Gbhe Proj MGMT Handbook Small Proj

GBH Enterprises, Ltd.
PROJECT MANAGEMENT
A Handbook for Small Projects
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Contents
SECTION 1 PRINCIPLE AND PRACTICES
1
INTRODUCTION
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
GBHE PROJECT PROCESS

Introduction
Project Opportunity
Project Definition
Project Implementation
Project Benefit
Project Review
Business Ownership
Measurement and Auditing
3
3.1
3.2
KEY CAPABILITIES
General Skills
Personal Competencies
4
4.1
4.2
4.3
4.4
4.5
PROJECT MANAGEMENT PRACTICES - PROJECT DEFINITION

Business Opportunity Testing & Objectives Setting
Developing the Project Scope
Project Strategies
The Project Organization
Project Estimating and Planning/Work Breakdown
PROJECT MANAGEMENT PRACTICES PROJECT

IMPLEMENTATION
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
Team Building and Team Management

Risk Management
Design Management
Contract Management
Construction Management
Commissioning Management
Change Control
Cost Management
Progress Monitoring, Control and Reporting
Information and Document Management
6
6.1
6.2
PROJECT MANAGEMENT PRACTICES - PROJECT REVIEW

Project Close Out and Reports/Reviews
Measurement and Learning
7
7.1
7.2
VALUE IMPROVING PRACTICES

Introduction
Types of Value Improving Practice
FIGURES
1
PROJECT PROCESS
2
COMMERCIAL STRATEGY & RISK RELATIONSHIP
3
GBHE RISK MANAGEMENT PROCESS
SECTION 2 CHECKLISTS AND REFERENCES

8
INTRODUCTION TO THIS SECTION
9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
PROJECT DEFINITION CHECKLISTS

Project Strategies
Developing the Project Organization
Cost Estimating
Contractor Selection
Work Breakdown Structure (WBS)
Planning and Control
10
10.1
10.2
10.3
10.4
PROJECT IMPLEMENTATION
Cost Management
Change Control
Document Management
11
11.1
11.2
PROJECT REVIEW CHECKLISTS

Project Review, Reporting and Close-Out
Measurement (Learning Log)
12
REFERENCES
DOCUMENTS REFERRED TO IN THIS INFORMATION FOR ENGINEERS

DOCUMENT
SECTION ONE PRINCIPLES AND PRACTICES

0
INTRODUCTION
This Information for Engineers document comprises two sections.

Section 1 contains the components of the GBHE Project Process, the capabilities
and competencies required by a Project Manager and, finally, specific project
management good practices including value improving practices.
Section 2 contains information that supports the practices contained within
Section 1. This includes helpful checklists, references and information about
deliverables and other examples, all of which will provide practical help to Project
Managers and their project teams.
The document assists client sites in meeting the necessary engineering
requirements related to safety, health and environmental matters on their sites,
and supports the GBHE Safety, Security, Health and Environmental Policy.
WHAT PROJECTS CAN IT BE APPLIED TO?
Although the information contained is applicable to most projects, the document
is aimed primarily at GBHEs Consultancy and Associated Projects in the range
of $40k to $5m and is adaptable across a wide range of technologies and
geographic locations within this range. How you apply it depends mainly upon
your Business and project strategies, the complexity of your project and the
Business you belong to.
Projects that are of higher cost or have some particular complexity may require
the application of additional and more rigorous procedures. Such procedures can
be found within each Business or organization and these will deal with the
requirements of projects that are not covered by this document.
WHY HAS IT BEEN WRITTEN?
All GBHE's major competitors apply and work to a companywide consistent
project process, one of the important features of which is a common language for
all those involved. Evidence also shows that as a result, most achieve high levels
of performance in delivering their projects. GBHEs guidelines for capital
investment projects now require GBHE Businesses to apply a consistent, GBHE
Project Process.
This document has been written, therefore, to describe the content of the GBHE
Project Process and also to provide a framework for good practice. This,
supported by checklists and examples, will thereby help Project Managers and
their teams to further raise GBHE's all round investment performance.
Finally, although GBHE's Guidelines require the GBHE Project Process to be
used company wide, this document has been produced to provide guidance not
establish hard prescription. Following the GBHE Project Process or the content
of this document does not imply working within a straight jacket of bureaucracy,
nor does it guarantee success; but will go a long way towards making success
more likely.
WHO HAS IT BEEN WRITTEN FOR?
It is hoped that both seasoned Project Managers and those learning the role will
find the contents useful and helpful. Seasoned Project Managers as a useful
reminder and new Project Managers as statement of the standards they need to
achieve. It has not been produced to replace the need for project management
experience and training but as a supplement to these.
GBHE PROJECT PROCESS
2.1
Introduction
The GBHE Project Process is part of a total business investment process whose
prime aim is helping to ensure that capital and revenue resources within the
company are spent effectively and that key safety, health and environmental
standards are met. The Project Process is set out in Figure 1 and defines the key
stages and decision points that are required for all projects. It does not prescribe
the way in which those stages are undertaken, this will normally be done by local
project procedures appropriate to the nature and size of the project as well as the
local business and regional context. For larger or more complex projects,
additional decision gates may well be required. Business and project strategy
usually determines how the Project Process is applied.
FIGURE 1
2.2
PROJECT PROCESS
Project Opportunity
The Business identifies the opportunities and their nature, reviews alternatives
and identifies the potential risks and benefits before defining the business
objectives for the project and appointing a Business owner. The decision to
proceed with the project and to provide appropriate resources is recorded.
2.3
Project Definition
The project definition stage tests that the business objectives are clear and
establishes critical success criteria for the project. The scope of the project is
defined in sufficient detail to satisfy the sanctioning criteria; and planning of the
execution of the project is completed in order to define roles and responsibilities
and resourcing requirements; schedules are produced which are based on an
appropriate work breakdown structure and estimation of costs. A defined project
strategy, definition package, project schedule and sanction cost estimate are
produced at this stage.
2.4
Project Implementation
Following the sanction decision, project implementation proceeds in accordance

with the defined project strategy and scope. The stages of implementation vary
with the nature of the project but typically include detailed design, procurement,
construction and start-up.
Appropriate monitoring, validation and control measures are employed to track

progress, control costs, ensure safety and limit change to ensure the project
objectives are achieved. The deliverable at the end of this stage is a productive
asset, which meets the business objectives.
2.5
Project Benefit
The Business ensures that the project benefits defined at the outset of the project
continue to be realized throughout the operating life of the asset.
2.6
Project Review
All projects complete an appropriate review process, which ensures that learning
from the project, both positive and negative, is captured and recorded. This
includes both project learning and business learning in terms of whether
business objectives have been achieved by the investment. Appropriate
mechanisms are put in place to ensure such learning is disseminated throughout
the Business and project communities to maintain effective feedback for future
improvement.
2.7
Business Ownership
Each GBHE project has an identified Business owner responsible for delivery of
the project benefit and accountable for managing the integration of activities from
identification of project opportunity through to delivery of project benefit and
completion of project review. The Business owner has responsibility for ensuring
that the capability is in place for the effective delivery of all stages of the project
process. This usually requires the appointment of a suitably qualified Project
Manager. The Business owner also has responsibility for ensuring that essential
safety, health and environmental requirements are met throughout the project
process.
2.8
Measurement and Auditing
Each stage of the GBHE Project Process includes the definition of key
deliverables. These deliverables form the basis on which decisions will be made
to proceed, or otherwise, to the next stage of the project process. It is important
that these deliverables are measurable and that suitable audits or project
assessments are carried out from time to time to ensure that the process is being
effectively and consistently applied.
These can take the form of self-assessments or may be peer assessments or

independent audits. It is particularly important that regular assurance of SHE
compliance on projects is undertaken.
3
KEY CAPABILITIES
In order to successfully complete projects there are a number of key

competencies and skills that are required within the project team. If the team is
lacking in any of these capability areas, the project may still be successful but the
risk of failure is greatly increased. Project management is both an art and a
science, combining a structured logical approach, which requires discipline with a
range of skills which require experience and judgment. The need for these key
skills and competencies is not reduced merely because the project is small.
3.1
General Skills
The key skill areas are as follows:
Adoption of a project process and appropriate procedures to ensure that

objectives are understood, scope defined and strategy planned before
implementation takes place. The GBHE Project Process is defined in
Section 2. It is part of the responsibility of the Project Manager to ensure
that the discipline of the process is applied throughout the project.
The project team needs clearly defined roles and responsibilities, which
cover all the project requirements. The internal interfaces between project
team members need to be clear as well as the interfaces outside the
project team (e.g. with the Business, works, other projects, etc.). The
interfaces with contractors and suppliers are especially important and
need to be properly managed.
The Project Manager must ensure that all the appropriate skills are
available and harnessed at the right time. Unlike many line management
jobs, the Project Manager will often need to draw upon the skills of people
who have other accountabilities in the organization. Access to resources is
a key requirement of project management.
Since projects usually involve the integration of related activities in a

defined time frame, good team building and communications skills are
required by the Project Manager. Similarly, good projects depend heavily
upon planning and preparation and it is essential that those skills are
available within the project team.
3.2
It is a key requirement in all projects that knowledge in the technology is

available to the project team. For the core skills of project management,
process and engineering design, knowledge of hazards and statutory
requirements, operational knowledge, construction management,
purchasing and contract management etc., these will often exist within the
project team. There are, however, other knowledge and skills which may
be required to ensure a successful project, such as risk management,
scientific know-how, legal and financial knowledge, and the project team
needs to have access to these where appropriate.
Some knowledge and skills can be developed through training and

education; others are only developed by practice and experience. It is
important that all members of the team have been trained to a level that
enables them to discharge their responsibilities and have the appropriate
level of experience where skill and judgment is required. It is the
responsibility of the Project Manager to ensure that the skill balance in the
team is sufficient to enable the project to be successfully completed.
Personal Competencies
The following make up the basic personal competencies required by the Project
Manager and they also need to exist to some extent or another within the rest of
the project team.
3.2.1 Defining
This is about helping customers, suppliers and the project team makes up their
minds and is aware of the consequences of their decisions.
3.2.2 Scanning
This is surveying the totality of the project including such things as business
politics, the market, goals, technology and progress against plans and budgets,
whilst maintaining a clear appreciation of the whole project.
3.2.3 Strategic Thinking
This is being able to identify key methods of approach that, if successfully
accomplished, will greatly facilitate the completion of the many tasks to be done.
Once decided, these become the key elements of the strategy.
3.2.4 Selecting
This is differentiating between those issues having a potentially great impact on
the project and those not so important.
3.2.5 Resourcing
This is finding the necessary resources to take advantage of an opportunity or to
resolve an issue or problem.
3.2.6 Influencing
This is using personal skills to get things done.
3.2.7 Interfacing
This is making sure that intergroup relationships promote the project rather than
draining its energy.
PROJECT MANAGEMENT PRACTICES - PROJECT DEFINITION
4.1
A successful project not only meets its own targets but delivers a benefit and
acceptable rate of return for the Business. It thus follows that both the project
objectives and the underlying Business drivers must be fully aligned, developed
and understood. If the latter have not been thoroughly developed, then the
expenditure incurred by the project team is likely to be abortive or wasted.
Further, it is difficult for a Project Manager to set the project objectives if there is
limited clarity around the reason for proceeding with the project and the issues
that affect it.
Hence it follows that the Project Manager needs to establish the background to
the project when they first become involved and certainly before committing
significant expenditure or other key resource. There are a number of key
questions (see Section 2 checklists) which can aid this process.
Having answered these questions, the Project Manager can then develop the
project strategy and objectives. This is sometimes best achieved by working
backwards from the end of the project and questioning what each stage of the
project requires from the preceding stage (i.e. what do commissioning require
from construction)? What does construction need from design and procurement
to achieve this, and in turn, what does procurement require from design? The
Project Manager then can set objectives for each area and stage of the project
which are consistent with the overall direction of the work. They can then use
these objectives to determine and select the relevant resources and services for
the project.
4.2
4.2.1 Introduction
Successful projects are categorized by good early definition, enabling only viable
business options to be evaluated, approved and implemented.
The Project Definition stage is concerned with developing definition, identifying
and assessing options, evaluating and recycling them through a series of
decision stages. Only viable proposals are then taken forward and considered for
approval by the sanctioning authority concerned.
There are 3 key phases during definition (i.e. Assessment, Optimization and
Development). Normally, 2 key documents are produced:
Project Proposal;
Project Specification and Strategy.
These are used to describe for example project boundaries, scope, cost and
timing. They are key documents and are used to drive out issues and ensure
alignment between the client, engineering and operational stakeholders.
The Project Manager takes the project team through the 3 important and distinct
phases, assessment, optimization and development, which systematically and
progressively improves definition and limits costly re-cycle and re-work. Poor
definition leads to a poor project outcome. Throughout, the project proposal and
project specification are re-visited, improved and re-issued.
Perhaps only the more complex of small projects will involve these 3 discrete
definition and re-cycle phases. However, following such systematic discipline is
good practice and can only help in improving the completeness of the scope and
the viability of the overall investment (not just the project).
4.2.2 Importance of Scope Development
A good scope is a prerequisite for a successful project. Scope development is a
key activity that involves taking the clients Project Proposal and building it into a
working project scope. The Project Manager in conjunction with the Project
Owner makes certain this work is carried out thoroughly and that the scope fulfils
the original intent and is supported by all stakeholders. A Project Scope
document is produced which, amongst other reasons for its production, helps the
scope to be tested to ensure adequacy and value.
The scope documents are important because:
By reviewing the project proposal and specification documents with the

client it confirms correct interpretation of Design Brief by the Project
Manager. Also:
o Becomes the official record of agreement between client and
Project Manager;
o Serves as a base case from which to control change;
o Ensures a consistent understanding of the brief across the project
team;
o Is the basis for the estimate;
o Is the basis for the program;
o As new people are brought into the Project Team this is where they
start;
o They are key documents in the Project Review, which is an
important part of the Project Process.
4.2.3 Getting the Right Project

