Project Engineering - CoP

Petroleum Development Oman LLCRevision: DRAFTEffective: Dec-5

Petroleum Development Oman LLCRevision: 5.0Effective: June 2012

Petroleum Development Oman L.L.C.

Document Title: Project Engineering Code of Practice

Document IDCP-117

Document TypeCode of Practice

SecurityUnrestricted

DisciplineProject Engineering

OwnerEngineering Project Delivery Manager

Issue DateJune 2012

Revision5.0

This document is the property of Petroleum Development Oman, LLC. Neither the whole nor any part of this document may be disclosed to others or reproduced, stored in a retrieval system, or transmitted in any form by any means (electronic, mechanical, reprographic recording or otherwise) without prior written consent of the owner.This page was intentionally left blankDocument AuthorisationAuthorised For Issue June 2011

Revision History Revision No.DateAuthor(s)Scope/Remarks

5.0June 2012Paul Sanders UEP/5Update to reflect changes in processes and standards, and to make the document more accessible.

4.0January 2011Anton Brouwer/ Mike TurbervilleUpdate/roll-out

4.0May 2010Anton Brouwer/ Mike TurbervilleMajor Update to reflect improvements in processes and standards in Project Delivery implemented since the last revision

3.0June 2004Austin Isaac UEJ1Alignment with Opportunity Realisation Process, Minimum Standards and Global Processes.

2.0April 1999Ohi Aikhoje, OTE4Incorporates comments from engineers, CFDHs and recommendations from external reviews and audits.

1.0August 1998Paul Hagemeijer, OME1Jyoti Kumar Das, OT1/32Graham Bolam, UEIIVarious Project EngineersInitial issue. Note: Originally conceived as an ERD and then converted to a Code of Practice under the new PDO Policy Cascade

Related Corporate Management Frame Work (CMF) DocumentsThe related CMF Documents can be retrieved from the Corporate Business Control Documentation Register.

TABLE OF CONTENTSiDocument Authorisation3iiRevision History4iiiRelated Corporate Management Frame Work (CMF) Documents41Introduction91.1Purpose91.2Target Audience91.3When and how should CP-117 be applied?91.4Scaling the CP-117 requirements101.5Reference documents101.6Document Owner101.7Document Hierarchy102Opportunity Realisation Process123Project Delivery Organisations within PDO143.1Asset Directorates, Central Project Delivery and Functional Directorate143.2Delegated Project Delivery Responsibilities143.2.1Central Concept Engineering Team153.2.2FEED Office153.2.3Central Project Delivery153.3Asset - CPD - Function Relationship153.3.1Facilities Engineering Leadership Team (FELT)163.3.2Corporate Functional Discipline Heads (CFDH) Forum164Project Governance and Assurance184.1Project Governance184.2Project Assurance194.2.1Pre-DG4 Assurance194.2.2Post DG4 Assurance194.2.3Project Controls and Assurance Plan204.2.4Assurance Activities Post DG4215Key Project Activities225.1Front End Loading (FEL)225.1.1Concept Engineering235.1.2Basis for Design (BFD)245.1.3Front End Engineering and Design (FEED) and Project Specification255.2Project Execution Planning (PEP)265.3Risk and Opportunity Management275.4Operations Readiness285.5Management of Change286Project Execution Activities306.1Detailed Design306.2Procurement316.3Construction316.3.1Construction Definition316.3.2Construction Objectives326.3.3Construction Planning326.3.4Mechanical Completion336.3.5Pre-Commissioning346.4Commissioning and Start-Up346.4.1Commissioning346.4.2Pre-Start-up Audit356.4.3Ready for Start-up (RFSU)366.5Project Close Out367Contracting and Procurement377.1Contracting377.1.1Contracting Governance Structure377.1.2Contracting and Procurement Activities & Deliverables387.1.3Contract Owner, Holder & Contract Engineer Responsibilities417.1.4Tendering Process Pre Contract Award417.1.5Execution Process Post Contract Award437.2Procurement, Materials Management & Logistics447.2.1Procurement447.2.2Vendor List Control447.2.3Inventory Management457.2.4Logistics Services458Project Services478.1Planning and Scheduling478.1.1Definitions488.1.2Schedule Development498.1.3Existing Assets and Integrated Activity Planning518.2Cost Estimating528.2.1Capex Estimates528.2.2Cost Estimate Preparation, Assurance and Approvals538.2.3Project Cost Estimates Build538.2.4Base Estimate548.2.5Contingency - Cost Risk Assessment548.2.6Future Market & EPC Premium558.2.7Cost Analogues and Benchmarking558.2.8Estimate Data Collection558.3Project Controls568.3.1Introduction568.3.2Management of Cost568.3.3Management of Progress578.3.4Management of Change578.3.5Management of Risk588.3.6Reporting588.3.7Project Close Out Reporting598.4Project Assurance598.4.1Estimate and Schedule Assurance Reviews598.4.2Programme Build599Quality Assurance609.1Discipline Controls and Assurance Framework (DCAF)6210HSE in Projects6410.1Introduction6410.2Application6610.2.1Mandatory HSE Deliverables6610.2.2Applicability6610.2.3ALARP Decisions Context6710.3Process Safety Management6810.3.1Statement of Fitness6910.3.2DEM1 Mandatory Process Safety Design & Engineering Requirements6910.3.3DEM-2: Process Safety Basic Requirements7010.4Contractor HSE Management7111Information Management7211.1Project Management System (iPMS)7312Finance in Projects7412.1Role of Finance in Project Governance7412.2The Role of Finance within the Project7413Value Improvement Practices7613.1Opportunity Framing7613.2Lessons Learned7713.3Value Engineering7713.4Benchmarking of Project Performance7813.4.1Project Metrics7813.5Technical Standards Challenge7913.6Availability Assurance / Reliability8113.7Constructability8113.8PEP-PER8113.9LIRA8114Project Resourcing and Allocation8215Technical Standards8315.1Technical Standards Framework8315.2DEM183Appendix 1 CP-117 Mandatory Requirements84Appendix 2 Governing documentation, References and Tools85Appendix 3 Abbreviations93

IntroductionPurposeThis Code of Practice (CoP) is intended to be an instruction manual or recipe book for how to manage projects in PDO.Compliance with the requirements stated in this CoP is MANDATORY for all project development and execution activities.Application of this CoP is intended to: Ensure a common way of managing projects within PDO. Facilitate internal and external (shareholder) project approvals. Enhance Project Delivery to achieve World Class performance.This CoP supports the PDO vision: To be renowned and respected for the excellence of our people and the value we create for Oman and all our stakeholdersTarget AudienceThe target audience for this CoP is all staff involved in the development and execution of Projects, for example: Project Managers and Front End Project Managers Project Engineers Project Services Engineers Project Assurance Engineers Contracting and Procurement Staff QA/QC staff Technical Authorities, as defined in DCAF Decision Executives (DE) Business Opportunity Managers (BOM) Members of Decision Review Boards (DRB)When and how should CP-117 be applied?This CoP shall be applied to all PDO Capital Projects. The CoP requirements should be scaled to match the size and complexity of the various Projects, and the scalability is defined in various sections of this document.Throughout the document a distinction is made between Mandatory and Non-mandatory requirements through the use of the words shall (Mandatory) and should (Non-mandatory). Non-mandatory activities are indicated for good practice and guidance.Deviations from the Mandatory requirements shall require formal approval from the CFDH (and TA-1) for Project Engineering (in accordance with SP-2061 Technical Authority System).Although CP-117 does not apply to Field Change Proposals (FCPs), the elements described here are equally applicable to FCPs.

Scaling the CP-117 requirementsIn order to scale the CP-117 requirements, it has been assumed that Projects with higher Capex values generally have higher business risks and complexity, and therefore warrant a higher degree of project management, governance, planning and controls. A simple categorisation of the Mandatory requirements based on Capex is given in Appendix 1.However, some Projects of lower Capex value may have significant complexity, business criticality, strategic importance, HSE exposure or other factors which also warrant a high level of attention. The Business Opportunity Manager (BOM) or Project Manager (or Portfolio Manager) is responsible to recommend in which category a particular Project falls, and have this decision endorsed by the Decision Executive (DE). This decision shall provide the guidance for level of application of processes and tools defined in this Code of Practice.Reference documentsAppendix 2 contains links to the Corporate Management Framework portal (for PDO Governing documents) and Shell iPMS (for Reference documents). Via these two links the most up to date versions of the documents are available. Appendix 2 also lists the PDO Governing Documents, Reference Information and Tools which are relevant to each Section of this Code of Practice.Document OwnerThis document is owned by the Corporate Functional Discipline Head (CFDH) and Technical Authority level 1 (TA-1) for Project Engineering, UEP, who is responsible for its regular update to reflect relevant internal and external learnings and the best practices in project delivery.UEP holds Functional responsibility for Project Delivery.For any questions or clarifications relating to CP-117, please contact UEP or UEP/5. For questions on specific sections of CP-117, support contacts are indicated at the end of each section.Document HierarchyCP-117 forms part of the PDO Corporate Management Framework (CMF).This CoP is designed to implement PDO Policies and to specify the usage of other PDO Codes of Practice, Specifications, Procedures and Guidelines as applicable to Engineering Projects.This CoP is also intended to embed the principles and processes of Opportunity Realisation as provided in the Shell Opportunity Realisation Manual (ORM). It further reflects the intent of all Shell Project Standards (PS), and specifies the usage of certain Shell Project Guides (PG) and Procedures, where these are consistent with PDO strategic objectives.PDOs strategic objectives are indicated in the Diagram below:

