents
TraditionalSafetyPrograms incident
reporting,inspections,maintenanceplans
10
TraditionalSafetyProgramswithEnhanced
Commitment training,orientations,
investigations,supervisor'sroles,communications
AdvancedApproacheswithSupporting
5 ManagementSystems analysis,measurement,
accountability,involvement,values
ModernizedApproaches behavioral
3 observationapproaches,human
factors,culturalalignment,balance
TIME MaturityofSafetyApproach
264
Attitudeslinkedtohumanfactors
Examplesofriskybehaviorsandsituations
Hard
Norespectofdrivingcode,conditions,
Drivingusingmobilephone,
Useofbrokentools,
Ignoranceofconditions(weather,seastate,softground,etc.)
Soft
Lackofattention,concentration
Expect,requesthelpfromnonqualifiedperson,
Ignoreworkpreparation,foroneself,asgroup,inparticularsafetybriefing
Assumeeveryoneunderstandthesituation,
Neglectadversephysicalconditionofparticipant(s)(tiredness,sickness,strength)
265
Summary
Thesafetyoffutureoperationsstartswithasafedesign
Asafetyconceptreportmustbeproducedtodetailallsafetyprecautionsor
measuresbuiltintothedesign
Risksandconsequencesshouldbeassessedthoroughlyandunacceptablerisks
shouldbeeithereliminatedormitigatedtoanacceptablelevelinaccordancewith
theALARPprinciple
Theimpactoftheprojectontheenvironmentshouldbeassessedandaninitial
baselineestablished
Therisktopersonnelishighestduringtheconstruction/installationphase.An
actionplanshouldbeestablishedtomonitorthoseactivitiesandHSEpersonnel
assignedinsufficientnumbers
Theprojectsafetyperformanceisakeyfactortobeconstantlymonitoredbytop
management.HSEperformanceshavebeenconsiderablyimprovedthanksto
persistentefforts,butvigilancewillalwaysbenecessarytomaintainandimprove
them
266
Quality
267
Quality management
Foreword
Mainobjective
ContractorandCompanymightnothavethesameobjectives
YetCompanyneedstobesatisfiedbyitscontractorsandvendors
Maintoolsandmeans
Process
Performanceindicators
Audits
268
Qualitymanagement
Aboutquality
QualityManagementprinciples
ProjectQualitymanagement
Planningqualitymanagement
PerformingQualityAssurance
PerformingQualityControl
269
QualityManagementPrinciples
QualityManagementhasfourmaincomponents:
Qualityplanning
Qualityassurance
Qualitycontrol
Qualityimprovement
ForCompany during contract phase
Quality SurveillancereplacesQuality Controlinorder tosuperviseContractor
QualityManagementdoesnotonlyaimtoensure'goodqualityofaproduct
butrathertoensurethatanorganizationorproductisconsistent.
QualityManagementisfocusednotonlyonproduct/servicequalitybutalso
onthemeans toachieveit.
QualityManagementusesqualityassuranceandcontrolofprocessesaswell
asproductstoachievemoreconsistentquality.
270
Definitions
QualityAssurance
QualityAssuranceisthemanagementprocessofsystematicplanning,implementing
andevidencingorganizationalprovisions,which,ifproperlyapplied,willreasonably
assureCUSTOMERthatthequalityofthefinalproductwillbeachievedinlinewiththe
Contractrequirements
QualityControl
QualityControlistheCONTRACTORoperationalprocessofinspectingandtesting
individualcomponentsorassembledunitsorpackagestochecktheconformityto
Contractrequirements,complementedbytherecordingofassociateddata
QualitySurveillance
QualitySurveillanceistheCOMPANYprocessofmonitoringatsecondlevelthatthe
QualityAssuranceandQualityControlareproperlyimplementedbyCONTRACTOR
271
Companymanagementsystem
Definition
Globalmanagementsystem(organization,responsibilities,processesandresources)to
steerandcontrolthecompanyactivitiesinanefficientandresponsiblemanner
describedinastructureddocumentation.
Notes
ApplicationismandatorytoallOrganicpersonnel
EfficientandresponsibleencompassesthecompliancewiththeapplicableRulesand
RegulationsandCorporateReferential
TheCMScontainstheHSEMSandanytypeoforganizedsystemcontributingtothe
mainobjective(includingInternalControl)
Benefitsofoperatingsuchasystem:
Sharingcorporatevalue
Policiesandbusinessobjectives
Clarifyingtheorganization
Settingcommonrulesforthedaytodayactivities
272
ThematicviewsacrossCMSdocuments
Quality InternalControl
Safety IT&Communication
Environment Policy SocialReponsibility

Charters
Health Sustainable Development
Managementand
Security Organization Ethic&Integrity
Generaland
Transverse
Specificdocuments
Workingdocuments
NOTES: OHSAS18001:2007:OccupationalHealthandSafetyAssessmentSeries
SA8000:"SocialAccountability8000"standard
SOA:SarbanesOxleyActof2002(financialreportdeficienciesidentification).
ISO26000:Guidanceonsocialresponsibility (previously:SD21000)
273
KeyQualitystandards
2015 2015 2009
2010
2003
Designa simpleISO9001compatibleSystem,
helpingimplementlocallytheProjectPolicy/commitments/objectives
274
KeyQualitystandards
275
TheBasicprincipleoftheQualityManagement:
ThePDCA cycle theimprovementloop
PLAN :
- Policy
ACT :
- Objectives
- Management reviews
- Action plans
Plan - Improvement directions
Act
DO : Do
Check
- Run Corporate operational CHECK :
and support processes - Reviews / Audits
- Implement action plans - Performance indicators
- Dashboard
276
ProjectQualityManagement
Qualityisthesustainablesatisfactionofclientsbyrespecting
technicalconformity
budget
deliverydate
AboveallQualitymeans:SATISFACTION
277
ProjectQualityManagementProcesses
CostBenefit Analysis
QualityManagementPlan
Cost of Quality (COQ)
ProcessimprovementPlan
Seven Basic Quality Tools
PlanQualityManagement QualityMetrics
Benchmarking projects Qualitychecklists
Design of Experiments ProjectDocumentupdates
Statistical Sampling
Seven Quality Control tools Changerequests

PerformQualityAssurance Quality Audits PMP/PEPupdates
Process Analysis ProjectDocumentUpdates
QCmeasurements
Validatedchanges
Seven Basic Quality Tools
Verifieddeliverables
Statistical
sampling Workperformance
PerformQualityControl Inspection information
Approved Change Requests Changerequests
Review PMP/PEPupdates
ProjectDocumentUpdates
Lessonslearnt
documentation
Quality Assurance focuses on nonquality prevention and process improvement

Quality Assurance is affected by the results of Quality control 278
Quiz 1
Quality is
A. Meetingandexceeding thecustomer's expectations
B. Adding extrastomake thecustomer happy
C. Thedegree towhich theproject meets requirements
D. Conformance tomanagement's objectives
Solution:C
Explanation
Exceeding expectationsoradding extrasmight haveacost/time/HSEimpact
279
Qualitymanagement
Aboutquality
280
QualityManagementprocess
Mainobjective
Toprovide guidanceanddirectiononhow quality will be managed and
validated throughout theproject by
Identifying quality requirements and/orstandardsfortheproject andits deliverables
Documenting howtheproject will demonstrate compliancewith relevantquality

requirements and/orstandards.
281
QualityManagementprocess
Input
282
Sevenbasicqualitytools
Causeandeffect
diagrams
Flowchart
Checksheets
Paretodiagrams
Histograms
ControlCharts
Scattered diagrams
283
Example ofcontentofaProjectQuality Plan
1. Definitions andabreviations
2. References andapplicabledocuments
3. ProjectQuality ManagementSystem
4. Managementresponsibility PLAN
5. Resourcemanagement
6. ProjectExecution
DO
7. Control CHECK
8. Continous Improvement
ACT
284
ProjectObjectivesfromaqualitypointofview
Measurableobjectives
Avoid"missionstatements
Qualitycharter
ItisimportanttoknowwhereCPY/CTRstandswithrespecttoobjectives
Continualmanagementofdashboard/indicators
ForaglobalProjectviewspecificindicatorsperactivitytypeshouldbedefined
HSE/Quality/Risk/ProjectManagement
Objectivesdefinedrightatthebeginninginorderto
Empowerprojectteam
Allowacoherentprojectorganization
EnhanceteamspiritduringtheProject
Objectivesshouldbebothrealisticandchallenging
285
TypicalProjectobjectives
AstrongSafetyManagementPhilosophyand QMS/Procedures
Procedures
SkilledandmotivatedProjectTeam Visits,selection,recruitment,indicator
turnover
ExcellentcommunicationwithintheProjectTeam Communicationactivities
WellknownanduserfriendlyQuality
ManagementSystem QAInduction
Continuousimprovement Audit,ManagementReview
Stronginterfacemanagement Dedicatedteammemberininterface
EffectiveManagementofRisksandOpportunities DedicatedteammemberinRisk
EffectiveManagementofChange
CPN,SCN,REXFilter/Register
EfficientDocumentationsurveillance
DCC,QC
DocumentManagementandControl
DedicatedteammemberinDCC
QualitySurveillanceandInspection
PSP/PIM
EffectiveFieldOperationspreparation
Anticipationofactivity+participationtothe
project
Definingtherelevantindicators Insuranceofaccurateobjectives
286
ProjectQualityOrganization
Necessityofqualityindependence
AsforHSE,eachProjectteammemberworkstowardsqualityachievements
287
Examplesqualityindicatorsforbusinessprocesses
Pilot :A
Pilot :B
288
Examplesqualityindicatorsfortechnicalprocesses
Pilot :J
Pilot :K
Pilot :L
289
Quiz 2
Who is ultimately responsible forquality managementontheproject?

A. Projectengineers
B. Theproject manager
C. Theproject Quality manager
D. Allteammembers
Solution:B
Explanation
Althougheachpersonworkingontheprojectshouldchecktheirownwork,theproject
managerultimatelyhastheresponsibilityforqualityontheprojectasawhole
290
Quiz 3
Paretochartshelptheproject manager
A. Focusonthemost critical issuestoimprove quality
B. Focusonstimulating thinking
C. Exploreadesired futureoutcome
D. Determine ifaprocess is outofcontrol
Solution:A
Explanation
Fishbone diagrams areoften used tostimulate thinking andtoexploreadesired future
outcome
Determining whether aprocess is outofcontrolis afunction ofcontrolcharts
Only focusing oncritical issuestoimprove quality relatestoParetocharts
291
Qualitymanagement
Aboutquality
292
QualityAssuranceprocess
Objectives
Toensure that appropriate quality standardsandoperational definitions are

used by
Auditing thequality requirements andtheresults from quality controlmeasurements
Preventing defects through theplanningprocesses
Tofacilitate theimprovement ofquality processes
293
QualityAssuranceprocess
Input
Improvements in order to take corrective action, preventive action, or to perform

defect repair
PMP Updates (Quality, Scope, Schedule, Cost Management Plan)
294
Sevenbasicqualityassurancetools
Affinity diagrams
Affinity Diagram PDPC Interrelationship digraphs (Mind mapping)
Process decision
programcharts (PDPC)
Tree diagrams Prioritization matrices Networkdiagrams
Interrelationship
digraphs
Tree diagrams (WBS,
OBS,PBS)
Matrixdiagrams
Prioritization matrices
Activity network
diagrams
Matrixdiagrams
295
Processtoolstoperformqualityassurance
Quality Audits
Aqualityauditisastructuredandindependentreviewtodeterminewhetherproject
activitiescomplywithorganizationalandprojectpolicies,processesandprocedures
Process Analysis
Process analysis follows thesteps outlined intheprocess improvement plantoidentify
needed improvements
Thisanalysis also examinesproblems experienced,constraints experienced,andnon
addedvalueactivities identified during process operation.
296
Quiz 4
Allofthefollowing result from quality auditsexcept

A. Determination ofwhether project activities comply with organizational policies
B. Improved processes toincrease productivity
C. Creation ofquality metrics
D. Confirmationoftheimplementation ofapproved changerequests
Solution:C
Explanation
Quality metrics are an output of the Plan Quality process
They are an input of the Perform Quality Assurance process, which is the process that
features quality audits
297
Qualitymanagement
Aboutquality
298
QualityControlprocess
Objectives
Toassess performanceandrecommend necessary changesby
Identifying thecausesofpoor process orproduct quality
Recommending and/orimplementing actionstoeliminate them
Ensuring that project deliverables andwork meet therequirements specified
Monitoringandrecording results ofquality activities
299
ProjectQualitySurveillancevs.ProjectPhase
300
Quiz 5
Allthefollowing aretools toperform quality controlexcept

A. Inspection
B. Cost ofquality
C. Paretochart
D. Fishbone diagram
Solution:B
Explanation
Inspection, Pareto charts, and fishbone diagrams are tools of perform quality assurance
or perform quality control (depending on how they are used)
Cost of quality is part of the quality plan to make sure the project is not spending too
much to achieve a particular level of quality
301
Quiz 6
Consider several ongoing activities onaproject andimagineyou aregetting

concerned abouttheaccuracy ofprogress reporting byyour teammembers
Howtoverify ifthere is aproblem?
A. Quality audits
B. Risk quantificationreports
C. Regression analysis
D. MonteCarloanalysis
Solution:A
Explanation
Quality audits are a necessary part of the Quality Assurance process
They help you assess whether the processes are being followed correctly on the project
or not
302
Qualitymanagementintherealworld
7.Execute
AllOther 6.Integration
Project
Knowledge ofProject
Management
Areas Needs
Plan
10.Integrated
1.Customer 8A.QualityControl 8B.QualityAssurance ChangeControl
Determine
definedProject Measure Audits
Relevant
Requirements Deliverables Processbeing ChangeControl
Organizational
AgainstthePlan followed Board(Ifrequired)
ProcessAssets
andMetrics LessonsLearned
2.Team
Clarifies
Project 4.PQPAvailable
5.PQP
Requirements Quality 11.AdjustPlansand
Additional
Standards, WorkAsNeeded
Standards 9.ChangeRequests
Policies,
Procedures Preventiveand
Proceduresand
andMetrics CorrectiveActions
3.Project Metrics
DefectRepair
ScopeDefined
LessonsLearned
12.Work
CompletedAnd
HappyCustomer
Determine
Quality
Enterprise
Assuranceor
Relevant
QualityControl
Environmental
Department
Factors 13.Organizational
ProcessAssets
Quality Processes Improved
303
ProjectQualitySurveillance
CertificationandClasification
Certification
formalprocedurebywhichanaccreditedorauthorized
organization(personoragency)assesses,verifiesand
attestsinwriting(byissuingacertificate)
theattributes,characteristics,quality,qualification,or Registrationproviders:
statusofindividualsororganizations,goodsorservices, BureauVeritas
proceduresorprocesses,oreventsorsituations,in Det NorskeVeritas
LloydsRegisterofShipping
accordancewithestablishedrequirementsorstandards AmericanBureauofShipping
MarineWarrantySurveyors(MWS)arenotcertificationbodies Germanischer Lloyd
assuch(theirfirstobjectiveistoprotecttheinterestsof RussianBureauofShipping
RecognizedMWS:
InsuranceCompanies),buttheiradviceorinstructionsare
NobleDenton
valuable LondonOffshoreConsultants
FalconerBryan & Associates
Classification(orRegistration) GlobalMaritime
procedurebywhichacertifiedorganizationrecordsa
product,processorservice,inanappropriatelistpublicly
available.
e.g.organizationconfirmingtheclassunderwhichavesselis
registered.
304
Verifyingparties
Firstparty
VerificationsareperformedbytheEntityontheirownoutputorontheirbehalf
e.g.departmentwithintheorganization
QCdepartmentofContractor
Secondparty
Verificationsareconductedbythecustomerorbyothersontheirbehalf
Companysurveillance
Thirdparty
Verificationsareconductedbyexternal,independentorganizations
suchasthoseISO9001orISO1400certified
IVB:IndependentVerificationBody
305
QualityControlPlan
TheQCPisthedocumentdescribingthecontractoroperational
processesofcontrol
Review
Verification
Qualification(incaseofspecialprocesses)
Inspection
Testingactivitiesthroughoutallphasesoftheworks
QCactivitiesare1stpartyresponsibility
306
Inspection&TestPlan
TheITPistheconsolidateddocumentissuedbytheContractor
listingallthemanufacturingactivitiesofaunit
executionworksandQCactivities
andprovingthelinktotheevidencesoftheirsatisfactoryperformance
associatedQualityRecords
Eachlistedmanufacturingactivityshallbethepurposeof
checks/verificationsasdefinedbytheITP
Evidenceofacceptanceatcompletionoftherelatedactivityisessential
cosignaturesofthevariousentitiesinvolved
Atendofexecution,theITPshallbeformallyapprovedasproofof
satisfactionofallmanufacturingactivitiesperformed
cosignaturesofthedifferentparties
Inspectionreferstoamanufacturingprocess
307
SurveillancePlan
TheSurveillancePlanisaconsolidateddocumentlisting
allthedifferentactivitiesperformedonacontractedwork
Project
Package
WorkPackage
Equipment
andtheassociatedsurveillanceactivitiestobeperformedinordertoensurethe
CustomerthatworkissatisfactoryperformedbySupplier
TheSurveillanceplanconsiderssuppliersQA/QCactivitiesandtheir
output(records)
Surveyactionsfocusoncriticalitemspreviouslyidentifiedassuchwithin
riskanalysis
Whennecessary,specific/reinforcedsurveyactionsbyclientaredefined
inaddition/complementtothoseplannedbysupplier
Surveillanceactivitiesaretheresponsibilityofsecondandthirdparties
308
Surveillancephilosophyandstrategy
Objectives
Toallowtheprojectteammemberstoreactquickly
TocomplementQCactivitiesplannedbycontractor
TosubstitutetoinadequatecontractorQCactivities
Why?
BecauseContractorsandOperatorshavedifferentperspectives
BecauseControl/Surveillancecannotbeimprovisedonceactivitiesareontheirway
Topreparethesubcontractsandtheirfollowupmechanisms
Toanticipateworkvolumeandresourcestocoverinspection
TosupplementContractorandtakeoverincaseofitsfailure
When?
Duringbasicengineeringphase
Onceequipmentlistsareavailable
309
Surveillancephilosophyandstrategy
Keysurveillanceprinciples
QualityauditsandguidanceonQualityissues
QualityControlassessment(atmanufacturingsites)
Documentreviews
ConsiderationwithregardstoCertifiedContractors
AnyISOcertifiedcontractorislikelytohaveanadvantageovertheothersintermsof
qualityunderstanding
qualitymethodology
However,Qualityisalsoanattitudeanditisnotgrantedforever
FeedbackshowslotsofdeficienciesinQualityManagementSystemsofISO9001
certifiedContractors
310
Surveillanceaudits
Aqualityauditisastructuredandindependentreviewtodeterminewhether
projectactivitiescomplywith
Organizationalandprojectpolicies
Processes
Procedures
Keyrequirements
Aformalizedprocess/methodology
Auditquestionnairetobefollowed
AsperISO19011standard:Guidelinesforqualityand/orenvironmentalmanagementsystemsauditing
Auditadaptedtothepurposeofthescopeofworkintermsofcontent,durationand
auditors
Feedbackfromotherprojectsand,ifpossible,fromothercompaniesandcontractors
Beingstringentonthedeficiencies
311
ProjectSurveillancePlan
Consolidateddocumentlistingallthequalityassuranceandquality
controlactivitiesandoftheirsatisfactoryperformance
RefertoGSEPPJC503
EachPSPtopiciscosignedbyentitiesinvolved,atcompletionofthe
relatedactivity
PSPiscosignedatendoftherealization&satisfactoryperformanceof
allactivities
OperationalorExecution Referencedocument ThirdParty
Id Responsibility CTRInspection CPYSurveillance OUTPUT
Activity Specification/Procedure/ QCProcedure Surveillance
No Executedby program Program Qualityrecord
instruction Acceptancecriteria Program
st nd rd
1 PartyQC 2 Party 3 Party
1,1 inspection Surveillance Surveillance
points points points
Companysurveillancepointsdefinitionrequirestobeintrusive
312
QualitySurveillanceProgram
BasedonSurveillance(orInspection)activitiesdefinedinaProject
SurveillancePlan,globallyorperunit(package/equipment/module)
Fivetypesofsurveillanceorinspectionpointsmaybedefined:
Information:documentsrelatedtotheexecutionofarelevantpartoftheWorkare
submittedtotheProjectforinformationonly
Review:documents(orresultsofcontrolsand/ortestsperformed)aresubmittedtothe
Projectforreview,beforeexecutionoftherelevanttaskorpartoftheWork
Monitoring:projectteam(orarepresentative)attendstheexecutionofthetask,either
continuallyoroccasionally
Witness:aProjectrepresentativeisexpectedtoattendanactivitybuthisabsenceat
thisstagedoesnotstoptheexecutionoftherelevantpartoftheWork.TheSupplieror
Contractorisrequiredtogiveanadvancednoticeasagreedbycontract
Hold: theabsenceoftheProjectrepresentativeatthisstagehaltstheexecutionofthe
relevantpartoftheWork,untilreceptionofCOMPANYreleasenotice;Supplieror
Contractorisrequiredtogiveanadvancednoticeasagreedbycontract
313
ExampleofqualityRecords
ApprovedContractorsQualityplans NCRsandwaiverrecords(accepted
QC,Inspection,Test,Surveillance andrejected)
Materialcertificates Thirdpartycertificates&reports
Mil,calibration designappraisals,Verifications,
Classifications,Certifications,firetest,
Qualificationofprocessesrecords
cranes
WPS,NDT,heattreat,painting,Weld
repair Contractualcertificates
RFC,RFSU,Transportation,Handover,
QCproceduresandrecords
Loadout,Acceptanceandassociated
visualinspections,NDT,checklists punchlists
Surveyreports Overallprecommissioningand
vibration,alignment,weight commissioningoutputanddossiers
Traceabilityrecords (evenifalsoconsideredelsewhere)
marking,markup
Trackingregisters/Actionlists
314
Summary
Qualitystartswithaproperdefinitionof
Objectives
Responsibilities
Accountabilities
andmanagementprocedures
Qualityauditsverifytheimplementationoftheprocedures
ThebasictoolforqualitymanagementisthePDCAimprovementloop
Thesurveillanceplanisanessentialtooltocheckthatthe
important/criticalproductsmeettherequiredspecifications
315
Summary
Reminder:Qualityconsistsinsatisfyingclientsneeds
"True"needs="ideal"product
Client
Implicitand/or Expressedneeds
forgotten
Perfectionism
Consideredneeds
Negligence
"Supplier" Satisfiedneeds=Productdelivered
nonqualityby Obtainedquality nonqualityby

