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Shell Global Solutions Confidential
OGP Project ServicesProject Guide No. 7: Project Premise
Document,Project Execution Strategy or Plan, Project Implementation
Plan
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Confidential This document is made available subject to the
condition that the recipient will neither use nor disclose the
contents except as agreed in writing with the copyright owner.
Copyright is vested in Shell Global Solutions International B.V.,
The Hague. Shell Global Solutions International B.V., 2003. All
rights reserved. Neither the whole nor any part of this document
may be reproduced or distributed in any form or by any means
(electronic, mechanical, reprographic, recording or otherwise)
without the prior written consent of the copyright owner.
Shell Global Solutions Shell Global Solutions is a trading style
used by a network of technology companies of the Royal Dutch/Shell
Group.
OG.03.30750
Project Guide 7
Project Premise Document
Project Execution Strategy
Or Plan
Project Implementation Plan
Custodian: M. Kalappa Shell Global Solutions, OGNL-OGP/4
Owner: H. Goudsmit Shell Global Solutions, OGNL-OGP
Keywords: Project Management, execution strategy, premise,
implementation plan
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OG.03.30750 1 Confidential
Document History:
Date Issue Reason for change Author Name / Ref.Ind. Approved
Name / Ref.Ind. Signature
Sept 2003
A Approved for Implementation
L. Keijzer, OGNL-OGP/8
H. Goudsmit, OGNL-OGP
The controlled copy of this document is held by Shell Global
Solutions, OGP Project Support Group. All paper copies are
uncontrolled.
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OG.03.30750 2 Confidential
Table of Contents 1. INTRODUCTION 6
1.1 PURPOSE AND USE 6 1.2 SCOPE 7 1.3 PROJECT PHASES 7
2. PURPOSE OF THE DOCUMENTS 8 2.1 PROJECT PREMISE DOCUMENT (PPD)
8 2.2 PROJECT EXECUTION STRATEGY (PES) 8 2.3 PROJECT EXECUTION PLAN
(PEP) 9 2.4 PROJECT IMPLEMENTATION PLAN (PIP) 10
3. CONTENT OF THE DOCUMENTS 11 3.1 GENERAL 11 3.2 PROJECT
PREMISE DOCUMENT PPD 11 3.3 PROJECT EXECUTION STRATEGY PES 11 3.4
PROJECT EXECUTION PLAN PEP 11 3.5 PROJECT IMPLEMENTATION PLAN - PIP
11
4. RESPONSIBILITY, OWNERSHIP, RIGHT OF USE 12
5. DEFINITIONS / REFERENCES 13
APPENDIX A: TEMPLATE WITH CHECKLIST FOR PPD 14 1. PROJECT
PREMISES 14
1.1 OUTLINE OF INVESTMENT PROPOSAL - SCOPE 14 1.2 OBJECTIVES 14
1.3 PRIORITIES 14 1.4 CUSTOMER / OPERATOR 14
2. KEY ISSUES, RISKS 15 2.1 MAIN ISSUES, INVESTMENT ORIGIN 15
2.2 JV PARTNERS 15 2.3 RISK IDENTIFICATION 15 2.4 AUTHORITY
ENGINEERING 15 2.5 MAIN CHANGES FROM PREVIOUS REVISIONS 16
3. STRATEGIC FIT AND BUSINESS CASE 16 3.1 FEEDSTOCK, PRODUCT AND
UTILITIES 16 3.2 ECONOMICS 16
4. PROJECT MANAGEMENT ORGANISATION 17 4.1 VENTURE ORGANISATION
17 4.2 PROJECT SITE CONSIDERATIONS 17 4.3 PROJECT OVERALL SCHEDULE
17 4.4 PROJECT COMMISSIONING AND START-UP 18
5. TECHNOLOGY 19 5.1 TECHNOLOGIES 19 5.2 CAPACITIES, YIELDS,
FEED AND PRODUCT QUALITY 19
6. HSE & SUSTAINABLE DEVELOPMENT 20 6.1 IDENTIFICATION OF
KEY HSE AND SD ISSUES 20
APPENDIX B: TEMPLATE WITH CHECKLIST FOR PES 21 1. PROJECT
BACKGROUND 21
1.1 SCOPE 21 1.2 SUMMARY OF DEVELOPMENT PLAN 21
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1.3 OBJECTIVES AND PRIORITIES 21 1.4 CUSTOMER/OPERATOR 22 1.5
UPDATE PROJECT PREMISE DOCUMENT PPD REV 1 22 1.6 NOMENCLATURE
22
2. KEY ISSUES, RISKS, SENSITIVITIES 23 2.1 TECHNOLOGY 23 2.2 JV
PARTNERS 23 2.3 PROJECT EXECUTION 23 2.4 AUTHORITY ENGINEERING
24
3. COST AND SCHEDULE AND CHANGE CONTROL 24 3.1 COST ESTIMATE 24
3.2 PROJECT SCHEDULE 25
4. DIVISION OF WORK AND RESOURCING 25 4.1 PURPOSE 25 4.2
CUSTOMER'S INPUT 26 4.3 SHELL GLOBAL SOLUTIONS SERVICES 27
4.3.1 Shell Global Solutions Services To be rendered Prior to
Implementation Phase 27 4.3.2 Shell Global Solutions Services In
the Project Implementation Phase 28
5. CONTRACTING 29 5.1 PURPOSE 29 5.2 STRATEGY 29
6. BUDGETS, SERVICE AGREEMENTS AND FINANCES 30 6.1 FUNDS 30 6.2
FORM OF AGREEMENTS 30 6.3 FINANCES 31
APPENDIX C: TEMPLATE WITH CHECKLIST FOR PEP AND PIP 32 1.
PROJECT BACKGROUND 32
1.1 SCOPE 32 1.2 SUMMARY OF DEVELOPMENT PLAN 32 1.3 OBJECTIVES
AND PRIORITIES 33 1.4 CUSTOMER/OPERATOR 33 1.5 UPDATE PROJECT
PREMISE DOCUMENT PPD REV 2 and 3 33 1.6 NOMENCLATURE 33
2. KEY ISSUES, RISKS, SENSITIVITIES 34 2.1 TECHNOLOGY 34 2.2 JV
PARTNERS 34 2.3 PROJECT EXECUTION 34 2.4 AUTHORITY ENGINEERING 35
2.5 VALUE AND WORK PROCESSES 36
3. COST AND SCHEDULE AND CHANGE CONTROL 37 3.1 COST ESTIMATE 37
3.2 COST CONTROL 37 3.3 PROJECT SCHEDULE 37 3.4 CHANGE CONTROL
38
3.4.1 Strategy 38 3.4.2 Change Control Procedure 39
4. DIVISION OF WORK AND RESOURCING 40 4.1 PURPOSE 40 4.2
CUSTOMER'S INPUT 40 4.3 SHELL GLOBAL SOLUTIONS SERVICES 42
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4.3.1 Shell Global Solutions Services To be rendered prior to
the Implementation Phase 42 4.3.2 Shell Global Solutions Services
To be rendered in the Project Implementation Phase 43
4.4 RESOURCES 43 5. CONTRACTING 45
5.1 PURPOSE 45 5.2 STRATEGY 45 5.3 MAJOR CONTRACTS 45
6. BUDGETS, SERVICE AGREEMENTS AND FINANCES 47 6.1 FUNDS 47
6.1.1 Application 47 6.1.2 Control 47
6.2 FORM OF AGREEMENTS 47 6.3 FINANCES 48
7. PROJECT ORGANISATION AND PROCEDURES 49 7.1 PURPOSE 49 7.2
CORPORATE STRUCTURE 49 7.3 PROJECT ORGANIZATION 50 7.4 PROCEDURES
50
8. QUALITY ASSURANCE 51 8.1 PURPOSE 51 8.2 STRATEGY 51 8.3
QUALITY ASSURANCE REQUIREMENTS 51 8.4 REVIEWS and AUDITS 52 8.5
QUALITY ASSURANCE FEATURES 52 8.6 AUDIT TRAIL 53 8.7 INTEGRITY OF
THE DESIGN 53
9. HEALTH, SAFETY, ENVIRONMENT (HSE) AND SUSTAINABLE DEVELOPMENT
54 9.1 POLICY 54 9.2 HSE PLAN 54 9.3 HSE FEATURES 55 9.4 PUBLIC
RELATIONS 55
10. ENGINEERING 56 10.1 PURPOSE 56 10.2 STRATEGY 56 10.3
Division of Work 57
11. PROCUREMENT 58 11.1 PURPOSE 58 11.2 STRATEGY 58 11.3
DIVISION OF WORK 59 11.4 PRE-ORDERING LONG-LEAD EQUIPMENT 60 11.5
ORDERING OF UNDERGROUND PIPING AND CABLES 60
12. CONSTRUCTION 61 12.1 PURPOSE 61 12.2 STRATEGY 61 12.3
DIVISION OF WORK 62
13. COMMISSIONING, START-UP AND PERFORMANCE TESTING 64 13.1
PURPOSE 64 13.2 PHASES 64 13.3 COMMISSIONING AND START-UP SCHEDULE
64 13.4 ORGANISATION 65 13.5 VENDOR ASSISTANCE 66
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13.6 SPARE PARTS 66 13.7 DOCUMENTATION AT HAND-OVER 66 13.8
DOCUMENTATION AT SUCCESSFUL PERFORMANCE TEST RUN 67
14. POST-IMPLEMENTATION REVIEW 68 14.1 INTRODUCTION 68 14.2
SCOPE AND TIMING 68
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OG.03.30750 6 Confidential
1. INTRODUCTION
This Project Guide (PG) is one of a series of guidance documents
to assist Shell Global Solutions staff in developing and
implementing capital projects. The use of PGs is a requirement for
all projects executed under the responsibility of the Shell Global
Solutions OGP business group as defined in OGP Governance: Project
Development and Implementation (Ref 1). These guides assist project
managers, project engineers and others involved in the development
and implementation of capital projects to execute the project
development and implementation process and to produce the required
deliverables.