PDOs Strategic Objectives

Where other documents are specified for usage, the reference will also indicate whether the documents are Mandatory or Non-mandatory. A Diagram of the Corporate Management Framework is given below:

Opportunity Realisation Process Support: UCI, UEPThe Opportunity Realisation Process (ORP) is PDOs process for managing Projects. Applying the ORP is Mandatory for all Projects and deviation from the ORP requires approval from the relevant Project Decision Executive.The underlying premise is that Project Success comes from: Setting up the Project for success with realistic and achievable goals from the outset. Taking good quality decisions and involving the right people in a clear governance structure. Safeguarding the value across the entire project lifecycle.The foundation of the ORP is the provision of: A decision-driven, stage-gated process which encourages good preparation, planning and appropriate assurance in the execution and delivery of an opportunity. A clear governance structure for the opportunity. Clear roles, responsibilities and competences for the people who lead and staff the opportunities.A project only moves as fast as the decisions are taken, and it is important to take Quality Decisions.

The ORP splits the Project into six phases:

At the end of each phase, up to and including the Define phase, there will be a decision point called the Decision Gate (DG) where the Decision Executive (DE) will decide whether the project is ready to proceed to the next phase. The readiness-to-proceed depends on satisfactory closure of the preceding phase and sufficient business drive, budget and resources to complete the following phase.Each Decision Gate has 3 potential outcomes:1. Project is given Permission to Proceed.2. Project is told to Stop. (Project is dropped because it is not economic, is not aligned to PDOs strategic objectives, or does not have sufficient resources).3. Project is told to Go-back. (Project has to do more work in the current phase to achieve further definition and/or see if there is a Techno-Economic Solution Space).The project team should only go to the decision gate if they have sufficient information for the DRB to decide on one of the outcomes. If the project team has the information early (e.g. the project should Stop) then they should hold the decision gate early.

The objective of each Decision Gate is as follows:PhaseGateObjectiveIdentifyDG1Do we understand what were starting?Do we understand how to exit, if required?AssessDG2Have we identified a full range of strategies and scenarios?SelectDG3Have we selected the optimum alternative?DefineDG4Is everything in place to ensure success?

Once the Project has been operating for some time, there is a look-back (DG5) where lessons learned are captured to be fed-back into future Projects.

The table below illustrates the ORP at a high level with key activities for each of the ORP phases. The key deliverables for each phase are discussed elsewhere in this document.IdentifyAssessSelectDefineExecuteOperate

Initiate Project:Generate ideas. Verify alignment with business strategy, establish potential value and decide whether to fund and staff.Demonstrate feasibility of the Project:Assess a complete range of alternative concepts against a complete range of possible outcomes, in the context of all attendant risks: Technical, Economic, Commercial, Organizational, Political.Select the best concept solution:Assess the best concept for delivering value from the Project and indicate why other choices are not preferred.Define the selected concept:Define technical scope, cost and schedule for Final Investment Decision.Deliver the promise:Deliver an asset consistent with the forecast scope, cost and schedule.Leads to hand-over decision to user for Operate phase.Start-up, operate and evaluate:Ensure performance specifications are met. Maximize return to shareholders. Protect License to Operate.

For further details, refer to the Opportunity Realisation Manual (ORM) and Opportunity Realisation Guide (ORG). The ORP specifies a number of mandatory actions and deliverables: Project (Opportunity) Framing, and Re-Framing at each Decision Gate. Project (Opportunity) Roadmap (Decision-Based Roadmap). Stakeholder Management Plan. Risk and Opportunity Management Plan. Project Assurance Plan.

Project Delivery Organisations within PDOSupport: UEPAsset Directorates, Central Project Delivery and Functional DirectoratePDOs Projects are delivered through a matrix organisation.Asset DirectoratesThe accountability for the initiation, development, business planning and execution of all Projects, ranging from Field Change Proposals (FCP) and minor brown field modifications to major green and brown field developments, rests with the four respective Asset Directorates: Oil North (OND), Oil South (OSD), Infrastructure (UID) and Gas (GD).Functional DirectorateThe Engineering and Operations Function Directorate (UEOD), and the Functional Project Engineering Delivery Team (UEP), through the skillpool managers and the Corporate Functional Discipline Heads, support the Assets in the delivery of Projects by; setting and maintaining the technical and operational standards, procedures and guidelines; verifying compliance against these standards and providing effective independent technical assurance; providing and improving the necessary technical capability (resources, tools and systems); ensuring PDOs resources are deployed in the best interest of the Company and the development of individual staff concerned; providing an effective knowledge sharing framework and delivering timely technical expertise where necessary; providing cost estimating, scheduling, planning and Information Management expertise for all PDO projectsCentral Project DeliveryThe responsibility for managing the execution of major projects (> $200mln) on behalf of the Assets has been delegated to the Central Project Delivery (CPD) department. See section 3.2.3In principle, the Asset Directorates and CPD are resourced to be self sufficient with a full complement of project engineering delivery staff as necessary to deliver the complete range of Projects. However resources may reside organisationally in one of the Functions (e.g. cost estimating staff, rotating equipment engineers, Contracting & Procurement, Finance technical HSE), where this helps to maintain a critical mass and facilitates easy sharing of limited resources and expertise between assets and projects. Delegated Project Delivery ResponsibilitiesWhilst the accountability for Project Delivery ultimately rests with the Asset Directorates, the responsibility for parts of the delivery can be delegated by the Asset to other parts of the organisation (e.g. Concept Team, FEED office, CPD), as described below in this section.Other key delivery activities, executed by the Functions during the Define phase (e.g. Resourcing, Cost estimating, Contracting & Procurement) are further described elsewhere in this CoP.Central Concept Engineering TeamThe concept development and selection of all major Sour and EOR Projects (with an estimated CAPEX above $200mln, depending on the strategic value) is normally carried out in the Central Concept Engineering Team (CCET), co-located in the Development Study Centre (DSC). The decision regarding where the Concept Selection should take place (i.e. in the Asset or in the CCET) lies with the Decision Executive (DE), supported by the DRB. FEED OfficeThe Front End Engineering Design (FEED) of projects with an estimated CAPEX above $100mln shall, by default, be executed by the in-house FEED office. Deviation from this default requires UEOD approval. Projects of smaller size, but of strategic value (e.g. sour projects) can also be carried out by the FEED office, subject to mutual agreement between Function and Asset and subject to FEED office capacity. Central Project DeliveryThe Central Project Delivery (CPD) group is responsible for the execution of major Projects (>$200mln). CPD will be a centre of excellence for Project Delivery. CPD is designed to: Enhance standardization, repeatability and dissemination of lessons learned/best practices. Manage projects according to the latest process and procedures, with particular emphasis on risk and change management.Major Projects (generally >$200 mln) move to the Central Project Delivery group at DG3 and the CPD team is then responsible for delivering these Projects on behalf of the Assets. As the centre of excellence, CPD will also run certain portfolios of projects which fit segmentation themes (e.g. high sour, high pressure, thermal EOR, chemical EOR, etc.). In addition, projects which are particularly complex, contain prototypes or new technology, or have high strategic or reputational importance may also be executed under CPD.Pre-DG3 projects which are likely to be in the CPD portfolio should be identified and agreed between CPD and the Asset Directors during the Program Build, and will be assigned Project Engineering support accordingly. The final allocation decision will be made by the DE (in consultation with the DRB) at DG3, and endorsed by the relevant Asset Director and Technical Director (TD).Asset - CPD - Function RelationshipThe matrix delivery approach described above is reliant on a strong relationship and good collaboration between the Asset, the Function and CPD. This requires clear Roles and Responsibilities, interfaces and communication lines. Two formal interactions are defined, the FELT and CFDH Forum:Facilities Engineering Leadership Team (FELT)The Facilities Engineering Leadership Team (FELT) is made up of the Engineering Managers from the various assets (Oil North, Oil South, Gas and Infrastructure), the Project Managers for major projects (Rabab Harweel, Yibal Khuff, Budour), the Manager of Central Project Delivery, the Function represented by the Project Delivery Manager (UEP), and the C&P Head of Capital Projects (FPO). Other Project Managers or Functional representatives are called to attend as required. The FELT is chaired by the Engineering and Operations Functional Director (UEOD).The FELT meets on a monthly basis to share learnings and discuss project delivery and engineering issues (either ad hoc or long term strategic in nature) that require to be addressed through a common, unified approach. In particular it develops, agrees and reviews the progress against the Project Delivery Improvement plans.The FELT has five main roles and responsibilities:1. The FELT is responsible for influencing Policies and generating Strategies:Given the FELT overview of the entire project delivery within PDO, the FELT is uniquely placed to provide key steer to the organization in the form of Policy and Strategy recommendations, and translating these into Codes of Practice.2. The FELT has accountability for Project Delivery:All projects in PDO report via the FELT members. The FELT is jointly responsible for project delivery within PDO. This responsibility includes accountability for annual spend, and project schedules. The FELT is responsible for setting realistic project targets (budget and schedule). One important aspect of this accountability is to jointly agree staff moves to make the best use of scarce engineering resources across the various assets and projects.Another important aspect of this accountability is the FELT ownership of the corporate risks relating to project delivery.3. The FELT is responsible for disseminating information and driving initiatives:The FELT forum is one of the most effective for disseminating information and knowledge within the organization given the mixture of Assets, major Projects, Function and Line in the FELT membership. The FELT has a responsibility to drive the cross-fertilization of lessons learned and best practices. When new initiatives are rolled-out, the FELT members have responsibility to drive the implementation throughout PDO.4. The FELT is a sounding board:The FELT provides an accessible sounding board to listen to new ideas, challenges, suggested changes, etc. coming from the rest of the organization (e.g. CFDH forum).5. The FELT is an early warning system for the Managing Director and TDG:The FELT informs the MD and TDG of issues that are surfacing within the organization, and provides advice as to how best to deal with these issues. The FELT is the conscience of the organization.Corporate Functional Discipline Heads (CFDH) ForumThe CFDH Forum is chaired by the Engineering and Operations Functional Director (UEOD) and made up of the Project Delivery Manager (UEP), all Engineering CFDHs and the CFDHs for Operations / Commissioning and Start up (UOP) and Maintenance (UOM).The CFDH Forum meets on a monthly basis to share learnings and discuss engineering issues (either ad hoc or long term in nature) that require to be addressed through a common, unified approach. In particular it develops and reviews progress against the Functional Engineering Capability Improvement plan and the annual Functional Engineering Business Plan.The CFDHs provide the technical assurance to projects which forms the back-bone of the Decision Controls Assurance Framework (DCAF). They also assess the competency levels of the various disciplines, particularly the Technical Authority Level 2 (TA2).Project Governance and Assurance Project GovernanceSupport: UEPProject Governance is defined as steer, supervision, support and assurance: Steer: giving direction to the Project Team; encouraging the Project Team to put the right emphasis on the right decisions, deliverables and activities. Supervision: the body providing the governance supervises the quality and robustness of the Teams output. Support: the DE/DRB can provide assistance to the Project Team through expert knowledge and/or providing funds and/or resources. Assurance: the management of a range of activities that collectively inspire confidence in the emerging decisions.