The scope development phase is the stage at which the client and project team
have the maximum influence on the project outcome. More projects have failed
to deliver business benefit through doing the wrong project than through poor
execution.
The client discusses the business case with the Project Manager, stresses
whats important and what is less important. Alternative solutions and ideas are
also investigated. It is rare that first ideas cannot be improved upon. Where
appropriate, input from the following is also key:
Business.
Marketing.
Engineering, Design and Construction.
Purchasing, Tax positions for overseas projects.
Commissioning.
Operations.
Maintenance.
Environmental.
Safety.
Occupational Health.
4.2.4 Value Improving Practices (VIPs)

Studies of past projects have shown that applying VIPs at the right stage will
enhance the quality of the project scope. Value improving practice is covered in
Section 7 of this document. However, the following are examples of those
deployed during Project Definition:
Value Analysis:
Breaks the scope down into its functional elements and allocates the
estimated costs allowing judgments to be made on value for money.
Conceptual Analysis:
Similar to above but carried out earlier in the project process using a
conceptual or very preliminary estimate.
BETA Studies - (Business, Engineering and Technical Assessment):

Compares business aspirations and needs with proposed engineering
solutions.
Risk Management:
Identifies project risks and develops a risk management process to
manage through the project.
4.2.5 Definition Phases
Assessment:
This is concerned with establishing understanding of the key project drivers and
influences, the development of an outline scope and the evaluation of the project
economics to assess viability. The project scope is developed to a point where
an order of cost estimate can be produced (likely 30%) and the timescale can
be confirmed with reasonable confidence. With this information a first-pass
economic assessment can be made by the Business to support decision making.
Optimization:
This involves further developing understanding and optimizing the project

economics. It is the phase, for example, where such things as the site would
normally be confirmed and process design and layouts optimized. Alternative
technologies are evaluated and VIP practices are applied such as VA. If this
phase is carried out properly, costs can be reduced considerably and/or
operability improved. Optimization and risk mitigation are the key drivers. The
likely outcome at the end of this phase is that an optimal solution is developed;
confidence in the outcome increased considerably, scope fixed and key project
strategies in place which will exist through to completion.
Only fully optimized and viable investments are taken forward to the development
phase. Costs will be evaluated to 20% confidence. If this is completed then the
client will have reworked economics and be in the position to consider
commitments to increased pre-sanction funds.
Development:
This is concerned with developing definition, improving implementation strategies

and commercial arrangements to a point where the implementation phase can be
initiated. It helps reduce risk by increasing knowledge/definition and starts the
preparation for implementation.
At the end of development the project will have been defined to a point where
delivery, in accordance with the investment case, can be formally assured. Costs
are evaluated to 10% confidence and a firm project schedule is available.
Contractual/commercial strategies and arrangements will also be fully developed.
4.3
Project Strategies
4.3.1 Introduction
To meet the business objectives and to provide a firm basis for management and
control requires a project strategy to be established as an early and key part of
project definition. The project strategy considers, for example, such things as
purchasing and contracting options, project organization roles and
responsibilities, timing and budgeting, information management, how the project
is to be designed, constructed and commissioned, role of the client,
communications and much more.
Formulating the project strategy involves considering all issues likely to affect the
project and the way in which they can be satisfied; the outcome provides a
framework for carrying out all subsequent project activities. As such, the project
strategy provides alignment of business objectives with those of the project and
this is therefore central to the successful outcome of the project.
4.3.2 Contract and Procurement Strategy
4.3.2.1 Contract Strategy
The Project Manager must make available all the required skills and resources to
the project to effectively achieve its aims. It is only on very small projects,
however, that all of the skills required are available in-house. For the majority of
projects, some skills within the project team must be supplemented by the use
of outside resources. Procuring these skills will be done through a contract. The
efficiency of the project will be determined by the Project Manager's selection
and subsequent management of the contract.
The successful management of any Contractor depends on a mutually respectful
relationship, with the objectives of both parties aligned to the objectives of the
Project. The relationship is crucial to success, and recognizing that the
Contractor has been engaged to supplement a skills shortfall within the project
team is the best way of avoiding the temptation for scarce specialist client
resources to get involved in detail which is the scope of the Contractor. Many an
escalation in scope and project cost has occurred because of 'preferential
engineering' - a difference of professional opinion, when either solution would
achieve the contract objective. It is worth bearing in mind that:
"A Contractor selected with the appropriate skills for the scope of works required,
and with appropriate reward for the complexity of the work and the market
conditions prevailing at the time, will perform to the standard required by the
terms of engagement"
A comprehensive contracting strategy is therefore essential for all projects and it
needs to cover all "procurement" activities. This is the foundation for effective
contract management and formulation commences during Project Definition. The
key to a successful outcome is a strategy that is aligned with the overall
investment objectives of the project and the aspirations of the contractor or
supplier. The contracting strategy defines the number of different contracts, the
scope of work of the contracts, the structure of the contracts, the timing of
contractors and so forth.
Choosing the contract type should be based on sound objectives with respect to
such things as performance, time schedule, quality, and scope, flexibility of
design, the clients involvement and risk allocation. The way in which you engage
and manage the contractor is therefore extremely important. A "win - win"
approach which embodies appropriate incentives balanced with associated risk is
the most likely route to success. The type of contract that emerges will then help
to deliver the required outcomes for GBHE in terms of efficiency, scope, cost and
time and will also be aligned to the aspirations of the contractor or supplier.
Careful planning is essential, and preparing a contract plan which

embodies the key elements to be contracted out, the preferred strategy
and a related schedule is good practice. Having enough time to complete
contract negotiations is key to getting the strategy you need, and making
sure that you have enough time for all the steps is essential.
It is essential to reflect the kind of constraints (some of which are identified

below) the project is facing in the strategy. Identifying these as soon as
possible during project definition, as part of the overall process for
formulating overall project strategy, will help you.
Consider and promote strategy that includes innovative approaches to

incentives as far as you can. For instance, these could be based upon
schedule, total project cost, quality, man-hours, client satisfaction and so
on.
If the project is part of a joint venture or other type of co-operative alliance,

this will have significant impact on the contract strategy. The joint venture
partners, or similar, will have specific objectives of their own in addition to
the overall product strategy, this also needs to be incorporated and you
will need to plan for a long lead time to complete the strategy stage.
A key output of the strategy is the decision on the type of contract. There
are a number of contract options. All arrangements bring with them
different risks, advantages and, importantly, dictate the need for different
levels of contribution and hence responsibility from the client.
A project is different from a manufacturing operation. In addition to direct

labor and direct materials a project organization may involve multiple
layers of management for example, as subcontractors work under larger
contractors and vendors. The result being mark ups for overhead and
profit and contingencies have a great effect on the final cost. The Project
Manager is however expected to achieve efficiencies through the selection
of an appropriate contract strategy and, specifically, thereby:
Eliminating mark ups by eliminating layers of subcontracting;
Eliminating mark ups through selection of competitive bidders who are

matched to the size of the project;
Eliminating mark ups for contingency during the bidding and procurement
cycles through good scope definition;
Reducing construction costs through proper evaluation and selection of

alternatives;
Reducing engineering design costs through leadership and complimentary

services.
The Project Manager, specialists within the project team and the Project
Owner are jointly involved and responsible for the development of the
contract strategy. Examples of the constraints that the projects face that
need to be taken into account are as follows:
Flexibility in execution;
Time schedule;
Client involvement;
Project budget;
Availability of client personnel;
Risks connected with the project;
Technical complexity of the project.
Capabilities of available contractors;
Location of the project;
Uncertainties;
Quality of the work;
Point in life cycle of product.
4.3.2.2 Types of Contract

There are a number of contract types frequently used and referred to industrywide. However, the use of this terminology is often variable; therefore the
important consideration is that a contract needs to be selected which will be
aimed at delivering the project objectives, and the scope must be clearly and
unambiguously defined in the contract document.
The following are some frequently used contract types:
Management by Client:
Each complete work package is contracted separately. The commercial basis for
the different contracts is variable. The client supervises the contracts and
manages the contractors. This type involves a high management overhead for
the client in terms of the management effort needed to control the individual
contract interfaces.
Engineering, Procurement, Construction Management (EPCM):
Detailed engineering, procurement and construction contract. The commercial
basis can vary from anything between lump sum and full reimbursable. If a single
contract is placed on a lump sum approach, the client usually places a contract
with a single contractor who carries the total responsibility for the project. The
contractor may in turn subcontract part of the work, but remains totally
responsible. If established properly and managed effectively these
arrangements, based on a well-defined scope, involve the least amount of
contract interface management effort for the client.
Turn Key:
The scope of works normally comprises detailed engineering, procurement and
construction up to and including commissioning. The commercial basis for the
total project is always a lump sum price. A Main contractor handles the contract
and may sub-contract specialist works to appropriate subcontractors. Complete
turnkey contracting involving little or no client involvement up to take-over has not
been widely used by GBHE.
Construction Installation Contracts:

Construction/installation contracts can be grouped into four approaches based on
the risk allocation and commercial arrangement:
Lump Sum Construction Contract:
A single contract approach on a lump sum basis. The client places a contract
with the construction contractor who carries the total responsibility for the
construction. The contractor may in turn subcontract part of the work, but
remains totally responsible. The contractor bears the economic risk of the
execution. A lump sum contract based on full design generally leads to the
best defined program and lowest costs, but not necessarily the shortest
project execution time.
Management Contractor:
Single contract approach. The client places a contract covering the entire
construction with the management contractor, for a fee related to a target total
cost for the installation subcontracts. The contractor will manage the
construction/installation subcontracts, which may be on a fixed price or
reimbursable basis. The client agrees to pay the management contractor for
the actual cost of the subcontracts, which may be a higher or lower figure
than the target set. The contractor carries responsibility for the entire
construction activity.
Main Contractor (sometimes called Coordinating Contractor):
Multiple contract approach. The client places several contracts with various
contractors to execute the construction. One of the contractors also manages
the other contractors and co-ordinates the execution. Each contractor is
responsible for and carries the financial risk for its own scope of work. The
commercial basis for the contracts is variable. This approach usually also
requires a higher level of client management activity.
Construction Management:
Similar to coordinating contractor, with the difference being that the

construction management contractor performs construction management only
and no actual construction.
Contracts are placed in the name and on behalf of the client with installation
contractors by the construction management contractor. The construction
management contractor carries financial risk for its own scope of services.
The commercial basis for the contracts is variable.
4.3.2.3
Commercial Considerations
The key to commercial success must be in acquiring commercial awareness.

This is a subject in itself and too large to be covered in detail here. Help is
available through both internal and external courses that are designed to
reinforce practical experience.
Contracts are classified by the price type, examples being, firm and fixed price,
cost plus, reimbursable and incentive. You cant rely too heavily on this
terminology, for example some of these are sometimes transposed in trade
practices and combined as fixed firm price or firm fixed price etc. leading to
confusion.
The degree to which cost, time, performance and profit is linked is reflected by
the type of contract selected and needs to be resolved as part of the contract
strategy.
In addition, payment and the mechanisms involved is an exceedingly important
part of the commercial considerations. Performance driven contracts will often,
for example, benefit by payment being linked to completion of specific
deliverables or other specific milestone achievements. This greatly improves the
likelihood for control and helps to mitigate against risk.
4.3.2.4 Commercial Arrangements
The two extremes of the wide variety of commercial arrangement available are:
(1)
(2)
Lump Sum (or fixed price).