This PG acts as a handbook for the Project Team on how and when
to execute the relevant activity, and also specifies the contents
and level of detail for the deliverables. It is used through
appropriate phases of the project development to provide guidance,
procedures and/or checklists for relevant subjects. In addition, it
will assists in creating an awareness of relevant aspects of the
project development and implementation process and transferring
knowledge on the subject to other parties, such as project
sponsors, stakeholders, contractors, etc.
As the PGs are an integral element of OGPs business process for
projects, maximum benefits are derived from using them in
combination with the Project Development and Implementation Process
and Project Value Processes.
1.1 Purpose and use
This particular Project Guide provides guidelines for the
preparation of the Project Premise Document (PPD), the Project
Execution1 Strategy (PES), Project Execution Plan (PEP) and the
Project Implementation Plan (PIP).
The purpose of the PPD is to ensure alignment of key
stakeholders that are impacted by the project on the premises and
requirements of the Venture on which all development will be based
and assessed. This information also provides key input to the
technical development as recorded in the BOD, BDP, BDEP/Project
Specification. In addition it provides a key reference for
initiation of many project processes such as Risk Management,
Contracting and Procurement Strategy Development, Operational
Implementation Planning etc.
The purpose of the PES/PEP/PIP is to detail, in increasing depth
as the project develops, the strategy, tactics and plans for
development and implementation of the project in order to meet the
premises and requirements laid down in the PPD.
It should be noted that prime responsibility within the Asset
Development Organisation (Ref.7) for establishing project premises,
objectives & goals lies with Venture Management, whilst prime
responsibility for project execution strategies, tactics &
plans lies with Project Management.
The PES, which is initiated in the Scouting phase and finalised
in FED 1, evolves with increasing definition during the development
phases of the project to the PEP at end of FED 2 and PIP at end of
FED3 or FID. The PIP covers a relatively long period in time and
may therefore require review and update during implementation of
the project. These documents are principally required to be
available to complement the proposal for and support the project
development at the assurance gate reviews.
1 The term execution describes the whole period of development
and implementation of a project.
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OG.03.30750 7 Confidential
1.2 Scope
This Guide covers the purpose of the PPD, PES, PEP and PIP,
their content, ownership, required signatures and right of use of
these documents. In Appendices A, B and C provide templates for the
subjects and issues to be addressed in these documents and
checklist items for consideration.
It shall be noted that the size of the project may determine the
level of detail of the subjects to be addressed in the various
documents; the principles nevertheless, apply for all projects.
1.3 Project Phases
In Project Guides, activities and deliverables are related to
the phases of a project. OGP have standardised on a common
nomenclature for the phases of a project that is utilised
throughout this document. However it is recognised that other Shell
business sectors utilise different nomenclature. Figure 1.3-1 below
illustrates the relationship between OGP phase / review gate
nomenclature and that used in other sectors.
Figure 1.3-1
Legend: BDEP = basic design and engineering package, BDP = basic
design package, BfD = basis for design, BOD = basis of design, EPC
= engineering, procurement, construction, FDP = field development
plan, FEED = front end engineering design, FID = final investment
decision, PEP = project execution plan, PIR = post implementation
review, PS = project specification, PSA = pre start-up audit, RFSU
= ready for start-up, VAR = value assurance review
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OG.03.30750 8 Confidential
2. PURPOSE OF THE DOCUMENTS
2.1 PROJECT PREMISE DOCUMENT (PPD)
The target groups for the PPD are:
The Customer
The Project Venture Organisation / project team
Shell Global Solutions project management, cost estimating and
future work planning, preparation and tendering
The PPD rev 0 - is to be considered as a high level - FED1 Entry
Document stipulating the key elements prior to enter FED and under
which main conditions. It is a live document that will exist
throughout the development of the investment proposal into a
project and ultimately, live Plant. At the end of FED1 it need
updating to rev 1 and at this stage, the Project Premise Document
need to be in near finished condition. This document could then be
tweaked in FED2, FED3 etc. As the PPD is likely to be used to rank
a project proposal amongst other investment opportunities, it need
to set out clearly the premises, objectives and economics, along
with a summary proposal for its Front End Development. For examples
of information to be included see Appendix A. A key step in the
development of the PPD and alignment of key stakeholders can be
archived by use of Opportunity Framing if it has been facilitated
prior to FED1.
The PPD is likely to be produced not only by the Project
Department in OGP, but significant and essential contributions will
be delivered by the investment originating party, especially where
economics and business issues are at stake. In this aspect it
differs from the follow up plans such as PES, PEP and PIP where the
focus will shift to development of an investment proposal where the
PPD focuses on its definition. The PPD shall therefore be kept up
to date as an individual document during the progression of the
proposal until its final completion, and (main) changes from
previous phases recorded. The Terms Of Reference (TOR) that need be
developed to define the scope of work for SGSi will refer to the
PPD.
2.2 PROJECT EXECUTION STRATEGY (PES)
The target groups for the PES are:
The Customer
The Venture Organisation / project team
Shell Global Solutions project management, cost estimating and
future work planning, preparation and tendering
The PES should describe as early as possible in a project (at
the end of the Scouting Phase, prior to FED1) the overall strategy
under which the project is intended to be developed and implemented
according to the template in Appendix B. The PES shall then be
further refined and updated, as appropriate, by end of FED 1.
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OG.03.30750 9 Confidential
Based on the above the purposes of the PES can be summarised as
follows:
Explain how Shell Global Solutions is going to execute the next
project phases or if so requested, describe alternatives that Shell
Global Solutions can offer for it (contract alternatives, Shell
Global Solutions involvement): This information enables the
Customer and SGSI to be in a better position to start planning and
preparing (e.g. for tendering) for the next project phases. It will
make the transition from FED1 to FED2 efficient and records the
conditions under which that will happen.
Provide background information for the 30% cost estimate: If
basic assumptions and requirements are agreed and recorded a
realistic +/-30% cost estimate and an overall preliminary schedule
can be prepared. If no information is available a contingency has
to be added in the cost estimate, based on the worst anticipated
scenario.
2.3 PROJECT EXECUTION PLAN (PEP)
The target groups for the PEP are:
The Customer
The Venture Organisation / project team
Shell Global Solutions project management, cost estimating
and/or future work planning, preparation and tendering
The PEP should describe the overall plan under which the project
is intended to be executed. Rev. 0 of the PEP should be prepared
during FED2, agreed by project participants, and approved by the
Customer. For examples of information to be included see Appendix
C.
Based on the above the purposes of the PEP can be summarised as
follows:
Explain how Shell Global Solutions is going to execute the next
project phases or, if so requested, describe alternative strategies
to execute the project and indicate the preferred option (e.g.
contract alternatives, Shell Global Solutions involvement): This
information enables the Customer and Shell Global Solutions to be
in a better position to start planning and preparing (e.g. for
tendering) for the next project phases. It will make the transition
from FED2 to FED3 efficient and records the conditions under which
that will happen
Summarise all critical actions to be done and decisions to be
taken in the next project phases by all parties involved (the
Customer, Shell Global Solutions or third parties): Providing this
information helps both Customer and Shell Global Solutions in
estimating required manpower and planning for the next project
phases, optimising in this way total project cost and schedule.
Provide background information for respectively the update of
the +/-30% cost estimate and the +/-20% cost estimate: Only if
basic assumptions and requirements are agreed and recorded a
realistic cost estimate and an overall preliminary schedule can be
prepared. If no information is available a contingency has to be
added in the cost estimate, based on the worst anticipated
scenario.
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OG.03.30750 10 Confidential
2.4 PROJECT IMPLEMENTATION PLAN (PIP)
The target groups and purposes of the PIP are the same as for
the PEP. The only difference between the two documents is that the
PIP contains more details than the PEP, especially for the
implementation of the project (the detailed engineering,
procurement, construction, commissioning, start-up and performance
testing). The document is prepared at the end of the FED3 phase
prior to FID and provides background for the +/-10% cost
estimate.
The PIP shall be considered a live document and should, during
the implementation phase of the project, be kept up-to-date with
the agreed project implementation strategies. Start of the
fieldwork and at around 50% completion can be important milestones
for release of PIP revisions to reflect actual situation and focus
on the periods to come. The last issue of the PIP shall contain
detailed information about the arrangements agreed for the
commissioning and start-up and refer to a final Operations
Implementation Plan (OIP).
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OG.03.30750 11 Confidential
3. CONTENT OF THE DOCUMENTS
3.1 GENERAL
It is recommended to produce the documents below by project
participants in their various disciplines or field of expertise and
assembled by the venture, asset development or project manager. The
content page of the document can serve as a vehicle to allocate the
different chapters for this purpose.