Governance is the responsibility of the DRB, chaired by the DE, up to and including Final Investment Decision (FID, usually the end of Define). After FID, the DRB members may change for continued Governance throughout Execution and Start-up, up to and including the Post Investment Review.The DRB, together with the Business Opportunity Manager (BOM), is responsible for ensuring that Quality Decisions are made throughout the ORP stages.

For Major Projects in CPD the governance Line of Sight runs from the Project Manager via the BOM and CPDM to the DRB. The PDO Technical Director (TD) acts as the Decision Executive (DE).For all other projects, the governance Line of Sight runs from the accountable Project engineer / leader via a Head of Projects and/or the Asset Engineering Manager to the relevant Asset Director (GD, OND, OSD, UID), who is also the DE. Project AssuranceSupport: UEPProject Assurance is defined as the management of a range of activities that collectively inspire confidence in the emerging decisions to be taken by the DE. It also provides an independent view to the DE and the Shareholders on the status of the project and the suggested actions to be taken by the Project team.All Shareholders are invited to participate in key reviews as part of the annual assurance review planning.Pre-DG4 AssuranceUp to DG4 the Assurance of all Projects with a total estimated Capex above $100mln is vested in a Decision Review Board (DRB), chaired by the Decision Executive (DE) with representation from UEOD, and other Asset Directorates and Functional Directorates. The DRB endorses the Project Control and Assurance Plan (PCAP) and the Decision-Based Roadmap, and advises the DE on key decisions; especially the decision to proceed with a project to the next phase. The DE holds single point accountability.In addition, the DRB: Gives mandate to the project team and BOM. Assigns Resources Reviews key project documents and activities (e.g. Risk Management Plan) Meets on a quarterly basis (or more often, if required). Monitors progress on audit and review actions follow-up and closure, particularly those from VARs. Ensures all stakeholders remain fully aware of key issues and project progress. Provides a forum for the BOM and Project Manager to seek help in resolving issues.

The DRB structure in PDO recognises two levels: DRB1, chaired by the TD for all projects with a total estimated CAPEX above $200mln (i.e. all projects in CPD). UCI is the secretary of DRB1 pre-DG4. DRB2, chaired by the Asset Director, for projects with a total CAPEX above $100mln and less than $200mln. The DRB composition and frequency of DRB meetings is defined by the DE. Minutes are taken by a nominated secretary from the Asset.The pre-DG4 assurance process for smaller projects shall take place within the existing Asset Management structure. Projects with CAPEX less than $100mln can also be covered by a DRB2 if justified by the risk profile or strategic nature of the project.Post DG4 AssurancePost DG4 and FID the Assurance of projects with an estimated CAPEX above $100mln continues to be vested in the DRB[footnoteRef:1], again chaired by the DE, but now with representation from Asset and Functional Directorates, including UEOD. At DG4, the DE appoints the DRB members for the Execution phase. [1: This used to be called the PDAB]

The DRB, chaired by the Decision Executive: Confirms the mandate of the project team. Owns the high level Risks and appropriate Risk Response. Provides resources to ensure the project is sufficiently manned. Carries accountability for effective project assurance post DG4/FID. Meets quarterly (or more often, if necessary). Verifies compliance with and approves deviations from the Project Control and Assurance Plan (PCAP). Monitors progress on audit and review actions follow-up and closure, including those from VAR4 and Project Execution Reviews. Ensures all stakeholders remain fully aware of key issues and project progress. Provides a forum for the Project Manager to seek help in resolving issues.While the DE has single point accountability, other DRB members retain shared ownership for the quality of the decisions. The DRB structure in PDO recognises two levels: DRB1, for projects with total CAPEX of more than $200mln (i.e. all projects in CPD) with TD as DE. Other DRB1 members include the Asset Director (deputy DE), UEOD, and other Asset and Functional Directorate representatives. UEP is the secretary of DRB1 post DG4. DRB2, for projects with total CAPEX of more than $100mln, but less than $200mln with the Asset Director as DE. Other DRB2 members include members of the Directorate Leadership Team, a UEP representative and an Engineering Manager from a different Directorate. The latter to ensure cross asset exchange of learnings and challenge. Minutes are taken by a nominated secretary from the Asset. A key member of the DRB is the Operations representative. Representatives from other Functions such as HSE, Legal, Well Engineering, etc. should be invited to DRBs as required.The assurance process for smaller projects shall take place within the existing Asset Management structure. Projects with Capex less than $100mln can also be covered by a DRB2 if justified by the risk profile. For projects where the costs are dominated by well activities the DE may decide that the DRB will be achieved through existing Well Delivery assurance bodies, and chose not to constitute a separate DRB. Project Controls and Assurance PlanFor all Projects with CAPEX in excess of $20mln, the Project Team shall prepare and implement a Project Controls & Assurance Plan (PCAP). The PCAP contains the Discipline Control and Assurance Framework (DCAF)-based deliverable QA/QC process with responsible Technical Authorities (TAs) for each deliverable. The PCAP also specifies specific additional assurance events required for the project. The PCAP shall be approved by the DE and updated at the start of each new project phase. At the end of each phase the DE must check that the PCAP deliverables have been actioned and signed off across the applicable disciplines.