underresponse overresponse
Idealquality
316
Risks
317
Risk management
Foreword
Mainobjective
Identifypotentialeventsthatcanhaveanimpactonprojectexecutionintermsof
Timedelay
Costoverruns
Qualityissues
Accidents,incidents
Maintoolsandmeans
Quantitativeandqualitativeriskanalysis
Riskresponsestrategies
318
Risk management
Aboutrisk
Riskdefinition
Whymanagerisks?
Planningriskmanagement
Identifyingrisks
PerformingQualitativeRiskAnalysis
PerformingQuantitativeRiskAnalysis
PlanningRiskResponses
ControllingRisks
319
Whenariskismaterialized
Causes
Event:Deep WaterHorizonExplosion&Oil Spill
Consequences
320
Whenariskismaterialized
Causes
HeavyAdverseweather
Enginefailure
Event
VesselwithEPCContractorcontainersgroundedneartheentranceoftheportchannel
(Alexandria)
Lossofcriticalequipment
Consequences
Scheduleslippage
ReManufacturingofequipment
321
Toqualifyaneventasariskitmust
322
Onthepositivesideopportunitiescanbedetected
Thesame evaluation techniquescan be used forrisks andopportunities

323
What is Risk Management?

asperEngineering&ConstructionRiskInstitute(ECRI)
1. Theprocessassociatedwithidentifying,analyzing,planning,tracking,and
controllingprojectrisks.
2. Thelifecycleprocesswhichincludesidentification,assessmentand
analysis,butaddstheidentificationandimplementationofproactive
actionswhichareintendedtomitigaterisksandenhanceopportunities.
Themanagementprocessalsoincludesmonitoringtheefficiencyof
plannedactions andthecontinuousupdateofallassessmentsasthey
changeduetotheimplementationofactionsand/orchangesinthe
projectenvironmentwiththepassageoftime.
324
RiskPerception:HumanandEnterpriseFactor
BEHAVIOURAL&CULTURALDIFFERENCES
RiskAttitudeisinfluencedbyAppetiteandPerceptionsoftheProjectStakeholders
(Company,Contractor,SubContractors,Vendors)
ViewofRiskisinfluencedbyAttitudeandPerceptionsofProjectTeamandIndividuals
RiskAverse,RiskNeutralandRiskSeeking
TherecouldbeCulturalorHistoricalAspects
TherecouldalsobeGeographic/Regionalaspects
325
ProjectRiskManagementObjectives
Whataretheobjectivesofriskmanagement?
326
Risk management
Aboutrisk
Identifyingrisks
ControllingRisks
327
Riskassessment
HazardIdentification
RiskCharacterization
likelihood Gravity
Risk
Acceptability
Cost/benefits
Prevention Mitigation
analysis
Followup&residualrisks
328
ProjectRisk KeyStakeholders
Client
Sub
PROJECT
Vendors
Contractors
RISKS
Contractors
&Partners
329
LevelandtypologyofriskvariesduringProjectLife
Basicdesign Detaileddesign Procurement Installation Commissioning

Manufacturing
Levelofrisk
Finish
Projectknowledge
Unknown
Known:
Contract
Basicdata
Projectcontrol
referencetools Start
Progress
Thelevelandthenatureoftheriskschangewiththeprogressoftheproject
330
RiskManagementProcess(APM)
Theprocesswherebyresponsestotherisksareformulated,justified,planned,
initiated,progressed,monitored,measuredforsuccess,reviewed,adjustedand
closed APM
Plan
331
Risk management
Aboutrisk
Identifyingrisks
Riskscharacterization
RisksIdentification
Howtostructurerisks
ControllingRisks
332
ClassificationofRisk/UncertaintySpectrum
NoInformation Partial Information Complete Information
Unknown Unknown Known Knowns

Unknowns Knowns Unknowns
TOTALUNCERTAINTY GENERAL SPECIFIC TOTALCERTAINTY

UNCERTAINTY UNCERTAINTY
Unforeseeable
Unquantifiable SCOPEOFRISKMANAGEMENT NotaRisk
Unmanageable
SourcePMIPMBOK
333
ClassificationofRisk/Uncertainty Spectrum
KnownUnknownRisk(SpecificUncertainty)
TheserisksincludeitemswhichrelatetoAccuracy,GrowthandDesign
Developmentoftheworkandelementsandconditionswhichcannotbefully
definedorassessedatthetimeofestimatepreparation.
DegreeofProjectdefinition,estimatingmethodology,design/takeoffallowances,
escalationandimpactofunusualbutforeseeableaspectsandcircumstances
KnownUnknownRisksarecoveredbyAllowances(allowancesarepartof
estimatingtechniqueandinnowayconsideredascontingency)
Companyexperienceandlessonslearnedareusedforimpactdefinition
334
ClassificationofRisk/UncertaintySpectrum
UnknownKnownRisk(GeneralUncertainty)
Theserisksincludethosewhichcanbeforeseenorareknowntoexistwith
varyingdegreesofcredibilityandassessedprobabilityofoccurrence
Examplesaresubcontractorsclaims,outofsequenceworking,deliveryslippage,
liquidateddamages,remedialworkunderguaranteeetc.
Managementjudgment,lessonslearnedandqualitative/analyticaltoolsare
usedtoassessimpact
UnknownKnownsarecoveredbyContingencyandFundedLiabilities
335
ClassificationofRisk/Uncertainty Spectrum
UnknownUnknowns(TotallyUncertain)
Theserisksincludethosewhichhaveneverbeenheardoforareeitherso
rareandunlikelyastobeunforeseeable,cannotbepredicted,are
unquantifiableandcompletelyoutsidetheprojectstakeholderscontrol
Examplesarepandemics,terrorism,economicdislodge,naturalphenomenon,piracy,
AIDS,regionalconflicts,lossofequipmentatsea,lockout,currencydevaluations,strikes
andthelike
UnknownUnknownsareeitheravoided,insuredwherepossibleorcovered
bywordsinthecontract
336
Qualitativeanalysis Riskscharacterization
337
WhatisaRBS?
RiskBreakdownStructure
ARBSisasourceorientedgroupingofrisksthatorganizesanddefinesthetotalrisk
exposureofaproject(APM)
Characteristics
Hierarchical
Descendinglevelsaremoredetails
Risksassessmentscanbesummarizedtothenextlevel
Objectives
Organizethreatsandopportunitieswithincommonframeworktoassesstherisk
exposureofaproject
Supportstrategicandtacticaldecisionmakingwhenmanagingrisks
Enhanceriskidentification
Outcomes
Summaryreportscanbegeneratedacrossmultipleprojects
Projectriskprofilescanbecomparedandbenchmarked
Riskscanbecategorizedwithinacommoncorporatestructure
338
Checklistforriskreview
RISKCATEGORY
Health
HSE&S
Safety
Level 3individualriskeventsidentifiedforprojectregister&action
Environment
Level1Category usedforconsolidationperOECorganization
Level 2Categoryusedfortheriskregister(RMSandRAW)
Security&Political
Technology
DESIGN
DesignBasis
Engineering
Procurement&MaterialManagement
Subcontracts
EXECUTION
Construction&Fabrication
AssetTransportandInstallation
HookupandCommissioning
Client
Partners
MANAGEMENT
Economical/Financial
Contractual&Legal
Interfaces&Management
Schedule
339
Risk management
Aboutrisk
Identifyingrisks
Riskprobabilityvsimpactassessment
Risksmatrix
ControllingRisks
340
Evaluate:Qualitativeriskassessment
RiskRating= Severity x Probability
Health&
Safety
VeryUnlikely
Unlikely
Company Social&
Possible
reputation Security Likely
VeryLikely
Impact
Quantitative
impact:
Environment
Schedule,
Cost
Performance/Q
uality
341
Evaluate RisksRatingandSorting
Define
Probabilityofoccurrence
Levels&Criteria
Level Criteria Factor
Very low < 10 % 1
Low 10% to 30% 4
High 30% to 70% 7
Very high > 70% 9
342
Definelevels Impacts
foreachcriteria CostImpact
ScheduleImpact
Level Criteria Factor Level Criteria Factor
Very low < 1 Mois 1 Very low < 50K 1
Low 1 3 Mois 4 Low 50 100K 4
High 3 10 Mois 7 High 100 1000K 7
Very high > 10 Mois 9 Very high > 1000K 9
343
Criticality=ProbabilityfactorxHighestimpactfactor
Criticality
Risk Probability Impacts Criticality
344
Evaluate RisksratingandSorting
Highcriticality Definethelimitsof
Actionplanneeded
thethreecriticalities TheHigestimpact
categories VeryLow Low High VeryHigh
Mediumcriticality Factor 1 4 7 9
Actionplansuggested VeryHigh 9 9 36 63 81
Probability
High 7 7 28 49 63
Lowcriticality
Low 4 4 16 28 36
Evolutiontobemonitored
VeryLow 1 1 4 7 9
Applythecategories
intheregisterand
findthecriticality
345
EstablishaRiskRegisterwithriskreducingmeasures
346
Risk management
Aboutrisk
Identifyingrisks
ToolsforQRA
UseofQRAforcontingenciescalculations
ControllingRisks
347
Asimplifiedapproach:ExpectedMonetaryValueofrisks
ExpectedMonetaryValueistheprobabilityweightedaverageofallpossible
outcomesandiscalculatedas
EMV=PxI
QuantitativeRiskAnalysisForm
Risk Activity Probability Cost EMVofthe RiskmovedintoPlan
Impact Cost RiskResponse
14 B 30% $60.000 $18.000 Yes
13 C 50% $40.000 $20.000 Yes
21 B 25% $10.000 $2.500 No
6 E 15% ($30.000) ($4.500) Yes
15 A 15% ($90.000) ($13.500) Yes
TotalExpectedMonetaryValue $22.500
348
AnexampleofEMVcalculation
Risk n RISK Financial Impact Probability Provision

Duplication or no numbering of the equipment assigned to the project in relation to
Tech 1 1 000 10% 100
equipment already on site
Tech 2 More trucks transporting hazardous products on a single road in poor condition 500 5% 25
Tech 3 Production line break in the plant 500 10% 50
Tech 4 Start-up of critical installations without totally controlling the related risks 1 000 5% 50
Inadequacy of current firefighting equipment (operational fire hydrant, etc.), combined
Tech 5 10 000 5% 500
with more work and more employees
Tech 6 Insufficent control of worksite vehicles on the worksite 500 2% 10
Complex local regulations for obtaining permits (land, construction, operation, etc.),
further complicated by the language of the country, with frequent additions and
Tech 7 10 000 50% 5000
modifications to regulations and even differences between local and French regulations
(e.g. on asbestos)
Tech 8 Obligation to use materials/equipment certified to local regulatory standards 2 000 10% 200
Tech 9 Lack of a safety culture in the personnel of local JV, Company and subcrontactor 200 20% 40
Tech 10 Feedback insufficient to understand and control the current plant process 4 000 20% 800
A restrictive work environment, with PSE sometimes not adapted to the working
Tech 11 500 5% 25
conditions required by the company
Business 1 Defective maintainability and operability of facilities designed by the project 2 000 5% 100
Business 2 Frequent changes by internal client impacting the specifications 4 000 50% 2000
Signing of contracts before technical specifications & Legal doc issue are finalized
Business 3 2 000 50% 1000
because of fast-track planning
Business 4 Requirement to buy 60% of material in country and 90% of intellectual services 1 000 10% 100
A tracky economy in country : Insolvency / availability of suppliers in time (spares,
Business 5 2 000 10% 200
maintenance)
Business 6 Lack of "As Constructed" technical documents to date 3 000 20% 600
Co-activity of the operator and the project subcontractors, with procedures that are
orga 1 6 500 5% 325
currently insufficient for the execution of the project
strat 1 Additional scope of work (landfill, pipe & buildings revamping,) 30 000 50% 15000
26125
349
Anothertool:MonteCarloMethod
350
Schedulequantitativeanalysis Createamodel
Usetheprojectscheduleoraspecificschedulefortheanalysis
351
Quantitativeanalysis Createamodel
Duration
Uncertainties
Minimum Maximum
duration duration
Rangeofuncertainty
Task +
Probable
duration
352
Quantitativeanalysis Createamodel
Determinetheshapeofuncertaintyspreading
Theshapeisselectedaccordingtothecharacteristicoftheuncertainty
Duration
Uncertainties 95 100 130
Triangular
Minimumandmaximumdurationsarenotlikelytobemet.
Theintermediatedurationisthemostprobable
Beta
Assumingthatmanyrealworldphenomenaare
normallydistributed.
producesacurvesimilartothenormalcurveinshape
Task +
Rectangular
Everydurationareequallylikelytohappen
Task +
353
MonteCarlosimulations
Duringeachiteration,foreachtask,adurationisrandomlyselectedwithinthe
shapeofthedurationprofile
10jours
20 9jours
19 27
12 18 26 33 14jours
11 17 25 32 38
17jours
6 10 16 24 31 37 42
5 9 15 23 30 36 41 45 10jours
2 4 8 14 22 29 35 40 44 47
1 3 7 13 21 28 34 39 43 46 48 Etc.
Min Probable Max

354
Quantitativeanalysis TheMonteCarlomethod
Foreachiteration x1000 Arangeofend

corresponda dates
Thenumberof
specificsetof Aseriesofdifferent
iterationsisinthe
durations criticalpaths
thousands
1path Output
355
ScheduleAccuracy&Risks
Schedule:42monthstoRFSU
ScheduleteamperformsascheduleRiskAnalysistobeconsideredintheCostEstimate
Model
356
Contingencycostanalysis&recommendation
Recommendationoflevelofcontingencies
Recommendation
P80%
Probabilityofnot
overrunningthebase
costestimate
BaseEstimate
Pxx%
=ContingenciesinMEUR
357
Quantitativeanalysis Cost
Analyse de sensibilit
Conjoncture lie au comportement des entreprises