3.2 PROJECT PREMISE DOCUMENT PPD
In Appendix A a template with checklist is given for the PPD.
This high level document shall give a synopsis of the key issues
only.
3.3 PROJECT EXECUTION STRATEGY PES
In Appendix B a template with checklist is given for the PES.
The PES shall be a concise document.
3.4 PROJECT EXECUTION PLAN PEP
In Appendix C a template with checklist is given for the PEP and
PIP. The main table of contents of the first 6 chapters of the PEP
and PIP is equal to that of the PES. The PEP should be much more
detailed than the PES. During FED1 and FED2 phases not all
information mentioned in the checklist of Appendix C is already
available in full detail, especially not for the chapters 10 up to
and including 14. However, as far as possible all items should be
covered either by definite information or by preliminary
information, mentioning possible (likely) alternatives or
describing what items still require resolution.
3.5 PROJECT IMPLEMENTATION PLAN - PIP
Ref Appendix C, the PIP is a further development of the PEP, and
contains information which becomes available during FED3 and, for
later revisions, during the implementation phase
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OG.03.30750 12 Confidential
4. RESPONSIBILITY, OWNERSHIP, RIGHT OF USE
Table 1 indicates who is the owner of the document, who should
sign them off (Shell Global Solutions and/or the Customer) and who
has the right to use them. For the documents to be signed off by
Shell Global Solutions the OGP Authority Matrix in the Business
Group Management Manual indicates the authority to approve.
Table 1 Ownership, signatures and right of use of PPD, PES, PEP
and PIP
Document Owner Signing off by Right of use
PPD Joint development by Investment Originator and/or Customer
(e.g. for Chemicals the asset development manager) and Shell Global
Solutions
- Shell Global Solutions
- Customer
- Shell Global Solutions
- Customer (no special secrecy agreement required)
- Investment Originator
PES Shell Global Solutions - Shell Global Solutions
- Customer
- Shell Global Solutions
- Customer (no special secrecy agreement required)
PEP Shell Global Solutions - Shell Global Solutions
- Customer
- Shell Global Solutions
- Technical or Steering Committee of the Customer with secrecy
agreement at corporate or personal level, as appropriate
PIP Shell Global Solutions Before FID:
- Shell Global Solutions
- Customer
After FID:
- Customer
Before FID:
- Shell Global Solutions
- Technical or Steering Committee of the Customer with secrecy
agreement at corporate or personal level, as appropriate
After FID:
- Shell Global Solutions
- Customer
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OG.03.30750 13 Confidential
5. DEFINITIONS / REFERENCES
Ref.1 OGP Governance Project Development and Implementation
OG.03.30540.
Ref. 2 Project Guide 8 Project Specification OG.03.30751
Ref.3 Project Guide 9 BOD/BDP OG.03.30752
Ref.4 Project Value Process 4 - Risk Management OG.03.30705
Ref.5 Project Value Process 3 Contracting & Procurement
Strategy Development OG.03.30704
Ref.6 Project Value Process 11 Operational Implementation
Planning OG.03.30712
Ref.7 Project Guide 11 Building the Asset Development
Organisation OG.03.30722
Ref.8 Project Value Process 2 Opportunity Framing & Project
Goals Setting OG.03.30703
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OG.03.30750 14 Confidential APPENDIX A - PPD
APPENDIX A: TEMPLATE WITH CHECKLIST FOR PPD
1. PROJECT PREMISES
1.1 OUTLINE OF INVESTMENT PROPOSAL - SCOPE
- Description of investment proposal
- Alternatives considered
1.2 OBJECTIVES
- Main objective of proposal / ultimate goal / market share
- Objectives in time, capex,
- Opportunity Statement. (a definition of the opportunity to
gain team focus on the opportunity)
- Value Drivers and Critical Success Factors. (Value drivers
identify what is important for increasing the value of the
opportunity. They can include economic as well as soft items (e.g.
reputation) and must reflect all the principles of sustainable
development)
- Business expectations: why / sensitivity of success
1.3 PRIORITIES
Checklist: Ranking with other proposals
(Third party) competition
1.4 CUSTOMER / OPERATOR
- Principal customer
- Stakeholder Identification and Mapping (to identify key
stakeholders who have varying degrees of influence on the project,
and their issues. Identification of proactive measures to engage
stakeholders)
- Future ownership and operating company
- Operating and maintenance practices
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OG.03.30750 15 Confidential APPENDIX A - PPD
2. KEY ISSUES, RISKS
2.1 MAIN ISSUES, INVESTMENT ORIGIN
- Boundaries and Givens
- Originating parties
- Definition of Success
- Confidentiality secrecy agreements, patents
Checklist: Previous investment proposals
2.2 JV PARTNERS
- Identification of (potential) Joint venture partners
Checklist: list pros and cons of venturing
2.3 RISK IDENTIFICATION
- Key Risk and Opportunities. (Rank using TECOP technical,
economical, commercial, organisational, political
- framework to provide a structured approach to identify issues
and define mitigation measures)
- Identification of show stoppers
2.4 AUTHORITY ENGINEERING
Checklist: Alternatives considered
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OG.03.30750 16 Confidential APPENDIX A - PPD
2.5 MAIN CHANGES FROM PREVIOUS REVISIONS
Background: the PPD is a quality document that exists next to
the various documents such as PES, PEP and PIP; these will become
extinct after use. The PPD requires to be updated as it contains
the defined premises, required until completion of the full PIR, 18
to 24 months after start up.
- Define criteria for recording of changes
- Record (main) changes
- Initiating party and justification
3. STRATEGIC FIT AND BUSINESS CASE
3.1 FEEDSTOCK, PRODUCT AND UTILITIES
- Feedstock / arrangements / contract opportunities
- Suppliers, alternate supply
- Delivery mode pipeline, truck, rail, ship
- Market share
- Number and types of products, marketing areas
- Quality specifications, off spec disposal
- Packaging, inventory requirements
- Utility requirements: supply versus self-generation
3.2 ECONOMICS
- Scenarios
- Sensitivities
- Acid tests
- Value of process materials and catalysts
- Energy values
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OG.03.30750 17 Confidential APPENDIX A - PPD
- Profitability criteria for trade offs capital labour
materials
- Trade off cost versus schedule
- Cost on carbon
Checklist: Max capital limitation
References to economic evaluation models (e.g. Cape)
4. PROJECT MANAGEMENT ORGANISATION
4.1 VENTURE ORGANISATION
- Company service agreements
- Sponsoring Steering Committee
4.2 PROJECT SITE CONSIDERATIONS
- Proposed location and alternatives considered (list pro and
contras)
- Synergy effects with adjacent and/or existing facilities
- General facilities requirements (buildings, warehouses,
effluent treatment etc)
4.3 PROJECT OVERALL SCHEDULE
- Overall schedule with FED phases and implementation /
start-up
- Product availability requirements
- Schedule constraints identify critical path(s)
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OG.03.30750 18 Confidential APPENDIX A - PPD
4.4 PROJECT COMMISSIONING AND START-UP
- First indicative plans with regard to Company / Organisation
of (initial) operation
Checklist: Indicate upstream and downstream linked plant
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OG.03.30750 19 Confidential APPENDIX A - PPD
5. TECHNOLOGY
5.1 TECHNOLOGIES
- Technology selection
- Licensing parties
- License agreements, conditions and fees
- Licensors and front end engineering parties
Checklist: - Alternatives considered
5.2 CAPACITIES, YIELDS, FEED AND PRODUCT QUALITY
- Nameplate capacity (including description of the definition
used)
- Production early years versus mature operation
- Proposed availability
- Yields
- Run length
- Turndown requirements
- Feedslate and indication min and max quality
- Product slate and quality
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OG.03.30750 20 Confidential APPENDIX A - PPD
6. HSE & Sustainable Development
6.1 IDENTIFICATION OF KEY HSE AND SD ISSUES
- Identify key issues on health, safety and environment and
sustainable development
- First high level identification of scope per Project Guide
1A
- Effluent handling and disposal requirement
- Required operating permits
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OG.03.30750 21 Confidential APPENDIX B - PES
APPENDIX B: TEMPLATE WITH CHECKLIST FOR PES
Paragraphs that are underlined need addressing in the Rev 0
issue in scouting phase
1. PROJECT BACKGROUND
1.1 SCOPE
- Project title and number
- Project location, e.g. country/town
- Short description of the project (green field, grass root or
revamp, type of plant, capacity)
- Listing of new plants/units to be constructed and main
modifications to existing plants.
1.2 SUMMARY OF DEVELOPMENT PLAN
- Purpose of the project (summary of Project Premise Document -
PPD)
- Project history
- Project development (description of the next project
phases)
- Status of planning application
- Ancillary facilities (neighbours)
- Provisions for infrastructure
- Significant provisions for future expansions.