Assurance Activities Pre-DG4Support: UPV, UEP3, UEP5The Value Assurance Review (VAR) process is owned by the Petroleum Engineering Directorate (UPD) and coordinated via Value Assurance Advisor (UPV). VARs provide key Project Assurance prior to decision gates. VARs shall be held for all projects in excess of $100mln towards the end of each ORP phase. The VAR provides independent assurance to the DE that the opportunity is ready to proceed to the next phase.The Estimate and Schedule Assurance Review (ESAR) process is owned by the Functional Head of Project Services (UEP3). ESARs provide independent assurance that the project cost estimate and schedule accurately represent the project scope and risks to project delivery are compliant with ORP requirements. ESARs are held prior to VARs and are mandatory for the following projects: Prior to DG3 for all projects with CAPEX exceeding $200mln Prior to DG4 for all projects with CAPEX exceeding $100mln.Projects of lower Capex with a large degree of complexity or a high risk/uncertainty profile should also be subject to ESAR. The ESAR process is described in more detail in section 8.4.1.The Project Health Check (PHC) process is owned by the Project Engineering Function (UEP5) and is recommended to be carried out as a self assessment by the project team to assess the status of the project against a predefined set of questions. An approved PHC facilitator shall guide the team. Assurance Activities Post DG4Support: UEP2, UPV, UEQThe Project Execution Review (PER) process is owned by the Engineering and Operations Director (UEOD), and coordinated via the Project Engineering Function (UEP2). The PER provides independent assurance to the DE that the project is under control and is being delivered in line with DG4 promises. PERs shall be held on an annual basis for projects with Capex in excess of $200mln. Projects of lower Capex with a high execution risk should also be subject to PER. The Pre-Start-Up Audit (PSUA) is owned by the Engineering and Operations Director (UEOD) and is coordinated via the CFDH Production Operations (UOP). A PSUA shall be held for all projects to confirm to the DE that the project is ready to proceed to the Operations phase. A VAR5 shall be held on projects with CAPEX in excess of $200mln, approximately 1 year after the on-stream date when a full TECOP look-back picture has emerged and performance testing has been completed.An overview of the mandatory requirements is given in Appendix 1.Key Project ActivitiesAlthough there are many activities and deliverables required for successful Project Delivery, the five key activities are as follows:1. Front End Loading.2. Project Execution Planning.3. Risk and Opportunity Management (TECOP).4. Operational Readiness and Assurance.5. Management of Change.Front End Loading (FEL)The essence of Front End Loading is to ensure that the maximum value has been built into the Project during the early phases of design to be set-up for success in execution.As the graph below shows, value is built into the Project during the phases Identify, Assess, Select and Define and can only be safeguarded or eroded during Execution.The early phases (until the end of Define) of the project are the opportunity for Value Creation. This is where the Value Improvement Practices (VIPs) should be applied and attention given to producing quality deliverables. The Execute phase focuses on Safeguarding the Value.

Concept EngineeringSupport: UEP2Concept Engineering is the pre-DG3 engineering activity in support of Project Development and is closely integrated with the subsurface Field Development Planning for Oil & Gas developments. Key deliverables are as per the Discipline Control and Assurance Framework (DCAF, see section 9.1), and the Project Specific Control and Assurance Plans (PCAPs). The main deliverables are summarized below per ORP phase:IdentifyAssessSelect

Project Initiation NoteDecision-Based RoadmapRisk and Opportunity Management planStakeholder Engagement PlanFeasibility Study ReportLevel 1 CESMap of solution spaceStakeholder Engagement Plan Ranked Decision Criteria/ Value DriversField Development Plan*Concept Selection Report (CSR)ALARP DemonstrationExecution and Contracting StrategyPreliminary PEP/PESLevel 2 Cost Estimate and ScheduleBasis for Design(*Except for infrastructure projects)

More detailed deliverables are given in DCAF. Concept Engineering shall take place in line with PR-1358 - Procedure for Concept Selection and Preparing Basis for Design and the key steps are hard-wired in iPMS. Key focus areas for concept engineering are: Clarity on Project Objectives and Value Drivers. Effective use of Value Improvement Practices (VIPs) such as Opportunity Framing, Risk and Opportunity Management, Concept Identification, Urban Planning, Concept Selection, Benchmarking, Value Engineering, Contracting Workshops, Constructability Reviews, PEP-PER, LIRA, etc. Use of the VIPs can be scaled to reflect the size and complexity of the project. Further requirements around VIPs are detailed in section 13. Standardization of approach and solutions: replication wherever possible. QA/QC in line with DCAF and PCAP.Concept Engineering will take place in the Asset and Infrastructure Directorate Concept teams for small and conventional projects, whilst unconventional (EOR and Sour) and major projects with an estimated Capex in excess of $200mln will take place in the Central Concept Team.PDO concept engineers can receive technical support from a Concept Engineering Services Contractor (CESC) as appropriate. This provides a means to get Third Party Support for niche applications where the capability and / or capacity are not available within PDO or the CESC contractor. Management of the CESC contract takes place within the Central Concept Team with UEP2T as Contractor Holder and CFDH Concept as Contract Owner.The Field Development Plan (FDP) and Basis for Design (BFD) are key deliverables of the Select phase. Since the FDP will usually be completed before the Concept Select Report (CSR) is finalised, it is recommended that the Subsurface Team engage with the DRB at completion of FDP to obtain approval for the FDP, prior to the stage gate approval that is DG3(a), to allow completion of the CSR and commencement of the BFD.Basis for Design (BFD)Support: UEP2All projects shall have a BFD. For all projects requiring engineering definition (FEED) the BFD shall be completed prior to DG3.The development of the BFD shall be completed in-house by PDO staff. In case of a shortage of internal resources or specialist technical skills the Asset or Project Team may use external contractor resources or outsource a specific aspect of the BFD but the activity shall always be led by a competent and authorised PDO engineer, and the BFD shall be approved at TA2 level (as per DCAF).During preparation of BFD, the concept in the approved Concept Selection Report is further developed to obtain a cost estimate for the project to an accuracy of +25% / -15% (Level 2). This should also define all system and equipment requirements so that FEED and Detailed Design can progress smoothly, and also forms the basis for the approved Project schedule. To achieve the above the minimum information required to be finalised and documented is given in PR-1358 - Procedure for Concept Selection and Preparing Basis for Design. Standardisation opportunities shall be explored and a project standardisation philosophy justified and documented. In addition, baseline values should be defined and agreed for Management of Change (PR-1247).At the end of the BFD all major Process, Control, Safeguarding, Instrument and HSE philosophies shall be finalised. Where the design involves high pressure or toxic fluids, reviews such as HAZID, course HAZOP, QRA, FEA and dispersion study shall be conducted to develop Plot Plan and Equipment Layouts. For major projects a System Availability study shall be conducted to finalise the equipment sparing.A Value Engineering check for projects between $5 100mln and a proper facilitated Value Engineering Review for projects exceeding $100mln shall be carried out prior to DG3, incorporating the BFD.The BFD is the basis for starting any FEED and is to be endorsed by the Concept team. The Project team takes over the project at the end of BFD and the Project Team Lead will be responsible for Cost and Schedule control against the agreed baseline values beyond this point. i.e. any changes beyond this point shall be subjected to Management of Change (PR-1247).Certain VIPs may be applicable during the Select phase. See Section 13 on VIPs.Close-out of the Select PhaseSupport: UEP2At the end of the Select phase of the project, there should be a formal close-out of the pre-DG3 project activities, capturing lessons learned (positive and negative) and recording the key technical and commercial aspects of the project so far including key decisions.The Project Engineer responsible for the BFD is responsible for the pre-DG3 close out report, in accordance with PG12b Capital Project Close-out Report.