0.676
de march de travaux
Evolution Matire premire et cot de main d'uvre 0.274
Conjoncture lie au comportement f ournisseur dans

0.249
un contexte de march satur - equipement
Evolution du scope df ini la f in du DIB 0.237
Conjoncture lie au comportement f ournisseur dans

0.147
un contexte de march satur - matriel secondaire
Df aillance lourde f ournisseur 0.126
Pilote sur ORV pour mesure d'encrassement -

0.099
volution du design
Productivit durant les phases de constructionsur

0.093
site plus f aible que celle estime 75%
Arrt de chantier pour raisons diverses 0.073
Monopole sur f ourniture des vaporiseurs - ORV 0.069
Levelofsensibility -1 -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1
Levelofcontributionofeach Coefficient de rgression
costitemtotheoverallcost
358
Referencetools
Palisade@Risk6.0orOracleCrystalBall
MicrosoftExcelandMsProject
Usedforcostmodelling
OraclePrimaveraRiskAnalysis(exPermaster)
Usedmainlyforschedulemodelling
359
Risk management
Aboutrisk
Identifyingrisks
GenericRiskresponses
Treatmentofopportunities
ControllingRisks
360
GenericRiskResponseStrategies
Whentheriskcannotbe
reducedoreliminatedwhere
Deletecauseand/orconsequence
noactionisthebetteroption
Prevention&Mitigation:controltheriskby Transferringarisktoanotherparty
reducingitsimpactorprobabilityofoccurrence isoftenpartial
361
GenericRiskResponseStrategies
Avoid
Eliminatetheuncertaintybyeliminatingthecauses:e.g.bynotbidding,change
technology,executionstrategyorcontractdisclaimers/exclusions
Transfer
Eliminateorreducethethreatbytransferring(generallypartially)tootherssuchas
partners(JV,consortium),subcontractors,vendors,insurance
Mitigate
Accept
Butcontinuecontainmentwith funding oftheassessedresidualriskthrough
Contingency,FundedLiabilitywherepossible
362
Mitigation:Examplesofriskreduction
RISK CONSEQUENCES MITIGATIONS
Implementalternatetoreducetherevampingactivities
Extentofshutdown Lostofproduction Optimizethedesigntoreducetheshutdownactivities
duration Extracosts Maximizethepreshutdownactivities
Implementprecom/comactivities
Importantwelding
Delayofconstruction Preparespecificexecutionplan
activitiesatSiteforlarge
Extracosts Resourcestobeplanedandleveled
equipment
Relevantmanpower
DedicatedVendorRepresentatives
Performance
Availableskilledstaff
Failureinmanaging Reengineering
Reinforcesupervision
equipmentnovelties Reworks
Adhocprocedures
Scheduleslippage
Finetunemethodstatements
Detailedconstructionsequences
363
ResponsePlanning GoldenRules
1. EachriskmusthaveaRiskResponsePlanOverview
2. AResponsePlancanbeusedformorethanonerisk
3. Theeffortprescribedbytheplanshouldbeappropriatefortheseverityof
therisk
4. Plansmustbetimely;sostartwiththeCriticalRisksfirst
5. TheRiskOwnershouldinvolvetheteamandotherssuitableforcreatinga
plan
6. TheplanshouldaddressknownSecondaryRisks
7. TheplanshouldidentifypotentialResidualRiskimpact
8. IncorporateResponsePlansintoProjectExecutionPlans
364
Risk management
Aboutrisk
Identifyingrisks
ControllingRisks
365
Monitor:RiskRegister
366
RiskResponsePlanningAnatomy
Risk Risk1 Risk2 RiskOwners

Register tovalidate
ResponsePlan
Overview ByRisk
Response
Owners
Plan
ActionItem1 ActionItem2 ActionItem3

ByAction
Owners
367
FollowUp ExecutiveDashboard
Top10withtrendsandprogress DetailedRiskSheet
RiskProjectSummarySheet
368
DetailedRiskSheet:Actionsheet
NIGERIA - OML 130 Mitigation plans

/ Owner
Action Status
/ Date
AKPO Field Development Project Date :
1- Performauditoncritcalelements requiringalternativesourceofsupply 01/10/2008
18/06/08
Risk Identification Sheet
Rev. : D
Owner : CALDER 2-
Risk ID: M040 Interface with packages: Status : Open 3-
Title: Lack of Facilities for offshore work

4-
Description: Facilities such as Flotel, boats are not available for offshore work, especially offshore commissioning
or capacity/quantity are not in accordance with project expectations
5-
6-
Causes: Bad estimate of required capacity
Late contracting
Lack of adequate means 7-
8-
Consequences: Offshore work delayed or duration increased
Few competitors with higher prices
Probability target: VL Impact: Cost M
First oil Schedule M
Criticality Target: 4 Ramp up Schedule M
Notes:
369
FollowUp ExecutiveDashboard
Risks distribution
30
25
Quantity of risks
20
Hig h crit icalit y - Immed iat e
act io ns required
15
M ed ium crit icalit y - A ct io ns
req uired
10 Lo w crit icalit y - To b e mo nit o red
0
Package Package Package Package Package Package
1 2 3 4 5 6
Package1 Package2 Package3 Package Packagen

370
Summary
Ariskmanagementplanhastobeinplacefromtheearliestphasesofthe
project(conceptselection)
Identifiedrisksshouldbecompiledinariskregistersharedbyallproject
actors
Aspecificorganizationinvolvingbothownerandcontractorsmustbe
establishedtomonitorprogressoftheactionsrelatedtoriskreduction
Qualitativeriskanalysistechniquescanbeusedtofocustheriskreduction
effortonthemostimportantissues
Quantitativeriskassessmenttechniquesareapowerfultooltocalculate
thelevelofprojectcontingenciestobeaddedtothebudget
371
Costs
372
Cost management
Foreword
Mainobjective
Keepprojectexpenseswithintheallocatedbudget
Maintoolsandmeans
Accurateprojectcostestimates
Costcontroltechniques
373
Objectivesofthemodule
Explainhowdevelopmentcostsarestructuredtoformtheprojectcost
estimate
Understandthemethodsusedatdifferentstagesintheprojectbothby
Companyandbythecontractorstodefinethecostestimate
Understandhowtheprojectbudgetisformedandtheprovisionsaddedto
caterforuncertaintiesinthecostestimates
ExplainmethodsusedtoestimatetheValueOfWorkduringproject
execution
Explainhowtoforecastthecostfinalestimate
374
Costmanagement
Aboutcost management
Planningcostmanagement
Estimating costs
Determiningbudget
Controllingcosts
375
Objectivesofcostestimation
Costestimationprovidesinputdatafor
Theeconomiccalculationsusedduringthedecisionmakingprocesspriortoproject
sanction
TheestablishmentofprojectbudgetCAPEX
Theanalysisofofferssubmittedbypotentialcontractors
Bydefinition,anestimateisbasedonuncertaininputdata
However,theamountofuncertaindatadecreasesduringthevariousphases
ofaprojectastechnicaldefinitionoftheProjectincreases
ABasisofEstimate(BOE)shallbeproducedalongwiththeestimate
ItisafundamentaldocumentthatremindsthescopeoftheProjectandexplainshow
theestimatewasproducedwithregardstothisscope
Itshallthereforehelpunderstandingandassessingtheestimate
Eachestimateproducedcomesalongwithestimateclassthatreflectsthe
estimatingmethodsused,thenecessaryinputandexpectedaccuracy
TheAACEi istheworldwidereferenceusedtoclassifyestimatesinascalefrom1to5
376
Costmanagement
Estimating costs
Determiningbudget
Controllingcosts
377
Input
WorkBreakdownStructureandOrganizationalBreakdownStructure
RiskmanagementPlan
Tools&Techniques
Expertjudgment
Analyticaltechniques
Probabiliticapproaches(seeriskmodule)
Meetings
Output
CostmanagementPlan
378
Contentofthecostmanagementplan
Shoulddefinethekeymilestonesforcostestimatesdefinition
AteachstageoftheprojectaBasisofEstimatedocumentshouldbe
prepared,defining:
Unitsofmeasure
Levelofaccuracyofthecostestimates
Organizationalprocedureslinks
Controlthresholds
Rulesforperformancemeasurements
Reportingformatsandfrequency
Rulesforuseoftechnicalallowances,contingenciesandmanagementreserves
Costvalidationprinciples
379
Costmanagement
Estimating costs
Determiningbudget
Controllingcosts
380
Inputdatatoacostestimate
Technicaldefinition
Themoreaccuratethebetterarethechancestogetaresultclosetotheactualcost(
onlyknownattheendoftheproject)
Historical/statisticalcostdatafrompastprojects
Feedbacktopopulatedatabasesisessential
Externalinformation
Quotationsfromsuppliers
Applicabletenderinformationfromcurrentprojects
Useofcommercialcostestimatingsoftware
Tobeusedwithcautionsincethedatabaseandcalculationmethodareoftenunknown
andtheresultingestimatemaycarryahighinaccuracy
Shouldbeusedtocrosscheckestimatesalreadyproducedwithothermethodsrather
thanstandaloneones
381
Costcomponents
CAPEX=FACILITIES+DRILLEX
FACILITIESEXPENDITURES
Processunits
Utilitiesstorages&generalfacilities
Commissioning&S.U.Spareparts
Engineering/Projectcosts
Processlicensesfees&royalties
Ownercosts
Abandonmentcosts
DRILLEX
Drillingofwells(production,injection)
Completionofwells
OPEX
Operation
Maintenance,obsolescence,inspections
Logistics
Chemicals,consumables
382
Breakdownoffacilities expenditures
MainEquipment Engineeringservices
Transportation
Bulk Management& Insurances
Temporary facilities
Fabrication/ Supervision Commissioning
Constructioncamps
Construction Surveys
Directcost Indirectcost
Technical cost EMScosts
EPCcost Owner costs Contingencies
Facilities cost
383
Breakdownod drilling expenditures
Wellcosts
Preliminarysitepreparationworks
Rigcost(perday)
Services(cementation,fluids,mud,logging)
Consumables
Logisticsandtransportation
Supervision
Insurances
Remotelogisticbase
OtherDrillex
Workovers
Taxesandcustomduties
Mobilizationanddemobilization
Riginspection,modifications
Abandonmentandsiterestitution
384
UsualExclusionsofCAPEX
Twoyearspareparts(includedinOPEX)
However,commissioning&startupspareparts,RFSUandSUcostsareincludedinthe
estimateavailableattheendoftheconceptualstudy
Taxes,customduties,harborfees
Preoperationcosts(trainingofoperators,firstfillofchemicalproducts)
Hotworksinterfaces
Operationcosts(OPEX)
Escalation(inflation),exchangeratesvariationsandcurrencyvariations
Financefees
Generalexpensesoflocaloperatingsubsidiaries
Riskscoveredbyinsurances
Abandonmentcostsunlessspecificallyincluded
Thislistisadeliverable tobeproducedalongwiththeestimate
385
Componentsofoperatingexpenditures
Fixedcosts(givenforexampleinUS$/year)
Manpower/Labor
Inspectionsandmaintenance
Workover andwellmaintenance
Logistics(includingtransportation)
Taxesandinsurances
Overheads
Variablecosts(givenforexampleinUS$/bbl)
Chemicals
Utilities(electricity,steam,fuel,water)
386
Estimating costs
Input
Tools&Techniques
Expertjudgment
Estimatingtechniquesdependingontheprojectphase
Contingencyandmanagementreservesdefinition
methodologies
Benchmarkingtechniques
Output
387
Estimating costs byrelying onexpertjudgement
Asalreadyexplained,historicaldataisessentialtoprepareaccuratecost
estimates
Inadditiontothis,expertjudgementisnecessaryto:
IdentifysimilarpastProjectsintermsofcontents,environmentandexecutionconditions
RetrievepertinentdatafromtheseProjectstobeusedasinputforthecostestimateto
beperformed
Correctthisdataintermsoflocationanddatesothatitremainsapplicablewiththeaim
ofproducingareliableestimate
Select,ifrequired,acombinationofestimatingmethods
388
Oneestimationmethodforeachdecisionstage
Preliminary Conceptual Project

Prospect PreProject
Studies Studies Execution
Generalcharacteristics Detailedequipment
Equipmentlist
Overallratios Bulkquantities
Factorizations
Benchmarks andConstructionspecificMTOs
Globalmethods Factored Semidetailedmethods Detailedmethods

AACEIsClass5 Class4 Class3 Class2
389
Oneestimatingtechniqueforeachprojectphase:
Prospect/preliminarystudies:Globalmethods
GlobalmethodsareusedattheearlieststagesoftheProject
TheyrequirelittleinformationabouttheProject
ThetotalcostoftheProject(orthecostofitsmainpackages)isestimated
withaglobalmethod(i.e.withoutproducinganycostbreakdown)
Similarfacilitiesalreadycompleted Newfacilitiestobebuilt
Capacity= Capacity=
Investment= Investment= 1
Chiltonsformula
Where isusuallycomprisedbetween0.5and0.8
Calculationmayalsotakeintoaccountlocalizationfactorandactualizationofdates
390
Preliminary/Conceptualstudies:Modular methods
Modularmethodsareusedoncethemainequipmentlistbecomes
available
Facilitiesarethenconsideredasanadditionofmoduleseachofthem
featuringonepieceofmainequipment
Thecostofeachmoduleisobtainedbyapplyingastandardfactortothe
costofthepieceofequipmentfeaturedinit
Theaggregatedcostofthesemodulesgivesthetotalcostofthefacilities
391
Preproject:Semidetailedestimatingmethods
AttheendoftheFEED,insteadofusingfactorstoestimatemostofthecosts
fromthecostofmainequipment,thenewlyavailabledeliverables,alongwith
somecostratios,areusedbyCompanytoimprovetheaccuracyofthecost
estimate
(Offers/FEC)
Detailedspecifications Main
equipment
price
Preliminarybillof Bulk
materials Bulkmaterialscost
quantities
PRICE
takeoffs Engineering Indirectcosts

services + Contingencies
Profit
Erection
manhours Erectionworkscost
Preliminary
billofquantities Workstake
offs
Constructionworkscost
392
Detailedstudies:Detailedestimatingmethods
BidderscanachieveevenmoreaccuracythantheCompanybyvirtuallyusingno
ratiosanddetailingallcostsinstead
(Offers/FEC) Manhours per

disciplineandby
Offers category/Hourlyrates
Detailedspecifications Main
equipment
price
Bulk
InitialBudget
Preliminarybillof
materials Bulkmaterialscost
quantities
takeoffs Engineering Indirectcosts
services + Contingencies
Profit
Erection
manhours Erectionworkscost
Preliminary
billofquantities Workstake
offs
Constructionworkscost
Offers 393
TurnkeycontractcostestimatingbyContractor
Provisionsareaddedtothecostestimatetocoverfor:
Uncertaintiesonquantities(MTO),dependingonthemethods/referencedocuments
usedtopreparetheestimate
Possibleprojectgrowth,i.e.whichdoesnotappearonthedrawings/information
availabletopreparetheestimate
Extraworkswhichwillbemostlikelyrequiredbyconstructioncontractorsworkingon
unitprice
Vendorproposalswillbecomparedandcontingenciesfortechnical
uncertaintiesand/orbuyouts(positiveornegative)willbeevaluated
Ariskassessmentwillbeperformedtotakeintoaccountrisksassociatedwith
thecompletenessandqualityofthebasicengineeringstudies(FEED),the
validityofofferssubmittedbyvendorsandsubcontractors,reliabilityof
availablebasicdata(forsoilandenvironment,etc.)
394
TurnkeycontractcostestimatingbyContractor
Contingencieswillbeaddedtocoverrisksassociatedwith:
Projectperformance
Schedulerisks
Otherrisks
Contractualpaymentconditionswillbereviewedbasedontheexpenses
curveandfinancialexposureriskswillbeassessed
MeetingswillbeorganizedwithContractormanagementand/orJVpartners
toreviewandendorsethecostestimate
Anticipatedprofit willbeaddedtothecalculatedcost
395
AccuracyrangesvsProjectprogress
396
Estimatingbasis
ESTIMATECLASSIFICATION
GeneralProjectData: CLASS5 CLASS4 CLASS3 CLASS2 CLASS1
ProjectScopeDescription General Preliminary Defined Defined Defined
PlantProduction/FacilityCapacity Assumed Preliminary Defined Defined Defined
PlantLocation General Approximate Specific Specific Specific
Soils&Hydrology None Preliminary Defined Defined Defined
IntegratedProjectPlan None Preliminary Defined Defined Defined
ProjectMasterSchedule None Preliminary Defined Defined Defined
EscalationStrategy None Preliminary Defined Defined Defined
WorkBreakdownStructure None Preliminary Defined Defined Defined
ProjectCodeofAccounts None Preliminary Defined Defined Defined
ContractingStrategy Assumed Assumed Preliminary Defined Defined
EngineeringDeliverables:
BlockFlowDiagrams S/P P/C C C C
PlotPlans S P/C C C
ProcessFlowDiagrams(PFDs) S/P P/C C C
UtilityFlowDiagrams(UFDs) S/P P/C C C
Piping&InstrumentDiagrams(P&IDs) S P/C C C
Heat&MaterialBalances S P/C C C
ProcessEquipmentList S/P P/C C C
UtilityEquipmentList S/P P/C C C
ElectricalOneLineDrawings S/P P/C C C
Specifications&Datasheets S P/C C C
GeneralEquipmentArrangementDrawings S P/C C C
SparePartsListings S/P P C
MechanicalDisciplineDrawings S P P/C
ElectricalDisciplineDrawings S P P/C
Instrumentation/ControlSystemDisciplineDrawings S P P/C
Civil/Structural/SiteDisciplineDrawings S P P/C
S=started P=InProgress C=Completed