1.3 OBJECTIVES AND PRIORITIES
- Evaluate key parameters in terms of Customer's requirements on
cost (capital cost, life cycle cost, operational cost), time,
resources, quality, HSE, limitations existing facilities, plot
space, etc. (summary Project Premises Document)
- Alignment between Customer and Project
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OG.03.30750 22 Confidential APPENDIX B - PES
1.4 CUSTOMER/OPERATOR
- Define Customer/Operator
- Shareholders
- Project Steering Committee
- Venture management
1.5 UPDATE PROJECT PREMISE DOCUMENT PPD REV 1
Background: the PPD is a quality document that exists next to
the various documents such as PES, PEP and PIP; these will become
extinct after use. The PPD requires to be updated as it contains
the defined premises, required until completion of the full PIR, 18
to 24 months after start up. With the start of every new phase, the
Project Premise Document requires updating, in case of transition
FED1 to FED2 from rev 0 into rev 1.
- Highlight main changes and their impact of Front End
Development / project execution.
1.6 NOMENCLATURE
- Definition of special words/terminology/abbreviations used
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OG.03.30750 23 Confidential APPENDIX B - PES
2. KEY ISSUES, RISKS, SENSITIVITIES
2.1 TECHNOLOGY
- Own technology
- Third party technology
- Licence agreements
- Licence contamination
- Technology risks
- Novelty of Plant and/or equipment design, automation and
information technology (Development Releases).
2.2 JV PARTNERS
- JV agreements - cost sharing
- Protection of know-how
- Disclosure of information
- Participation in project execution
2.3 PROJECT EXECUTION
- Customer objectives
- Fast track or split phase
- Shell Global Solutions involvement:
- Selection of value and work processes
- Execution/cost risks
- Modular construction opportunities considered decision
point
- Grass roots, local organisation
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OG.03.30750 24 Confidential APPENDIX B - PES
- Project financing/financeability
- IT applications E-documentation Livelink platform (incl access
control), storage and recording of key project / auditable
documents
- Benchmarking activities through Front End Development, setting
(contractual benchmark) targets
Checklist: Enhancement of local business / local content
requirements
Simultaneous construction activities in the area
2.4 AUTHORITY ENGINEERING
- Responsible party and focal point
- Timing permit applications (NB: allow sufficient time for
approval of the permit applications)
3. COST AND SCHEDULE AND CHANGE CONTROL
3.1 COST ESTIMATE
- Responsible parties to prepare the estimates (i.e. on-plot,
off-plot, shipping, infrastructure, financing, insurance, taxes,
duties, Shell Global Solutions-services)
- Type and format (breakdown) of estimates
- Description of Owners Cost elements
- "Asset Breakdown", Work Breakdown Structure (WBS)
Checklist: Explain project's aim for low-life cycle cost
Responsible party to prepare cost comparison analysis between
successive estimates
Justify type of estimate, e.g.50/50, 10/90 or 90/10
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OG.03.30750 25 Confidential APPENDIX B - PES
3.2 PROJECT SCHEDULE
Great emphasis shall already be given in the earliest project
phases to the detailed planning of project activities of
alternative project execution strategies.
Optimising sequences and minimising interfaces could
considerably shorten project schedules at no extra capital
cost.
- Concise overall schedule
- Prepare Front End Development schedule with forecasted
expenditures per phase
Checklist: Describe main planning features of proposed
implementation schedule(s)
Define the critical steps in the overall planning of the project
(e.g. permit application, long delivery items) and identify
critical path elements.
4. DIVISION OF WORK AND RESOURCING
4.1 PURPOSE
The purpose of a division of work is to formulate a policy for
the division of activities and responsibilities between Customer
and Shell Global Solutions and to translate this into resource
requirements.
When the project is on a new site (so called grassroots),
Customer resources will initially be very limited. The site
organisation is likely to be built-up concurrently with project
development and hence will not be available for project duties. In
such a case, Customer might wish to appoint Shell Global Solutions
as the Technical Leader whereupon Shell Global Solutions will set
up the required organisation for the realisation of the total
project. For other projects, the assistance of Shell Global
Solutions could be limited to a specific phase of the project,
ad-hoc advice or the provision of resources to reinforce Customer's
project team.
To check if the capacity of the Customers organisation is
sufficient or requires strengthening a proper listing of all his
required actions and deliverables shall be done.
The division of work and responsibilities between Customer and
Shell Global Solutions need to be defined and agreed and relevant
agreements drawn up. Separating scope out from the main EPC(M)
contract(s) for implementation by the local company needs to be
handled with care. When elements are removed from the main contract
scope this can compromise the technical integrity of the
installation and introduce complicated interface problems between
the Customer and the Contractor(s)
The necessary resources for the project in terms of skills of
personnel and accumulated know-how adjusted to the needs of each
project phase can be made available from Shell Global Solutions
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OG.03.30750 26 Confidential APPENDIX B - PES
(international) staff, Customer staff, temporarily hired staff,
contracted staff, and by contracting out work.
Shell Global Solutions can advise Customer on the organisation
and structuring of the project team.
4.2 CUSTOMER'S INPUT
- Master plan
- Management policy
- Local conditions/soil investigation/technical standards
- Interfaces with existing plant/demarcation boundaries/BL
conditions/ meteorological data/economic data
- Outside plot/plant change
- Planning application/permits
- Tendering for Project Implementation
- Contacts with local authorities
- Provide staff for project teams
- Installation of a steering committee
- Tendering for construction and other local contracts
- Agree/prepare/monitor estimates and schedules (refer
Chapter3)
- Project language
- Approved vendor list
- Terms and conditions for contracts
- CAR insurance
- Contractor's third party liability covered under Customer's
insurance?
- Preparation of monthly progress reports
- Training
- Build-up of organisational site organisation
- Supplies of operating materials
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OG.03.30750 27 Confidential APPENDIX B - PES
- Commissioning and start-up
- Cost control/budgets for start-up
- Funding/financing
- Land acquisition
o NB: Finalise land acquisitions the earliest to minimise
engineering and construction changes.
- Change control
- Management reviews
- HSE reviews during Implementation Phases
- Feedback of lessons learned during construction, commissioning
and start-up to Shell Global Solutions
- Performance testing
- Identification of Customers risks/liabilities
4.3 SHELL GLOBAL SOLUTIONS SERVICES
4.3.1 Shell Global Solutions Services To be rendered Prior to
Implementation Phase
- Scouting Studies
- Basis of Design (BOD)
- Basic Design Packages
- Project Execution Strategies, Project Execution and
Implementation Plans
- Selection of Value and Work Processes
- Operational Implementation Strategy and Plan
- 30%, 20% and/or 10% cost estimates
- Site investigations/early start of site preparation work
- Development of Project standards (DEP-s versus Industry
Standards)
- Tendering for PS
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- Project Specification or BDEP
- Procurement engineering for long lead items
- E-Procurement
- Pre-qualification, tendering, bid evaluation of EPC(M)
Contractors and recommendation of preferred Contractor
- Participation in Independent Management Reviews (IMR) (refer
also to Appendix C para 8.4)
- Economic assessments
- Licence agreements
- Shell Global Solutions services: internally aligned, costs
estimated and approved via Deals Management System (DMS)
procedure
- Cost accounting structure for SGSi services to be structured
and approved
- Shell Global Solutions services to be covered under
Construction Service Agreement (CSA) or Letter Agreement as
amendment to existing Services Agreement.
- Identification of Shell Global Solutions
risks/liabilities.
4.3.2 Shell Global Solutions Services In the Project
Implementation Phase
- Monitor/advise on contractor(s) activities
- Selection and application of Value and Work processes
- Provide (international) staff for project teams
- Prepare/monitor cost estimates/schedules
- Assistance to Customer during engineering, construction,
commissioning, start-up and performance testing
- Review/audit of work contracted by Customer to others
- Steering Committee representation
- Shell Global Solutions services to be internally aligned, cost
estimated and approved via DMS procedure
- Shell Global Solutions services to be covered under CSA or
Letter Agreement as amendment to existing Services Agreement
- Operational Service Agreement (OSA) for post-start-up
period
- Review of major changes in PS/BDEP
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- Participation in Post Investment Reviews (PIR)
- Identification of Shell Global Solutions
risks/liabilities.
5. CONTRACTING
5.1 PURPOSE
The purpose of contracting is to obtain specific works, services
and goods required to support the project objectives that cannot or
will not be supplied by Shell Global Solutions and/or Customer.
5.2 STRATEGY
Through a structured process (identifying the most suitable
contractors where necessary via a pre-qualification procedure - to
be invited to bid for a work package, competitive or single-source
tendering, technical clarification, commercial evaluation and the
final ranking) the contract is awarded to the Contractor considered
most attractive to execute the work. Where process technology is
key, advise from the relevant Shell Group technology custodian need
be sought and recorded.
- Contracting workshop
- Competitive or single source tendering
- Pre-qualification Bidders
- Contract type or if not yet decided, overview of possible
contract alternatives
- Required local content
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6. BUDGETS, SERVICE AGREEMENTS AND FINANCES
6.1 FUNDS
- Required budgets from Customer for services to be rendered by
Shell Global Solutions during the individual project phases.
- Responsible party to initiate budgets
- Timing for the preparation of 502 or similar documents
6.2 FORM OF AGREEMENTS
The role of Shell Global Solutions, its authorities,
responsibilities, liabilities, lines of communication, advice and
services rendered, and its remuneration are all encapsulated in an
agreement to be concluded between Shell Global Solutions and
Customer. Upon signature of the agreement by Customer, Shell Global
Solutions will initiate all related activities covered by the
Agreement.