Front End Engineering and Design (FEED) and Project SpecificationSupport: UEP1The Front End Engineering Design develops the requirements of BFD into design deliverables leading to a Project Specification. The transition from Select into Define at DG3 is a key milestone in the Project Delivery lifecycle. It is critical that the project retains continuity of key staff, budget and understanding of any outstanding (sub-surface) risks.The FEED shall not start until the DE mandates it, usually when the BFD and other key Select deliverables have been approved and fully signed off. The BFD should not contain extensive holds on information, or outstanding concept selection choices. The FEED start is also dependent on completion of any key recommendations from the VAR3/DG3.The FEED shall: provide a sound technical basis for the Execution Phase (Detailed Design, Procurement and Construction) with minimal uncertainties; provide a basis for a Cost Estimate with +15% / -10% accuracy (Level 3); provide a firm schedule for the Execution phase; identify all the risks/opportunities and sensitivities.During the FEED all assurance reviews to meet technical integrity shall be completed, such as: HAZID, Design Review, HAZOP, QRA, FEA, PDMS Model reviews (3 stages), SAFOP and IPF. 3D Model Reviews or 2D General Arrangement reviews shall consider, as a minimum, process issues, safety issues (QRA, SIMOPS, etc) maintenance and operational accessibility (including manual handling), constructability (equipment handling requirements and access for construction) and escape routes (on ground and at platforms). An update of the Risk and Opportunity Management Plan shall be made shortly after kick-off of the FEED phase and a risk register maintained during the Define phase to track the Risk Mitigations. Those risks/opportunities that cannot be closed out before execution phase should be mitigated and transferred to the execution contractor for management (see section 5.3).It is important to have PDO approved facilitators/leaders for HAZID, Design Review, HAZOP, IPF and Value Engineering. It is the responsibility of the Project Engineer to ensure close out of all action items resulting from various reviews and maintain the records for the same. The FEED shall deliver a Project Specification which will require only addition of vendor specific information and construction related details. For a detailed list of deliverables and activities to be covered in FEED reference is made to the list of deliverables in DCAF. During this stage, extensive vendor communication needs to be established so that the Process design takes into consideration the most probable scheme in any vendor package. A black box approach, where minimum information on vendor packages are provided, shall be avoided. All interfaces with vendor packages shall be finalised to avoid major changes during Detailed Design. The FEED shall also ensure that all PDO Environmental and Sustainable Development requirements are met.A HOLDS list shall be maintained and any residual holds shall be transferred to the Project Team for management through the execution phase.In FEED stage, specifications for all major equipment and Long Lead items shall be developed. Depending on the procurement strategy these shall be used for procurement by PDO or the contractor.All changes to the recommendations of the BFD shall be subjected to rigorous Management of Change to track possible Project Cost and Schedule impact (see Section 5.5)In PDO, all FEED for projects exceeding $100mln in total estimated Capex are carried out by default by the in house FEED office, if capacity exists, using the FEED office Management system and standards. Smaller project FEEDs are typically outsourced. See also Section 3.2.2.All outsourced FEEDs for projects exceeding $20mln shall be subject to an independent FEED review. Project Execution Planning (PEP)Support: UEP5Planning a project properly and taking it methodically through the various ORP Phases from Identify and Assess all the way through to the Operate Phase is key to the successful outcome of any Project in terms of Value, Cost, Schedule and Quality. The Opportunity Realisation Manual (ORM) sets out a rigorous approach to planning and managing the opportunities and projects throughout the different phases. This approach shall be documented from early in the project (i.e. at the start of Select as a Project Execution Strategy) and shall be developed into a preliminary project-specific Project Execution Plan prior to DG3 and a final Project Execution Plan prior to DG4. The Project Execution Plan is a live document which shall also be updated during the Execution phase as necessary, particularly after contract award.At DG4 the Project Execution Plan (PEP) shall describe in sufficient detail, to the Project team and the project stakeholders, how the project will be executed. The PEP should cover all key project activities, resources and third party contractors involved directly or indirectly in the delivery process. In particular it sets out what internal project controls and external assurance steps will be put in place to ensure the desired outcome as promised at DG4/FID. The PEP should include a realistic P50 ( i.e. 50% probability of finishing before scheduled completion date) and P90 (i.e. 90% probability of finishing before scheduled completion date) project schedule at sufficient level of detail (minimum level 3) to show the inter-dependencies and logical sequence of the various project activities and milestones.The PEP shall also describe the proposed/approved procurement and contracting strategy, and specific plans with respect to project reporting, project resourcing, risk management, HSE and Quality management, Information management, Interface management, subcontract management, Operations Readiness and Assurance, Commissioning and Start Up, Project Hand over and Close out, etc, all of which are needed to ensure delivery against the FID Promise. To develop the Contracting and Procurement strategies the Project team shall conduct a supply chain management workshop and contracting strategy and tactics workshops with appropriate input from all relevant Functions and stakeholders. The typical standard contents of a Project Execution Plan can be found in Project Guide 10a and examples of best practice Project Execution Plans are available in iPMS (see section 11.1).The Project Manager or Project Lead engineer is responsible for the preparation of the preliminary PEP (Pre DG3) and final Project Execution Plan (pre DG4) and ensures the necessary approvals are in place as per the Discipline Control and Assurance Framework. The PEP is a live document and shall undergo updates as the project progresses, particularly at the end of FEED and Detailed Design stages, to reflect any change in strategies required due to developments in the previous phase. In PDO all EMC/ODC projects with a total estimated CAPEX exceeding $5mln (excluding materials) shall have a specific Project Execution Plan, prior to proceeding to the execution phase. For EMC/ODC projects of smaller size a portfolio generic Execution Plan can be prepared. All other projects shall have their own specific Project Execution Plan. Note that the PEP is scalable depending on the size and complexity of the Project.Risk and Opportunity ManagementSupport: UEP31Risk and Opportunity Management concerns the identification and subsequent management of both Threats and Opportunities that might apply to a Project (or portfolio of small projects), and ensures that the risk levels are kept as low as practicable (ALARP) and that the opportunities are exploited to the fullest.Risks are uncertain events which, if they occur, would have a negative impact on the project objectives (e.g. cost, schedule, etc.). Opportunities are similar to Risks except the consequences for the Project objectives are positive. Risks are identified, usually during a risk workshop, in each of the five TECOP types:1. Technical Risks2. Economic Risks3. Commercial Risks4. Organisational Risks5. Political RisksEach Risk is categorised by the probability (likelihood) of occurrence multiplied by the severity of the consequence, and the Risks are ranked in a Risk Assessment Matrix (RAM) that allows the Risks to be prioritised relative to one another.Once Risks have been identified and ranked, the decision can be made as to whether or not the Risks can be accepted, transferred, mitigated or avoided. (This is also known as the 4-Ts: Take, Transfer, Treat, Terminate). All projects should have a Risk and Opportunity Register. For Projects above $50mln this is Mandatory. For Projects above $50mln the Risk Register shall be maintained in EasyRisk. In the Risk Register all Risks and Opportunities shall be recorded, assessed, assigned an owner, and possible mitigation steps and timing. The Risk Register shall be regularly reviewed and updated, particularly at the start of each Project phase.The specifics of how the Risk Management process will be conducted by an individual project (or portfolio of smaller, similar projects) are documented in the Project/Portfolio Risk Management Plan and/or the Project Execution Plan (PEP), specifically: The ongoing process of identification, review and (re)assessment of risks relative to project objectives, roles and responsibilities that enable risk management, how risks will be managed, and how and when risks will be reviewed, reported and communicated.As part of assurance, the project team must also be able to demonstrate that The Risk Register is being regularly reviewed and updated, and the risk environment and the effectiveness of actions taken to manage identified risks are being evaluated on an ongoing basis and The risks in the Risk Register are reflected appropriately in the project cost estimates and schedules, including mitigation and Opportunity cost and schedule impacts. The development of the Risk Register, Risk Management Plan and RAM is the responsibility of the Project Manager. These deliverables are owned by the Business Opportunity Manager, and endorsed by the Decision Executive. Operations Readiness Support: UOP4Operations Readiness (OR) is a focused, proactive and systematic approach to successful commissioning, start up and normal operation of a new facility.The Operations Readiness process in PDO is detailed in PR-1612 - Operations Readiness The purpose of OR is to assist Operations and Engineering Teams to collaborate and ensure that Operations requirements in Engineering Projects are made sufficiently clear, are of a high quality and are met in a timely manner. It is expected that following the prescribed methodology will ensure that: OR aspects and concepts are integrated into all phase of a Capital project. Support Project Manager to deliver the project to the Asset Owner in compliance with the minimum Operations Excellence standards. Ensure Future Asset Owner is fully prepared to receive, operate and maintain the facilities. Right first time commissioning and start-up is achieved. Reduction in changes / modification to design in the latter stages of projects. Specified operational performance over the lifecycle of the Asset can be realized.The OR process includes important sub-processes: Flawless Project Delivery (FPD), which is mandatory for all projects >$100mln. Commissioning and Start-Up (CSU) (PR-1159 - Commissioning and Start-up) Total Reliability (TR) and Technical Integrity (TI) (CP-114 - Maintenance & Integrity Management Code of Practice) Logistics and Infrastructure (L&I)Management of ChangeSupport: UEP3Management of Change is an important factor in ensuring that projects are completed on time and within budget. Changing the project scope, other than developing and defining the scope throughout the Select and Define phases and carrying out the detailed engineering during the Execute phase, should be discouraged in principle and by definition.Strict scope management should be applied in order to safeguard the schedule, the cost and the quality of the project. Any change of scope, or the transfer of scope from one contractor to another (or one project to another) is subject to formal change control.Proposals for changing the project baseline documents, scope, quality, schedule and cost, should be strictly controlled at any point in time in the project once the Select Phase has been completed. All projects shall adopt the Management of Change (MOC) procedure PR1247. The procedure: Describes the process for controlling and managing technical change during the concept definition and execute phases of PDO projects. Sets out a series of key Baseline Value Drivers (BVD) for the projects which shall be developed during conceptual Select phase and approved by the DRB at Decision Gate 3 (DG3). If a change occurs through DEFINE an updated set of BVDs are approved at DG4. These Value drivers are normally captured in the Field Development Plan, the Concept Select Report, the Basis for Design and the Project Specification Describes a structured method of assessing and approving or rejecting changes against these parameters. A change to the Baseline Value Drivers will either increase or erode the value of the project and is therefore subject to the MOC. All changes are documented in a Change Proposal Form. Defines Approval Levels associated with the varying degrees of change. Sets up the Change Review Panel consisting of senior project personnel that meets regularly and acts as the Stage Gate screening and approval body for change impact. The Panel will review every Level 3/2/1 change proposal and ensure that all implications of the change are considered before being accepted or rejected. Periodically, the Panel reviews the list of Level 4 change proposals.The Project Change Coordinator (usually appointed from Project Services) maintains the Project Management of Change process.Project Execution ActivitiesThe Project Execution phase commences from FID and usually starts with Detailed Design and Procurement before moving into Construction, Pre-Commissioning, Commissioning/Start-up and Initial Operations. Note that each of these activities may overlap:

The PEP, Risk and Opportunity Management and Management of Change (as described in Section 5) continue to be applied and updated during the Execute phase, while the Operations Readiness becomes increasingly important.Detailed DesignSupport: UEPIn the Detailed Design phase the Project Specification developed during FEED shall be further detailed to the level which is needed for procurement, fabrication/construction, testing, commissioning and handover. For deliverables to be produced in this phase refer to SP-1134 - General Specification for Detailed Design and Engineering of Oil and Gas Facilities. Key assurance and design reviews are carried out during the Detailed Design phase, after incorporating any changes to the FEED design basis and actual vendor design data. It is important that the vendors participate in these reviews so that any assumptions made in the design are corroborated by them and all controls and safeguarding issues in vendor packages are addressed to PDOs satisfaction. It is important that minimum changes are made to basic schemes, philosophies, material, strategies etc in the Detailed Design. Any such changes shall be subject to rigorous Change Control.When the Detailed Design deliverables are developed to a reasonable level of detail, a Constructability Review shall be done with participation from experienced construction personnel. For Green field projects this may be done in a 3D PDMS model review. In Brown field projects a site review in addition to a 3D model review will be required. For major or complex projects, the benefits of 4D modelling should be evaluated.During the Design the contractor will be expected to set up a Material Management System including tracking, receipt, handling, storage and preservation and installation. The use of Radio Frequency ID (RFID) tagging is recommended.It is important to set up a Commissioning Team at the early stages of Detailed Design and involve them in the review of Process schemes and participate in reviews such as HAZOP to ensure the requirements of Commissioning are incorporated in design to enable Flawless Start up. For large complex projects early commissioning planning input is required in the Front End phase of the project, as the commissioning by systems may determine the packaging of the facilities scope in FEED and subsequent execution phases. The Detailed Design scope shall also include development of Commissioning and Start up procedures, Operating and Maintenance manuals, setup of the Construction Completion Management System (CCMS), SAP Plant Maintenance System, HSE case, Safety Critical Elements, etc. Close-out of the Detailed Design phase includes handover of these deliverables to the Operator in the correct data format.ProcurementSupport: FPOThe Procurement phase may begin before Detailed Design, particularly for Long Lead materials and equipment. However, the other procurement will commence during the Detailed Design phase and continue into Construction.Procurement is discussed in more detail in Section 7 and the Quality Assurance and Control aspects are discussed in Section 9.ConstructionConstruction DefinitionSupport: UEPIn PDO construction activities are usually contracted out to third party companies. The size of construction scopes/projects varies from the very small plant modifications to multi-million dollar construction projects, involving a large workforce and construction periods of three or more years. Contracting mechanisms vary depending on size and complexity of the work ranging from agreed day rates to lump sum prices.Key Construction activities include but are not limited to the following: Input in design and confirmation of work scope. Site establishment including offices, lay down, specialist storage, welfare facilities, local fabrication areas, workforce accommodation (e.g. onshore camp) supply base and staging points. Set up and maintenance of Material management system including tracking, receipt, handling, storage and preservation and installation. Identification and recruitment of competent contractors and resources and where applicable the development of local content strategies and plans. Construction sequencing and planning and resource loading, including levels and competencies of personnel. Job hazard analysis and Development of Construction methodologies e.g. stick build versus modularisation strategies. Development of work packs and inspection and testing plans. Fabrication of structures, piping and installation of major items of equipment e.g. vessels, compressors. Specification and procurement of specialised installation/construction equipment e.g. heavy lift equipment. Logistics associated with the mobilisation of personnel, equipment and materials. Mechanical completion leading on to Pre-commissioning of all utility and process systems (Refer to sections 5.6 onwards for Mechanical Completion and Commissioning definitions). Following pre-commissioning, handover to the Commissioning and Start-up (CSU) Team for live commissioning , start up and operations.Construction ObjectivesSupport: UEP-Overall: To construct the Project as per the approved design drawings, specifications and standards in a manner that ensures the overall project objectives are met, typically including specific targets set for cost, schedule , HSE, quality and local content:-Safety: To design and construct the facility in a manner that minimises risk to the construction workforce during construction and ensures a safe and orderly start up on completion.-Schedule: To develop and pursue a proactive, realistic and sufficiently detailed execution plan in line with overall project objectives that effectively utilises available design deliverables labour, materials and equipment in the most efficient manner.-Quality: To maintain rigorous quality assurance and control on all construction activities, to ensure full compliance with project technical specifications and standards and allow timely and efficient (pre)commissioning and start up, as per overall schedule.-Cost: To execute the project within budget and to continuously look for the most cost effective implementation options.-Local Content: To meet the Project local content requirements and support the development of local capability.-Management of Change: To manage and control changes which occur during construction (e.g. site queries/clashes) to minimise impact on Cost, Schedule, Quality and other project objectives.Construction PlanningSupport: UEP3For reliable project execution planning a Level IV Detailed Construction Schedule shall be prepared soon after the start of the detailed design. This level IV is typically prepared by the main Construction contractor, shall cover all subcontractor construction activities, shall be fully aligned and integrated with the design and procurement schedule and be fully resourced with man-hours and materials from which a progress S curve can be constructed. Estimated construction durations shall be based on proven local productivity levels and realistic resourcing levels. It is vital that a Level IV Schedule is produced before work starts on site and that the plan is adequately reviewed by all the disciplines to ensure it is a realistic and robust plan. The absence of a detailed level IV plan is an indication of poor project planning and control and delays and re-work can be anticipated. The Level IV Schedule is used by the Contractor in planning, executing and controlling his work. A Level IV Schedule can also be used in planning work to be implemented during a plant shutdown. These detailed schedules typically consist of thousands of activities and are updated at least weekly and in some cases daily.The Contractor on medium to large Projects should be reporting against the following Key Performance Indicators (KPIs) weekly but certainly monthly: Progress % actual versus planned (this is physical progress NOT cost progress). Construction milestones achieved versus planned. Direct man-hours achieved versus planned. Indirect man-hours to direct man-hours ratio. Cost Latest Estimate versus planned and commitment.For the more complex projects the Contractor should also produce a Level V Schedule which gets down to job card level (see below) and includes all the man-hours, materials, tools and equipment needed to do a particular task.For complex multidiscipline construction scope, particularly in large Brownfield type projects it is good practice to plan the entire construction scope at Job Card or Job Pack level. A Job Card or Job Pack would contain the following information: AFC Drawings/Engineering requirements. Safety Statement/Risk assessment 9toolbox Talks). Permit to Work requirements (including isolation requirements). Material requirements. Scaffolding/Rigging support. Construction/Execution Check sheets (Quality (QC) Requirements). System Construction handover requirements/punch lists.It is important when pre-qualifying construction contractors to make sure they have the capability in terms of experienced personnel, systems, labour and equipment to undertake the scope of work being requested.As a tool to help manage construction safety risks, Shell has introduced a set of Wisdom packs. These wisdom packs are intended to be used as a job hazard checklist, specific for the upcoming work phase (e.g. trenching, pipe installation, cable terminations).Each sheet has links to applicable Control Framework manual sections, Life Saving Rules guidance, typical do and dont examples, training material applicable to the activity, typical risks/hazards associated with the activity andcross-business information related to the activity.Sheets are developed for activities in both the construction and fabrication sites and will be updatedon an ongoing basis as deemed necessary.Mechanical CompletionSupport: UEPMechanical completion is a milestone achieved when all specified construction work is complete and acceptance inspection and physical testing is satisfactorily performed and documented.Typically, inspection and testing activities performed to achieve mechanical completion will be carried out on a single discipline basis, by construction work packs, building to systems / subsystems. Such activities will not require equipment or systems to be energised, but may include bench calibration of instruments, electrical insulation tests, electrical continuity tests, hydro testing of pipes and integrity testing of valves.Mechanical completion will be documented on check sheets known as A check sheets, which will be generated and managed by the Completions and Certification Management System (CCMS) to ensure that asset integrity can be verified and demonstrated. On achievement of mechanical completion, responsibility for the facility will transfer from those responsible for construction to those responsible for pre-commissioning and commissioning.Pre-CommissioningSupport: UEPPre-commissioning activities undertaken after mechanical completion, but prior to commissioning, are to prove and validate the functioning of equipment. Such activities could involve the introduction of fluids into systems, but not hydrocarbons.Typically, pre-commissioning activities will verify that documentation to support mechanical completion is in place, and not repeat work carried out to achieve mechanical completion. Such activities are carried out on a single discipline basis, by system / subsystem, and require equipment or systems to be energised, but do not require the introduction of process fluids. Activities include instrument loop checks, panel function tests, energising electrical equipment and running motors without loads. They are documented on B check sheets, which will be generated and managed by CCMS to ensure that asset integrity can be verified and demonstrated.At the start of pre-commissioning, CCMS needs to be ready, operational and maintained up to date and the commissioning Permit to Work (PTW) System activated.Normal dump flushing is typically a construction activity but specialist flushing and cleaning, e.g. chemical and hydraulic cleaning, drying, oxygen freeing etc, falls within the integrated Commissioning Teams responsibility - see SP-2051 - Specification for Flushing, Pressure Testing, Pickling and Sensitive Leak Testing of Mechanical Equipment and Piping.Commissioning and Start-UpSupport: UOP4The key principles for Commissioning and Start-up are outlined in SP-2113 - Specification for Commissioning and Start-Up (Key Principles). The management, technical preparation and subsequent execution of facility pre-commissioning and commissioning activities, up to the point where the facility is ready for Start-up is described in PR-1159 - Commissioning and Start-up, which also covers start-up and testing of the facility to achieve steady-state operations and handover to the future asset owners organisation.It addresses preparation and execution of commissioning and related activities for all types of developments, i.e. oil, gas or power generation projects, Greenfield or Brownfield etc, along with execution considerations related to the execution strategies adopted. CommissioningSupport: UEP, UOP4These activities are those undertaken after pre-commissioning to dynamically verify functionality of equipment and to ensure that systems, or facilities forming part of a system, are in accordance with specified requirements to bring that system into operation. Typically, commissioning activities undertaken after pre-commissioning will be carried out on a system basis by a multidiscipline team of engineers and operations staff under simulated conditions. Commissioning responsibility may necessitate nitrogen and helium testing, which shall normally be executed by specialist contractors and supported by the commissioning personnel.The Commissioning Start-up (CSU) Team will start up and operate the non-hydrocarbon systems during commissioning activities until these systems are fully proven and provisional handover to Operations can be carried out. For hydrocarbon systems, provisional handover will take place after all pre-commissioning and commissioning activities have been completed up to the point of hydrocarbon introduction. The Operations group takes responsibility for the introduction of hydrocarbons, the Start-up activities and operation of hydrocarbon process systems. Co-ordination between the Operations and CSU is essential and particularly so on Brownfield sites. In this instance, a Commissioning Leader may report to an asset owner for the duration of CSU activities.The Commissioning plan and Start-up sequence shall be developed for the Integrated Production System (IPS) during the Front-end Engineering Design (FEED) and detailed design; with clear distinction between non-hydrocarbon systems (e.g. firewater, utility air, sewage etc) and hydrocarbon systems (e.g. process system, fuel gas, drains/vents etc.)At some point commissioning requires the introduction of fluids (process or non-process) and operation of the system. This will be documented using a procedure which shall be compiled specifically for the project and provide for signature on completion of each step. The procedure shall form part of the Commissioning Management System (CCMS) to ensure that asset integrity can be verified and demonstrated.Pre-Start-up AuditSupport: UEP, UEQ, UOP4For all projects, a pre-Start-up Audit (PSUA) shall be carried out prior to introduction of hydrocarbons. The PSUA shall be carried out by an independent Function-led review team, including representation from Operations, Engineering and HSE. UOP is the process owner for PSUA and co-ordinates all PSUAs in PDO. The audit shall verify key items such as: Facilities are constructed as per design; Operations philosophy is complied with; Asset Integrity Process Safety (AI-PS) requirements have been met and a Statement of Fitness has been signed; Necessary vendor support is identified and scheduled; Operations staff are sufficiently trained and competent; Operations Management System (OMS) is operable and ready for steady-state operations; Commissioning imperatives are in place and complied with; Project assurance in place; HSE-MS is in place.The Pre-Start-up Audit will be used to demonstrate the operational readiness of the facilities and systems.Ready for Start-up (RFSU)Support: UOP4, UEQ, UEPI, MSE4RFSU is considered as the point when all activities necessary to support the introduction of hydrocarbons, including all utility and process utility, safeguarding and shutdown systems have been pre-commissioned, commissioned and integrity verified.The verification of readiness for the introduction of hydrocarbons shall require the contractor / project and the asset owner to agree that all systems, facilities, processes, skills and procedures required to control, safeguard and support the introduction of well fluids / hydrocarbons for live process systems testing, and subsequent production operations, are available, proven and commissioned (function checked and/or dynamically tested).All projects shall provide proof of verification of Asset Integrity Process Safety by means of a Statement of Fitness document prior to start-up.All the items in this section are executed under the umbrella of Operations Readiness and Assurance (OR&A) See separate section on this subject.Project Close OutSupport: UOP, UEP3, UEPIProject Close Out is the formal process of recording technical and commercial completion of a project.The Project Engineer responsible for a project shall initiate the Project Close Out process after completion of construction. It is the responsibility of the Project Engineer to co-ordinate and ensures that all the activities indicated in PR-1150 - Project Close Out Procedure and Work Instruction are completed and the Project Close Out Certificate (PCC) is endorsed by all signatories that includes: SAP TECO transaction -Technical completion of project. Acceptance signature of completed facility by Asset Manager List of Surplus Material. Fixed Assets Created, Fixed Assets Made Redundant & Fixed Assets Data Acceptance. As Built Drawing Acceptance, in the correct data format. Details of Outstanding charges & unsettled claims (if applicable). WBS Level 4 and 5 Close Out (including Design project close out). Complete project file with all project data in the correct data format. DEM1 compliance report.In addition, for all projects >$20mln, the Project Engineer shall produce a formal Project Close-out Report, detailing the above aspects and any relevant lessons learned.Contracting and ProcurementContractingContracting Governance StructureSupport: FPOIn PDO all Contracting and Procurement of 3rd party services and materials shall be in full compliance with the requirements stipulated in CP-129 Contracting and Procurement Code of Practice and in accordance with GU-425 Contracting and Procurement Guidelines and PR-1233 Contract & Procurement Procedure. The governance structure around Contracting and Procurement is provided through 2 different bodies, these are: Minor Tender Board limit for Goods Procurement above $130k and for Services above USD 50k to maximum of $2.5mln except for Government Gas requirements the maximum limit is $650k. Major Tender Board for all proposals above $2.5mln except for Government Gas requirements above $650k. Procurement and Contracting Steering Committee (PCSC) for all proposals above $10mlnThe Role of Tender Boards is to ensure the following: Representative, qualified, suitable Vendors are invited to bid. Bids are evaluated comprehensively and fairly. The process of contracting is conducted ethically and transparently. Contracts awarded at best commercial value to Company. Awards are in accordance with Company objectives. There is consistency of Contract award and implementation.It is important that Ethics is maintained throughout the entire Contracts process and in accordance with GU-529 Statement of General Business Principles..The Project team mandate is to ensure that all essential internal as well as external project specific approvals are obtained in time to meet the planned project delivery schedule.Following is a summary table of MTBC approval requirements. For full procedural details please refer to PR1233 Contract & Procurement Procedure..Contract StageReferral Requirement