397
Costmanagement
Estimating costs
Determiningbudget
Controllingcosts
398
InitialBudget
AnInitialBudgetispreparedinaccordancewiththeCostBreakdown
Structure(CBS).Itiscontrolleduntilfinalcompletion(whetheronCompany
side,oronContractorside).
OncetheCostEstimateisreadyandtheProjectagreedbytheOperatorandthePartners
(Projectsanction),theInitialBudgetRev0,isfinalised.ItbecomestheLifeofProject
(LOP)Budget.
TheInitialBudgetmayrequireadjustmentsduringtheProjectLife:eitherforthe
transferofaprovisionorabudgetlinefromonePackagetoanother,orthe
deletion/additionofonebudgetline.TheamendedBudgetbecomestheRevisedBudget
Thebudgetwillincludeprovisions
AttheendoftheProjectoratanytime,ifuncertaintiesbecomefixed,thebudget
contingenciesmaybereduced.
399
Provisionstobeaddedtothebasecosts
Allowances
Resourcesforrequirementswhichareknowntoexist,buthavelittleornoscope
definition (AACEi)
TheyshallbeallocatedtospecificitemsfeaturedintheTechnicalCost
Allowancesarenotcontingencies
Contingencies
Amounttocoveruncertainties intheestimatewhicharelikelytooccur,butwhich
cannotbespecificallyidentifiedatthetimetheestimateisprepared
(R.WESTNEY ManagingtheEngineeringandConstruction)
TheiruseissubjecttoapprovalatProjectlevel
ManagementReserve
AmountreservedbytheTopManagementoftheCompanybeyond theoverallfacilities
cost
TheiruseissubjecttoapprovalatCorporatelevel
400
Contingencies
Eventscontingenciescaterfor
Errorsoftheestimationmodel
estimationmodelsarebasedonmeanvaluesofthevariousparameters
Uncertaintiesonunitcosts
Uncertaintiesonquantities
Possiblevariationsoftheworkforce
Variationsofproductivity
Evolutionofthemarketprice
Risksassociatedtotheselectedprocess
Minorchangesofdesign
401
Focusoncontingencies
ContingencyprovisionsDONOTcaterfor
Exclusions oftheestimate
refertotheaboveCAPEXUsualExclusions
ChangeinscopeorinBasisofdesign
architecture,treatmentcapacity,effluentcompositionattheinletandoutletofthe
installation,changeintechnology
Process designmodifications
acidgasvs.sweetgas,turboexpandervs.JTvalve
Exceptionalstandby
weather:environmentharsherthanexpectedbyinstallationcriteria
exceptionaldelayofequipmentdeliveryleadingtostoptheconstructionactivities
402
ContingencyprovisionsDONOTcaterfor
Majorchangestothecontractualstrategy
EPCtypecontractvsreimbursablebasiscontract,changingtheconstructionyard...
Mainplanning changes
additionalmob/demobduetodelay,reducedconstructionschedulerequiringthe
mobilizationofextendedworkforceandimpactingproductivity,additionalsupervision
costs,simultaneousconstructionandproductionduetoadelay
Majormarket effects,lackofcompetition
embargo,singlesource
Majorrisks
war,strike,earthquake,hurricane
Forcemajeurecasesasspecifiedincontractdocuments
bankruptcy,failureofthecontractororthepartner
403
Twomainwaystocalculatecontingencies
Probabilisticapproach Statisticalapproach
Nocostestimateis100%certain TypeofFacilities Class5 Class4 Class3
Acomprehensiveriskanalysiscanbe
performedtoevaluatetheprobablecosts Onshorepipeline 20 15 10
ofaProjectandtheirprobabilityof Offshorepipeline 20 15 10
occurrence
Basedontheseresults,thenecessary Onshorefacilities 25 20 15
contingencies willbecalculated Offshorefacilities 25 20 15

Intheabsenceofadetailedstudy,
Deepoffshorefacilities 25 20 15
statisticalratios(basedonpastexperience
suchasthosegivenhereby)givingthe Subseadevelopment 25 20 15
percentageofbasecosttobeaddedon
topoftheestimatecanbeusedto Onshoremodifications 30 20
calculatethenecessarycontingencies
Offshoremodifications 35 20
404
Contractpricesandclientbudget
(Nottoscale)
405
Costmanagement
Estimating costs
Determiningbudget
Controllingcosts
406
Majorcostcontrolobjectives
TomonitorandcontrolallProjectcostsinordertoaccuratelyand
continuouslyevaluatetheanticipatedfinalcostoftheProjectthusenabling
ProjectManagementtotakeanynecessarypreventiveand/orcorrective
actions
Costcontrollerscoordinatetheactivitiesoftheprojectteaminorderto
maintainprojectexpenseswithinthebudgetlimits
Toprovidefeedbackforfutureestimates
407
Majorcostcontroltasks
Todetectadversecosttrends,earlyenoughtoallowcorrectiveactiontobe
taken.
Toanticipateprojectcostchangesbypreparingareliableforecast
Managechangeorders(ContractortoissuechangeordersandCompanyto
discussandaccept)
Controlfinancialandcashflowsstatus,trendsandcurrencybalances.
CostControlactivitiesstartatProjectstartandfinishfarafterhandoverto
Operations,whenconstructioncontractsareclosedout(withclaimssettled)
andfinalCostControlreportissued.
408
Cost ManagementProcesses
asofProjectExecution PointofView
Cost Project
Estimating Definition
Cost Decision
to
Budgeting proceed
Cost Execution
Control
FinalCost Final Acceptance

Report
409
Costcontrolcurves
410
Forecastingfinalcost
AnEstimatedFinalCostforaeachcommitmentisaforecastofrelatedcosts
basedonitsintrinsicperformance.Themostcommonforecastingtechniques
are
EFC=Actualstodate+ Remainingparttoberealised
Thisapproachismostoftenusedwhencurrentvariancesareseenasnottypicaland
theprojectmanagementteamsexpectationisthatsimilarvarianceswillnotoccurin
thefuture
EFC=Actualstodate+ RemainingparttoberealisedxPerformancefactor
Thisapproachismostoftenusedwhencurrentvariancesareseenastypicalof
futurevariances
EFC=Actualstodate+ Newestimatefortheworks
Thisapproachismostoftenusedwhenpastperformanceshowsthattheoriginal
estimatingassumptionswerefundamentallyflawed,orthattheyarenolonger
relevantduetoachangeinconditions
AttheendoftheProject,thefinalcostanalysiswillestablishtheFinalcost,
afterhandover,whenconstructioncontractsareclosedout(withclaims
settled) andthefinalCostControlreportisissued
Eachoftheaboveapproachesmaybediscussedforeachgivencommitment
411
ContingencyManagement
ContingencyamountshallbeclearlyidentifiedintheProjectbudget
ForprojectsalreadysanctionedwithanApprovedBudgetpriortolaunchingcallfor
tendersandcontractsawards,thecontingenciesarebasedonthecostsestimates(P50
MostLikelyamount).
Forcomplex/riskyprojectssanctionedwithanApprovedBudgetafterBasic
engineeringandcallfortenderstage,thecontingenciesareevaluatedbytheProject
teamalreadyinplace.
Inanycase,theexclusionsmentionedforthecontingenciesstillremain
Duringtheexecutionofaprojectthecontingenciesmanagementconsistsin
keepinguptodatetheutilizationofthecontingenciesbutalsoreestimating
thesecontingencieswhenprojectmilestonesarereached
ContingenciescanonlybeusedwiththeagreementoftheManagementand
inlinewiththeManagementAgreementandtheFinancialAgreements
412
Companycostreportformatprinciples
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Approved Scope Budget Current Commit. Estimate Estimated Variance Expend. Approved
Budget Change Transfer Budget to FinalCost Incurred Invoices
Complete
(1+2+3) (5+6) (47)
WP1 100 0 0 100 90 12 102 2 70 65
WP2 50 0 10 60 60 0 60 0 60 60
WP3 90 0 10 80 70 5 75 5 68 65
Subtotal 240 0 0 240 220 17 237 3 198 190
Contingencies 24 0 0 24 22 22 2
Total 264 0 0 264 220 39 259 5 198 190
413
CostmonitoringprocessbyCompany
Companycostcontrolprocessandowninvolvementintrackingofcost
componentsdependsonthetypeofcontract(s)placedforprojectexecution.
Ifacontractisonreimbursablebasis,Companywillhaveaccesstoallcostelementsand
CompanywillbasicallyberesponsibleforthecompleteProjectcost.
IfacontractisonaLumpSumbasis,Companywillhaveaccessonlytothecostitems
specifiedinthecontract(Globalpricesforworkpackages,unitpricesforchanges).
Forallcases,Companywillhaveaccesstothecostestimatetosupportany
changeorder,willbeabletocheckit,approveit,anditwillthenbeincluded
inthecostcontrolprocess.
414
Projectcostvariationspossiblecauses
Causesduetotheoperator/Company
Projectdefinitionambiguousand/orincomplete
ChangeduringtheProjectexecution(basicdesigndata,scope,interfaceswithother
projectsorotherfacilities)
Delayedaccesstoconstructionareas
CausesduetotheCompanyorContractorestimates
Insufficientprovisions
Missingcosts
Wrongassumptionsonmarketcosts
Causesduetoprojectdevelopment/management
Contractualstrategyambiguity,unclearinterfacesbetweencontractor(s)
EndorsementofFEEDleadingtochanges
Conflictswithcontractor(s)
InsufficientqualityofProjectManagementTeam;ofProjectorganization
DelaysinachievingCompanytasks
415
Summary
Differentmethodologiesareusedtoestimateprojectcostsatdifferent
stagesitsprogress
Thelevelofcontingenciestobeaddedateachstagedependsonthedata
availabletoperformtheestimate
ABasisofEstimate(BOE)shouldbeproducedtoindicatetheinputdata
usedandtheassumptionsmade
Thelevelofcontingencieswilldecreaseastheprojectproceedsbutshould
notbereducedtoodrasticallytooearlyasunforeseenadditionalcosts
oftenappearinthelastpartoftheproject
Budgetsmayincludeamanagementreservetocaterforunlikelyevents
whicharenotpartofthecontingencies
Severalmethodsexisttoforecasttheprojectfinalcost
416
Time
417
Timemanagement
Foreword
Mainobjective
Finishtheprojectontime
Maintoolsandmeans
Planningactivities
Projectschedule
Criticalpathidentification
Progresscontrol
418
Timemanagement
Aboutprojectcontrols,planningandscheduling
Planningschedulemanagement
Definingactivities
Sequencingactivities
Estimatingactivitydurations
Estimatingactivityresources
Developingschedule
Controllingschedule
419
Whatdoesittaketoplanaproject?
Objective Contract&ScopeofWorkdefinition
Schedule Targetcompletiondate
Strategy Executionplan
Budget Baselineforprogresscontrol(cost&time,focusontime)
Forecast Periodicprojection
Organization Planningengineer
420
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
421
Planninginteractioninprojectcontrol
Estimation(proposalphase)
Duringproposal,quantitiesarenotknown,theyareestimated.Quantitiesare
necessaryfordurations
Someresourceshavedailyrates(suchasinstallationvessels),durationofuseallows
Estimationtoestimateassociatedcosts
Costengineering&control(contractphase)
ACostEngineerisnotperformingaccounting,heneedstoforecastcosts,then
scheduleupdatearenecessary
Costprovidespentmanhours,whichallowtovalidatescheduletrendswith
productivity
Contractmanagement(proposal&contractphases)
PlanningisbasedonContract
Changesinschedulecouldhavecontractualimpact ContractManagertobe
informed
ChangesintheContract(changeorder,delaysoninputdatafromClient)couldhave
impactonSchedule
EOTtobemanagedjointly
Riskmanagement(proposal&contractphases):
Riskmodelsarelinkedto(orsimplified)schedule planningprovidesinputand
receivedrecommendationsforimprovementinreturn
422
Planninginteractionwithallotherstakeholders
Projectmanagement
Bringgoodandbadnewsasitoccursandavoidthe shootthemessengersyndrome
HomeofficeEngineeringProcurement&Subcontractingdisciplines
Purchaseequipmentandplacesubcontractsbasedonpreliminarydata
Deliverscopeofworkattherequiredlevelofquality,withinbudgetandtime
Manufacturing&transportation
EconomyofscaleversusRequiredOnSite(ROS)dates
Integrationofvendordatabyengineering
Yardfabrication&Constructionmanagement
Tightschedulerequirestradestoworkinparallelandrequiresclosemonitoring
(Pre)commissioning,handover&startupteams
Appreciateimpactofactivitiesandtransferofresponsibilitytoconstruction
productivity
Understandingoftheseprocesses&interactionsstartswiththebreakdown
intomanageableworkpackages,bothbyareaandbydisciplines
423
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
424
Planningandscheduling
Basictechniques
Whatisthedifferencebetweenplanning&scheduling?
Planning:ElaboratingthePlan(strategy)
Scheduling:Elaboratingthesequencingofactivities(withdates)
Someplanningtechniques
PDM(PrecedenceDiagrammingMethod)
PERT(ProgramEvaluation&ReviewTechnique)
Sometechniquesofanalysis
CPM(CriticalPathMethod) Totalduration&floatoriented
CCM(CriticalChainMethod) Resourcelimitoriented
Resourcelevelling
Whatifscenarios(MonteCarlo)
Schedulepresentation
Activitylist
BarChart
NetworkDiagram
425
Componentshierarchy
TheWBSisgenerallybuiltwitha
topdownapproach
1
Informationisrolledupwitha
bottomtopapproachtoproducean
Overall
Project
overallpictureoftheproject
2
3
Partof
Project
426
WorkBreakdownStructure
WBS(WorkBreakdownStructure)
Representswhatistobedone
Reflectsthegeographicaland/orprocesssplitofwork(Area,Unit,Platform,Function,
etc.)
Onshore/Offshore
Project
ProcessUnits Utilities Offsites
Fractionation SteamProduction
Compression Electric.Generation
Subsea
Project
ColdSection
HotSection Rigid Flexible Umbilical
427
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
428
Schedulepreparation
SchedulingisoneofthefundamentaltasksofProjectManagement
Themostcommonwaytopreparethefirstschedulestudyofaprojectis
throughaBarChart
PROS:easytoprepare, A2
easytobereadand
understood,possibilityto
condenseseveraltasksina B10
singleline
CONS:doesnotallow C5
controllingthelogicsofa
complexsequenceoftasks; D3
norcontrollingschedule
uponchangesintasks
durations
E2
F1
429
Schedulepreparation
0 Bids(3) 3 Fabrication(10) 13

0 3 13
Approval Acceptance(1)
Studies(1) 1 4 14 16

3 Foundations(3) 11 Utilities(3) 14 Installation(2) 16
AnetworkbuiltusingtheProjectEvaluationandReviewTechnique(also
calledCriticalPathMethod)isinfacttheonlywaytohavesequencing
logicsbuiltintotheschedule
BarChartscanbethendeducedfromthenetwork
430
SchedulingandProgressControlofaProject
TheresultingScheduleshallenableproperSchedulingandProgressControlof
theProject
Inotherwords,itshallprovideatalltimesProjectManagementwithaclear
pictureofprogress againsttheProjectbaseline schedule
Didactivitiesstartattheinitiallyplanneddate?
Ongoingactivitieswillbecompletedattheirinitiallyplannedcompletiondate?
Willitbepossibletostartthefollowingactivitiesasplanned?
Ultimately,willtheProjectbecompletedattheexpecteddate?
Theanswertothesequestionsshallenablethetimelyidentificationof
adversetrendsandshallthereforeenableProjectManagementtomake
correctiveactionsand,shoulditbenecessary,recoveryplans
431
Schedulelevels
Level0 ProjectMasterSchedule
Onepageexecutivesummaryschedule usedforreportingatProjectManagementlevel
FrozenatProjectSanctionandconstitutestheInitialBaselineSchedule
Featurestargetdates,keymilestonesandmainphases
Level 1 IntegratedProjectControlSchedule
Timescalelogicdiagramfeaturingdecisionphases,contractssequence,workpackage
summaryactivitiesincludingLongLeadItemsandmajormilestones
Displaystheoverallprojectcriticalpath
Level2 ContractorSchedules
Thesenetworkscoveralltheactivities/tasksoftheContracts
Allthemilestonesnecessarytocontrolcontractorsphysicalprogressshallbeidentified
intheseschedules
Procurementofmainequipmentandfabrication,construction,installation,
commissioningshallbeshownseparately,withaclearhighlightofthecriticalpath
432
Level0schedule
433
Level1schedule
Example:Offshoreplatform
Criticalpathisshowninred
434
Linksbetweenactivitiesandcriticalpath
Reminder:linksbetweentwo
consecutiveactivitiescanbe:
FinishtoStart
StarttoStart
StarttoFinish(uncommon)
FinishtoFinish
FLOAT
Planningtwoormoresetsofactivitiesofdifferentdurationsinparallel
maycreatefloatontheseparticularactivities
Thecriticalpathisthepathofactivitieswithnofloatandprovidesthe
shortestprojectduration
435
Contractorschedulingprocess
SchedulingbyEPCContractorsisdoneatamoredetailedlevelthanby
Company
AdetailedWBS/OBSisprepared,todefineareasandworkphasesfortheproject
schedule&progressreporting
Schedulinghierarchygenerallyincludes4LevelsfortherelevantEPCcontract:
Level0 ProjectMasterSchedule:executivesummary
Level1 OverallProjectSchedule:rolledoverfromLevel2
Level2 AreasSchedule:contractcontrolschedule,preparedasaCPMnetwork
Level3 DetailedSchedules:
Engineeringdeliverables(usuallyintegratedwiththeengineeringprogressmeasurement
system)
Procurementpurchasingstatusandmaterialstatusreports
Siteconstructionschedule,preparedatsite,inlinewiththeLevel2schedule,theglobal
scheduleandconstructioncontractorsdetailedschedule
Note:Theselevelsmaybecalleddifferentlybyfromonecontractortoanother(e.g 1to4)
436
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
437
Threepointestimatingofactivitiesduration
Mostlikelyduration:estimatebasedondurationoftheactivitygiventhe
resourceslikelytobeassigned,expectedproductivity,realisticexpectations
ofavailabilityforthework,dependenciesonotherparticipantsand
interruptions.
Optimisticduration:bestcasescenario
Pessimisticduration:worstcasescenario
Optimistic Pessimistic
duration Rangeofuncertainty duration
Task +
Treatmentofthisuncertainty
iscarriedoutbyRiskspecialists Mostlikely
duration
438
Schedulecontingencyreserves
Durationestimatesmayincludecontingencyreservessometimescalledtime
reservesorbuffers
Allocatedforidentifiedrisksthatareacceptedandforwhichcontingentor
mitigationresponsesaredeveloped (knowunknowns)
CanbedefinedasapercentageoftheestimateddurationorusingMonte
Carlotechniques
Canbeaggregatedintobuffersandidentifiedassuchintheschedule
Astheprojectproceedsthetimebuffercanbeused,reducedoreliminated
Shouldbecontrolledbyprojectmanagement
439
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
440
Activityresources
Activities might require allorpartofthefollowing