- List agreements (to be) concluded and executive summary, such
as:
* Cost Contributing Agreement
* Construction Service Agreement
* Technical Support Agreement
* Side letter to existing Service Agreement, in case project
activities are "optional services"
* Operational Service Agreement
* Joint Venture Agreements
* Licence Agreement
* Others
* Timing of Agreements.
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OG.03.30750 31 Confidential APPENDIX B - PES
6.3 FINANCES
- Finance arrangements for disbursement of invoices
- Tax/treasury/insurance/audit matters
- Local tax regulations applicable for services and supply of
goods
Checklist: - Procurement of long delivery items
- Financing
NB: Already in the first phases of the project, proper
arrangements should be in place which allow Shell Global Solutions,
Contractors and Vendors of long delivery items to be paid in time
for work done. Loan arrangements whereby the shareholders do not
guarantee the full amount of the loan should be avoided. In case
such arrangements cannot be avoided a multidisciplinary task force
is to be set-up in the early days of the project for the purpose of
establishing a comprehensive, integrated strategy and plan to deal
with and co-ordinate project financing.
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OG.03.30750 32 Confidential APPENDIX C - PEP and PIP
APPENDIX C: TEMPLATE WITH CHECKLIST FOR PEP AND PIP
1. PROJECT BACKGROUND
1.1 SCOPE
- Project title and number
- Project location, e.g. country/town
- Executive summary of Basis of Design or BDP, including:
* Short description of the project (green field, grass root or
revamp, type of plant, capacity)
* Listing of new plants/units to be constructed
* Modifications to existing plant/tie-ins.
1.2 SUMMARY OF DEVELOPMENT PLAN
- Purpose of the project (and capture of main changes of Project
Premise Document PPD from rev 1 to rev 2)
- Project history
- Project development (description of the next project
phases)
- Changes to approved BOD, Rev. A
- Status of planning application
- Ancillary facilities (neighbours)
- Provisions for infrastructure
- Significant Provisions for future expansions ref Design Class
process.
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1.3 OBJECTIVES AND PRIORITIES
- Evaluate key parameters in terms of Customer's requirements on
cost (capital cost, life cycle cost, operational cost), time,
resources, quality, HSE, limitations existing facilities, plot
space, etc.
- Identify developments/changes to agreed objectives.
- Arrange alignment meeting customer sponsor - project
1.4 CUSTOMER/OPERATOR
- Define Customer/Operator. If more parties are involved define
responsibilities of each party; in case of overlapping
responsibilities clearly define this.
- Shareholders.
- Arrange alignment meetings with stakeholder / customer /
operator / project
1.5 UPDATE PROJECT PREMISE DOCUMENT PPD REV 2 and 3
Background: the PPD is a quality document that exists next to
the various documents such as PES, PEP and PIP; these will become
extinct after use. The PPD requires to be updated as it contains
the defined premises, required until completion of the full PIR, 18
to 24 months after start up. With the start of every new phase, the
Project Premise Document requires updating, in case of completion
of FED2 into rev 2 and upon completion of FED3 into rev 3.
- Highlight main changes and their impact of Front End
Development / project execution.
1.6 NOMENCLATURE
- Definition of special words/terminology/abbreviations
used.
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OG.03.30750 34 Confidential APPENDIX C - PEP and PIP
2. KEY ISSUES, RISKS, SENSITIVITIES
2.1 TECHNOLOGY
- Own technology
- Third party technology (if need be to be decided during a
later Project Phase, e.g. application of CO2 removal process for
LNG plants)
- Licence agreements
- Licence contamination
- Studies remaining to be completed after the BOD, Rev. A has
been approved, including development releases.
- Technology risks
- Novelty of Plant and/or equipment design, automation and
information technology (Development Releases).
2.2 JV PARTNERS
- JV agreements cost sharing
- Protection of know-how
- Disclosure of information
- Participation in project execution
2.3 PROJECT EXECUTION
- Customer objectives
- Fast track or split phase
- Shell Global Solutions involvement
o Update of results of utilized value and work processes
previous phases
o Selection of value and work processes this phase
- Modular construction: final concept
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OG.03.30750 35 Confidential APPENDIX C - PEP and PIP
- Define project control philosophy
- Define measures to specify and purchase and accept of vendor
packaged units, back-up documentation and agreement on engineering
standards, listing of deviations;
- Enhancement of local business
- Simultaneous construction activities in the area
- Execution/cost risks
- Import restrictions
- Withholding tax
- Tax/duty exemption
N.B.: Substantial amounts of money can be involved resulting
from local taxation requirements. Appropriate actions and
organisational measures have to be stipulated to prepare a tax
strategy. The objective is to have a clear identification of who
pays what taxes. A study can reveal the most tax-efficient
contracting strategy to be used and also to identify who are liable
if the tax regime changes. Such a study should be carried out by a
competent tax professional as early as possible in the project
development. Contractors may gain advantage by establishing a
project company in a tax shelter or a tax-advantaged location.
Project language
- Grass roots, local organisation
- Project financing/finance ability
- Interface/division of responsibilities with other Group
Service Companies
- Provisions for site construction teams of Customer and Main
Contractor in terms of housing, facilities, IT, schooling,
familiarisation with different cultural, political and juridical
circumstances (in particular important for remote construction
sites).
- Provision and arrangements of benchmarking activities.
- IT applications E-documentation update Livelink platform with
its key and auditable documents focal point
2.4 AUTHORITY ENGINEERING
- Responsible party and nomination overall coordinator(s)
- Summary of required technical and operations permits, with
schedule and application periods; and their assignment to focal
points
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OG.03.30750 36 Confidential APPENDIX C - PEP and PIP
- Timing of permit applications (NB: allow sufficient time for
approval of the permit applications)
- Supporting (design) documents (N.B: early preparation of
documents for Authorities required which do not contain information
on proprietary know-how of Shell and third parties)
- Concept on HSE (deviations from normal standards)
2.5 VALUE AND WORK PROCESSES
- Summary of status of value and work processes that have been
applied during the earlier phases of front end development and a
programme of the activities that need be undertaken to complete
- Schedule when these processes are most efficient applied and
arrangement for participation;
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OG.03.30750 37 Confidential APPENDIX C - PEP and PIP
3. COST AND SCHEDULE AND CHANGE CONTROL
3.1 COST ESTIMATE
- Explain project's aim for low-life cycle cost
- Responsible parties to prepare the estimates (i.e. on-plot,
off-plot, shipping, infrastructure, financing, insurance, taxes,
duties, Shell Global Solutions-services)
- Executive summary of available capital cost estimates
- Identify Capex and Revex items for further cost estimates
- Type and format (breakdown) of estimates
- Timing of estimates and phasing of expenditure
- Responsible party to prepare cost comparison analysis between
successive estimates
- "Asset Breakdown", Work Breakdown Structure (WBS.
Checklist: justify type of estimate, e.g. 50/50, 10/90 or
90/10
3.2 COST CONTROL
- Responsible party to prepare budget cover statements for
future commitments
- Provisions of counter-estimates
- Preparation of a Cost Control Management Plan.
3.3 PROJECT SCHEDULE
Great emphasis shall already be given in the earliest project
phases to the detailed planning of project activities of
alternative project execution strategies.
Optimising sequences and minimising interfaces could
considerably shorten project schedules at no extra capital
cost.
- Describe planning features of proposed implementation
schedule
- Define the critical steps in the overall planning of the
project (e.g. permit application, long delivery items), fallback
scenarios, and mitigation measures.
- Describe critical path analysis results of the implementation
phase;
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OG.03.30750 38 Confidential APPENDIX C - PEP and PIP
- Detailed schedule up to investment decision
- Responsible party to update project schedules
- Overall schedule, including interfaces with other Group
Service Companies, deliverables of Customer and third parties,
including milestones for all major activities
- Describe impact of agreements (to be) concluded.
- Describe risk in case of a stretch target completion date.
Consider the impact of a potential on delay in completion on
product sales contracts (a schedule contingency to be added to the
sales contracts?) and trade off between schedule and cost.
- Progress control
Checklist: Justify probability of schedule (preferably linked
with constructability reviews) e.g. P50
3.4 CHANGE CONTROL
3.4.1 Strategy
Proposals for change need to be strictly controlled and their
cost/ time implications closely monitored in order to ensure that
project objectives are met on time and within budget, or
alternatively, that appropriate action is taken to obtain the
necessary agreements on revised schedules and/or budgets. A
procedure shall be in place making it compulsory that change
proposals are properly screened for their impact on Operability,
Safety, Health and Environmental aspects.
The control of change is an important factor in ensuring that
the project is completed on time and within budget.
Changes to the BOD or BDP (scope changes) might affect the
business objectives and may require budget resubmission.
Alterations to the detailed execution of the work (Implementation
changes) should be financed out of the Project Contingency
Allowance. Major implementation changes should be treated as scope
changes and may require a budget revision.
Scope Changes are basically "forced" scope changes, i.e., they
are variations to the agreed scope necessary to secure the project
objectives of realising a safe and reliable operating unit.
Initiatives or improvements for earning power or marketing and
operations flexibility shall be carefully considered. The only
legitimate reasons for Scope Changes within the authorized project
budget are for:
Correction of errors (in original scope).
Restoration/enhancement of safety and safe operation.