Reimbursable (or cost plus).
The variations between Lump Sum and Reimbursable are almost limitless. For
each project the optimum commercial basis has to be developed based on the
project objectives, client requirements and specific circumstances. The
commercial strategy should be developed by a team including the Project Owner,
where appropriate the Commercial Manager and the Project Manager. Figure 2
illustrates the decision process. The commercial strategy reflects on the
commercial basis of the contract and is independent of its scope of work.
FIGURE 2 COMMERCIAL STRATEGY & RISK RELATIONSHIP
Some frequently used arrangements include:
Guaranteed maximum price:

This variation is essentially reimbursable but puts a ceiling on the total
project cost and provides more certainty in critical budget and financing
situations. A reasonable scope definition is required. It is usually combined
with an incentive plan related to cost savings.
Unit Rates:
This variation is preferred where the specifications are well defined but the
scope of work and therefore material and labor quantities are subject to
variation. The contract quotes unit rates (including labor) per defined
quantity and quality of material or item of work.
This type of contract requires a labor intensive supervision (quantity
surveying) of the contractor.
Fixed Fee:
The contractor is reimbursed for his material costs but the profit and some
general overheads are included in a fixed fee based on an agreed scope
of work.
Fixed Price with Escalation (variation of fixed fee):

The contractors risk is reduced by means of an indexed adjustment to the
initially quoted contract price. This variation may be appropriate in
unstable economic conditions.
Omnibus Fee:
This approach is a combination of the lump sum and fixed fee type
contracts. A portion of the contractors cost is fixed, with a percentage fee
applied to other reimbursable costs. Strict control procedures should be
established to keep the fixed and reimbursable parts of the work separate
before using this type of contract.
4.3.2.5 Incentive Plans

Irrespective of contract types, the contractor can be stimulated to better
performance by means of incentives built into the contract. These incentives are
generally based on achieving mutual benefit for client and contractor by means of
increased productivity, efficiency or cost effective execution. Incentives are often
directly self-funding.
Incentive plans are becoming increasingly sophisticated. They can be based on
schedule, total project cost, productivity, safety, quality, man-hours, client
satisfaction and so forth. Incentives can be unilateral or of the bonus/penalty
type. In the first case the contractor is only rewarded for better than target
performance, in the latter the contractor will also be penalized if the target
performance is not achieved.
Penalty clauses, however, may cause the contractor to re-assess his risk and
add an allowance to the contract price for the possible imposition of a penalty, or
to relax the targets set for its performance.
4.3.2.6 Contractor Pre-Qualification
Contractors often need to be pre-qualified to assess their suitability to carry out
the work. Where this is the case, a formal and objective process is used and the
results and decisions are recorded. The Project Manager ensures that this is
carried out objectively against consistent criteria. There are at least 2 routes
depending upon the size and scale of the contract. One is to carry out "bench"
surveys based upon existing local intelligence and completion of the
questionnaire and the second is a more detailed and rigorous approach based on
visits and interviews.
The first route can also be used in conjunction with the second to refine a longer
list of possible suppliers or contractors down to a short list when the second
approach can be used to focus on the likely bidder list.
4.3.2.7 Enquiry Parcel
Preliminary engineering or definition is insufficient for instructions to third parties.
A bid package or enquiry parcel is required. This must provide sufficient
information for the contractor or supplier, based upon the instructions to tender,
to bid for the work including the completion of any pre-contract work that may
require to support the tender price.
The checklists contain help with putting together the contents of an enquiry
parcel.
4.3.2.8 Tender Evaluation and Contract Award
Tender Evaluation:
Following receipt of the bids, strict confidential and consistent procedures need
to be followed. The instructions to tender will contain information for the supplier
on how the bid is required to be structured and when it must be returned. It is
essential that this is maintained so that such things as co-operate governance
and commercial professionalism can be maintained at all times. It may well be
necessary to clarify detail with the contractors or suppliers concerned following
receipt, however it is important that confidentiality and discretion is maintained
when providing answers to any questions they might ask.
The bids are compared and analyzed consistently against criteria developed prior
to enquiry. Perhaps where complex projects or contractual arrangements are
concerned, it is sometimes useful to have the bids validated or compared by an
independent organization to provide greater objectivity from an industry wide
perspective. It is good practice to include a (GBHE) purchasing professional in
this process.
The outcome of the evaluation process is recorded including reasons for the
conclusions and final choice made.
Contract Award:
Contract award is the final step in the process leading to execution of the
works and management of the ongoing contract. Care is required to ensure
that the award of the contract is a formal step including the issue of all
necessary paperwork, and contract related activities are not inadvertently
entered into which might prejudice or jeopardize the eventual ongoing
contract.
Negotiation is a key activity at this stage and merits a complete manual in its
own right. The negotiation might be related to:
A contract issue;
The process of agreeing the contract;
or, following award, other post contract negotiations.
Negotiating is a critical and specialist task and requires professional

assistance and training. Preparation and formulation of strategy and a plan is
key to a successful outcome.
4.3.3 Design Strategy

This concerns not only how the design will be handled in terms of the
organizations best equipped to do it, proportions of the work they will handle,
consideration of the skill balance needed, the resource levels required but also
consideration of the tools and techniques to be used to support the design
process. Resources like IT are often key to the successful outcome of design and
particularly for projects where people are dispersed over a wide area.
Communication is a key element of the design strategy; poor communication
processes add considerable inefficiencies to the design process and overall
success of the project.
Contributions required from the client, roles of external specialists are also key
items to be considered when formulating and establishing the design strategy.
4.3.4 Construction Strategy

The strategy for construction (including its management) is developed as early as
possible during project definition as a key part of the overall project strategy. In
addition, it needs to be formally recorded and communicated within the project
team. The construction strategy also plays a key part in developing contracting
and purchasing strategies and is likely to be refined and developed during the
time these are being considered and when detail design is being carried out.
Some key aspects of this strategy will include considerations for site
establishment, resourcing, contracts, construction SHE, off-site assemblies,
construction risk and arrangements during the hand-over to operations.
Additional items for consideration are included within the checklists.
The Project Manager, in conjunction with construction, formulates and
establishes the appropriate construction strategy.
4.3.5 Commissioning Strategy
This covers not only the events after completion of the construction, but also the
role commissioning plays in the development of the overall project process.
Resourcing, the extent of interface with operating plant, batch trials, hand-over
sequence, availability of raw materials for start-up, production windows are some
examples of the things to consider. The Project Manager in conjunction with
commissioning formulates and establishes the commissioning strategy.
For a project to be successful, an effective communication strategy is essential.
The objective of this is to make certain that all those involved in the project are
regularly and effectively informed on the state of the project. Small projects often
have teams whose members work very closely to each other and therefore the
strategy for projects of this sort will be very different than where the project team
is dispersed over great distances. However, considering the following good
practice improves any communications process:
The communication process is established at the start of the project and

reviewed thereafter at regular intervals to make certain that any new
communication requirements are incorporated.
The following is typical of the organizations who may need to be kept

regularly informed:
Business;
Production works;
Project Team;
Other GBHE management;
Contractors and subcontractors;
Suppliers.
The amount of information communicated to each individual needs to be

established carefully to make certain that relevant messages are
communicated and individuals are not overwhelmed with data.
The presentation of information needs to be carefully designed to make

certain that it can be effectively absorbed. Use of graphical presentation
gets the best results and should be considered.
The means of transferring information, either electronic, paper or

combinations of both is important and needs to be established as part of
the strategy.
Circulation of the routine project status report (or a summary of it) is a very
good way of communicating project status formally.
Regular project team meetings, formal or informal can also used to keep
the team informed.
Regular presentations on the status of the project at the following:
Steering group meetings;
Appropriate meetings of works personnel, particularly works

management;
Routine review meetings with contractors, subcontractors and

suppliers.
A regular project newsletter is another very effective way of communicating.
4.4
The Project Organization
4.4.1 Introduction
The project organization and its roles and responsibilities are a key ingredient for
the success a project. The organization and certain of the roles and
responsibilities vary from project to project depending on such things as
complexity and size. Smaller and less complex projects are less likely to require
as many of the roles needed by larger and more complex projects. Multidiscipline projects, for example, will have matrix organizations, whereas single
discipline projects may not. The organizational model chosen will reflect such
considerations whilst avoiding the need for overly complex interfaces roles and
responsibilities.
Studies show that team integration is an important characteristic of particularly
successful smaller projects. Projects with truly integrated teams cost less than
projects without and implement the project around 20% faster. Project Managers
often find themselves responsible for multiple smaller projects, and studies show
that for each additional project managed the schedule grows longer by 4% and
definition worsens. However, setting pacesetter targets, achieving business buyin and support and communicating effectively the importance of the project on
the project team improves cost performance. In addition, results also show that
defining the business and project objectives (and communicating these
effectively within the project team) clearly and resisting changes can double cost
performance. These are key considerations to take on board when building and
developing your project team.
4.4.2 Roles & Responsibilities

For any project to be successful there needs to be clarity with regard to who is
carrying out what role, and what the individual responsibilities are. This needs to
be agreed and understood by the key individuals involved with the project, and
communicated effectively to all who are in any way connected with the venture
as early as possible.
Everyone involved in the project should be fully aware of the individuals (by
name) assigned to the various projects roles, the extent of their respective
accountabilities and the tasks that fall within each persons remit. It is generally
more effective to have one person only accountable for each given task
(committee responsibility can result in some tasks not being attended to).
Roles and responsibilities should be clear at all levels of the project organization,
with those in leadership positions setting these out for their respective teams.
The Project Manager plays a key role at Business and Project levels, and should
ensure that these roles and responsibilities are clear, agreed and documented.
Note that one individual may adopt more than one of the roles outlined below. It
is, however, important that where an individual carries out more than one role,
these roles should be complementary and do not create potential areas of
conflict.
At the Business level, the following roles/persons should be identified:
(For larger and/or more complex projects, they should meet regularly as a
steering committee, to ensure that the project work is directed towards and
functions to meet Business requirements):
The person who holds the active ownership for the delivery and success
of the project; the projects customer; the person who will champion the
project, who is responsible for gaining and retaining the Business support
and who seeks the requisite funding and resources.
The person who sets the technical and SHE standards for the project.
The person accountable for Business Planning who can evaluate the
project against this background.
The person who co-ordinates the various Business functions involved in

the project, ensures that the project is in the Capital program and who
prepares the Expenditure Proposal.
The person who will accept and operate the assets delivered by the
project.
The person responsible for ensuring that the products manufactured on

the new asset will be marketed and sold.
The person responsible for managing the execution phase of the project.
The person for ensuring that SHE performance of the new asset is
acceptable.
The person responsible for overall project finance and ensuring that there
is a Business case for the project.
The person managing the R & T effort which affects the project.
The person accountable for closing the project and preparing the closure
report.
At Project level, the following persons need to be identified.

They will need to meet regularly to focus on the delivery of the project and to
drive it forward.
(as above) the person who co-ordinates the various Business functions
involved in the project, ensures that the project is in the Capital program
and who prepares the Expenditure Proposal.
(as above) the person responsible for managing the execution phase of
the project.
The person responsible for preparing and maintaining the project plan,
and communicating and agreeing it with all interested parties.
The person responsible for estimating, preparing and maintaining cost

reports, tracking costs and communicating these as required.
The Chemical Engineer who specifies the process requirements for the
project and who underwrites the process engineering.
Engineers with the knowledge and experience to lead the design work and
who underwrite the engineering in their respective disciplines.
The people from the Works which will receive the asset, who ensures that
operational and Works needs are incorporated into the project design and
execution, and who communicates project information to the Works.
The person who develops the procurement strategy with the Project
Manager and assists with its execution.
The person responsible for site work aspects of the project.
The person responsible for managing the commissioning of the new asset
and its hand-over to the Works.
In addition to the above, the Engineering Project Manager needs to

appoint the following:
Design Authorities.
Design Verification Authorities.
Hazard Study Leader.
All of these are defined in the GBHE Engineering Procedures.