Material resources
Human resources
Equipment
Supplies
Foreach ofthese
Typeandquantities shall be estimated asafunction oftime
Histograms should be produced
Availability shall be checked
Compatibilitybetween mobilization peaks andmaximummobilization limits shall be
verified
After such astudy
Some activity durationsmight require being revised
Rescheduling might be necessary
441
Exampleofhistogramofnecessaryresources
442
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
443
Estimateresourcesandduration
WBS OBS Strategy Quantities

LessonsLearned
Durations
Responsibilities Individual
Personsorgroupin activities
charge durations Resources
Scope Logic Materialand
Perimetertobe Sequenceof humanresources
operations availableand
scheduled needed
Scheduledata Logic
basecoding network Barchart Histograms
(PERT)
Scheduleedition
444
Typicalcriticalpath
Asaresultoftheschedulepreparationprocess,thecriticalpathforan
onshoreprojectusuallygoesthrough:
ProcurementofLongLeadItems
Piping erectionrelatedtotheseLLIs
Relevantcontrolsandinstrumentationcompletionandlooptests
And/orthrough:
AFCProcessPIDs
Mainequipmentpurchase(Vendorsdrawings)
Engineeringto40%isometricdrawings
Pipingprefabrication
Pipingerection
Instrumentsloopchecks
445
Anticipatingprojectduration
Generalconsiderations
LongLeadItems(ifany)
WhatLLIswillbeonthe theprojectcriticalpath?
Howwilltheygoverntheschedule(intermsofdelays,risks)?
Globalprojectsizeandmainphases:Engineering,Procurementand
Construction
Whatresourcestheyrequire?
Willtheseresourcesbeavailableattherightlocationandattherighttime?
Howmanymanhourswillberequiredatthemobilizationpeak?
Asaconsequence,whatisfeasibleprogressrate?
Permittingactivities
446
Expectedprogressforeachphase
Standardstatisticprogresscurvesareavailabletoprovideareference
progressforeachactivity
Achievabilityofsuchprogresscurvesshallbeappraisedfor:
Engineering
Foreachdiscipline(process,equipment,civil,piping,electrical,instrumentation)
Procurement
ForequipmentandbulkmaterialPurchaseOrders
Construction
Foreachtrade(Civil,U/Gpiping,Pipingprefabrication,equipmenterection,pipingerection,
electrical,instrumentation,painting,insulation,etc.)
Dotheresultingprogresscurves(forthewholeProjectorforeachunit)
complywiththeintermediateandfinalContractualmilestones?
447
TypicalSshapedprogresscurve
%Progress
100%
Slowdown demobilization
Endoffieldwork
Constantworkspeed
Mobilization/
Acceleration
Time
448
Typicalprogresscurvesandmilestones
449
Optimallogicalsequencesforconstructionactivities
Foreacharea:
AFCplotplansandP&IDsarerequiredtolaunchconstruction
Startofpipingprefabrication requires40%ofAFCisometricsand5060%ofpiping
materialsofallrequiredtypes(CS,SS,CuNi,GRE...)andenoughelbow,fittings,etc.
Structureshavetobefabricatedanddelivered
Startofpipingerectionrequires50%ofequipmentnozzlesavailableandallsteel
structures
Constructionactivitiesshallbesequencedinordertoprovideworkfrontat
site
Structuralsteelshallbeapriorityforprocurementpriority,sothatconstructionof
interconnectingpiperacksstartsquicklyallowinganearlythemechanicalcontractor
mobilization
Eachtypeofunit(power,firewater,utilitiesandprocess)shouldbe
completedprogressivelysothatprecom/comactivities(thatarecarriedout
perunit)areperformedinthemosttimeefficientfashion
450
Schedulecompression
Techniquesthatcanbeusedtoshortenthescheduledurationwithoutreducing
theprojectscope,alteringsafetyorquality:
Crashing
Addingadditionalresources,approvingovertimework,payingtoexpeditedelivery
Usedonlyforactivitiesonthecriticalpath
Mayresultinadditionalcostsandrisks
Fasttracking
Performactivitiesinparallelinsteadofsequentially
Feasibilityofparallelactivitiestobechecked
Mayresultinreworkandincreasedrisksorcosts
451
Pointstobecheckedtoensure
theintegrityoftheSchedule
Nolags:
theirstatuscannotbecheckedduringscheduleupdates
tobereplacedbyanactivity
Noopenends:
noactivitywithoutapredecessor(exceptProjectStart)
noactivitywithoutasuccessor(exceptProjectFinish)
Nofixedconstraints
WasResourcelevellingdone?
Criticalpaths
CompliancewithContractMilestones,intermediateCD
Floats
Numberofcriticalactivitiesshouldbebetween10and15%
452
Schedulingsoftware
TypicalsoftwareusedbyPlanningengineers:
MicrosoftProjectforsmallEPCprojectswithlittlecomplexity
PrimaveraProjectManagementforlargeEPCprojects
Itcanmanageagreateramountoftasksand
Itallowsmultipleuserstofeedthedatabase
Typicaltoolsforpresentationpurposes:
Level0schedulesareoftenmadewithExcelbaseduponinformationtakenfromthe
PrimaveraLevel1rolleduptoLevel0
ProgresscurvesandtabularreportsareoftenpreparedwithMSExcel
453
Timemanagement
Definingactivities
Developingschedule
Controllingschedule
454
Scheduleanalysis
Workprocessin3steps
EstablishaReference=Baseline
1st issue=Planned (Thermometerfabrication&calibration)
Checkprogressstatus
ActualandTrend (Thermometermeasurement)
Detectionofdelays
Enforcecorrectiveactions,ifneeded
Forecast (TakeAspirin)
RePlan/RecoveryPlan (Thermometerrecalibration)
Terminology:RePlan(PreviousPlannedbecomes Initial ):Revisionoftheschedule
455
Scheduleanalysis
1 Planned
InitialSchedule
2 Actual/Trend TrendAnalysis
Actual
DataDate Analyseofdiscrepancies
Progress Remaining Duration
Remedial Actions
Planned
3 Forecast
ApprovedBaseline Reference
CheckLogic&/or
DataDate Resource
Actual
Progress RemainingDuration
SystematicInputoftheActualProgress
ForecastedDuration
Planned
4 RePlanned
RevisedSchedule
Progress DataDate
Revisionofplannedincase
oflargedeviationormajor
projectchange
RePlanned
InitialPlanned
456
Progresscontrol
Theprogresscontrolsystemallowstocompute,atcutoffdatesin
accordancewiththeProjectCalendar,theplannedprogressandtheactual
progressinorderto
Compareonaregularbasisthequantityofworkdoneversusthequantityofwork
planned
Assessifobjectivesforcompletiondatescanbemet
Analyzetrendsandtakecorrectiveactionsifnecessary
Productivitymeasurementisthemeasureoftheefficiencyintheutilizationof
resources
Afactorsmallerthan1demonstratesabadproductivity
Afactorhigherthan1demonstratesagoodproductivity
457
Physicalprogress measurement
Anexample
AFactoryhastofabricate100identicalitems(theWork),ina10days
period,costexpectedis1000Eurosperitem
After5days,10itemsarefabricated,andcostincurredis800Euros
(=expensesforfabricationofeachofthose10items)
ProgressinTimeScheduleis:
5daysspent 5/10 =50%
10daysexpected
Productivityis:
800Eurosspent(Actualvalue) 1000/800=1,25>1 GOOD
1000Eurosexpected(Earnedvalue)
ButPhysicalProgressis:
10itemsfabricated 10/100=10%
100itemstobefabricated
458
Progressmeasurementprinciples
ProjectactivitiesaresplitaccordingtostructureclosetotheWBS/OBS
Weightsareassignedusingconvenientunits(USD,manhours)inorderto
splitallprojecttasksintoelementarytasks
ForeachProjectworkpackageorsubprojecttobeindependentlycontrolled,
thesetasksareaggregatedbylevels:
WorkPackageorsubproject
Categories:homeofficeservices,engineering,procurement,construction
Subcategories:engineeringdisciplines,requisition,constructiontrade...
Tasks:engineeringdeliverables,equipment,constructionindividualitems
Elementarysteps(scales):drawingpreparationstep,procurementfabricationstep,
constructionworkstep
Duringprojectexecution,progressachievedismeasuredforallelementary
stepsandaggregatetothedifferentlevels
459
Exercise:Overallprogressmeasurement
Project
BudgetSplit
Work Package Work Package

1 2
40% 60%
Engineering Procurement Construction Commissioning Engineering Procurement Construction Commissioning

10% 35% 50% 5% 10% 35% 50% 5%
EPCCprogressesforWP1 EPCCprogressesforWP2
E: 100% P: 50% C: 10% Comm: 0% E: 40% P: 10% C: 2% Comm: 0%
EPCCweighted progressesforWP1 EPCCweighted progressesforWP1

E: 10% P: 17,5% C: 5% Comm: 0% E: 4% P: 3,5% C: 1% Comm: 0%
ProgressforWP1:32,5% ProgressforWP2:8,5%
Weighted progress forWP1: 13% Weighted progress forWP2: 5,1%
Overall Project progress:18,1%

460
Typicalprogresscurves
100% 100%
99%
97%
Engineering 95%
92%
90% Procurement 90%
87%
85%
Fabrication 84%
82%
80% 79%
Construction
76%
Commissioning 73%
70% 70%
Total 67%
61%
60%
56%
50% 51%
46%
40% 40%
35%
30% 30%
25%
20% 20%
17%
14%
11%
10% 9%
7%
6%
2% 3% 4%
0% 0% 0% 1%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Progress (%) vs. Duration (Months)
461
EP 21684_b_A_ppt_01 8.1Planningcontrol 461
Recoveryplan
462
Originalbaselinerevision
463
Originalbaselinerevisionafterincreaseofworkscope
464
Summary
PlanningandschedulingarebasedontheWorkBreakdownStructure
(WBS)andOperationsBreakdownStructure(OBS).
Severallevelsofplanningaredefinedwhichcanberolleduptoformthe
highlevelplan
Definitionofthecriticalpathenablesidentificationoftaskswhichrequire
specialfollowup,asanydelayonthosetaskswillimpacttheoverall
schedule
Schedulecontingenciescanbelumpedtogetherinaschedulecontingency
reserve(days)tobeusedasneeded
Bymonitoringphysicalprogressandproductivity,adversetrendscanbe
detectedandcorrectiveactionsimplemented
465
Engineering
466
Engineeringmanagement
Foreword
Mainobjective
Produce engineeringdeliverables tofeed
Procurementactivities
Constructionactivities
Inalesserextent,commissioningactivities
Maintoolsandmeans
Understandingofthekeychallengesofdetailedengineeringactivities
Interactionsbetweendetailedengineeringandotherprojectactivities
Listsandsequencesofproductionofengineeringdeliverables
Systemsinplacetocontrolthereviewandapprovalofdocuments
467
DetailedEngineeringobjectives
PlanningDetailedEngineeringactivities
PerformEngineeringactivities
ControlEngineering
468
Objectivesofdetailedengineering
TodevelopalldocumentsoftheFEEDtechnicalpackageinaccordancewith
thecontract(unlessmodificationsarerequired,whicharethentobeagreed
withCompany throughapprovedchangesmanagementprocedures:
EngineeringQueries/DeviationRequests)
TotimelyissueApprovedforDesign (AFD)andthenApprovedFor
Construction (AFC):specifications,billofquantities,drawings,scopeofwork,
materialrequisitions,constructioncontractspackages,includingtimely
processingofCompanycomments
TotimelyreviewVendorsandsubcontractorsdocuments
Inordertoallowatimelyexecutionofprocurement,constructionandpre
commissioning/commissioning
Todevelopaworkprocessofquality,i.e.whichwillminimizecorrective
revisions,fieldchangesandavoidchangestoprocurementdefinitionduring
itsprocurement/fabricationprocess
469
ControlEngineering
470
Planningdetailedengineeringactivities
Input
Projectscopeofwork
ProjectExecutionPlan
WBS
Contractingstrategy
Tools&Techniques
Output
471
PlanningDetailedengineering
Identifyalldetailedengineeringdeliverablesincluding:
DeliverablesalreadypreparedatFEEDtime,progressed/completed andtobereissued
until AFC andasbuiltstatus,whereapplicable
Additionaldeliverables,whichcomplementtheFrontEndpackageandprovideall
necessarydetailedanalysis,calculation,drawings,specification,toachieveprocurement,
construction,precommissioning/commissioningandoperations&maintenance
(nonexhaustivelist)
Prepareascheduleofalldetailedengineeringdeliverables
AllthesedocumentsaretobefiledintheMasterDocumentRegister
472
Input
Tools&Techniques
Expertjudgment
Experiencefrompreviousprojects
Resourceanalysis
Subcontractingplan
Planningsoftware
Output
473
Engineeringmanagementcoordination
EngineeringManagementmainlycoordinateswith:
ProcurementforanswerstoVendorstechnicalqueries,preparationof
requisitionlistandrequisitions,TBTs,participationtoclarificationmeetings
formajorequipmentandmultidisciplinespackages
Fabrication/ConstructionContractsManagementforpreparationof
Fabrication/ConstructioncontractsBidPackagestechnicalpart(scope,
specifications,drawings,BOQS),answerstotechnicalqueries,participation
toclarificationmeetings
SiteConstructionteamforanswerstoqueries,fieldengineeringrequests,site
engineeringsurveysforexistinginstallations
474
Mainscheduleinterdiscipline relations(1/2)
Source:Theoilandgasengineeringguide Herv Baron EditionsTechnip 2010

475
Mainscheduleinterdisciplinerelations(2/2)

476
Example offlowchart forPiping acivities
Input From:
Piping & Instrumentation
Process Diagrams(P&lDs)
Process PreliminaryEquipmentsizing
Mechanical
Piping
Civil Plot Plan& PipingLayout
Safety (2D) drawings
Piping
Civil PipingGeneral
PipingMaterialTakeOff
Safety Arrangements (3D)drawings Pipingprocurement
Structure
Instrumentation
Electrical
Piping Pipingisometricdrawings
Pipingfabrication
Instrumentation

477
Thechallenge matchingtheconstructionschedule
Process
simulations
Process
data sheet
Equipment
selection &
purchase
Vendor data
Foundation
drawings

478
PlanSafety&technicalcompany(PTR)reviews
(typical)
PREPROJECT PROJECT PRODUCTION
DETAIL COMMIS START

STUDIES SOR BASICorFEED &CONSTRUCTION SIONNING UP
HAZID HAZID
HAZAN HAZAN
S.O.R P&ID DEROGATION
CHANGE REVIEW REQUESTS
HSE SAFETY
CASE/REPORT DOSSIER
TECHNICALSPECIFICATIONS HAZOP1 HAZOP2 HAZOP3 POSTSTART

UPAUDIT
PTR1 PTR2 PTR3 PTR4 PTR5
6months
Feedback afterS/U
479
Input
Tools&Techniques
Output
Detailedengineeringactivitiesschedule
Listofdeliverables
Scheduleofdelivery
480
Keydocumentsforprocurementandconstruction
AFCPlotPlansandPIDs
AreadrawingstoplanandcheckU/Gworks
Civildrawings(U/Gworks,foundations)forcivilconstructionstart&progress
Steelstructures/piperacksdetailedproductionschedulebyareas(ormodules)
withinunitstopermitprocurementandfabricationofeachstructure
Pipingisometricsproductionschedulesbyareas(ormodules)withinunits,tolaunch
prefabrication(40%iso available)andallowprefabseamlessprogress
3Dmodelusedatfabricationorconstructionsiteand/orpiperacksdrawings
Requisitions&TBTstopurchaseequipment
MTOs&requisitions/TBTstopurchasebulks
WeightcontrolforFPSOandPlatformstopsides
Timelyprocessingtoresolvefieldengineeringqueries
Vendordocumentation(uptofinal)
481
Masterdocumentregister
Example
TITLE BLOCK DOC Mgt

MASTER DOCUMENT REGISTER
Company planned return date (AFC)
Company planned return date (ASB)

Company planned return date (IFA)
Company planned return date(IFC)
Company actual return date(AFC)
Company actual return date(ASB)

Company actual return date(IFC)
Company actual return date(IFA
Doc number
Superseded (S) Deletion(D) to
Addition, (A) Modification (M),
Zone or install or WP
System - Subsystem
Planned Date (AFC)

Forecast Date(AFC)
Planned Date (ASB)

Forecast Date(ASB)
Planned Date (IFC)
Forecast Date(IFC)
Planned Date (IFA)

Forecast Date(IFA)
Actual date (AFC)
Actual date (ASB)

Actual date (IFC)
Actual date (IFA)