Changes in legislation requirements or regulations.
Major cost savings.
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OG.03.30750 39 Confidential APPENDIX C - PEP and PIP
Late safety and operability requirements need to be addressed
first through procedures, training, i.e. soft measures rather than
Capex. In principle no change will be considered if the capital
project facility can operate reliably for the defined turnaround
cycle (between two planned shutdowns) without a forced shutdown.
Changes need to be approved at senior level in Shell Global
Solutions and/or Customer
3.4.2 Change Control Procedure
The most important aspects of the change control procedure
are:
- Recognition and recording of change and reporting.
- Analysis of impacts on operability, safety, health and
environment.
- Analysis of the consequences on cost and schedule.
- Arrangements between Shell Global Solutions and Customer
regarding the responsibility for handling changes.
- Effective procedures for preparation, evaluation and approval
of changes.
- Arrangements in the project organisation to ensure that change
control procedures are followed by all parties involved (no
unauthorised implementation of changes).
- All changes to Shell Global Solutions deliverables (BOD, BDP,
BDEP/PS) should be verified by Shell Global Solutions skill
departments prior to implementation, as design integrity may have
to be guaranteed.
- Prompt authoritative responses to change proposals.
- Provision of funds.
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OG.03.30750 40 Confidential APPENDIX C - PEP and PIP
4. DIVISION OF WORK AND RESOURCING
4.1 PURPOSE
The purpose of a division of work is to formulate a policy for
the division of activities and responsibilities between Customer
and Shell Global Solutions and to translate this into resource
requirements.
When the project is on a new site, Customer resources will
initially be very limited. The site organisation is likely to be
built-up concurrently with project development and hence will not
be available for project duties. In such a case, Customer might
wish to appoint Shell Global Solutions as the Technical Leader
whereupon Shell Global Solutions will set up the required
organisation for the realisation of the total project. For other
projects, the assistance of Shell Global Solutions could be limited
to a specific phase of the project, ad-hoc advice or the provision
of resources to reinforce Customer's project team.
To check if the capacity of the Customers organisation is
sufficient or requires strengthening a proper listing of all his
required actions and deliverables shall be done.
The division of work and responsibilities between Customer and
Shell Global Solutions need to be defined and agreed and relevant
agreements drawn up. Separating scope out from the main EPC(M)
contract(s) for implementation by the local company needs to be
avoided, especially when the elements removed from the main
contract scope can compromise the technical integrity of the
installation and introduce complicated interface problems between
the Customer and the Contractor(s)
Where developments indicate that an adjustment is necessary,
parties must get together to revise the originally agreed division
of work. Interfaces must be clear and preferably at natural
borders, either in time or in scope.
4.2 CUSTOMER'S INPUT
- Master plan
- Management policy
- Local conditions/soil investigation/technical standards
- Interfaces with existing plant/demarcation boundaries/BL
conditions/ meteorological data/economic data
- Outside plot/plant change
- Planning application/permits
- Tendering for Project Implementation
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OG.03.30750 41 Confidential APPENDIX C - PEP and PIP
- Contacts with local authorities
- Provide staff for project teams
- Installation of a steering committee
- Tendering for construction and other local contracts
- Agree/prepare/monitor estimates and schedules (refer Chapter
3)
- Project language
- Approved vendor list
- Terms and conditions for contracts
- CAR insurance
- Contractor's third party liability covered under Customer's
insurance?
- Preparation of monthly progress reports
- Training
- Build-up of organisational site organisation
- Supplies of operating materials
- Commissioning and start-up
- Cost control/budgets for start-up
- Funding/financing
- Land acquisition
NB: Finalise land acquisitions the earliest to minimise
engineering and construction changes
- Change control
- Management reviews
- HSE reviews during Implementation Phases
- Feedback of lessons learned during construction, commissioning
and start-up to Shell Global Solutions
- Performance test.
- Identification of Customers risks/liabilities
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OG.03.30750 42 Confidential APPENDIX C - PEP and PIP
4.3 SHELL GLOBAL SOLUTIONS SERVICES
4.3.1 Shell Global Solutions Services To be rendered prior to
the Implementation Phase
- Scouting Studies
- Project Premise Document applicable revision
- Basis of Design (BOD)
- Basic Design Packages (BDP)
- Project Execution Strategy, Project Execution and
Implementation Plans
- Operational Implementation Strategy and Plan
- 30%, 20% and/or 10% cost estimates
- Site investigations/(early start of) site preparation work
- Development of Project standards (DEP-s versus Industry
Standards); nomination of the CD-ROM version applicable for the
duration of the project
- Tendering
- Choice of Project Specification or BDEP depending on
implementation strategy
- Summary of selected Value and Work Processes
- Procurement engineering for long lead items
- Prequalification, tendering, bid evaluation of EPC M)
Contractors and recommendation of preferred Contractor
- Participation in Independent Management Reviews
- Economic assessments
- Licence agreements
- Shell Global Solutions services: internally aligned, cost
estimated and approved via the Deal Management System (DMS)
procedure
- Shell Global Solutions services to be covered under
Construction Service Agreement (CSA) or Letter Agreement as
amendment to existing Services Agreement.
- Provide staff for project and/or residence team(s)
- Identification of Shell Global Solutions
risks/liabilities.
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OG.03.30750 43 Confidential APPENDIX C - PEP and PIP
4.3.2 Shell Global Solutions Services To be rendered in the
Project Implementation Phase
- Monitor/advise on contractor(s) activities
- Provide staff for project teams
- Prepare/monitor cost estimates/schedules
- Provide (international) staff for project teams
- Assistance to Customer during engineering, construction,
commissioning, start-up and performance test
- Review/audit of work contracted by Customer to others
- Steering Committee representation
- Summary of selected Value and Work Processes
- Model reviews
- Operational readiness review
- Pre-start-up HSE review
- Fire Safety Review
- Shell Global Solutions services to be estimated and approved
via Finance DMS system
- Shell Global Solutions services to be covered under CSA or
Letter Agreement as amendment to existing Services Agreement
- OSA for post-start-up period
- Review of major changes in PS/BDEP
- Participation in Post Implementation Reviews (PIR)
- Identification of Shell Global Solutions
risks/liabilities.
4.4 RESOURCES
The necessary resources for the project in terms of skills of
personnel and accumulated know-how adjusted to the needs of each
project phase can be made available from Shell Global Solutions
(international) staff, Customer staff, temporarily hired staff,
contracted staff, and by contracting out work.
Shell Global Solutions can advise Customer on the organisation
and structuring of the project team, in particular during the
Implementation Phase. The level of expertise required in Customer's
project team should be assessed, for new organisations preferably
at the time the CSA is negotiated. This would be the vehicle
through which Shell Global Solutions staff is transferred to
Customer.
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In general it is preferable to transfer at least those staff
that have been most closely involved in the PS/BDEP in order to
provide continuity and in-depth knowledge of the project. Sometimes
a particular skill is not required full time within the project
itself, in which case such expertise may not be represented in the
Customers project team. Under these circumstances the timely
involvement of appropriate expertise from within Shell Global
Solutions becomes even more important.
Competence mappings of project teams should be prepared,
indicating the required discipline competences specific for the
project, and competences actual available in the team. Lacking
competences, requiring decision-making or verification of documents
at a higher level, could then be provided by Shell Global Solutions
on an ad-hoc basis.
For each of the project teams required for the individual
project phases, specify the required resources.
Decide whether the project team, in particular during the PS
Phase, will work as a task force or in the matrix organisation.
The extent of Contractor supervision needs to be defined, in
particular whether a resident team in Contractor's office is
required.
- Resourcing policy
- Manpower resource plan/assignment durations/Shell Global
Solutions staff/Customer staff/Contractor staff
- Physical location of team(s)
- Strength and compositions of teams for:
* Basic Design Package
* Home office project management and engineering
* Longlisting, shortlisting of Contractors, tendering, bid
evaluation, recommendation of preferred Contractor
* PS/BDEP Package (home office, resident)
* Detailed Engineering and Procurement (home office,
resident)
* Construction
* Commissioning, start-up
* Performance tests.
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OG.03.30750 45 Confidential APPENDIX C - PEP and PIP
5. CONTRACTING
5.1 PURPOSE
The purpose of contracting specific works, services and goods is
required to support the project objectives that cannot or will not
be supplied by Shell Global Solutions and/or Customer.
5.2 STRATEGY
Through a structured process (identifying the most suitable
contractors to be invited to bid for a work package, competitive or
single-source tendering, technical clarification, commercial
evaluation and the final ranking) the contract is awarded to the
Contractor with the most attractive package to execute the work.
For the first step, establishing the contracting strategy for the
project, a contracting workshop, as part of the value processes,
may be considered. In case such has been applied in FED 1 phase,
the strategy need be confirmed.
- Contracting strategy / confirmation earlier contracting
strategy and / or workshop proceedings
- Identifying objectives to be achieved, in particular in case
of incentive contracts
- Expression of objectives in terms of time
- Assessment of (quality of) resources both available and
required
- Allocation of responsibilities Constraints
- Financial stability of selected Contractor
- Ensure life cycle requirements are incorporated.