Pre - TenderContract Strategies

Tender Lists

Company Estimate

Tender PeriodTechnical Disqualification

Technical & Commercial Evaluation Model

Company Estimate alterations

Opening Commercial Bids

Commercial Clarifications

Contract StageReferral Requirement

Contract AwardFailed Tender and CallIn the Tender Bond

Negotiation results

Contract Awards

Contract ExecutionRevised ACV Limits

Suspension/Termination

Annual reviews over USD 10 Million

Variations to ContractChanges

Significant changes to Terms & Conditions

New scope

Extensions of Time

Claims exceeding Review Limit

Contracting and Procurement Activities & DeliverablesSupport FPOThe table below lists at summary level the Mandatory Contracting & Procurement activities and deliverables per project phase. This is important in order to ensure that: The scope of Contracting and Procurement strategy and implementation activities for all phases of a project are defined and applied with the intent of delivering goods and services on agreed schedule and at a commercially competitive price without jeopardising the quality. Market capability and capacity, category opportunities and local content requirements are fully addressed in the acquisition of goods and services.Petroleum Development Oman LLCRevision: 5.0Effective: June 2012

Petroleum Development Oman LLCRevision: DRAFTEffective: Dec-5

Petroleum Development Oman LLCRevision: 5.0Effective: June 2012

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Capital Projects C&P Mandatory Activities & Deliverables:

IdentifyAssessSelectDefineExecuteOperates

Activities** General Market Analysis up to date / revised.

** Identify major factors that influence the project Execution strategy.

** Identify standardization and repeatability opportunities across the project portfolio including category options.** Identify ICV opportunities** Assign Project CP support personnel.

** In depth and current market analysis completed. ** Develop Project Contracting Strategy aligned with project drivers including standardization and repeatability opportunities.** Select appropriate ICV options

** Identify Procurement List of Major Long Lead equipment and critical materials.** Concept Executability realistic assumptions (demand & supply).** Commence Internal & External approval & governance process.

** Prepare Contract Plan.** Provide input into Project Execution Plan.** Stakeholder engagement and acceptance of strategy.** CP team fully established and ready for execute.** Contracting strategy updated.** Define Scope of Work for execution contracts.

** Risk-based tactics developed for main contracts.** Define ICV targets** Prepare Post-Award Contract Management Plan.

** Compile ITT document.

** RFQ & Award Long Lead items & Mobilize early works.

** Prepare Tender Evaluation Plan with approved Technical Evaluation Model.

** Award Contract(s).

** Conduct Kick off meetings.

** Manage, control & report Execute contract(s) delivery and performance against the Contract Management plan.

** Milestone schedule compliance.** Budget (ACV) compliance.** Manage and control contract variations and correspondence.

** Advice on resolution of contractual issues/ claims.** ICV promises achieved and communicated.** Proactive contractor management managed at all levels.** Claims management** Implement CP Transition Plan.