4.4.3 The Organization
Projects are initiated for a wide variety of reasons and against varying
environments. Further, project teams are made up of individual persons, each
of whom have their own unique blend of skills and experience. Consequently,
projects are set up and organized in different ways, in part to respond to the
requirements and constraints laid upon the project and in part to reflect the
balance of ability and skill within the team. It is essential that the Project
Manager take full account of these issues when determining the project
strategy and organization.
Likewise, it is rare for a project to be handled completely in-house, and thus
the project team is likely to include contractors, consultants, vendors and/or
other service providers. The Project Manager needs to consider how each
party can best contribute to the success of the project and then create and
sustain the working environment that will enable this.
The organizational model selected to deliver it is likely to vary from project to
project depending upon characteristics such as size, technology, complexity,
degree of contractor involvement, role of external authorities, joint venture
considerations and many more. Good practice will involve making sure that
the organization has clear and unambiguous lines of accountability and
reporting, avoids duplication and has uncomplicated interfaces as far as is
practicable.
4.5 Project Estimating and Planning/Work Breakdown

4.5.1 Introduction
Planning typically involves deciding what needs to be done, how it should be
done and whos responsible. Estimating and planning involves deciding how
long it is going to take and when it is best to do it. Monitoring provides the
feedback loop required for effecting control by checking whether plans and
schedules are being achieved and, if they are not, what forecasts can be
made and what re-planning is needed for the future to take corrective action.
Good planning relies upon the establishment of project strategy, definition,
deliverables, and allocation of responsibilities and subsequent management
of the overall project process.
The Work Breakdown Structure (WBS) is a key tool for identifying and
displaying the basic elements of the project deliverables. The plan and the
WBS often develop simultaneously.
4.5.2 Developing the WBS
Breaking down the project scope into clear accountabilities for delivery
and control will help bring about effective project control. The time to do
this is when there is reasonable understanding of the project scope. Work
Breakdown Structure (WBS) is a technique that can be used to achieve
this. Producing a WBS will also provide a framework for the project budget
and a structure for progress reporting.
In order to develop the WBS it is essential that the Project Objectives are
clearly defined in terms of what the Project Team expect to have produced
by the end of the project.
The development of the WBS takes place by identifying the project

deliverables and then sub deliverables which are required to complete the
main deliverables. This sub-dividing of deliverables continues to the point
where a clearly quantifiable final element is identified.
A final element sub-deliverable does not need to be a single function task but
must be capable of being assigned as a single accountability. In some cases
this may mean assignment of a whole work package to a specific contractor,
in other cases an individual may be responsible for the provision of a
particular element of the design.
The completed WBS can be displayed either as a hierarchical listing or in the

organization chart format.
When completed, the WBS can be used to help with:
Identifying resource requirements;

Developing the estimate (from Order of Cost to Grade B);
Assigning Responsibilities;
Resource Identification;
Sequencing and Scheduling the Project;
Monitoring and Controlling Change.
4.5.3 Estimating
It may seem a statement of the obvious, but the key to accurate estimating is
to ensure that everything that is required from the project has been
considered. The best opportunity for this is within the WBS.
Where possible, the production of the estimate should be a team effort with
production of various sections in line with accountabilities within the WBS. In
some cases, particularly when developing very early order of cost estimates,
the Project Manager/Engineer may have to rely on their own experience to
produce the estimate; in such cases the value of a comprehensive WBS will
become apparent.
The first stage in producing the estimate is the identification of the individual
resources needed to complete the deliverables as displayed in the final
elements of the WBS. The typical resource types which may be required
include:
Human - designers, planners, construction management;

Facilities - buildings, furniture, team accommodation;
Equipment - types, hire/purchase;
Materials - bulk, one-off, specialist, MPI.
Having identified the types of resources needed, the next step is to identify
the unit rate of each resource and how much of each resource is needed.
Use of Value Analysis allows for future decision making against Change
Requests to be based on sound cost information.
At the earliest stage of project definition, identification of resource

requirements will facilitate ball-park or Order of Cost estimates to be
produced. As the definition develops, the same process can be used to
produce grade 'B'(10%) estimates for sanction. Though this level of estimate
will normally be produced within a functional group such as piping, vessels
etc. it may be expected that each function has considered its own WBS for its
contribution.
As definition improves, uncertainty and risk will, in general, reduce. However,

it is very important that the potential impact of individual risks is assessed
when considering the level of contingency required within a sanction estimate.
It is entirely legitimate to have a general level of contingency below 10% and
in addition to have a specifically defined contingency for an individual risk.
4.5.4 Planning
This involves deciding and recording what needs to be done, how it should be
done, how long it will take, who should do it and how many resources are
needed. The purpose of planning is to organize the delivery of the project and the
resources required for delivery in order to avoid future problems.
The WBS is the tool which shows WHAT must be done to complete a project;
however, in order to plan WHEN it must be done, it is necessary to combine both
availability of resources (WHO) required to achieve the task and the logical
sequencing of those tasks.
Deciding project strategy is an essential element of planning, and establishing

this as early as possible is good practice, providing a firm basis for detailed
planning, scheduling and subsequent project control.
Establishing appropriate measures of project performance as early as

possible (and agreeing these with the project owner), likely based upon
critical success factors, will help in benchmarking the delivery of benefit at
completion.
Deciding and establishing as early as possible, systems for managing handovers will help the effective and efficient hand-over of design packages to
construction, equipment and process system packages to commissioning,
operating asset to operating management.
Typically, one integrated project master plan is needed covering all project
stages. From this a hierarchy of plans can be produced of increasing levels of
detail to meet the requirements for effective project control (Critical path
analysis for planning and Gantt bar charts for scheduling, monitoring and
control, are good practice planning techniques).
Resource management is an essential part of planning. People are the most

common type of resource for whom resource planning is carried out.
However, it may be necessary sometimes to look also at other critical
resources like equipment. (Resource planning techniques are often embodied
in computer software planning packages and can be usefully used to provide
indications of resource requirements).
Agreeing and recording responsibilities and requirements for planning and

control (particularly with a contractor), is important to do and record as early
as possible.
Having the plan formally approved by the Project Owner and Project Manager
will engender joint ownership, commitment and provide a firm basis for
effective control.
When a contractor is employed, it is essential that a contract master schedule

is produced identifying key contract milestones (payment or critical interface
milestones, for example). Detailed planning and scheduling is the
responsibility of the contractor down to whatever level is appropriate for
effective control.
In order to be able to organize resources, it is necessary to ensure that

responsibility for completing final element tasks is clear. It is essential that
only one person is given the prime responsibility for completing a final
element deliverable in order to avoid confusion amongst team members and
ensure delivery.
In assigning responsibility it is important to consider the skills and knowledge

that may be required to complete the task. If resources are not available
within the immediate project team, the Project Manager ensures an external
supply is made available.
There are many different scheduling techniques such as Program Evaluation

and Review Technique (PERT)) and Critical Path Method (CPM). Choice of
technique will depend on project complexity and personal choice; however,
project scheduling is now almost universally carried out on PC based
planning tools.
All planning techniques and tools require knowledge of:

(a)
the dependencies and precedence of each task (i.e. what other activities
have to happen before a particular task can start/finish);
(b)
the duration of each task;
(c)
the resources involved in each task.
It is common practice to display the output from the planning tool in the form
of Gantt (or bar chart) which shows activities organized against a calendar
timeline. In order to interpret and use the plan it is important to know whether
Earliest or Latest Start and Completion dates are being used and therefore
where float exists.
Having established a plan it is then useful to review the output for potential
Threats and Opportunities. For example, if a single specialist resource or
piece of equipment is on the Critical Path or several other key activities
depend upon it, the project team might wish to take specific Preventative
action to ensure availability. Where appropriate, Contingency action may also
be put in place.
In such cases the project team must remember to include the activity in the
WBS and incorporate its cost within the estimate.
4.5.5 Computer Software

The use of computer planning/scheduling software at an appropriate level
enhances planning and scheduling and is highly recommended. However, it does
not follow that control will be achieved. Achieving control is a direct function of
professional and effective Project Management.
Avoiding changing the contractors system will normally avoid cost

implications and impediments to the planning/scheduling capability.
The decision on the choice of software should be taken at project strategy

stage. Bearing in mind that where contractors are being used, a PC based
system such as Microsoft Project will probably adequately cope with the
demands of GBHE's planning and scheduling needs. (If something more
sophisticated is thought appropriate there are numerous other proprietary
systems on the market, but they are normally more expensive, need higher
specification hardware and more training to use them without offering greater
guarantees of achieving control).
5 PROJECT MANAGEMENT PRACTICES - PROJECT IMPLEMENTATION

5.1 Team Building and Team Management
Project Managers have long known that building a cohesive, motivated and
focused project team is a key step towards achieving a successful outcome.
Sadly, however, effective groups or teams do not just coalesce as soon as
people are brought together. Effective means working together towards common
objectives, without interpersonal or intergroup conflict and with satisfied
members. Thus it takes time and leadership to develop an effective group; but
time, of course, is something which a dynamic group such as a project team,
likely doesnt have. The Project Manager therefore must be a leader who
commands the respect of the team and can effectively bring and hold it together
through the probable conflicts that a change management organization will face.
An open and participative management style is important to building an effective
project team culture. The development of mutual acceptance, trust, co-operation
and open communication style can be hampered by the project management
style. However, one essential factor is the perceptive capabilities of the Project
Manager and their ability to recognize early and resolve conflict within the team.
The Project Manager cant however perform all the leadership roles all the time
and leadership responsibilities must be delegated, often within the team.
A common feature of successful projects is that the team members have enjoyed
working together. This is especially so when they have experienced challenges
together and still won through. In essence, they have faced adversity and bonded
together as a real team. Another feature is that teams must be built that have a
high degree of confidence in their individual and collective abilities.
This in itself establishes high self-esteem, mutual respect and collaboration.
These are the common requirements of a group of individuals who need to work
successfully together towards a common objective.
Conflict both within and without, is a key thing which undermines the success of
a project team and rapid resolution is always important. The Project Manager, as
well as being the leader, is the mentor and psychologist all rolled into one!
Interpersonal skills such as this will play a key part in the selection of the right
man for the job.
Larger projects where staffs are working fulltime on that project are usually set up
for that project and as such develop a culture of their own often heavily
influenced by the Project Manager and his supporting senior staff. Where project
staff are resident in a more stable project group (e.g. manufacturing site) the
culture is driven by the local site management. Not all project teams are
successful. So how do we ensure we work in the successful team mode?
By taking example from successful teams we can identify behaviors to
encourage Characteristic Behaviors:
Mutual respect for each other as people and workers.
Good communications across the team.
Project Goals are known, understood and supported.
Project Goals remain consistent and steady. Occasionally they do need to

change for business or other reasons. In this case, the changes are
communicated throughout the team with the reason why.
A Management structure that is understood by all and behaves in a firm yet

fair manner.
The team is involved in decision making on local and project issues wherever
practicable.
Roles for each member of the team are understood by all.
Skills within the team are appropriate to the task in hand.
Skill levels of individuals are recognized by management and colleagues.
Rewards for good performance are team rather than individually based.
Personal and team development is valued by management and staff.
5.2
Risk Management
5.2.1 Introduction
Risk Management is a structured approach to improve the likelihood of having a
successful Project. Risk is any area of uncertainty with the potential to have
significant impact on the achievement of the project objectives. These can
generally be grouped into:
Business or Strategic Risk:

Probably with 5/10 years perspective; and would address such questions as
"Are we in the right business, region or technology"?
Investment Risk:
Probably 3/5 years perspective; and would address whether the investment
was likely to be successful, (e.g. IRR or RONA).
Project Risk:
Will address the project period only; and will raise issues like capital cost,
time to beneficial operation and plant capacity. SHE is usually a feature.
5.2.2 The Risk Process

The Risk Management Process is shown in Figure 3:
FIGURE 3
GBHE RISK MANAGEMENT PROCESS
5.2.3 Identify Risks

A team based process: Agree level of scope of review, consider appropriate
range of risks.
5.2.4 Quantify Risks
Develop a risk register: Assess probability and impact, allocate responsibility,
explore risk options, and evaluate residual risks.
5.2.5 Model Impact
Impact of risks on main project success criteria: Capital cost, time to beneficial
operation, production cost, impact on IRR/NPV
5.2.6 Benefits to Your Business
5.3
Clearer comparison of investment opportunities.