5.3 MAJOR CONTRACTS
- Preliminary list of principal contracts
- Scope of principal contracts
- Party responsible for prequalification / tendering / award /
monitoring / invoicing / payment / change orders
- Type of contract reimbursement
- Single or competitive tendering
- Contractor selection criteria
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OG.03.30750 46 Confidential APPENDIX C - PEP and PIP
- Target incentive contract
N.B.: Bonus incentive schemes need not only to focus on the
achievement of intermediate milestones and the RFSU date. Customer
may benefit more from linking the incentive scheme to the
achievement of "sustainable products in tanks".
- Consider utilising international contractors' operating
experience in involving them actively in Customer's commissioning
and start-up teams
- Qualitative and quantitative assessment of milestone
achievements
- Tender Board approvals.
Checklist: local content
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OG.03.30750 47 Confidential APPENDIX C - PEP and PIP
6. BUDGETS, SERVICE AGREEMENTS AND FINANCES
6.1 FUNDS
6.1.1 Application
- Required budgets from Customer for services to be rendered by
Shell Global Solutions during the individual project phases.
- Responsible party to initiate/prepare/monitor/consult
budgets
- Align the project funding with the Work Breakdown Structure,
if required back to back with Customer and / or JV partners
- Timing for the preparation of 502P and F
- Supporting documents.
6.1.2 Control
Customer is fully responsible for the control of funds. Customer
may in turn request the services of Shell Global Solutions for the
execution of certain project activities. Within Shell Global
Solutions, the Activity Leader is then responsible for the proper
execution of these services and the control of related cost within
the approved budget.
Checklist: - List budgets to be controlled by the Activity
Leader
- Change control procedure (see also chapter 3).
6.2 FORM OF AGREEMENTS
The role of Shell Global Solutions, its authorities,
responsibilities, liabilities, lines of communication, advice and
services rendered, and its remuneration are all contained in an
agreement to be concluded between Shell Global Solutions and
Customer. Upon signature of the agreement by Customer, Shell Global
Solutions will initiate all related activities covered by the
Agreement.
- List agreements (to be) concluded and executive summary, such
as:
* Cost Contributing Agreement
* Construction Service Agreement
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OG.03.30750 48 Confidential APPENDIX C - PEP and PIP
* Technical Support Agreement
* Side letter to existing Service Agreement, in case project
activities are "optional services"
* Operational Service Agreement
* Joint Venture Agreements
* Licence Agreement
* Others
* Timing of Agreements.
6.3 FINANCES
- Financing
NB: Already in the first phases of the project proper
arrangements should be in place which allow Shell Global Solutions,
Contractors and Vendors of long delivery items to be paid in time
for work done. Loan arrangements whereby the shareholders do not
guarantee the full amount of the loan should be avoided. In case
such arrangements cannot be avoided a multidisciplinary task force
is to be set-up in the early days of the project for the purpose of
establishing a comprehensive, integrated strategy and plan to deal
with and co-ordinate project financing.
- Financial control
- Tax/treasury/insurance/audit matters
- Budgetary control
- Commitment and expenditure control
- Expenditure phasing and (3 months) roll over cash call
forecasts
- Disbursement control
- Corporate ledger.
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7. PROJECT ORGANISATION AND PROCEDURES
7.1 PURPOSE
The purpose of the project organisation is to provide a
well-defined organisational structure to manage the resources
allocated to the Project (manpower, know-how, time and
capital).
With Customer being Project Principal and budget holder,
management of the Project is Customer's responsibility. However,
the available resources and expertise often necessitate assistance
being requested from Shell Global Solutions.
Projects taking the size of a major revamp or new plant
construction require the establishment of (a) dedicated project
team(s) with their own management for each phase of the work.
In a split-phase project with a division between the PS
Phase/Implementation Phase/on-plot/off-plot/procurement activities,
the interfaces need to be carefully managed and a clear hand-over
point must be defined in terms of completed activity (e.g. Project
Specification and the 10% estimate are ready).
In dividing the work, it is advisable to keep management of the
relevant work synchronous with the division in scope.
Independent Management Reviews are recommended. These reviews
need be planned well in advance, and can be carried out e.g. at the
end of the BOD and towards the end of the BDEP or PS. If a Customer
will prepare the project execution strategy and plans, the
responsible Activity Leader shall explain and justify the benefits
of the value and work processes within the project governance
structure of Shell Global Solutions.
7.2 CORPORATE STRUCTURE
- Include a block diagram showing Customer's relationship
with:
* Shareholders
* Advisers
* Authorities
* Shell Global Solutions Project Management
* Feedstock suppliers/off-takers
* Licensor
* Others
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7.3 PROJECT ORGANIZATION
- Describe Project phases and their management
- Shell Global Solutions or Customer Project management
- Milestone identifying beginning/end of phases
- Reporting relationships/interfaces
- Customer/Shell Global Solutions organisation and focal points;
Indicate who are the key decision makers
- Consider assigning a dedicated team member for matters related
to financing, legal, insurances and contractual agreements
- Financial authorities
- Provide a narrative of main organisational features for each
phase (e.g. task force, matrix organisation, home office, resident
team)
- For mega-projects that include "non-traditional shareholders",
consider employing the services of a reputable and experienced
legal firm from the earliest stages of the project, to assist Shell
Global Solutions contracting department and Customer on legal and
contractual matters.
7.4 PROCEDURES
- List and justify any deviations from OGs Business Process
Manual Projects
- Management systems
- Administrative procedures
- Information systems
- Document commenting, control and distribution
- Progress/cost reporting of achievements, concerns and
corrective actions:
* Contractor to Shell Global Solutions Activity Leader
* Shell Global Solutions Activity Leader to Customer
- Project Review meetings with Customer
- Communication with others
- Lessons learned from Customer to Shell Global Solutions
Activity Leader.
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8. QUALITY ASSURANCE
8.1 PURPOSE
Quality is to be the total of characteristics that makes a
project fit for the intended use, to reduce unnecessary expenditure
arising from avoidable failure to achieve project objectives in the
most efficient manner.
8.2 STRATEGY
In order to ensure the efficient and effective realisation of a
project, it is necessary to manage quality. This will require a
quality management approach that involves three elements:
- Quality planning
- Quality control
- Quality improvement, taking due regard of the conflict of
interest between (always) Customer's requirements for long-term
durability and (generally) Contractor's and Supplier's short-term
involvement.
8.3 QUALITY ASSURANCE REQUIREMENTS
ISO 9000 and ISO 9001 have been set as the basic quality system
requirements that shall be fulfilled by all parties involved in the
execution of the Project. The services rendered by Shell Global
Solutions on behalf of Customer's Project will be executed in
compliance with OGs Business Group Management Manual Projects
Quality guidance is available on the OG website, via the home
page:
http://sww-ogstaff.shell.com/OG_mgt_system/OGMS/OG-Home/Home.htm
Whilst the Shell Global Solutions quality system cannot be
imposed on the Customer, the principal quality steps should be
equally valid for the Customer, and Shell Global Solutions can
advise on the establishment of an appropriate system.
Any QA/QC system put into place, should take into account the
degree of expertise available within the Customer, in particular
Customer's project team, and should require consultation with Shell
Global Solutions whenever this is appropriate.
The objectives of the QA strategy will be to assure design
integrity, the optimum selection and procurement of the required
materials and equipment, and the construction of the project
facilities in strict compliance with the requirements of the Basic
Design Package and with the Definition and Implementation phase
Contracts. Adherence to project standards will be verified by
control of non-conformances, by identifying areas for improvement,
and by acting upon those promptly and resolutely to ensure
compliance
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8.4 REVIEWS and AUDITS
Project development need be subjected to a structured programme
of reviews and audits. Reviews are more generic and must be seen as
an assessment against best practices and project guidelines
identifying strength and weaknesses and recommendations for project
execution improvement; audits are independent assessments to ensure
compliance to agreed standards. Both reviews and audits need to be
scheduled in the overall Project Quality Plan, which will also
stipulate requirement with effect to timing and participation.
The most common reviews are:
Independent Management Reviews commonly executed under guidance
of Shell Global Solutions, with senior project executive
participation
PEER reviews reviews on discipline level, likely with assistance
of relevant SGSi expertise PEER groups
Functional Reviews such as desktop safety studies HAZOPS IPF
reviews pre start up reviews fire safety reviews
Checklist: - List all identified reviews during BDEP/PS and
Implementation phase
- Responsible party to initiative review(s) and for drafting
terms of references
- Anticipated participants in the reviews
- Timing.
- Allocation of cost in budget
8.5 QUALITY ASSURANCE FEATURES
- Quality assurance in design
- QA audits; Contractors internal QA audit schedule, Contractors
quality plan
- Records on Corrective Action Requests, Request Technical
Deviations, Non Conformance Requests
- Interface control
- Quality assurance in procurement (incl. sub vendors)
- Vendor appraisal
- Procurement control
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- Inspection parties
- Authority inspection
- Quality assurance in construction
- Contractor appraisal
- Construction control
- Construction material control
- Commissioning and start-up control.
8.6 AUDIT TRAIL
An audit trail of all decisions on alternative solutions that
have an effect on technical and operational matters, on the
Project's economics, quality, safety and environment, should be
kept up to date. Where necessary, a reference to the Project
Premise Document shall be made. This will provide the rationale for
the ultimate plant design.
8.7 INTEGRITY OF THE DESIGN
A procedure has to be developed for individual project phases
that deal with the handling and authorisation of changes to the
design intentions or deviations from agreed standards.