Document type
Approval Class
Revision date
Progress (%)
Field or area
Weignt (%)
Initial MDR
Originator
Discipline
Revision
Page No
Country
Chrono
Format
SPARE
Status
To be filled by Company X X X X X X X X X
Transm ittal (1) >> (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X) (X)
INITIAL MDR (2) >> X X X X X X X X X X X X X X X X X X X X X X X
Document Number GENERIC DOCUMENT TITLES
NG-USN-GE-ORI-061245 Accommodation Architectural Draw ings CIV DRW
NG-USN-GE-ORI-061246 Administration Building Architectural Draw ingsCIV DRW
NG-USN-GE-ORI-061247 Architectural Draw ings CIV DRW 1 NG USN GE ORI 000001 0 IFC 28/01/2006 1 A3
NG-USN-GE-ORI-061248 Building Foundation Draw ings CIV DRW
NG-USN-GE-ORI-061249 Building plans CIV DRW
NG-USN-GE-ORI-061250 Construction Draw ings/*Shop draw ings CIV DRW
Control Room Architectural Draw ings CIV DRW
482
ControlEngineering
483
Engineeringmanagementdisciplinescontrolkeytasks
Listofactivitiesperdiscipline
Processdesign
Mechanicalequipment
SafetyandEnvironmentalengineering
Civilengineering
Instrumentation,control&telecommunication
Electrical
Installationengineering
484
Engineeringsubcontractorsmanagement
O&GEngineeringContractorshaveskillsingivenProjectAreasofO&Gengineering.
Forlargeprojects,majorEngineeringContractorscanorganizeinPartnerships,with
splitofwork(accordingtotheirskillsandresourcesallocation);theycanalsosplit
theirownscopeofworkbetweendifferentofficesoftheirworldorganization
Forsomespecificareas,specializedengineering(orEPorpossiblyEPC)sub
contractorsmaybeselected(eitherbyCompanyatFEEDtime,withcontracts
endorsedbyMainContractor),orbyMainContractoramongCompanyapprovedsub
contractors,e.g.:
Infrastructurecontracts(e.g.jetties,MOF,camps,buildings,largeseawaterpumping
stations)
ParticularProcessPlants(e.g.LNGTanks,SulphurPlants,CombinedCyclePowerPlants)
EngineeringManagementhasakeyroleinmanagementandcoordinationofthese
subcontractors;itincludes:
SubcontractTechnicalscopedefinition&interfacesmanagementplan
EngineeringTeamresidentatthesubcontractorsoffices
Coordinationprocedures
ParticipationtoprojectReviewsforthisengineeringscope
Managementofsubcontractorsdocumentsreview&approval
Etc.
485
PerformConstructabilityassessment
WhatisConstructability?
Theoptimumuseofconstructionknowledgeandexperienceinplanning,
design,procurementandfieldoperationstoachieveoverallprojectobjectives.
(CII ConstructionIndustryInstituteDefinition)
Dueaccountofcontext/conditionsofconstruction,asinputtodesign,andto
avoidreworkorincompatibility(ex:barredaccessduetoerectionsequence
486
ConstructabilityitemsinLayoutreview
ConstructionandCommissioningInputsintotheEngineering
TCFareas
Trafficatsite(equipmentandpersonnel)
Accessesforequipmentdelivery,constructionequipmentandrigging/heavy
lifts,laydownareas
Accessesformodulesdelivery,liftingorrollinginsitu
Accessesandlaydownareasformaintenance
SIMOPs
Prefabricationplans
Modulefabrication/delivery/integrationplanforoffshorefacilities
487
Exampleofa3Dmodel
Tocheckconstructionfeasibility
488
Typicalengineeringsupporttoprojectreviews
489
Globalprojectsystems
Projectinpartnership principleprojectsystems levels
SCHEDULING,PROGRESSCONTROL,
COSTREPORTING,ACCOUNTING&CHANGEMANAGEMENT
Projectlevel
managementsystems INFORMATIONHANDOVER&PLANTLIFECYCLEINFORMATIONMANAGEMENT
PROJECTCOMMONDOCUMENTMANAGEMENT
Operatingcenter,siteor DOCUMENT PROJECTCONTROL

subprojectlevel MANAGEMENT Schedule,ProgressControl,CostControl,Changes
E,EP,CorF,EPCorEPFF
projectcontrolsystems
MHControl EngineeringProgress ProcurementProgress ConstructionProgress
ENGINEERING PROCUREMENT&
Operatingcenter,siteor CONSTRUCTION MANAGEMENT
CAD,P&ID,3D,INtools, MATERIALMANAGEMENT
subprojectlevel
E,EP,CorF,EPCorEPF LOCALITINFRASTRUCTURE
executionsystems Localnetwork,LocalServers
PROJECTCOMMONITINFRASTRUCTURE
GlobalNetwork,ProjectPortal
Projectcommon PROJECTSTANDARDS&PROCEDURES
systems&foundations ProjectControl,Engineering,MaterialsManagement,ConstructionManagement&Documentation
ITSTANDARDS&PROCEDURES
StandardHardware&Software,StandardDataFormats,InformationSecurity
490
ControlEngineering
491
Engineeringmanagementdisciplinescoordinationand
controlkeytasks
Controldisciplinesprogressbyensuringdesigninformationavailabilityfrom
otherdisciplines,Company(comments,answerstoqueries),other
engineeringcontractorsifworksplitsorsubcontracted,Vendors,orother
parties(interfacesmanagement),3rd partyreview/acceptance,technical
reviews,etc.
Manageweeklyinterdisciplinesmeetingstochecktheaboveanddiscussany
relatedissue
Checkengineeringprogress&mobilizationofengineeringresources(current
andplanned)
OrganizesandManagesProjectReviews(EngineeringDisciplinesContract
Reviews,ConstructabilityReview,PlotPlanandPIDsDesignReviewsbefore
AFDissue,HAZOP&SILreviews,3Dmodelreviews)
Coordinatewithandcontroltheprogress(currentandplanned)of
engineeringsubcontractors,andsatelliteengineeringcentres
492
Principleofdetailedengineeringcompanycontrol
OrganiseKOM,ensureissueofgeneralprocedures,
Reviewand/orApprovalofengineeringdocuments,byCompany,3rdparty
certification
AttendancetoProjectengineeringreviews,supplyofcommentsandroleper
procedure
Reviewand/orApprovalofContractor/Company/Thirdpartiesengineeringmeetings
MOM(whenapplicable)
SupplyanyinformationtobeprovidedorobtainedbyCompany:
BasisOfDesigninformation,
Fromexistingoperations/facilities
Interfaceswithotherpackages
Derogationrequestapproval
Ensurecorrectuse/followupofCompanyprojectdocumentationsystem
Engineeringprogress,includingLicensors/vendors
Qualitycontrol
493
Engineeringdocumentsmanagementsystem
EDMSmanages3categoriesofdocuments:
TechnicalDocuments
ProjectManagementDocuments
Correspondence
494
COMPANYengineeringdocumentsmanagementsystem
Managesdocumentworkflow:issue/distribution/receipt/review/
approval/update
ExchangeofDocumentation(throughDMZ)
ControlofoverdueDocuments/Comments
Securityofdata
SearchFacilitiesforallProjectUsers
ReportingFacilitiesmadeeasyforProjectEngineeringManager
FacilitatehandoverofdocumentstoFieldOperations
Fullaudittrail
495
Documentworkflowduringengineering
496
Summary
Thedetailedengineeringteamisthecornerstoneofthetechnicalorganization.It
willprovideinformationenablingtheProcurementteamtoordertheequipment
andtheConstructionteamwithinformationtoperformtheiractivities.The
sequenceofproductionofengineeringdeliverablesmustbeadjustedtothe
constructionstrategy
Detailedengineeringmustincorporatetheinputoftheconstructionandfuture
operatingteams(resultsofprojectreviews)
Controlofengineeringsubcontractorsiskeytothesuccess,especiallywhenthey
arelocatedinremoteplaces
Areducedfollowonteamhastobemaintainedthroughouttheconstruction
phasetoprovideadviceandclarifications
AgoodEngineeringDocumentManagementSystem(EDMS)mustbeinplaceto
facilitatereviewandapprovalofdocuments
AcompleteFinalasbuiltdocumentationisessentialforfutureoperations
497
Procurement
498
Procurement management
Foreword
Mainobjective
PrepareandimplementaProcurementplaninordertosourcequalityandcosteffective
servicesandequipment
Maintoolsandmeans
Qualitymonitoringandsurveillanceplans
Selectionofefficientandreliablesubcontractors
Findingthebestcompromisebetweencostandqualitywithintheobligationsofthe
owner
Verifyingthattheservicesandequipmentprovidedbythecontractorssatisfycontract
requirements
499
Objectivesofthesession
Understandkeyfactorsinthedefinitionoftheprocurementstrategy
Knowhowtoselectefficientandreliablesubcontractors
Understandthevariouscompetenciesnecessaryintheprojecttoensurethat
thedeliverychainwillbeworkproperly
Understandhowtofocustheinspectioneffortonthemostimportantor
criticalelementsoftheproject
Verifythattheservicesandequipmentprovidedbythecontractorssatisfy
contractrequirements
Knowthesystemrequiredtomonitorstatusofthepurchasedequipment
untildeliveredtosite
500
Aboutprocurementactivities
PlanProcurementactivities
ConductProcurementactivities
ControlProcurementactivities
Closeprocurements
501
ProcurementManagementGeneralObjectives
Todeliverequipment&commoditiesinaccordancewiththerequisitions,i.e
contractrequirements(e.g.FEEDtechnicalpackage),unlessmodifications
arerequired,whicharethentobeagreedwithCompany throughapproved
procedures(EngineeringQueries/DeviationRequests).
TodeliverVendorsdrawings&informationontimetoallowengineering
progress.
TocontrolreviewVendorsofdocumentstoensureVendorsfabrication
continuity,testinganddeliverywithoutproblems.
Todeliverequipment&commodities(incl.spareparts)throughawork
processofquality,i.e.whichwillensureadeliveryinconformitywith
requirements,fullycompletedandtestedtoavoidfixingproblemsat
fabrication,constructionorintegrationsites.
Todeliverequipmentandbulksontimeperscheduletoallow
fabrication/constructionprogress.
502
Closeprocurements
503
Input
LongLeadEquipmentlistfromOwner
Equipmentlistfromdetailedengineering
MTOfromdetailedengineering
Projectschedule
Riskregister
Vendordatabase
ListofCompanyapprovedvendors
Companytechnicalreferential
Toolsandtechniques
Output
504
Projectprocurementstrategy
Procurementstrategywillfocuson:
WorldwideprocurementtooptimizeVendorselectionandprice,inlinewith
thecontractualVendorsList
Projectstandardizationpolicyinparticularforcommoditiessuchas
instrumentation(controlvalves,transmitters),PLC's,LVelectricalmotors,
transformers,switchgear(subsupplierslistsformainVendorsatbidding
time)
OriginofSuppliesaccordingtoProjectconstraints(Financing,LocalContent)
Preferenceforqualitysuppliersintheareawhichmayminimizedelivery
scheduleandglobalcostwhenconsideringshipment&inspectioncosts.
505
Procurementoflongleaditems/criticalequipment
( companyitems )
VendorContractsforLLIs/CriticalEquipmentwillgenerallybeassignedtothe
EPCcontractor,whowillneedtoendorse these(normallyduringEPC
Tendering).Thismayleadtosomedifficultiesinexecutionofthesedeliveries,
suchasinterfacingandconnectingtootherequipment:
Companycontractformatsareusually Contract typeandnot Purchase
Order typeasnormallyusedbyEPCcontractors;theyaresometimes:
NotfullyinlinewiththeEPCContractrequirements.
Madeofinitialenquirydocuments+setsofclarifications(whicharenotnecessarilyall
clearlyunderstoodandmaybearcontradictions)+Vendorsproposals.
Notanticipatingtherole/needsoftheEPCContractorbetweenVendorandCompany.
TheEPCContractorwillneedtorationalisethesecontractsandtoapply
executionproceduresinlinewithhisrequirementsasfaraspossible.
506
Companyitems:LLIsandcriticalequipment
507
Planprocurementactivties
Input
Toolsandtechniques
Marketresearch
Criticalityratingoftheequipment
Output
508
Equipmentcriticalityassessment
TheProjectManagerisresponsiblefortheCriticalityAssessment,whichwill
becarriedoutassoonastheequipmentlistisavailable,andshalloccurprior
toenquiryissue.
TheProjectManagerwillconveneameetingtoperformtheCriticality
Assessment,comprising:
ProjectManagerand/orEngineeringManager
ProjectQualityManager
ProcessManager,ProcessEngineer(s)
LeadDisciplineEngineers,DisciplineEngineer(s)
Procurement(includingInspection)Departmentrepresentative(s)asappropriate
509
Criticalityratingofequipment Typical
8evaluationcriteria,gradedonascaleof1to4,1representingzeroimpactof
thecriterionontheequipmentcriticalityand4representingmajorpotential
impact.
PotentialimpactonSAFETYAND/ORENVIRONMENTresultingfromfailure
PotentialimpactonPLANTOPERABILITYresultingfromfailure
PotentialimpactonOPERATINGCOSTSresultingfromnonavailabilityorreplacementof
theequipment
SEVERITYOFSERVICEresultingfromservicesconditions(P,T,corrosion)
DESIGNCOMPLEXITY
MANUFACTURING/TESTINGCOMPLEXITY
ENGINEERINGSCHEDULEIMPACTresultingfromdelayinengineering,manufacturingor
deliveryoftheequipment
OVERALLSCHEDULEIMPACTresultingfromdelayinengineering,manufacturingor
deliveryoftheequipment.
510
Definitionoftypicalinspectionlevels
511
Planprocurementactivties
Input
Toolsandtechniques
Output
ProcurementmanagementPlan
Procurementscopeofwork
Procurementdocumentation
Selectioncriteria
Scheduleofdelivery
Inspectionprogram
Requestsfordeviations
512
Majorcomponentsofthebidresponse
Programofworkandlistof Warranties
deliverables Productsupport
Schedulebaseline Limitationofliabilities
Performancereporting Feesandretainer
Organizationcharts Rolesand Penalties
responsibilitiesofthekey Incentives
personnel
Insuranceandperformance
Contractorplaceofperformance bonds
Pricingformat Subcontractorsselectionand
controlprinciples
Paymentterms
Changerequestshandling
Placeofdelivery
Terminationclausesand
Inspectionandacceptance proceduresforconflictresolution
criteria
513
Closeprocurements
514
Procurementactivities
Purchasing Expediting
Mainequipment Documentdelivery
Smallequipment Equipmentdelivery
Bulkmaterials Invoiceverification
Spareparts
Inspection Transportation
Progresscontrol Storage
QualityControl Packing
FactoryAcceptanceTests Loading
Carriage
Customclearance
515
ProcurementManagementProcess(Purchasing,
Expediting)
516
ProcurementManagementProcess(Inspection,shipping)
517
Shipping:SometypicalRoutestoKashaganField
518
Traffic
519
Procurementaudits
Inspectionprogram
Surveillanceplan(seequalitysession)
Closeprocurements
520
Materialcontrolsystem
MajorEPCContractorshaveimplementedanintegratedMaterial
ManagementControlSystemwhichincorporatesalldataoncommodities
requisitioned,BillsofBulksMaterials(BOM)andtheirprocurementstatus.
Purchasing,expediting,inspection,shipping,receivingandsitestorageand
handlinginformationisloadedinthesystem,successivelybyengineering,
procurement(expediting)andconstruction.
ThesystemallowsindividualtrackingofbulksitemsfromMTO'stothesite
AtSiteitallowsto:
Continuouslyupdatethematerialwarehouseinventoryuponmaterialreceipts
IssueOS&Dreports
Knowthestatusofmaterialdeliveriesandcheckorforecastavailabilityofmaterialfor
prefabricationorerectioninordertoplanthefabrication/constructionorexpedite
lackingitems(thiscanalsobedoneatHomeOffice).
521
Typ.materialscontrolsystem
EXCELBOMFORELECTRICAL
CAD/MTO ELECTR. IN EQPT.

SYSTEM MTO TOOLS LIST
SYSTEM
PIPINGCLASSES
MR CONSTRUCTION
BOM REQUI PROCUREMENTINFO
SITE,
PIPING
INSTRUMENTATION PURCH. EXP. FABRICATION
ELECTRICAL
OS&D
YARD
EQUIPMENT
STORAGEINFO.
MATERIALCONTROLSYSTEM
RFQ
P.O.STATUSNFO
DELIVERIES/SHIPMENTINFO
VENDORS
BOM
522
Keyelements
ProcurementPlanconfirmedbyallplayers:
Procurementmanager(withCompanyservicessupport)
Vendors,SuppliersformainE(equipment)andBM(bulkmaterial)(E&BM)
Constructionmanagerforsiterequirement,
ShippingmanagerforE&BMconditionoftransportuptositedelivery,
BiddingandTenderingprocedureconfirmedandeffective
SoundandcompleteOrdersconditionanddocumentation:
General,contractingandcommercial,
Technicaldefinitionandscopelimitofsupply
Inspectionand3rd partyrequirement
Vendorsassistanceandguarantee
Finaldocumentation
Procurementteamorganizationempowered,abletoactandreactrapidlyto
changingconditions
523
Companycontrolofprocurement(LSTKProject)
524
PressureVesselsInspectionLevels(Typical)
W:witnesspoint(notificationby
Vendor10daysinadvance),but
optionforinspectortoattend
H:holdpoint(notificationby
Vendor10daysinadvance),but
inspectortoattend&provide
approvalbeforefurther
processingbyVendor
R:Reviewpoint:review&
acceptanceofVendor
documentation.Noformal
notification
525
SurveillancePlan
Criticality Rating of Units

COMPANY Quality Surveillance
1 2 3 4
Supplier Quality System audit prior to commitment X
Review of supplier Quality Manual prior to commitment X X
Supplier Quality System audit during the WORK X X
Review of supplier Quality Plan X X X
Review of supplier Quality Control (Insp. & Test) Plan X X X X
Independent review of supplier engineering documents {1}

Systematic review of supplier engineering documents {1} {1}
Selective review of supplier engineering documents {1} {1} {1}
CONTRACTOR resident inspector at suppliers X

CONTRACTOR part-time inspector at suppliers X X
CONTRACTOR inspector visits at suppliers X X X
Independent Inspection (certifying) Authority {1} {1} {1}
Review of sub-suppliers list X X

Review of supplier purchasing documentation X X X
Attendance to pre-inspection meeting at suppliers X X

Attendance to co-ordination meeting with supplier X X X
Second level direct inspection at Hold points X X

Witness supplier QC specific stages X X X
Witness of final factory acceptance tests X X X X
Intermediate review of suppliers QC records X X