Early identification of potential traps and pitfalls.
Builds team trust and confidence.
Ensures that risks are properly managed through the life of the
investment.
Identifies opportunities as well as risks.
Design Management
Effective management of the design process is an essential part of successful

project implementation. The design process is characterized by the decisions
made and the deliverables produced, right through to information required for
operating and maintaining the asset. The main objective for managing the
process is to ensure that correct design information of adequate quality and in
the appropriate form is produced at the right moment. If this happens effectively,
then the success of subsequent procurement, construction and commissioning
activities is more likely.
Responsibilities at every phase of the design process are defined as early as

possible during definition as part of the project strategy. It is essential where
contractors are being used, that responsibilities between GBHE and the
contractors are clearly defined, recorded and communicated within the project
team.
These are normally defined in terms of who is managing the various design
activities (particularly, for example, design and safety reviews, design
verification) and the deliverables themselves (for example, flowsheets, P & I
diagrams, data sheets).
The quality of the output is very much dependent upon the caliber of the
people employed, and the Project Manager needs to take this into account
particularly when building his project team and also during the selection of
contractors and their specific resources.
It is important to identify the sources of, and availability, timing, and

contributions from GBHE resources as early as possible at the start of the
project. For example, these may come from different organizations such as
Business and works, particularly where process engineers are concerned.
The characteristics of small projects will inevitably mean that these resources
will face conflicts of priorities with concurrent demands from numerous
sources.
Production works, construction and commissioning are specialist inputs

required at an early stage of the project, and it is important that resources
such as these are identified and recruited into the team, either part or fulltime,
as early as possible.
The relevant engineering standards and specifications to be used need to be

agreed at the project strategy stage. These need to take into account the
requirements of GBHEs Group Engineering Procedures and Guides
appropriate to the specific project. (In addition, there may also be other GBHE
standards appropriate such as site, mandatory or national requirements,
which need to be identified and followed).
Key safety and design reviews are identified at the earliest stage of the
project. This involves: procedures to be used (for example GBHE, contractors
or combination), responsibilities for organizing and leading reviews should be
agreed and recorded. Reviews are also normally scheduled and recorded
within the project plan. It is also important that appropriate information of
adequate quality is available prior to the reviews and the right individuals are
involved and available.
Checking and approval arrangements for design information are normally

agreed early as part of project strategy and included within the requirements
for project information and document management. (See the section on
information and document management for good practice procedure and
responsibilities).
Where contractors are involved, procedures to be used together with format

must be agreed with them and recorded at an early stage. (This is particularly
important for design verification, e.g.: relief systems, pressure systems,
critical machines etc.).
Design information required to be updated as part of as-built information at

the end of the project, needs to be identified and agreed with the production
works/site as early as possible as part of project strategy. Other information
required by the operations team for maintenance purposes also needs to be
identified at this stage and confirmed, if involved, with the contractor.
Where verification of design is needed, requirements should be agreed with

the appropriate design authority as early as possible.
Where contractors are involved, the production of a project contract coordination procedure is good practice and is produced as part of the contract
documentation.
5.4
Contract Management
5.4.1 Introduction
If you are using contractors, the way you use them will probably vary from
Business to Business, site to site and country to country. The use of contractors
to execute projects within GBHE is increasing; for example, evidence from some
recent GBHE projects around the world shows that around 80 - 90% of the value
has been sourced from a single contractor. These suppliers of goods and
services include both global multi-nationals and smaller local contractors, but the
need for expertise and good practice when engaging and managing each is no
less important. The successful use of contractors, whatever the size or
complexity of the project, is critical to successfully achieving the investment
objectives. Following good practice from the point of formulating contract strategy
through to closing the contract is an essential part of this.
It is essential that all work done under the contract is consistent with the
strategies developed by the Project Manager prior to the letting of the contract. In
particular, the Project Manager should ensure that the objectives of the
Contractor are aligned with those of himself, and the project, with efficiency of
execution paramount.
Where a fixed price contract has been agreed with the Contractor, it is the
Contractors responsibility to ensure that the execution of the project is in
accordance with the strategies identified in the contract. In a reimbursable
contract, the Contractor may be required to act in accordance with a strategy
developed by the Project team, of which they form a part.
In either case, the Project Manager will have determined the following detailed
functional strategies prior to defining the scope and objectives of the contract:
Design Strategy.
Procurement Strategy.
Construction Strategy.
Commissioning Strategy.
5.4.2 The Contract Document

The contract document forms the basis of the relationship between the client and
the contractor. The main purpose of the contract is to define the duties and
responsibilities of the contract parties clearly, thereby avoiding conflicts. By
agreeing on all contractual matters at the start of the project, problems should
never arise. If a problem does arise, the contract should provide the answer
without the need to litigate. Litigation anyway is a place of last resort and where
there is often no "winner".
The contract should at least include the following subjects: the scope of work,
responsibilities of the client and contractor, the co-ordination procedure, the
price, agreed date(s) of delivery, terms of payment, liabilities and guarantees,
availability of key personnel, termination and cancellation, insurance, definition of
completion, acceptance and transfer, and general provisions. The Project
Manager should be intimately familiar with the contract and must inform all
parties involved of the main features of the contract and how these affect their
contribution to the project.
GBHE maintains a library of standard contract terms and conditions (Ts & Cs).
In addition, standard contracts for various types of projects are available from
international and national professional associations. Any variations to the use of
GBHEs standard terms and conditions requires the Project Manager, together
with the GBHE legal department, to review the change to ensure it is applicable
and acceptable.
The proposed contract should form part of the enquiry parcel in order that the
contractor may base his tender on the terms and conditions of the proposed
contract.
5.4.3 Insurance
Huge risks are involved in the execution of projects. For example, the prices of
items of equipment can be in the order of $1,000,000 and any damage occurring
during construction or transportation can result in a serious financial loss. Also,
financial liabilities for personal injuries during construction can be substantial. It is
therefore important to have these risks covered by insurances. It is the Project
Manager's responsibility to ensure that all parties carry the required insurance.
After hand-over of the project, the coverage of GBHE Technology's property is
automatically provided under the GBHE Technology Property Insurance Program
and will be included in the annual current replacement value (CRV) statement to
the insurance division.
GBHE Technology's policy on insurance is based on an active risk management
approach. It is most cost effective to take account of loss prevention in the design
phase. Advice on risk management should be sought by the Project Manager.
The contract defines the liabilities of both parties and the insurances they are
obliged to maintain. The following insurances are likely to play a role in a project:
Transportation Insurance:
This can be covered by suppliers when delivering to factory/site or place of
embarkation. If company blanket insurance for transportation already exists,
then suppliers should be advised accordingly.
Professional Liability/Indemnity Insurance:

Insurance for contractor/consultant against direct financial (not consequential)
losses as a result of errors in design or execution.
Construction (Contractors) All Risk (CAR) Insurance:

It is GBHE Technology's policy to maintain an overall insurance for each
project that protects GBHE Technology's interest against physical loss or
damage from the time the (building) materials and plant/equipment arrive at
the project site until final completion and hand-over of the project as a whole.
This insurance may be either on a project by project basis or a continuous

blanket insurance, depending upon the strategy of the operating company.
(Sub) contractors, architects, engineers, and so forth are co-insured.
Contractor's equipment is only covered if explicitly agreed.
Third Party Liability Insurance:

During the course of the project, client and contractor are exposed to legal
claims from third parties for death, injury or damage to property arising from
the carrying out of the project. Again, it is GBHE Technology's policy to cover
these risks by incorporating this liability as part of the CAR insurance
providing protection to all interested parties.
In addition, contractors are often required to maintain employers' liability
insurance and motor vehicle insurance.
5.4.4 Managing the Contract

The contractor will have contract management duties to perform which will be
included within the terms and conditions of the contract. As well as being
responsible to the client for the general success of the outcome, the Project
Manager will also have contract management responsibilities. He or she will
need to ensure specific control mechanisms are established to enable effective
management of the contract, contribute to establishing these and be involved in
monitoring the outcomes. The extent of involvement may depend upon the type
of contract selected but would typically include:
Scope and design development.
Technical reviews and studies.
Site health and safety.
Progressing technical queries.
Schedule and cost monitoring.
Change control.
Permits to operate.
Hand-over / transfer of the works.
Certifying (and paying) invoices.
Final Accounts.
Acceptance.
5.4.5 Closing the Contract

The procedure for this is specified within the contract Terms and Conditions. The
Project Manager also reviews the post completion guarantees, warrantees and
maintenance required from vendors and ensures that these are transferred to the
client at completion. Closure of the contract at completion is as an important step
as placing the contract at the start. However, the effort and discipline applied is
often not as consistent.
Closure often lingers on well after physical completion, sometimes due, for
example, to inability to agree final accounts, actions on outstanding work etc.
leading sometimes to further contractual difficulties and warrantee questions. It
has become rare in certain areas to find a fully completed client acceptance
certificate and a contract closure certificate. The implications of this on possible
future claims or litigation can be enormous. Experience from recent legal
judgments show that the existence of these documents carries significant legal
weighting on the outcome of disputes (particularly when the Ts & Cs call for
them to be produced as evidence of contract closure). Experience shows that
clients who have not closed their contracts in accordance with the terms and
conditions can be severely disadvantaged.
5.5
Although dependent upon the project strategy selected for construction, in most
cases, construction and the management of construction is carried out on behalf
of GBHE by contractors. Construction management is increasingly being carried
out as part of the duties of a main or prime contractor, although this is obviously
not the only model. This contractor will also have the task of managing the
activities of relevant subcontractors. This further minimizes interfaces and
reduces the management work for GBHE. Construction is another key stage in
the project process, and the Project Manager is responsible for ensuring that it is
completed safely and in accordance with the project scope and schedule and
cost requirements.
Smaller or less complex projects and particular sites may operate different
management models, this is much dependent upon the local circumstances. For
example, the presence of term agreements with local suppliers or contractors will
influence the construction management model; however, the following are some
principles of good practice for the Project Manager to follow whatever the
circumstances:
The quality and success of construction and its management is largely

dependent upon the caliber of all contractors selected. Site safety cant be
compromised or traded in the search for lower costs or earlier completion
dates and the Project Managers needs. The caliber of the contractor needs
to be examined and determined carefully during contractor pre-qualification,
and subsequent tender/bid analysis activities.
The Project Manager needs to assure himself throughout that the contractors
management team is handling the contract in the interests of GBHE. This
needs to be done, but without there being a duplicate GBHE management
team (even if this is a credible option). The Project Manager needs to ensure,
however, that adequate management and supervision arrangements are in
place to safeguard GBHE's interests (particularly for SHE) during
construction. In particular, responsibilities/resource for handling technical
queries, handling any necessary change, safety issues are also important and
need to be identified and addressed as early as possible.
The extent of construction assistance during commissioning needs to be

identified and agreed with commissioning as early as possible. This may
require resource from the contractor or specialist suppliers and, if so, these
need to be incorporated into relevant contracts.
The construction safety plan is an essential part of site management

activities. The site contractor needs to develop this and get agreement to it
from site management. The Project Manager needs to set up appropriate
checks and controls to assure compliance by the contractor and relevant
subcontractors
Interfaces arrangements are a key ingredient for successful construction

management. These need to be defined as early as possible as part of the
project strategy. Construction and commissioning interfaces are important,
particularly the timing and sequence for the transfer of systems needs to be
established as early as possible as part of project strategy and included in
relevant contracts.
Effective project management control arrangements need to be in place

during construction, for example:
Progress and cost monitoring and control;
Formal change control, particularly process for managing technical

queries.
Inspection, such as eye-witness testing, is often required by GBHE to ensure

the quality of workmanship. This needs to be defined as early as possible
during project definition and certainly built into relevant contracts. In addition,
a control system will need to be set up to assure these standards are
maintained.
Document and information management arrangements need to be defined

and established as early as possible. In particular, a control system for
managing the transfer of information (and hardware) from design to
construction to commissioning is essential.
5.6 Commissioning Management

The commissioning strategy selected sets the extent of commissioning. It is not
solely about the activities that follow on from construction of the plant at the tail
end of the project. The contribution from commissioning starts early in the life of
the project during definition and extends through to the plant start-up and
sometimes beyond.
A Commissioning Manager or someone responsible for commissioning is usually
appointed by the Project Manager as early as practicable in the life of the Project,
although this of course is dependent upon the characteristics of the project. (Not
all small projects will require all of the activities below).
The typical commissioning activities might include:
Defining and agreeing the responsibility in the project strategy for safe
operation and compliance with statutory & local requirements throughout
Commissioning.
Contributing to the Project Strategy and Organization and providing input on

method of Commissioning, resourcing, costs and timetable.
Initiating and completing Hazard Studies in accordance with PSG-001 and

meeting all other requirements of GBHE GEPs associated with completing
commissioning and hand-over.
Attending the various design and Project Reviews and supporting the design
process as required.
Producing specific written Commissioning procedures to deliver the

Commissioning Philosophy covering all activities involved in commissioning
the asset, for each plant and system.
Ensuring that specified Commissioning activities are carried out to validate

the objectives for Project performance and meet requirements of GBHE
SSHE Standards & Guidelines.
Ensuring information, resources and systems are available to an agreed

timetable and cost to help deliver the commissioning activities.
Preparing estimates for commissioning and carrying out commissioning