A competent focal point should have the technical authority to
approve/disapprove change and deviation requests. This focal point
should have the experience and seniority to judge whether the
request has been properly checked for impacts on the design
integrity, operational, safety, health and environmental aspects
and whether the request has to be referred to the respective Shell
Global Solutions specialist department for further review.
Changes to the design intentions need always Shell Global
Solutions' support.
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9. HEALTH, SAFETY, ENVIRONMENT (HSE) AND SUSTAiNABLE
DEVELOPMENT
9.1 POLICY
The Group Policy Guidelines on Health, Safety and Environment
require to conduct all activities on the project in such a way as
to take foremost account of the health and safety of all persons
working on the project and to give proper regard to the
conservation of the environment. In implementing this policy, the
requirement of the local legislation shall be complied with and
measures for the protection of the health, safety and environment
for all who may be affected directly or indirectly by the project
shall be promoted in an appropriate manner. To achieve adherence to
Group Guidelines and for the proper implementation of HSE/SD, the
Project Guide 1A on HSE and Sustainable Development shall be
followed.
9.2 HSE PLAN
- Statement of policy check PG 1A
- Summarise available safety studies
- ESHA : Environmental Safety Health Assessment draft and final
reports
- Responsible party to prepare Safety Management Plan
- Timing
- Safety ranks alongside traditional areas of productivity and
quality
- Safety is line responsibility
- Employers, managers/supervisors, employees, contractors and
suppliers have "Duty of Care"
- Self-regulated safety approach
N.B.: Self-regulated safety approach and line responsibility of
safety may be difficult to achieve at some construction sites right
from the beginning. Although this approach to be a development
objective during the course of the project, appropriate measures
need to be in place right at the start of construction, e.g.
additional safety officers chastising the construction site.
- Considerations such as:
* Identifying all regulatory authorities having jurisdiction
over the Project
* Identifying all regulations that must be complied with
* Identifying all permits and certificates that are needed
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* External safety, i.e. protection of the public
* Internal safety, i.e. protection of staff
* Preparing design philosophy
* Planning safety audits and identifying auditors
* Assessing and planning for external safety approvals.
9.3 HSE FEATURES
PG 1A HSE and sustainable development and PG 1B: HSE&
Sustainable Development Management of Construction describe the
minimum requirements for Shell Global Solutions involvement in
areas which are of vital interest to Shell Global Solutions
business and which are related to Health, Safety, Environment and
Operability.
- Management of HSE in
design/engineering/construction/commissioning
- Discussions with local authorities.
- Reporting Accidents and Safety Performance
- Statistics
- Contractors HSE plan
- Emergency procedures, responsiveness
- Training
- Audits, inspections
- Safety incentives
9.4 PUBLIC RELATIONS
- Formal consultative mechanisms with environmental stakeholders
and regulators to increase understanding and co-operation
- Meeting specific needs of the community
- Public Relations plan
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10. ENGINEERING
10.1 PURPOSE
The purpose of engineering is to specify plant and equipment in
sufficient detail that elements can be procured and facilities
constructed in accordance with the requirements of the Basis of
Design and of the Process Design/Licensing Packages. Furthermore,
engineering shall deliver the documentation required to operate and
maintain the plant, to satisfy authority regulations and to enable
future plant developments.
10.2 STRATEGY
To achieve the project objectives, the contents of the Basis of
Design need to be developed into the Basic Design Packages and
further into a PS or BDEP so that a +/- 10% estimate can be made.
The Project standards are agreed in this phase. Sufficient
definition should be achieved to prepare for the Implementation
phase in accordance with the desired contracting strategy. If
pre-ordering (purchasing equipment or goods prior to final
investment decision) is required, detailed engineering for the
long-lead items need be performed during the PS phase, and
procurement terms & conditions be available. The strategy of
low project life-cycle cost has to be applied as intended.
- Validation of BOD
- Identify critical non-routine engineering subjects
- Technology assurance
- Involve customers representatives in operations and
maintenance during the preparation of the PEFS-s and development of
the plot-plan and involve also specialists in construction during
the development of the plot-plan
- Incorporate in the design of a grassroots project a Local Area
Network (LAN), a maintenance management system, a computerised
materials handling system and Computer-Aided Design package (e.g.
AutoCAD) to update engineering documents
- Overlapping of detailed design/procurement and construction
activities
- As built requirements handover documentation (schedule) extent
of electronic documentation with pre-requisite formats and
structure / software compatible solutions
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10.3 Division of Work
- Division of engineering scope between Shell Global Solutions,
Customer, licensors and others
- Interface control procedure
- Consider the PS Contractor deal directly with the sub license
Contractors. Advantage: streamlining level of Shell Global
Solutions liabilities; proper Contractor control of process
engineering and technology design, thereby making effective use of
Shell Global Solutions man-hours.
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11. PROCUREMENT
11.1 PURPOSE
The purpose of procurement is to purchase materials and
equipment required for the project, satisfying all technical
specifications, project planning and commercial objectives.
11.2 STRATEGY
To achieve the project objectives during procurement,
consideration to the below-mentioned key parameters should be
given. It shall be made clear that low life-cycle cost can mean
higher Capex cost. For this purpose, a set of selection criteria
will be defined and agreed that justify higher expenditures versus
a longer and/or more cost effective life cycle.
- Project organisation for procurement
- The Shell Group's statement of General Business Principles
with respect to business integrity
- Project vendor list, vendor qualifications, local
requirements, standardisation and resource availability, and
international/local vendors
- Use of export credit facilities
- Use of MESC, EMA and/or E-SPIR 2000 (early input from Customer
required to take existing stock of spare parts into
consideration)
- Purchasing conditions
- Development of vendor price agreements (blanket orders for
bulk materials)
- Corporate procurement initiatives
- E-procurement
- Electronic material management systems to be compatible with
engineering design systems
- Commissioning/Maintenance agreements (include requirement for
Vendor Service Men in equipment inquiry and consider quoted cost in
bid evaluations)
- Negotiate maintenance support deals during purchase of e.g.
rotating equipment and main instrumentation packages
- Sealed bid receiving and evaluation
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- Assessment of tenders on the criteria of quality, price,
life-cycle cost, delivery and overall performance
- List critical equipment and subcontract packages for which
verification of Vendor/Subcontractor proposals is required
- Pre-ordering of long-lead equipment
- Contractual arrangements on factory acceptance testing (FATs)
of DCS / process control systems
- Procure spare parts needed during commissioning, start-up and
first year of operation together with the main equipment/bulk
materials
- Quality assurance/control requirements
- Importation, duties
- Document requirements
- Delivery and site handling of materials, Forwarding Agent
- Vendor performance feedback to Customer and Shell Global
Solutions
- Surplus disposal (include buy-back clauses for bulk materials
in inquiry and consider offered credits in bid evaluations)
- Procurement of last-minute items
- Location of material/equipment landing, harbour facilities,
temporary material unloading jetty required, road transport,
bridges, defiles
- Store spare rotors vertically in inert (N2 blanketed)
containers
- Delivery conditions such as FOB (Free On Board) or other
- Discrepancy reports.
11.3 DIVISION OF WORK
- Responsible parties for procurement, on-plot and off-plot
materials
- Resources
- Procurement offices
- Procedures
- Monitoring of procurement activities
- Resident inspectors and expediting
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- Third party inspection and expediting agencies.
11.4 PRE-ORDERING LONG-LEAD EQUIPMENT
- Responsibility to requisition/tender/evaluate/procure
- Assignment of purchase orders to Contractor
- Bridging funds required covering advanced detailed engineering
and procurement work and cancellation charges, in case these
activities are executed prior to EPC funds approval.
11.5 ORDERING OF UNDERGROUND PIPING AND CABLES
It should be considered to order underground piping and cable
materials as early as possible, and be validated with the
construction plan. This will allow early completion of
corresponding construction activities and the application of
paving, which is one of the prerequisites for a smooth and safe
construction progress.
Buy-back clauses will prevent excessive surplus materials.
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12. CONSTRUCTION
12.1 PURPOSE
The purpose of construction is to build the Plant in accordance
with the project specifications and procedures.
12.2 STRATEGY
To achieve the project objectives, the design shall be
translated in actual plant.
- Project organisation for the construction
N.B.: experienced operating and maintenance staff shall be
involved early in the construction phase
- Prefabrication (included in erection contract, off-site,
on-site)
- Modular construction (consider also the logistic restrictions
for this)
- List of execution contractors
- Development of contract packages
- Procedure for tendering of site/erection contracts
- Field administration procedures
- International/local contractors
- Preference of Customer for "house" contractors
- Definition of mechanical completion, RFSU, scope of
commissioning activities
- Hand-over from Contractor to Customer's construction team;
Customer's construction team to Operations
- Sequential mechanical completion dates for systems according
to logic of commissioning and start-up (several RFSU dates instead
of only one RFSU for entire complex)
- Restricted work periods due to public holiday seasons and
weather conditions
- Dedicated construction areas (general work permit)
- Special requirement from the site/Customer
- Interface with existing site operations/maintenance activities
(e.g. shutdown, tie-ins)
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- Infrastructure, construction areas, work permits, temporary
facilities
- Early erection of warehouse, admin.