Review of suppliers final QC & Certification(1) dossier X X X X
526
Workshopinspection
Whentoorganizeaworkshopinspection?Howtoorganizeit?
Eithertheequipmentrepresentsatechnicalcriticalelement,orisan
equipmentonthecriticalpathoftheproject.
Someequipmentsuchaspipelinetubesormainpipelinevalvesrequirealso
workshopinspectionduetothesize,thequantityofmaterialinvolvedand
theuniqueroleofanypipelineinaproject.
ItisthechoiceoftheCompanytodecidewhetheritsownpersonnel,theEPC
contractoraloneorathirdpartywillbecalledtoperformtheinspectionat
thesupplierworkshop.
Inspectionhastobeorganisedalongaplanningpreparedassoonaspossible
aftercontractaward.
Youdon'tgetwhatyouexpect,yougetwhatyouinspect
527
Closeprocurements
528
Closingprocurement
Providesformalwrittennoticethattheequipmenthasbeendeliveredand
thatthecontractobligationshavebeenmet
Technicaldocumentation(asbuiltfile)
Outstandingornonconformingitems
Pendingwarrantyissues
Acceptancecertificates(provisional,finalacceptancecertificates)
Lessonslearntdocumentation
Recommendationsforimprovement
529
Summary
Theprocurementstrategyshouldbedefinedatthebeginningofthe
project(internationalsourcingvslocalsourcing,standardizationpolicyfor
theproject
ThelistofpossiblesuppliersshouldbedrawnupwiththeClient(approved
vendorlistinthecontract)
Aratingsystemmustbeestablishedtodeterminethecriticalityofthe
equipmentfortheproject
Basedonthiscriticalityrating,inspectionandsurveillanceplansshouldbe
definedtogetherwiththeresourcesneededtoimplementthem
Forremoteprojectlocations,transportationcanbeanimportantissueand
requireconsiderableplanningandresources
Anefficientmaterialcontrolsystemisnecessarytotracktheequipment
untildeliveryonsite
530
Construction
531
Objectivesofthesession
PresentspecificaspectsofO&Gprojectsintermsofconstruction
Presentorganizationsandcontractingstrategies
Developthedifferentconstructionstrategieswhichcanbeimplemented
Indicateschedulingcriteriatomaximizeefficiencyoftheconstruction
activities
Detailprogressandefficiencymeasures
532
Constructionandinstallationmanagementprerequisites
Thorough,realisticConstructionStrategyandPlanconfirmedbymainplayers:
Constructionmanager(withCompanyservicessupport)
Allcontractors,andtheirmainsubcontractors
Procurementmanagerforequipmentdeliveryatsite
ShippingmanagerforEquipment&BulkMaterial(E&BM)conditionoftransportupto
sitedelivery
Tenderingprocedureconfirmedandeffective
SoundandcompleteContractsconditionanddocumentation
Temporaryandfinalsiteoperability(access,preparation,contractors
facilities,materialstorage,prefabrication,etc.)
Contractorsmobilization,coordination
Constructionteamorganizationempowered,abletoactandreactrapidlyto
changingconditions
533
Constructionmanagement
Fabricationandconstructionactivities
Constructionchallenges
Constructionstrategies
Modularconstruction
Onsiteconstruction
Contractingconstructionactivities
PlanningConstructionactivities
PerformingConstructionactivities
ControllingConstructionactivities
534
Constructionchallenges:projectsize
LargeProjects
Asanaverage
Over10MMconst mhrs
CaseofMegasingleprojectsinthe
MiddleEast
30to50MMconst mhrs
TICrangingfrom3to5GUSD
Directmanpowerpeak:10to20,000pax
MainContractorsitesupervision
mayreach300pax
Nationalitiesatsitemaysurpass30
Challenge:howtodealwithsuch
manpowerintermsof
Coordinationandcommunication?
Accommodation?
HSE?
535
Onsitevs.modularizationapproaches
Parameterstoconsider
Costandamountoflabourcapableofbeingremovedfromtheconstruction
site
Transportationandlogisticsconsiderations
Cost
Feasibility
Localandworldwidemodulefabricationcontractorsworkloadand
availability
Economicsofthevariousoptions
Mainconstraint:tobeeffectiveandallowcompletemoduleassemblypriorto
delivery,themoduledesignshouldbesubstantiallycompletebefore
fabricationcommences
536
Modularizationbenefits
Removesconstructionhoursfromsite
Reducessitecongestionandincreasesavailabilityofworkfronts
Improvesconstructionschedules
Minimisessafetyrisks
Improvesproductivityandcostforthepartoftheworkfabricatedinshops
Reducesscaffoldingonsite
537
Modularizationrisks
Engineeringneedstobecompleteearlierthanforstickbuiltconstruction
Inparticular:electricalheattracing,insulation,
Suppliersdataiscriticaltomodulesdesignandshouldbeavailableintime
Structuralsteeldeliveryisonthecriticalpathinthemodulesassembly
schedule
Modulesbeingshippedtositeincompleteorlateresultincostlyfieldwork
andoutofsequenceerection
Supplychainmanagementmorecomplexincaseofseveralmodules
fabricationyards
Bulkmaterialnotorderedintime
Transportationmeansmustbesecuredwellinadvance
538
SnohvitLNGproject
ModularconstructionandIntegrationataSpanishyard
539
Modularization
540
Specificitiessofamodularizedproject
Foroffshoretransportation,requiresaMOFfacilitytoberthvesselsfor
longitudinal(RO/RO)orlateral(RO/ROorLO/LO)unloadingofthemodules
onSPMTs(SelfPropelledModularTransporters)
Foronshoretransportation,accessroutes(road,rail)tobeidentifiedand
limitationsintermsoftonnagetobedefined
Foralargeoffshoreproject,modulestonnagemayrangefrom40,000tonsto
200,000tons;severalfabricationyardsmayberequired
TransportationVesselsareinlimitedinnumbersandshouldbehiredwellin
advance(precommitbeforeprojectsanction)
SPMTsTransportersarealsolimitedinnumbersandshouldalsobehiredwell
inadvance(precommitbeforeprojectsanction)
541
Specificities ofonsiteconstruction
Mainlyalogisticsproblem
Accessroutesandtraffic
Sufficientareatostoreandpreassemblepartsandequipment
Timelydeliveryofconstructiondrawings
Timelydeliveryofequipment
Managementofalargeworkforce
Accommodationonsite
Accesstotheworkfront
Planningofheavyequipmentinstallation
542
Constructionexecutionplanhighlights
OccupationalHealth&SafetyPlan,SecurityPlan
Organization,Managementplanandprocedures
Accommodation,Camps,siteoffices,TCFfacilities,Accesses&Traffic
Constructionmethods,heavylifts,prefabrication
PlanningandProjectControl
MaterialsManagement
Logistics
ContractsAdministration;ChangesManagement
FieldEngineering
QualityControl
Handovertocommissioning
LessonsLearned
543
Constructionexecutionplanhighlights
Specifcities ofoffshoreprojects
Offshoresiteaccess
Maximalweightacceptableforlift
Acceptablealternatetoheavylift
Coordinationwithlocalfabricationyard
Loadoutprocedures
Transportationprocedures
Siteinstallationandhookupprocedures
Offshorepipelinesconnection/tiein
Offshorepipelinelayingconstraint;shoreapproachguidelines
Pipelineconstructionmainprocedures
Safetyprocedures
544
Constructioncontractualapproach
Keyobjective:selectfabrication/constructioncontractorsthatwillensurea
competitivedeliveryoftheprojectfabrication/construction
Surveysofpotentialcontractors
PrequalificationinquiriestoprepareaqualifiedSubcontractorsMasterList
basedon
InterestintheProject
Qualificationfortheworks
Availabilityofresourcespersonnel&constructionequipmentfortheProjectorforsome
oftheprojectpackages
Competitivebiddingamongqualifiedcontractors,throughaformaltendering
procedureallowing
Acceptanceofcontractconditions
Understandingofthescope
Competitiveprices
545
Contractingstrategyforoffshorefacilities
OffshoreFPUs,FPSOTopsides,hull,andOffshorePlatformsTopsidesare
usuallybefabricatedatyards,eachbeingaworkpackage.
ForanFPSOoraFloatoverplatform,forexample,thestrategymayinvolve
competitivebiddingbyConsortiaorJointVenturesincluding:
AnEPCContractorspecializedinoffshorefordetailengineering,procurementand
fabricationsupervision,hookupandcommissioningsupervision.
AYardforpartoftheprocurement,fabrication,loadoutofthehullorjacketand
topsides.
AnoceantransportationvesselsCompanyfortransportationandmating.
OrbothaboveContractorsmaybeindependentlyselectedbyCompanyafter
competitivebidding
546
Contractingstrategyforoffshorefacilities
ForOffshoreFieldDevelopmentProjectincludingseveralplatformsand/or
FPUSand/orFPSOs,thestrategywillbedevelopedconsideringawork
packageforeach,dependinguponthetypeoffabricationworksrequiredfor
thesupportorhull,topsidesandT&Irequirements.
IftheFieldDevelopmentincludesoffshore,onshore,pipelinesfacilities,the
strategywillbedevelopedaccordinglyfortheonshorepartandtheoffshore
part.
547
Construction/fabricationstrategy
TheProjectconstruction/fabricationactivitiesaresplitintoworkpackages,
generallyaccordingtotheprojectWBS:
ByPlants,byareas,ProcessUnits,Offsites
Andthenbytrades
AndInquirypackagesarepreparedwithBOQandscopeforeachwork
package
Thisallowspossibilitytogroupseveralpackagesafterevaluationoftheoffers
Itmaybenecessarytofindatradeoffbetween:
TosecureenoughcontractorsresourcestoprovidereliableexecutionoftheProject
Butalsotolimitinterfaces,andminimizethenumberofcontractors,easiertomanage
andlesscostly
Theaboveappliesforonshorefacilitiesstickbuiltormodularized
548
Construction/fabricationcontractspriceschedule
contracts
Pricescheduleorunitratescontracts:extensivelyusedforonshoreLSTK
projects:
Directcost:unitpriceforeachitemofadetailedpriceschedule:BOQs(BillOf
Quantities)
Pluslumpsumforindirectcosts,fixedifquantitiesremainwithinarange(e.g.+ 20%)
Thesubcontractorguaranteesaprogresscurveandcompletiondates
Flexibilityadvantageas
Quantitiescannotbeknownexactlyuntildetailengineeringiscompleted
Thesubcontractorcanprogressaslongasworkfrontisavailable,eveniftherearesome
delaysforsomeactivitiesoftheLevelIIworkconstructionschedule
549
Construction/fabricationcontractsunitratescontracts
ThecontractstructureispreparedwithaMasterSubcontractingPackage
(MSP) andspecificsareaddedforeachcontracttype;e.g.,typically:
Sitepreparation
Piling,Civilworks,U/Gpiping,roads,Buildings(independentortogether)
Structuresfabrication
Pipingprefabrication
Mechanicalerection(equipment,piping,structures)
Electricalworks
Instrumentationworks
Insulation,Painting(independentortogether)
550
Benchmarksforconstructionratios
Base:Europe
PeakLabor
AverageLoad=TotalCraftManmonths/Durationinmonths
PeakLoad=8/5xAverageLoad
ConstructionComplexity
Onlyapplicableforprocessandutilityareas
SimpleUnit(e.g.Gasunit) 40 55manhours/m
AverageUnit(modules) 60 75manhours/m
ComplexUnit 80 110manhours/m
(e.g.Integrateddeck,largemodules)
LaborDensity
Tiedtoabovecomplexitydata(m2usefularea)
SimpleUnit 14 18m/man
AverageUnit 17 25m/man
ComplexUnit 23 30m/man
551
Benchmarksforconstructionratios
552
Constructionorganizationprinciples
Safety Construction Construction

Manager Manager QualityRepresentative
Logistic Scheduling&Cost FieldEngineers Administrative

Manager Group andSupervisors Manager
Onshoreareas OffshoreAreas
Managers Managers
553
Constructionorganizationprinciples
FieldEngineersandSupervisors
Construction
Manager
Civil/Struc Mech. Piping E&I
A
AreasManagers
554
Company,maincontractor,constructionsubcontractors
typicalroles
Note:IncaseofaGeneralConstructionorFabricationContractor(nominatedorin
Consortium),MainContractorroleisreduced 555
ConstructionHSEplanhighlights
SubcontractorsSelectionCriteria
CompanyManagementCommitment
ProfessionalCompetenceandQualificationofLabor
EmployeeTrainingandParticipation
SafetyCommunication,SafetyInformation,SafetyMeetings
WorkPreparationandOrganization
RiskEvaluation,JobSafetyAnalysis(partofWorkStatements)
Accidents/NearMissIncidentsInvestigationandReporting
HuntDownandCorrectUnsafeConditionsandBehaviours
ResultsMeasurement,DeviationsAnalysis,CorrectiveActions
FieldandSystemAudits,ContinuousImprovementSystem
EmergencyPlanningandResponse
PermitToWorksystemforworkinexistingfacilities
Safetyawarenessisatsiteandatfacilitiesusedtoworkatsite
556
Materialmanagementsystem
MajorEPCContractorshaveimplementedanintegratedMaterial
ManagementSystemwhichincorporatesalldataoncommodities
requisitioned,billofbulksmaterialsandtheirprocurementstatus.
Purchasing,expediting,inspection,shipping,receivingandsitestorageand
handlinginformationisloadedinthesystem,successivelybyengineering,
procurement(expediting)andconstruction.
ThesystemallowsindividualtrackingofbulksitemsfromMTOstothesite
AtSiteitallowsto:
Continuouslyupdatethematerialwarehouseinventoryuponmaterialreceipts.
IssueOS&Dreports.
Knowthestatusofmaterialdeliveriesandcheckorforecastavailabilityofmaterialfor
prefabricationorerectioninordertoplanthefabrication/constructionorexpedite
lackingitems(thiscanalsobedoneatHomeOffice).
557
Temporaryconstructionfacilitiesplan(1/2)
APlanfortimelyandadequatedevelopmentofTCFisessential,including
drawingsforthesefacilities
Company,ContractorandSubcontractorsofficeswithIT/telecomforeasy
communications
FirstAid/MedicalAidFacilities
MainWarehouse(managedbyMainContractor)
ConstructionContractorsWarehouse/ConsumablesStore
MainLaydownArea
ConcreteBatchingPlant
Concreteprecastingyard
558
Temporaryconstructionfacilitiesplan(2/2)
FabricationFacilitiesPipingprefab(spools,CSSS);steelsupports
SpoolLaydownarea(piping,steel...)
Dressuparea,Aircoolersassemblyarea
Plant&Vehiclesmaintenancefacilities
Testlaboratories/calibrationfacilities
Painting:blastingshop
Hotinsulation&coldinsulationshops
Areasforspecificcontractors(APItanks,RefrigeratedTanks)
Accessroads&gates
Mayreachupto100hectaresforMegaProjects
559
Equipmentdelivery/erection
Minimizetransportationcost/erectioncost
Balancelargecranage requirementcostversusadvantageofdirect
delivery/erectionontofoundations
Deliveryofabnormalloads(heavy,large):
Oceanjumbodedicatedships(RO/ROorLO/LO)tonearestportorprivateMOF
OnlandTransportationstudiestositefoundation
Riggingstudyforerection
560
PerformingConstructionactivities
ControllingConstructionactivities
561
Typicalconstructionschedule
Caseofanonshoreproject
SitePreparation
CivilWorks,Roads,Railways Mechanical
StructuralSteel Completion
U/GPipingInstallation
EquipmentErection
A/GPipingErection
Generallyonthecriticalpath
U/GElectricalCables
A/GElectricalInstallation
ElectricalTracing
Instrumentation
FireProofing
Painting Insulation
Precommissioning
562
Sixconditionstostartconstruction
Deliverables
ApprovedForConstructionDrawingsandspecifications,procedures
Equipment
Rotatingmachines,separators,Pumps
Materials
Structure,pipingcables,cement
Tools
Cranes,weldingtools,controlapparatus
Consumables
Electricpower,water,fuel,weldingrods
Manpower
ResourcesMobilized
563
Constructionscheduledrivers
Engineeringdocumentsdelivery
Equipmentandbulksdelivery
Homogeneousprogressbytradesconsistentwithplannedprogress
Workfrontavailability
Recoverymeasuresincaseofscheduleslippage
Thenprogress/completionbysystemstotransfertheunitstocommissioning
perprecom/comschedule
564
Typicalprogresscurvesandmilestones
PROVISIONAL
ACCEPTANCE
STARTOF
PIPINGSTUDIES
P&IDs &PLOT
PLANAVAILABLE
STARTOF
STARTOF PRECOM/COM
PIPING
PROCESSSTUDIES PREFAB
STARTOFEQP&
MATERIALSPECS
STARTOF
UNDERGROUND STARTOF
WORKS PIPINGERECTION
STARTOF
CONSTRUCTION (above ground)
565
PerformConstructionactivities
Sitepreparation
Disciplineactivities
Precommissioning
ControlandmonitorConstructionactivities
566
Sitepreparation
Somesitesarequitedifficult,bythesea,butrocky,withquitesloppygrounds
(e.g.from0to90melevation).
3to30MMm3 commonforlargeprojects.
BlastingMMofm3 onrockysitesisrequired.
Excavationofcompleteprocessareasandbackfillingwithcontrolled
materialswhensoilistoorocky.
Forshoredevelopments,possibilityofreclamationoversea
Sitepreparationmaytakeupto1or2yearsandadetailedstudymaybe
requiredatearlyFEEDtime.
567
Sitepreparationinarockyenvironment
568
Yardfabrication
ExamplesofSPMTloadout
569
Disciplineactivities
Civil(Concrete/Steel)&Buildings
Phasebyphaseanddisciplinebydiscipline
Mechanical
Releasetopiping
Pipingprefabricationanderection
Releaseafter(hydro)test
Electricity&Instrumentation
Releasetoprecommissioning
Paint&Insulation
Releasetostartup
570
PerformConstructionactivities
ControlandmonitorConstructionactivities
Progressmeasurement
ParticularaspectslinkedtoLocalContent
QualityControl
571
Monitoringofconstruction
ProgressMeasurement
FollowupMonthly/WeeklyProgressbyWorkQuantities/Manhours
ProductivityAnalysis
ManhoursExpenditure
FollowupMonthly/WeeklyManhourspertrade
TrendingandForecasting
CompareearnedmanhoursperWorkQuantities
LookforTrends,Forecast
572
Definitionofmanhours categories
Directproductivemanhours
Hoursspentbytheworkforcetoperformthemeasurablescopeofwork
Theyareusedtoestimatetheresourcesandtomonitortheprogress
Directmanhoursareestimatedusingtheindustry/contractorsratiorelatedtothetype
andconditionsofworktobeperformed
Directunproductivemanhours
Hoursspentinsupportoftheworkforceperformingthemeasurablework,i.e.material
handling,scaffolding,constructionequipmentmaintenance,sitecleaning
Nonproductivemanhours
Hoursspentbytheworkforcenotdirectlylinkedtothephysicaladvancementofthe
worki.e.whichresultfromworkinterruptions,standby,waitingformaterial,interface
problems,waitingonworkpermits,accidents,sickness.Localsitetravelandmealtime
arealsoconsideredasnonproductive
Nontechnicalhoursrelatedtomanagement:projectmanagementteam,supervisors,
inspectors.
573
Manhoursandprogressdefinitions
Costs and Progress definitions:

Earned costs
They represent the costs authorized in the budget to complete or
partially complete an activity
Actual/consumed or spent costs
They represent the actual manhours expended to complete or
partially complete an activity
Progress measurement
Physical progress= actual progress/planned progress
Productivity: earned costs/actual costs
A factor smaller than 1 demonstrates a bad productivity
A factor higher than 1 demonstrates a good productivity.
Depending on companies, productivity may be calculated on man

hours and not on costs, PMI proposes to follow values
574
Monitoringofconstruction:delayonengineering&
procurementresultsindelayinconstruction
Progresscurves
FinEngineering FinProcurement
100
98,7
90 90,1
80
70
60
50
40
36,8
30
20
12,8
10
0
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
2000 2001 2002 2003
Original Plan Engineering Actual Engineering Original Plan Procurement (Bulk Material) Actual Procurement (Bulk Material)
Original Plan Construction Actual Construction Original Plan Commissioning Actual Commissioning
575
ImplementationoftheLocalContentplan
Ensureconsistencybetweencontractorscommitmentsandproject
expectationsintermsofLC(traceability)
Liaisewithcontractors&theirsubcontractorstomonitortheirperformance
andabilitytodeliverLC
SuperviseandfacilitatetheinputofallstakeholdersrelatedtoLCscopeandexecution
FacilitateresolutionofdifficultiesassociatedtoLCdelivery
Buildrecoveryplan,secondmanpowertoassistsubcontractorsorcontractorsin
projectmanagement,etc.
Monitorcontractor/vendortrainingprograms&efficiencyoftransferof
knowhow
576
Localcontent Measurementandcontrol
Localcontentaccountingprocedurespecifictotheprojectcountry
Localcontentmetrics
Tonnage
Manhoursforlocalworkforce
ManhoursforexpatriateworkforceinTheHostCountry
Otherparametersaboutpeople:training,transferofknowhow,monitoringoflocal
employment,etc.(ifapplicable)
Technicaldifficultylevel(1to4)
LocalContentIndicatorsontechnicalandcriticalitylevelforfabrication,assembly,actionsandservices
providedtotheprojectwillhelptounderstandtheeffectivenessoftheindustrialskilldevelopmentand
transfertoknowhow.
Productionsite
Projectcost(percentageofthepackagecost)
Recorddeviationsfromtheagreedplanandexplainreasonsforthosedeviations
577
LocalContentmetricsforconstructionactivities
Tonnages(fabricationorintegrationofstructure/modules)
Tenderersevaluation
Localworkforce
Manhoursbycategory(unskilled,mediumskilled,management)
Associatedcost
Training(evenabroad)
ManhoursforexpatriateworkforceintheHostCountry
Transferofknowhow
Trainingofnationals
ornoexpatriates,oraveryfewminimum
Technicaldifficultylevel(below)
Effectivenessofskilldevelopment&transferofknowhow
Constructionsite(LCimpact)
Projectcost
AggregationofLC%ofpackagecost
578
Constructionqualitycontrol
QualityControlPlansarepreparedtocheckconstructionqualitybyinspection
andtests,asconstructionprogressesandworksarecompleted.
QualityiscontrolledbytheQualityControlteamwhichincludes:
Piping&mechanicalinspectors
Civilworksinspectors
Weldinginspectors
E&Iinspectors
Nonconformancereportsarepreparedwhenworksarenotinconformity
withspecifications,drawingsorconstructionspecifications.
SiteQualityControlmayalsobecontrolledbyanIndependentThirdParty,for
instanceforweldinginspection.
579
Nonconformancereporting
580
Differentconstructionstrategiescanbeenvisaged:stickbuiltvs
modularization
Anumberofconditionshavetobemettostarttheconstructionefficiently
(availabilityofdrawingsandequipment)
Physicalprogressandproductivityarethetwoparameterstobeevaluated
jointlytomonitorefficiencyoftheconstructionoperations
Personnelsafetyiscriticalatthatstage(preventionplanandresourcesto
beinplace)
Specialfollowupoflocalcontentconstructionactivitiesshouldbemade
toensurethatthequantitiesachievedeffectivelycorrespondtothe
contractualcommitment
581
Pre commissioning
and
Commissioning
582
Commissioning management
Foreword
Mainobjective
Successfultransferofresponsibilitiestotheoperatorattheendoftheproject
Maintoolsandmeans
MethodologiesandITtoolstobeusedtoensureefficientprecommissioningand
commissioning
583
Commissioning management
AboutCommissioningmanagement
Planningcommissioning
Methodology
Toolsandtechniques
Organizationandcontracting
584
Definitions
PRECOMMISSIONING,ormechanicalcompletion(nonenergized):
Visualinspectionofequipment(PowerGeneration,motors,cables...).
Qualityofinstallation.
CompliancewithProjectdrawingsandspecifications.
Coldtesting:calibrationofinstruments,machineryalignment,settingofsafety
valves,pressuretestingofpiping...(Deenergizedtests).
Pipesandvesselsairorwaterflushingandcleaning.
COMMISSIONING:allthetestactivitiescarriedoutonanewplant,between
theendofconstructionandtheproductionstartup,whichenergizethe
systems.
Electricalmotorsuncoupledruns,instrumentloopstests,electricalbreakersoperation...
Runninginandonlinetestsofplantutilities,andmainprocessequipmentinclosed
loop(whereverapplicable).
Pipingdryingoutandleaktesting,inerting orloadingofvariouschemicals.
Testsofallsafetysystems(gasdetection,firewater).
585
Completionactivitiesandmilestones
586
Commissioningmanagement
Methodology
Toolsandtechniques
587
Completionactivitiespreparation
Projectphaseandcompletionactivities
Preproject Project Operations

studies
Preliminaryandconceptual
Basicengineering
Detailedengineering
procurement
Construction&
execution
Precommissioning
Commissioningexecution
Startup
Routineoperation
Generalpreparation
Completion
Mechanical
StartUp
Readyfor
Precommissioningpreparation
Commissioningpreparation
588
OverallSequence
589
Interfacebetweenconstructionandcommissioning
590
FromTradetoSystemapproach
CONSTRUCTION:organizedandsplitbyTrades,disciplines(Civilwork,
structural,piping,electricity,mechanical).
CommissioningActivities&Startup:organizedbySYSTEM(Functions)
AsystemisapartofanInstallation(builtbyvarioustrades)thatperformsa
givenoperationalfunctionsuchas:
Safetysystem
Instrumentair
Firewater
Oilseparation
591
Systemapproach
Projet withoutsystemapproach
Project
Projetwithsystemapproach
System1
TIMEBENEFIT
System2
System3
PreComm
Comm
StartUp
592
Systemapproach
Exampleofsubsystembreakdown
Utility
Oil FuelGas Water
OiltoUtilities
ExchA
ExchB
ExchC
HeatA HeatB
Drain
593
Systemapproach
Sub systemdisciplines
VESSELS&PIPING
INSTRUMENTS
ELECTRICAL
MECHANICAL PUMP MOTOR
594
Example:numberofsystemsandsubsystems
595
Methodology
Precommissioningmethodology
Commissioningmethodology
Toolsandtechniques
596
Precommissioning
PrecommissioningisthelastphaseofConstruction(tobemaximized
onshoreforoffshoreproject):
Pipinghydrotests
TestofElectricalInstallation
TestofInstrumentControlLoopsContinuityTests
AlignRotatingEquipment
PunchLists
PreparedbybothConstructionandOperationTeams
CategorizePunchListItems
A= ItemstobecompletedbeforeMechanicalCompletion
B= ItemstobecompletedbeforeStartUp
C= ItemswhichcanbecompletedpostStartUp
D= Nicetohaveitems,butnotpartofthescope,
ItemstobeassessedlaterontheirownmeritbyOperation
597
TASK DISCIPLINE NUMBER SUPPORTDOCUMENT
1CheckListpertypeof
1peritemof equipment&subsystem(Field)
ConformityChecks All equipment(Field)
1CheckListperpackage
1perpackage
1Listofchecksinthe
StatusIndex
1testperspecified 1TestSheetpertest
StaticTests All item(Field)
1testpersafety Listoftestsinthe
item(Package) StatusIndex
Flushing&Cleaning Process 1persubsystemor Specificprocedure&

NetworkorTestPack report
598
Sequencedocumentationanddossiers
Precommissioningdossier
CombinedRFCCertificate
Onedossierper
subsystem
599
TASK DISCIPLINE NUMBER SUPPORTDOCUMENT
1taskreportformper
Preliminary 1persubsystem subsystem+punchlist
All
Checks 1perpackage itemsinPrecomm.
dossier
Functional Electrical 1FunctionalTestSheet

1testperBasic
Instruments Listoftestsin
Tests Function
Telecommunication TechnicalDataBase
1operationalTest
Operational 1persubsystemor Procedureby
Test:multidiscipline
Tests Network Subsystem,specific
totheinstallation
PreStartup 1persubsystem,or Leaktest,Inerting...

Process levelofpressure,or reports,specifictothe
Activities maincircuit Installation
600
Commissioningdossier
RFSUDossierIndex RFSUCertificate
Onedossierpersub
system
601
Handoverdossier
RFHOCertificate
SUBSYSTEMXX
SUBSYSTEMYY
SUBSYSTEMZZ
Onedossierper
hand overunit
602
Overalldossiers
308m 273m 206 HOUDossiers

849 RFSUDossiers
891 RFCDossiers
1,946 Dossiers
603
Methodology
Toolsandtechniques
604
UseofdedicatedITtoolstocarryoutCommissioning
EXECUTION
PREPARATION PUNCHLIST
OPERCOM
FORMS PROGRESS
POPULATION
ENGINEERING REPORTING
605
Methodology
Toolsandtechniques
606
Keyelements
Experiencedorganization,team
Provenreliableprocedures,methodsandsoftware
Setupanddevelopanaccurateandcompletecommissioningdossier(from
RFC,thoughRFSU,toRFHOcertificates)
EffectiveandregularcoordinationwithconstructionTeam
Participationinkeyfactoryacceptancetests(e.g.ICSS)
607
CommissioningwithinanEPCCcontract
Typicalresponsibilitybreakdown
ActorsResponsibilities
Projectphase Activitydescription COMPANY COMPANY COMPANY

CONTRACTOR Construction Commissioning Operation
Manager Manager Manager
Contractstrategy,Precommissioning& Define(with Approve
Commissioningscopeofwork, contractteam) (Commissioning
Commissioningorganizationrequirements Exhibit)
BasicEngineering
Startupsequencesubsystembreakdown Define(Basic Approve
Engineering
CONTRACTOR)
Commissioningorganizationprocedures Define Approve
DetailedEngineering PrecommissioningandCommissioning Carryout Approve

preparation(technicaldossier)accordingto
deliverablesstatedintherelevant
specifications
PrecommissioningActivates CarryCut Control Witness
Construction,Pre
commissioningand
commissioning CommissioningActivities(incaseofEPSC Carryout(Assist) Control(CarryOut) Witness
contract)
608
Typicalcommissioningorganizationchart
COMMISSIONING MA NA GER
COM SITE 1 COM SITE 2

LEA DER LEA DER
SA ME ORGA NIZA TION THA N SITE 1
SA FETY OFFICER SY STEM 1 SY STEM 2 INSTRUMENT ELECTRICA L MECHA NICA L OTHER

ENGINEERS ENGINEERS SUPER- SUPER- SUPER- SUPER-
INTENDENT INTENDENT INTENDENT INTENDENT
EQUIPMENT
PLA NNING OPERA TORS OPERA TORS
PUNCH LIST
COST
1 - O peration INSTRUMENT ELECTRICA L MECHA NICA L OTHER
SPECIA LISTS SPECIA LISTS SPECIA LISTS SPECIA LISTS
V ENDORS REP
3 - Miscellaneous 2 - Specialist
609
Summary
Preparationoftheprecommissioningandcommissioningactivitiesstart
veryearlyintheprojectduringBasicEngineering
Awellstructuredandsystematicapproachisnecessarytohandlepre
commissioningandcommissioningactivities
Inordertoimproveefficiencyofthecommissioningoperations,thelogicof
yardactivitiesischangedfromatradeapproachtoasystemapproach
whenthoseactivitiesbegin
Toolsexistonthemarkettoensurethatallsystemsanditemsare
systematicallycheckedpriortostartup
InEPCCcontractstheresponsibilityforcommissioningstayswiththe
contractorbutingeneralthefutureoperationpersonnelattendsthose
testswithamonitoringrole
610
Collective
knowledge
611
Collectiveknowledge
Foreword
Mainobjective
Gathertheexperiencegainedthroughouttheprojectandtransferittostakeholders
Maintoolsandmeans
Procedurestocloseouttheproject
Returnofexperience
612
Projectcloseout
Input
Documentationfromeachactivityorsubproject
Output
Closeoutreports
Asbuiltdocumentation
Signedhandovercertificates
Contractualobligationsclosure(financialandwarrantyclaims)
613
Managementofcollectiveknowledge
PerformancefeedbacktoProjectOffice
Finalreport
Debriefingpresentations
Lessonslearned
Goodpracticestoberepeatedinfutureprojects
Problemareas
ProposalsforimprovementofCompanyorContractorreferential
DebriefingbetweenCompany,contractorsandvendors
Debriefingwithstakeholdersincludinghostcountryrepresentatives
614
Problem areas
Closeoutactivitiesareessentialbutoftenfaceproblems
Earlydemobilizationoftheteams
Lackofkeypersonnel
Incompletefiles
Underestimationofthetimeneededtocloseoutproperlytheproject
Costissue?
Someoftheactivities(financialclosureorwarrantyclaimsnegotiations)
mightextendbeyondprojectformalclosure
Asmallteamtobemaintaineduntilallthoseactivitiesareclosed
615
Summary
HandovertotheOperationsteamiscompletewhenallcertificates,as
builtdrawingsanddocumentationaredelivered
Asmallprojectteamshouldremainoperationaluntilallcontractualand
warrantyclaimsareclosed
Adebriefingoftheprojectisessentialtorecordpositiveandnegative
experience
Thisfeedbackshouldbetransferredtotheknowledgedatabaseand
internaldocuments/proceduresupdated
616
Conclusion
Everthing is now settostart field operations
617

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ProjectManagement Costs 372

Theneed ofprocess groups

Initiating Executing Asmoreinformationis

Processes toformally conclude theproject orproject phase

Results ofallprevious process groups

Phasing options Fieldarchitecture Technology options

Example ofconceptual selection studies

Example ofconceptual selection studies

Partnerinputs Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts Accordingcontracts

Approvefeasibility Approve Operations

Technicalreviews Yes Yes Yes Yes Yes Yes

Qualityreviews Review Review Review,audits Review,audits Review,audits Review,audits Review,audits

Hazop,Hazid,Hazan, Hazop,Hazid,Hazan, Hazop,Safetydossier Safetydossierfinal

Appraisal andDevelopment studies ononesideandDefinitionstudiesonthe

ProcessUnits Utilities Offsites

HotSection Rigid Flexible Umbilical

Commissioning Construction ProjectControl Engineering

Vendor/ Vendor/ Drawings

Interfacebetween topsides anddeck

Difficulties toidentify allinterfaces

Example ofinterfaceorganization chart

Includes in general several disciplines: For an equipment or materials issued from

Flowdiagram ofcontracting activities

FPSO Wells Drillingrigs

Startup Company with Contractors assitance

Wellequipment Procurement byCompany

DrillingRig Drilling Contractor

Separate contracts EPCm EPC EPCC Turn Key

Pre-FEED, FEED, EPCI Pre-FEED, FEED, EPCI Pre-FEED,FEED,

BULK MATERIALS CONSTRUCTION MGT ASSIGNED L.L. ITEMS

Pipes Pipes Pipes

Commissioning Commissioning Commissioning

Location: GuineaGulf OffshoreCongo

Constructionand Startupand warrantyperiod

produces produces proceeds to proceeds to

Functional Adjusted Analysetheir Comparison ofthe

inorder tolaunch inorder tolaunch inorder tosubmit inorder toaward

Profit at risk = A (M$)

Moho North TLP

Functional organization Projectized organization

Functional Functional Functional Project Project Project

Staff Staff Staff Staff Staff Staff

Staff Staff Staff Staff Staff Staff

Staff Staff Staff Staff Staff Staff

Typical organizational structures

Functional Functional Functional Functional Managementof

Staff Staff Staff Staff ProjectManager

Staff Staff Staff Staff ProjectManager

ProjectManager Staff Staff Staff ProjectManager

Staff Staff Staff Staff ProjectManager

ProjectManager's Lowto Moderateto HightoAlmost

Lowto Moderateto HightoAlmost

Whomanagesthe Functional Functional Project Project

ProjectManager'sRole Parttime Parttime Fulltime Fulltime Fulltime

SafetyEngineer QAEngineer Headof HeadofProject Headof Headof

ProjectEngineer ProcessEngineer PlanningEngineer

Specialist Specialist Supervisor*** Supervisor***

SafetyEngineer QAEngineer WorkPackageManager1 HeadofProject Headof

ProjectEngineer ProjectEngineer Planning Engineer

SiteRepr. SiteRepr. CostEngineer

Engineering Project Construction Operator Commissioning Safety

QAManager Safety ProjectControl SurfaceManager Operator Drilling Subsurface

PREPROJECT PROJECT PRODUCTION

Specialist Specialist Supervisor* Supervisor*