Planning and Cost Control.
Agreeing the process for acceptance testing and including it in the Project
Strategy statement along with production of test schedules. When acceptance
testing is required, agreeing the detailed requirements for testing with the
Project Owner to verify that the project will achieve its performance
objectives.
This includes for example:
Legal/statutory requirements;
Responsibilities for preparing the Test Schedule;
Responsibilities for conducting the Acceptance Test;
A system for remedial action;
Timetable;
Procedure for resolution of difficulties.
When acceptance testing is required, agreeing this with the Project Owner
and arranging for all the necessary acceptance tests and inspections to be
carried out and the relevant documentation produced.
When the Project has been completed and all necessary tests and
inspections carried out, that an Acceptance Certificate is prepared and
issued, together with all the other necessary documentation, to the Project
Owner for Project Acceptance by the Business.
When the Acceptance Certificate has been signed and returned by the
Project Owner, and financial provision has been made for any necessary
remedial action, the Project Closure is initiated.
5.7 Change Control

5.7.1 Introduction
Fighting a tendency for scope "growth" following project sanction or approval is a
common pastime for a Project Manager. There is industry evidence that changes
can add anything up to 50% to the cost of a project and it is not unusual for it to
be more. Thus, one of the most important and, unfortunately, unpleasant and
difficult functions of a Project Manager is to control the changes to a project.
Changes have the following detrimental effect on project performance: they
increase the cost, cause delay, reduce morale and worsen relationships among
those involved. Technical Queries are often the start of the opportunity for scope
growth (they are changes sometimes just waiting to happen) and good practice
will include a process for managing Technical Queries as part of the overall
change management process.
A formal system for identifying and recording a design change, or change of
intent, to an agreed scope of work is therefore essential for effective
management control. It provides a means to control changes and their effect on
Project scope, cost and schedule by requiring formal authorization before
acceptance. The process needs to be in place at the onset of the project and
operate through to closure.
5.7.2 Change Control Process and Responsibilities

Having a formal (auditable) process in place from identification to authorization is
essential if change is to be controlled. Project changes in GBHE are often
classified as either Changes of Intent (any change or modification outside the
agreed scope - client authorization will be required for this) or Design changes
(any change or modification within the agreed scope).
Look for local good practice which sets down the steps, responsibilities and
authorization levels of the change control process you are required to follow
(an appropriate change control form may also exist as part of this process
which will need to be completed with appropriate sign off required).
A change register or log will enhance the control process by providing a

formal record of each change including a description, estimates of cost and
schedule, who raised it, its forecast effects on project cost and schedule and
some dates to assist progressing and control. (Maintaining this through the
projects lifetime will support cost control, help in forecasting final project costs
and help in determining final accounts and with managing claims).
It is usual for any member of the project team to be able to initiate a request
for change, but the Project Manager has the task of establishing
responsibilities for authorization. (It is also good practice to establish and
record these arrangements at the project strategy stage).
The Project Manager has the ultimate responsibility (sometimes following

consultation with the client) to authorize changes to the project control
schedule or budget. (It is good practice to lay down the process for modifying
project schedules or budget documents as part of the overall document
management process).
5.7.3 Technical Queries

These are raised, for example, when there is a need for clarification. If technical
queries are not managed effectively, they can lead to scope growth, possibly
contractual claims or problems in resolving the contract final account. Often
resulting from innocent requests for information or requests for direction,
technical Queries can evolve into unauthorized changes, unmanaged scope
growth and loss of project control. Technical Queries are an element of the
overall change process and need to be treated in the same way through a
formally managed process.
Like a change control process, look for local good practice which sets down
the steps, responsibilities and authorization levels of the process for
managing Technical Queries. (an appropriate Technical Query control form
may also exist as part of this process which will need to be completed with
appropriate sign-off required).
A register or log will provide a formal record of each Technical Query,

typically include a description of the query, who raised it, likely impact on
project cost and schedule and some dates to assist progressing and control.
(Maintaining this through the projects lifetime will support cost control, help in
establishing final project costs and help in determining final accounts and
managing claims).
Where a contractor is engaged, they should be required to operate through

the Project Technical Query process.
Efficient response to Technical queries is important (sometimes work stops

until an answer is received), where it is important to get a quick
response/resolution this can be done by telephone but it is good practice to
formalize and complete the paperwork/process thereafter as quickly as
possible.
If the Technical Query results in a formal change, then this must be followed
through the Change Control process.
5.7.4 Impact Analysis

Analyzing effect on scope, cost and schedule is an important part of change
management. Good practice will link this to cost and schedule control with
appropriate analysis carried out to measure the impact on either project budget
or overall timescale as routine. It is also good practice to differentiate between
the effects of existing change and impending change (those on the register but
not formally authorized) and continuously monitor both so that there is never any
surprise to project schedule, budget or anticipated final cost as an overall result
of change.
5.7.5 Reporting
Formal status reporting of change is essential to maintaining effective project
control. The minimum may typically include routinely publishing the
Change/Technical Query registers along with a cost/schedule impact report, and
it is important to distinguish between approved and unapproved (pending
authorization) change. However, look for local examples of good practice to
follow.
It is good practice to decide the reporting requirements for change management
as part of the project strategy.
5.8
Cost Management
5.8.1 Introduction
Good cost control needs the early establishment of project strategy, definition,
deliverables, and allocation of responsibilities and subsequent management of
the overall project process.
The effects of poor cost control can be catastrophic, particularly when using a
contractor or supplier. When using a contractor or supplier, behave as though
they know exactly where their money is at all times (they invariably do!), how
they can make profit, what their margins are and when these might be at risk.
Therefore, for effective cost management, the emphasis at all times must be on
being commercially aware. GBHEs overall aim must be to be better at cost
management than the contractor or supplier.
Maintenance of project cost management systems has, historically, consumed a
significant amount of time and resource, therefore a key aim for cost
management systems should certainly be to avoid this.
The following are some of the key components of good cost management
practice.
5.8.2 Cost Estimating

This is the foundation of effective cost management.
Effective cost management depends much on the quality of the estimate.

Focusing on the quality of definition, or other information being used for the
basis of the estimate and estimating data, will help in getting the best basis
for subsequent cost control.
Areas of risk within the scope/estimate (e.g. lack of definition, decisions still to
be made, currency fluctuations, etc.) are key reasons for subsequent lack of
cost control. Use of formal contingency planning measures related to risk
(e.g. pre-allocation of reserves) will assist effective cost management.
A policy for estimating is essential (e.g. assumptions, boundaries, program,

data sources, accuracy, roles/responsibilities etc.) for effective estimating and
subsequent cost management. Establishing this policy as part of the project
strategy is good practice.
The estimating/cost accounting structure (e.g. code of accounts, cost

breakdown structure) is key to managing costs and particularly to avoiding
significant maintenance effort later. Deciding this as early as possible, and
making it relevant and as simple as effective control allows (whilst achieving
the right balance of detail for control), is good practice.
Objective validation of estimates prior to and after contract award (or

sanction) will test out such things as the competitiveness of a bid or estimate,
value for money. Getting this done by an independent source is worth
considering.
5.8.3 Cost Accounting

This is the job of ensuring that all project costs are accounted for, are legitimate,
and are in the correct slot in the project cost structure.
Putting emphasis on ways to ensure that all the project team understand the
project cost structure and the importance of behaving in a disciplined way
when recording or allocating costs, will assist greatly in maintaining the cost
management system. Emphasis this, for instance, if involved in selecting or
prequalifying contractors.
If employing a contractor, the better your knowledge is of their cost

accounting/management system and the more effective their system is, the
smaller is likely to be GBHEs accounting effort and the greater likelihood of
successful project control.
If the contractors cost accounting system is "fit for the purpose", try to avoid
asking for changes to it. Instead, concentrate on appropriate interfacing (not
necessarily electronic) arrangements.
Financial probity is a key element of corporate governance (e.g. the project
accounting system must contain legitimate costs and always reconcile with
information contained within GBHE's financial accounting systems), so the
project accounting system must help to safeguard financial probity.
5.8.4 Cost Control
This involves monitoring, analyzing and forecasting costs and taking any
corrective action required.
The 2 key components of cost to monitor are expenditure and commitment.

However, there is little sense being within budget if the project is late.
Methods of cost control which integrate cost, with time (the project schedule)
and quality (project scope development [% complete and growth]) will provide
the best basis for effective overall project control.
It is important that systems and processes in place for paying for work carried
out under any contract, validate, verify and ensure quality of work and in
particular safeguard the value/loss of the asset to GBHE.
AFC's and changes to purchase order commitments should be recorded and

updated as appropriate.
Cost control can be improved if a performance payment approach is used,

and there is often wider benefit to the project from offering such incentives.
For example, if the work is being carried out under a contract; consider
opportunities for tying payment to the completion of deliverables (e.g. no
deliverable no payment).
A means of capturing the cost impact of scope growth (from technical queries
through formal change control) linked into the cost control system, will provide
a better understanding and means of forecasting the potential cost of the
project. This will also help provide a firm basis for updating the AFC and
remove the element of surprise
It is important that for contract final accounts and particularly to provide

defense against possible contract claims, an audit trail is kept of key cost
management information such as through the technical query/change control
route.
5.8.5 Cost Reporting

Structured cost reporting is essential to an effective cost control system. The
project cost coding system selected will enable reports to be produced at a
variety of levels (e.g. project area/cost centre/item and to an organizational
hierarchy within and external to the project) for cost management and analysis
purposes.
Reporting requirements and schedules for their production, agreed at the

project strategy stage (which include the needs of the project team, contractor
and client), will provide the basis for effective cost reporting from day one of
the project.
Reporting requirements from suppliers or contractors need to be included

within the contract.
If time and effort is put into formatting reports which are not likely to
overwhelm recipients (making reports, for example, more understandable and
with the focus on key issues or exceptions); this can only improve the all
round effectiveness of cost management. In particular, the report needs to
focus on deviations, explanations/remedies and forecasting effects.
Maximizing use of graphical output (e.g. expenditure, commitment and %

complete graph) is an excellent way of understanding the key elements of
cost management, at a glance.
As financial systems lag behind actual progress, a reporting system which

includes the effect of work done but not paid for (e.g. approved for payment
but not physically recorded as paid), will provide another excellent basis for
forecasting AFC and hence improving cost management.
5.8.6 Computer Software

Computer software is an essential part of a project cost management system.
There will normally be a requirement for an (GBHE) in-house accounting system,
the contractors/suppliers system and a means of bringing the information
together for project cost management purposes.
Not changing the contractors system will help keep contractors charges
down and help keep their cost management performance up.
PC based software such as WordPerfect Quatro Pro and Microsoft Excel, will
often provide a sound basis for summarizing costs from within the contractors
system to provide summary project cost management information.
Maximizing the contractors resources as far as is possible, to provide

information in the form appropriate for entry into the "project summary", will
keep the in-house effort required to a minimum. (It may even be appropriate
to let the contractor produce this report under certain circumstances).
5.9
Progress Monitoring, Control and Reporting
5.9.1 Monitoring and Control

This involves monitoring achieved progress, comparing this with what was
planned, using the results to forecast the affects on the schedule and taking any
appropriate corrective action.
Establishing and recording, as part of the project strategy, the scope, the
frequency and responsibilities for progress monitoring, will greatly improve the
effectiveness of project control. The key elements for effective monitoring and
control typically include, physical % complete (earned value) against that
planned, and achieved schedule or milestone dates versus planned.
Integrating schedule with cost, and quality (project scope development [%

complete and growth]) will provide the best basis for monitoring and effective
overall project control.
Monitoring specifically key deliverables, milestones and interfaces greatly

enhances prospects for achieving control.
The plan/schedule for control should not be fundamentally changed (e.g.

activities, logic or milestones, likely to affect project objectives) without the
formal agreement of the Project Manager (this is particularly important when
in contractual situations). It is therefore good practice to apply appropriate
Document Management methods to plans and schedules.
Recording and analyzing progress trends improves the effectiveness of

forecasting.
5.9.2 Progress Reporting

Structured reporting is essential to a project control system. Aligning reports to
the chosen project scope breakdown (techniques such as WBS) will help provide
focus and improve the effectiveness of the reporting system.
Reporting requirements and schedules for their production agreed at the

project strategy stage (which include the needs of the project team, contractor
and client), will provide the basis for effective reporting from day one of the
project.
A system of succinct but formal exception reporting which focuses on

deviations from schedule, impact and possible corrective action (rather than
long narrative) is good practice and provides a firm basis for achieving project
control.
5.10 Information and Document Management