** Provide input into Project close-out report and Lessons Learned.

** Maintain all project warranties.

IdentifyAssessSelectDefineExecuteOperates

Deliverables** CP Objectives and CP Assessment of feasible concept under consideration.

** Project Category Assessment (to be finalized after Contracting Strategy Workshop).** Pre-Award Contracting Activities clearly defined and dates allocated.** Project resourced.** Governance in place.** Project Contracting & Procurement Strategy.

** Pricing Scheme from Contract Tactics Workshop.

** Post Award Contract Management Plan.

** ITT, Evaluation Reports & Award documentation.** Long Lead items & early works Contracts.

** Project Execution Plan.** Execute Contract(s).

** Contract Management Documentation and Close out Plan for major contracts.

** Contracts & Procurement Transition Plan.

Contract Owner, Holder & Contract Engineer ResponsibilitiesSupport: FPOThree key roles are associated with managing contracts: Contract Owner: Integrity management of the contract by having level of authority to direct contracting process to protect overall Company & Asset objectives. Legally responsible for all aspects of the control of the contract. Should attend Tender Board presentations to support Contract Holders. Should at all times be aware of HSE and Quality issues in each contract. Contract Holder: Shall have single point responsibility for: Activity management of the Contract and verification that controls are in place. Advising contractor and/or contractor personnel of activities requiring their action. Contract Engineer. Shall support and provide Commercial advice to the Contract Holder during the development and implementation of contracts.Contract Holdership Scheme: It is mandatory for all Contract Holders & Contract Owners to attend the Contract Holdership Course and to get assessed and certified for competency.Appointments of Company personnel: The Contract Owner shall nominate in writing a competent Contract Holder to manage the contract. The Contract Holder shall nominate the Company Representative and the Company Site Representative if required. The responsibilities delegated to them shall be well defined in writing and the Contractor shall be informed of the same. The Contract Engineer shall be nominated by his supervisor based on competence.For further procedural details please refer to the PR-1233 - Contract & Procurement Procedure (CPP).Tendering Process Pre Contract AwardSupport: FPOThe tender process shall be carried out in compliance with the PR-1233 - Contract & Procurement Procedure (CPP) and is summarised as follows: Planning & Scheduling The Contract Holder shall prepare the pre & post contract plan & schedule. Development of Contracting Strategy Contracting Strategies shall be developed for contracts with an estimated value in excess of US$10 million. The Contract Holder is responsible for the development of the Strategy and has to seek Tender Board endorsement. PCSC (Procurement and Contracting Steering Committee) approval is required prior to visiting Tender Board.These Contracting strategies shall clearly identify; The top five solution attributes or objectives that the project will strive to achieve referred to as the Value Drivers (and derived from the Project Drivers). Alternative contract scenarios/options for delivering the project requirements. Tactics Workshop to identify the contract pricing structure to be utilised.The output will be in the form of a Contracting Quilt see example below showing possible different contracting options for various Capital Project phases:

PDO Projects Portfolio Contracting Strategy

Selection of Tenderers There are various options for selecting Tenderers to participate in a tender such as PDO Public Tender (PPT), Prequalification, Registered contractors, Pre-select and Unregistered contractors. The default approach is PDO Public Tender. The option is selected based on the Preliminary Cost Estimate and Risk Profile of the contract. The Contract Holder shall seek Tender Board endorsement of the selected Tenderers. Tender Document Preparation The Tender & Contract documents are prepared by the Contract Holder and Contract Engineer. The Contract Holder has the overall responsibility. The Contract Engineer shall be the single focal point for all correspondence with the Tenderers at the pre-contract award stage. Tender Period The Tender document has to be issued only to the approved Tenderers. The Contract Holder has to ensure that all Technical queries from Tenderers are clarified. All Tenderers have to be informed equally of any changes in the tender document in the form of addenda. The Contract Holder has to arrange for pre-tender submission meetings and Site meetings if necessary. The Contract Holder has to prepare the Technical Evaluation Model and the Contract Engineer has to prepare the Commercial Evaluation Model. The Models have to be presented to Tender Board for endorsement. Tender Evaluation The Contract Holder carries out the Technical Evaluation and the Contract Engineer carries out the Commercial Evaluation. Results of evaluation with award recommendation are to be presented to Tender Board for endorsement. Execution Process Post Contract AwardSupport: FPOPost contract award processes are covered in PR-1233 - Contracting and Procurement Procedure. Post Contract award the Contract holder shall be aware of the following steps and minimum requirements: Mobilisation The Contract Holder is responsible for ensuring that the Mobilisation is carried out in accordance with Contract and HSE Procedure PR-1171 and that Contractor Quality and HSE management Plan are approved and in place. Contract Holder has to ensure that the Kick-off meetings (Internal & External) are held. The Contractor cannot start work unless the HSE Commencement Certificate is issued. Execution The Contract Holder has to manage the progress of the work, the performance of the Contractor and has to be competent in identifying & managing contract risks and claims. The Contract Holder has to monitor spend against approved contract value (ACV) and timely address MTBC in case of foreseeable overspend. The Contract Holder has to minimise the changes in contract and claims. For contract above $10M the Contract Holder has to ensure that Annual Reviews are prepared and presented to Tender Board. Completion and Close out On completion of the contract, the Contract Holder has to ensure that the Completion certificates, the Site Restoration Certificates and the Final Account are issued, As-Built drawings & data are received from the contractor and the Contract Holder has to prepare the final performance report of the contractor.

Procurement, Materials Management & LogisticsProcurementSupport: FPOProcurement of both materials and services are covered in PR-1233 - Contracting and Procurement Procedure. There are four Procurement Options that a project may decide to adopt as part of its procurement strategy, namely:1. EPC Projects: Contractor is fully responsible for all aspects of projects procurement requirements. In this case, PDO involvement is limited to providing technical support and other relevant clarifications on the materials requirements. However, PDO may decide (depending on the approved contracting strategy) to place the Purchase Orders (POs) of the long lead items then novate the POs to the EPC Contractor at the award time. In addition, PDO may opt to Tender the long lead items during the pre-award phase then handover, at post award, the Tender to the EPC Contractor who places and manages the PO. In all cases management fees for placing the PO are included in the EPC Lump-Sum Price.2. EpC (small p) Projects: This is similar to option 1 but PDO is responsible for procurement of the critical items. For this type of work, PDO shall arrange procurement of such materials and free issue to the contractor for installation as appropriate.3. EMC/ODC Projects: Contractor performs procurement on behalf of PDO. For this type of jobs, the respective contractor is expected to use PDO SAP/IX2 systems to perform both the Sourcing (Tender) and Procurement of materials. PDO will pay the material supplier (not the contractor) directly after the successful processing of goods receipting in SAP. Good receipting and transportation of materials to contractors storage sites or work locations will be done via PDOs nominated LSP (Logistics Service Provider).4. Stock and Project specific items: PDO C&P Organisation performs the procurement. This is mainly for standard or project specific items that need to be stored at PDO logistics warehouses, prior to being (free) issued to contractors. For stock items, the project pays for the material at the time of goods issue to the project, while ordering of materials as project items requires upfront payment by project at time of goods receipting.Vendor List ControlSupport: FPO, UEQThe Approved Vendors, Manufactures Equipment (AVME) list is mandatory to all assets and projects in PDO. In order to provide vendor registration transparency and clarity PDO has developed and implemented a formal framework including but not limited to CP-129, PR-1233, GU364, GU398, Vendor Registration and Complaints Board (VRCB) and AVME listing : A listing of approved vendors, manufactures who supply products and/or services to PDO Assets with Product Group Service Codes (PGSC). The listing is maintained and managed by FPM / FPS, although the CFDHs are the custodian/authorized approvals to register/deregister the vendors from the AVME list. Prior to inclusion within the AVME/PGSC (used interchangeably) listing the applicant vendor must be formally approved and capabilities verified.A Vendor Registration and Complaints Board has been established in order to implement and operate a formal framework of Vendor registration transparency, evaluate received complaints and review, approve/reject registration and suspension/de registration requests (prior to submission to the Tender Board). A yellow, red card system has been developed and is being implemented to manage issues associated with non-performing Vendor and/or Manufacturer. Inventory ManagementSupport: FPC3CP-193 - Inventory Management provides a mandatory set of guidelines pertaining to stock levels determinations to ensure that PDO inventory levels are maintained at an appropriate level consistent with both Company and accounting policies and required customer service levels. DEP 70.10.90.11 Gen Spare Parts provides guidelines for the management of spares. In PDO, all commissioning & insurance spares shall be treated as Property, Plant & Equipment and orders placed by project under CAPEX. Initial and normal operation spares shall be ordered under stock account as OPEX and users will be charged on consumption basis.Logistics ServicesSupport: UWLLogistics services comprise the following: Cargo haulage and handling services, including water haulage, loading/unloading and rigs & well test units moves. Warehousing storage and preservation of all types of material including special projects material. For further details please see PR-1858 Procedure for Material Handling, Storage and Preservation Passenger Commuting by land and air, including scheduled and chartered f