5.10.1 Introduction
Project Documentation is information, either in paper or electronic form, which is
required for the specification, design, procurement, construction and
commissioning of a project. It includes both design information (including
correspondence) and instructions/procedures required for management and
control. Managing this information effectively throughout the lifetime of the
project, is essential for the efficient operation of the project.
It is good practice to specify the requirements (including roles and
responsibilities) for effective control of all project documentation throughout the
lifetime of the Project (including archiving at Project Closure), at the
project strategy stage. These requirements typically cover identification,
authorization, revision, issue/transmittal, storage and disposal of both electronic
and paper information and all associated responsibilities.
If a sensible approach is taken to Document Management (whatever the scale or

cost of project), the result will be not a bureaucracy, but a significant benefit to
the effectiveness of Project Management.
5.10.2
Security of Documentation
This is arguably the most important aspect of the document management

system.
GBHE has standing instructions on security of documentation and these must

be followed; it is also possible that there is a good practice local procedure
covering your organization, which also needs to be referred to.
For Electronic Document Management systems there is a BSI (British

Standards Institution) code of practice for Legal Admissibility of Information
Stored on Electronic Document Management Systems (this is a reference
document providing good practice, following it however does not guarantee
legal admissibility).
5.10.3 Identification and Registration of Documents

The effectiveness and efficient operation of the Document Management System
is much dependent upon being able to find and retrieve (without danger of
confusion with other project documents) the documents within it.
Uniquely identifying documents will enable them to be stored, found and

retrieved as required. A system consistently applied to all documents, which
includes minimum attributes such as a unique Project number, title, date,
author, file reference, document and revision identifiers, will enable this. Look
for guidance from local document management good practice on referencing
drawings and types of documents.
A central project document register provides a formal record of all documents

produced and a communication tool for the project team. Pre-allocating
blocks of drawing numbers and other unique identifiers to specific groups
within the project team (particularly external organizations), will help
safeguard the integrity of the system, avoiding also the need for central
administration for allocating document numbers. (When working with
contractors or other external organizations, it is essential to have an up to
date list of their drawings and documents for both project and contractual
reasons).
External organizations should be required to operate under the project

system, even if they are also required to use their own document
management systems (for internal reasons). If they are also using their
own system, it is good practice to require them to publish copies of their
registers at routine intervals.
5.10.4 Distribution of Documents

A formal document distribution system, which identifies who gets what and when,
is invaluable in maintaining discipline and improving efficiency of the Document
Management system. In addition, use of a formal transmittal process will help
safeguard the effectiveness of the system, particularly where external
organizations are involved.
Use of a Document Distribution Chart, which lists the types of project documents,
numbers of copies required and the recipients, is a typical example of a good
practice. This can be structured by organization, whos responsible, for example.
Use of a transmittal note is an example of good practice for recording what
documents are being sent to whom, when and where. There are various local
examples of transmittal proforma in use for reference and these can often be
easily adapted.
5.10.5 Filing
Regarded much as a chore by many but is central to the Project Document
Management system It is sometimes under resourced, its structure too
individually orientated and therefore not widely understood and often too
complicated: to the extent that documents take a lot of time and effort to retrieve.
Important components for a successful filing system include an appropriate

structure (which enables effective storage and retrieval) and discipline to keep
it maintained. The use of electronic systems, such as Lotus Notes, is
increasing the effectiveness of Project Filing systems (particularly in
distributed organizations and even on projects at the lower end of the value
range) by improving discipline, efficiencies, and productivity.
It is strongly recommended that the number of individual file codes is limited

to create an effective filing system that reflects the size and content of the
project. Once agreed, the selected coding system should be communicated
throughout the project team and subsequently maintained. Look for examples
of local good practice to help with structuring/coding the filing system
effectively.
For access and maintenance considerations, a key decision is the choice

of location for the files. This is often a particular problem for projects
where the team is distributed. Consideration in this situation of an
electronic system with multi-user access is beneficial, and Lotus Notes or
a proprietary document management system is examples. (Electronic
systems obviously require careful consideration of backup requirements
and the potential for loss of access to information during off-line periods.
However, the increasing integrity of hardware and telecommunications is
reducing this concern, and reducing software costs make them
increasingly attractive even to projects at the lower end of the cost scale).
Including a file reference in the document registration system and as part

of the identification attributes, is strongly recommended. It helps both
efficient filing and retrieval.
Large documents such as operating manuals and contracts, for example,

which cant be incorporated easily into the project filing system, should be
filed separately with cross-indexing to help describe them and their
location.
5.10.6 Checking and Approval

Checking and approval is essential to effective document management. It is
important that this policy is not onerous (such that it extends critical
examination to all documents, for example) but is selective and appropriate to
the project, ensuring as a minimum that key documents are checked by the
design authority (particularly where SHE, critical design calculations are
involved for example).
As part of the document management strategy for the project, decide and
specify the checking and approval process applicable to specific types of
documents; for example, independent check and independent approval,
recorded self-check and independent approval, recorded self-check and
approval, no recorded checking and approval required, are examples.
It is good practice to list and communicate those areas requiring formal

calculations as early as possible. For example, these are likely to cover
design, fabrication or installation of the following: key equipment,
registered equipment, statutory approvals, and structural approvals
anything else specified by the design authorities.
It is important to ensure that individuals with authority to sign documents

as checked or approved are formally nominated as early as possible.
Where a contractor or supplier is involved, the process for checking and
approval, including responsibilities, should be recorded in the contract.
5.10.7 Revision and Amendment

It is important that the status of documents is clear at all times. Working with
out of date documents is serious and can have enormous consequences for
the project (as well as GBHE as a whole).
Decide the system to indicate the status of a document as early as possible
(for example, Preliminary, Approved, Approved for Fabrication (or
Construction), For Checking, For Approval). Typically, it would be applied to
drawings, data sheets, calculations, studies and reports.
It is important that when amended, documents should carry an updated
revision identifier and the amendment identified and recorded.
Practice for approving and issuing revised documents should be consistent
with that used for approving the original and the document should not be reissued unless it has been followed.
5.10.8 Control of Vendor Data
This involves information provided by a supplier as part of a contract. It is
often an area where the project process can be delayed or extra costs
incurred (sometimes unknowingly, for example a contractor/supplier is well
aware of the opportunities arising from late returns from a client, for final
account purposes). Therefore control of vendor data is a key area of
document management and worthy of special consideration (quite often a
supplier will have a specific organization to deal with vendor data control)
It is important to establish what vendor data is required, when it is required

(and received), how many copies, the recipient, turn round time, usually at
the enquiry stage. (This is particularly important when full or part payment
is linked to receipt of the document or the start of manufacture of a
component for example, delays can be costly both with receipt and turn
round).
The process and management requirements typically for registering

receipt, responsibilities for comment or approval and ensuring timely
return need to be in place well in advance of the receipt of the documents
from the supplier. Look for local good practice for typical examples of
ways to do this.
5.10.9 Archiving of Documents and As-Built Documents

Archiving documents upon completion involves specifying what needs to be
retained, for how long, whos responsible and the media to be used (for example
paper, electronic).
It is important to get these requirements agreed as part of the project

strategy. This would typically involve discussions with client, works
(manufacturing plant concerned) and the design authority.
Prior to project closure it is good practice to close the project files extracting
all documentation (including electronic information) required for archiving. All
other material would normally be disposed of taking into account the
requirements for the security of information
Local good practice will provide guidance on archive retention periods

appropriate to the document type some of which will be the subject of
statutory requirements such as contract documentation
Documents updated "As Built" status, usually those essential for ongoing
operation, maintenance and eventual demolition of the plant are normally reissued to the operating works or client for retention.
PROJECT MANAGEMENT PRACTICES - PROJECT REVIEW
6.1
Project Close-out And Reports/Reviews
6.1.1 Introduction
The final stage of the project is that of Review and Close-out. The purpose of this
stage is to test whether the project objectives were met, complete and close the
project financial accounts and to gather and share learning for application on
future projects.
6.1.2 Review and Reporting
Project Reviews may be conducted in a number of forms; however the

fundamental purpose remains the same. These are:
(a)
To compare the final outcome with the original Project Objectives and
Deliverables;
(b)
To review performance of the project team throughout the project cycle

and identify learning (positive and negative) for implementation on future
projects.
Evaluation of delivery of the projects objectives and deliverables can be

conducted by a small group comprising the Project Owner, Project Manager
and members of the client organization.
Evaluation of the project team performance requires contributions from the

whole project team and can be conducted in one of two general ways.
For larger projects it is often more practical to review the projects learning
opportunities via a formal agenda covering Key aspects of the project
process. Guidance on the type of subjects to be covered are well presented in
GBHE Project Procedures (PP's). Typical areas include Design (contractor/in
T house), process engineering, project management, construction
(management/contractors), commissioning etc.
For most projects, learning can be identified through a more informal

brainstorming process asking the questions:
o What went well on the project?
o What could have been done better?
o What action is needed to ensure success of future projects?
This should not be a process of identifying 'guilty parties' but an open sharing of
issues and good practices.
The Project Manager should then summarize the outcome of the review and
issue a report on the project performance and future recommendations.
In order for organizations to benefit from learning experiences, it is necessary

to share learning gained 'locally' with the wider corporate organization. It is
therefore necessary for the Project Manager to identify to whom the report
should be circulated in order to ensure the opportunity for wider learning.
6.1.3 Financial Accounts
This is the final act on the project, and the exact process will be a function of
the local and business accounting practices.
Before authorizing closure of the project accounts, it is essential to ensure

that all contractors have submitted full and final invoices and that all internal
charges have been accounted for. The costs of project review and the closeout activity should be included in these considerations.
If individual costs have not been finalized through, for example, a protracted
dispute over liabilities with a contractor, it may be advantageous to agree to
close the existing project accounts and open a dedicated settlement
account. This will minimize the risk of the project accounts attracting spurious
bookings.
6.2 Measurement and Learning

6.2.1 Introduction
Measurement provides a means for collecting learning, improving performance
and raising shareholder value. Sadly, it is sometimes low on priority when
pressured with completing projects to tight targets. Collecting learning takes
effort and money and often projects do not allocate much, if anything, to it.
However, at the start of a project there is often a large demand for information
that will help test a business case, validate an estimate and schedule, remind
how things were done before or compare performance with the competition.
The reality is that this data and learning does not often exist and we rely on our
informal networks to provide it at the expense, for instance, of time.
However, the issue is not only money and effort; it is also about having a process
and measuring the right things. Measurement should focus on the critical drivers
for improvement and distinguish between the desirable and the essential. The
failure of most performance measurement systems is that they often lack clarity
of focus; leading to significant amounts of measures being taken, things taking
too long, too expensive and lacking an effective feedback loop for analysis,
learning and communication.
6.2.2 Measurement Process
A Project Review stage is built into the GBHE Project Process, the purpose of
which is to establish a formal means of gathering project learning at project
completion. However, depending upon the characteristics of the project, there
may be various performance measurement or audit stages to consider during the
life of a project which will also provide recyclable learning.
Deciding upon a process and appropriate measures at the project strategy

stage and building these into the project schedule, is good practice. In
addition, you will need to decide and plan for appropriate resourcing,
responsibilities and cost to do the work and build allowances for these into
schedules and estimates. (These need not be significant if objectives are
clear at the onset and you differentiate between essential and desirable
information).
Specialist SSHE Audits are a requirement of GEP 1. GEN-002 provides

further guidance on carrying them out and you will also need to refer to the
requirements contained within GBHE Group.
Where the Project is carried out under a local QA Registered system; you will
need to refer to the local requirements covering independent QA Compliance
Audits.
It is good practice to consider peer reviews carried out by independent

professionals such as other Project Managers. This will help you test, for
example, the business readiness, completeness of the technical scope,
capability of the organization, value for money of the scope or fitness for the
purpose of the project, particularly prior to sanction to proceed (you will need
to develop protocol for this or refer to locally available practice).
Benchmarking performance of your project versus industry standards will

provide a basis for comparing good practice with external best practice. For
example, measures collected from each project can be tested objectively with
industry-wide metrics. A range of typical measures is available for guidance.
(GBHE uses external consultants who have assembled a significant industrywide database of metrics on a range of project sizes and other project
characteristics).
Producing an end of project report will help structure and formalize the project
learning. You will also need to refer to appropriate local arrangements for
storing the report and transferring the knowledge and learning as widely as
appropriate. Also refer to local good practice for examples of the structure,
content and distribution.
Where the project has been carried out by a contractor, learning from contract
performance is extremely valuable particularly to assist in decisions relating to
future use of the same contractor and also in assistance with potential claims.
Some of GBHEs projects require a project post event review to be

completed. If this is the case, it will be required typically within 6 months of
project completion and the Business owner may call upon the Project
Manager to provide certain information for this. It is good practice to plan this
requirement into project schedules at the project strategy stage.
VALUE IMPROVING PRACTICES
7.1
Introduction
Value Improving Practices (VIPs) are activities/techniques used during Project

Definition aimed at reducing absolute costs, thereby improving capital
productivity. They are intended to increase the value of the plant by reducing
non-critical scope items, increasing reliability, simplifying the process and
generally facilitating project implementation. Some of these are fairly generic
such as Value Engineering for example but perhaps not all of them will be
appropriate to your project and the extent to which you apply these techniques
will depend upon such factors as the process, technology that you are involved
with.
Projects that make extensive use of VIPs are much more likely than others to
meet their business objectives, particularly if the use of VIPs is combined with
well defined definition.
The following are categorized as "value engineering" practices and are defined
as follows:
7.2 Types of Value Improving Practice
7.2.1 Process Simplification
A disciplined analytical method for reducing investment requirements and often
operating costs, by combining or making unnecessary one or more chemical or
physical processing steps. (Common examples include: elimination of heating
followed by cooling, concentration by diluting, etc. and combination of previously
separate reactions).
7.2.2 Technology Selection
A formal systematic process by which a company searches for production
technology externally, which may be superior to that currently employed in its
projects. It is a method to ensure that the technology used for projects is the
most competitive available technology.
7.2.3 Process Reliability Modeling
This involves the use of computer simulation of processes to explore the
relationships between the maximum production rates and design and operational
factors such as, quality, yield, production transitions, maintenance practices and
requirements, capacity, safety and environmental concerns.
7.2.4 Customizing Standards and Specifications
Engineering Standards and Specifications can affect construction efficiency,
product quality, operating costs and employee safety. However, sometimes the
cost of a facility is increased by the actual needs of the specific facility to be
designed. Do you employ a practice of scrutinizing all standards and
specifications to ensure that they do not exceed the actual requirements of a
particular service?
7.2.5 Design to Capacity
Often, equipment is designed with a "safety factor" to allow for additional
downtime or some production increases. Designing to capacity requires the
evaluation of a maximum capacity of each major piece of equipment. Design
capacity can then be limited to the needed capacity without the added cost of the
"safety" factor.
7.2.6 Classes of Quality

Classifying needed quality is a tool used to establish specifically what kind of
facility is needed to meet the business plan. This tool establishes a balance of
costs, both operating and capital, versus reliability, expandability, automation, life
of the facility, expected stream factor, likelihood of expansion, production rate
changes with time, product quality and product flexibility. The class of project
quality can be used to determine needed design allowances, redundancy,
sparing philosophy and room for expansion.
7.2.7 Traditional Value Engineering
A disciplined method used during design, often involving the use of internal or
external VE consultant, aimed at eliminating or modifying items that do not add
value to meeting business needs.
7.2.8 Constructability Reviews
These analyze the design and are usually performed by experienced
construction personnel and intended to reduce costs or save time in the
construction phase.
A Constructability Review usually takes place early in the project process. On
projects with a short/intense period of installation/start-up activity it is useful to
revisit the "constructability" issues shortly before the start of the work. Such a
review:
Clarifies roles/responsibilities.
Reinforces the project objectives.
Assists in team building.
7.2.9 Energy Optimization Modeling

This is used for optimizing the capital cost, operating cost, and operability of a
process unit, utility system, or manufacturing site. Using the basic
thermodynamic data for the process(s), targets for energy consumption and
power generation that take into account the cost of equipment, can be
determined. The purpose of an energy optimization study is to improve the return
on investment for projects by identifying the most economical levels of heat
recovery and power generation.
7.2.10 Waste Minimization

A process by process stream analysis is to develop concepts and proposals to
reduce or eliminate each non-useful stream. This analysis is made before project
scope is firm. A formal step-by-step process must be used to qualify this VIP.
7.2.11 Review of Recycled Product
Recycled material differs from effluent and by-product streams in that the
process requirements for the recycle stream need to be equivalent to the main
process stream requirements; whereas this is not necessarily so for effluent or
by-products. For batch units, it is also CRITICALLY important to take account of
the time delay involved in returning the recycle material in order to avoid crosscontamination issues.
7.2.12 Static/Dynamic Modeling of Batch & Continuous Plants
This technique is used to model the continuous operations within batch or
continuous plants. The models include material and energy hold-ups in them. For
batch plants, this enables the user to find out how hard the plant can be driven
when changing state. The modeling will generate the optimal plant control
Parameters (e.g. ramp rates, timer values for sequences, controller tuning
values). The provision of Right First Time control will simplify/speed-up the plant
commissioning.
7.2.13 Benefits Review for Batch & Continuous plants.
The review is carried out during Project Definition and possibly even at Project
Opportunity. The starting point for the review is the plant operational objectives
(e.g. maximize rate, minimize energy, product consistency). The plant measures
are used to examine how well these objectives are being achieved on a day-today basis. From this, the technique identifies the points in the process which
contribute to the failure to meet objectives and, by looking at past plant
performance, the amount of benefit which improved control would deliver.
7.2.14 Safety Reviews for Control Systems
Projects with a significant level of automation benefit from dedicated safety
reviews of the control/automation systems. Two techniques which are commonly
used in these safety reviews are:
CHAZOP (Computer HAZOP).
FMEA (Failure Mode and Effect Analysis).
7.2.15 CO-OP for Batch Plant

A structured methodology which delivers the Control and Operability
requirements for batch plants. CO-OP Phase 1 delivers sufficient detail to fix
hardware requirements (vessel & pump capacity, instrumentation
requirements). CO-OP Phase 2 delivers the detailed software requirements.
7.2.16 Off-line Testing of C/E/I Control Systems
The testing is performed to give confidence of equipment/system functionality
prior to on-plant installation. The form of the testing depends on many factors
(e.g. the degree of complexity/novelty in the technology, the likely impact of
failure on operating plant, fall-back options) and will usually include both
hardware and software components. (The test platform can often be used to
assist with operator familiarization/training).
7.2.17 Modeling/Scheduling for Batch Plants
Focused application of modeling and scheduling techniques can provide rapid
assessment of the impact of design / up-rate decisions prior to project sanction.
For batch processes, the key performance indicators modeled might include
throughput, OTIF adherence, and lead-time and plant utilization. These
techniques can be used to explore performance against the identified business
measures for a spectrum of possible market growth scenarios.
SECTION 2 CHECKLISTS AND REFERENCES

8
INTRODUCTION TO THIS SECTION
The aims and objectives of Section 2 are consistent with those of Section 1, as is
the scope of application. Overall, Section 2 supports and is complimentary to
Section 1. The content of Section 2 is made up of helpful checklists, references
and information about deliverables and other examples, all of which will provide
practical help to Project Managers and their project teams.
For a new Project Manager the checklists will help them carry out projects to
a standard expected within GBHE.
For a seasoned Project Manger it is hoped that they will provide a useful
reminder.
However, whatever your role in the project process, we hope that you will
find it interesting and useful and a helpful support in carrying through your
responsibilities towards a successful project outcome.
PROJECT DEFINITION CHECKLISTS
9.1
9.1.1 Aims
To help align the project objectives and Business drivers.
To help reduce abortive work to a minimum.
To help the project meet both its own targets whilst delivering a benefit and
acceptable rate of Business return.
9.1.2 Responsibilities
Driven by the Project Manager supported by the Venture Manager and
representatives of the Business.
9.1.3 Project Checklist
Have you established?
Whether the project is primarily about financial return, SHE and Licence to
operate, strategic development or other issues?
How the Business will measure project delivery - what are the Critical
Success Factors?
o For financially driven projects, the key customers?
o Whether contracts been placed?
If project Sanction is ultimately connected to customer contract or product

approval?
For SHE and License to operate driven projects, if commitments have

been made to external authorities?
If the Business is required to undertake the project or if it is being

internally promoted?
o Who in the Business is the Venture Manager/champion of the
project?
o Whether the project is part of an agreed Business strategy or
development plan?
Whether the project has been discussed within the Business up to and
including the Sanction Authority and is their support for the project?
o If the project is included in the Business Capital program?
Whether the intention is that the project will proceed to implementation or

is the Business seeking to explore options further before committing itself?
Whether Pre-sanction funding has been approved by the Business?
If the Pre-sanction authority is the same as the ultimate Sanction

authority?
Whether there are political pressures within the Business driving or

seeking to halt the project?
Whether there are political pressures within the Business to hold cost and
program below realistic limits?
The ultimate benefit the project is expected to deliver?
Whether the project and the envisaged benefit are consistent with the
overall Business direction?
Whether the Business has considered other solutions to achieve the

envisaged benefit?
If these other solutions have been adequately analyzed?
If the Business expectations for the project cost, program and technical
aspects are realistic?
If the project is expected to deliver the envisaged benefit, is it to deliver a

facility, which will enable the Business to realize the benefit? (I.e. is the
project required to deliver performance or simply hardware?)
If the project is to deliver the latter, then who is accountable for the
delivery of the actual benefit?
Whether the envisaged benefit can only be realized within a given time
window?
How much involvement is envisaged from Business personnel? Is this

consistent with anticipated Business expectations at the time of delivery?
What the Businesss track record is on delivering projects of this kind?
Whether the operational and maintenance organizations that will receive

the project delivery have been consulted and have their views been fully
expounded?
Once the Business background is fully understood, project issues can be

explored and objectives set. Useful questions at this stage include:
What are the hold points on the project?
At what level will these hold points be released and how long will the
Business take to release them?
Does the Business recognize the implications of the stop/go nature of clearing
hold points? How does the Business wish to manage this?
What constraints are the Business imposing on the project or its

organization?
Have all key Business project personnel been identified and appointed?
Are Business/steering committee roles and responsibilities clear and have

they been agreed and communicated?
Is the project primarily sensitive to cost, program or technical performance?
9.2
What internal and external political issues could affect the ability of the project
team to deliver?
What are Businesss requirements for reporting during the life of the project?
9.2.1 Aims
To ensure that only viable business options are implemented.
To ensure business objectives are aligned with project objectives.
To establish and develop the project strategies, objectives, organization and
resourcing.
To establish the correct level of technical scope definition.
The stages included within project definition of assessment, optimization and
development, although described sequentially, they will involve perhaps
considerable re-cycle as definition is developed progressively towards the
necessary level of confidence required for sanction approval.
The Project Manager in collaboration with the Venture Manager and the project
team.
Have you:
Obtained client authorization for the project and formally registered it within
your local work management system?
Considered, clarified and confirmed the basis of the project proposal?
Prepared the project scope document and had it approved by the Venture
Manager?
Prepared a project strategy statement, which includes all project stages?
Identified, characterized and assessed sources of risk?

Considered the key project deliverables required during project definition and
built these requirements into the project plan?
Established and agreed the project organization, considering all internal and
external roles and contributions, particularly the business, commercial and
site representatives?
Considered the requirements for SHE/statutory approvals?
Carried out Hazard Studies 1, 2, 3 and other appropriate reviews and

studies?
Established sources of resources to meet the project schedule and budget?
Considered the requirements for project control and set these up?
Optimized the project scope/economics, considered and evaluated alternative

technologies where appropriate and utilized appropriate VIPs?
Established and evaluated appropriate investment models?
Evaluated and developed project risks, incorporating sales and marketing

information?
Refined the project estimate towards that required for sanction approval?
Identified, evaluated and selected the site?
Reviewed and fully optimized the plant in terms of technology, layout, SHE,
constructability, commissioning, operability, maintainability?
Considered the commercial requirements including contracting strategies,

licensing arrangements, strategic alliances?
Completed and submitted documentation for sanction approval?
9.2.4 Deliverables
9.3
Project scope document.
Project strategy document.
Project definition package.
Project estimates.
Project schedules, progress and cost reports.
Documentation for sanction approval.
Contract enquiry package
Project Strategies
9.3.1 Contract Strategy

9.3.1.1 Aims
To produce a comprehensive contracting strategy for the project which is aligned
with the Project and Business strategy and which will eventually align with the
aspirations of the contractor.
9.3.1.2 Responsibilities
Project Manager in collaboration with the Venture Manager.
9.3.1.3 Project Checklist
Have you prepared a contract strategy that has considered?
Implications of existing or possible future Joint Venture or other strategic

alliance arrangements?
Complexity of the process, licensing or confidentiality issues?
How to minimize levels of risk involved?
Quality standards required?
How to minimize interfaces between GBHE and the contractor?
Maximizing incentives and motivation of the contractor?
How to bring about uncomplicated and effective control arrangements?
State of competition within the market for the contractors?
The number of different contracts and their scope of work?
The commercial basis of the contracts?
The structure of the different contracts and the resulting split in

responsibilities?
The timing of the different contracts?
The definition required to support the desired commercial approach?
Resources and skills available in the project team to work with, and
anticipate, the contractor in developing and reviewing definition and design?
Resources and skills required and available in the organization to manage

and administer the contractor?
What equipment needs to be free issue to the contractor?
Opportunity to use existing or second hand equipment?
The use of modular/pre-assembled units?
9.3.1.4 Deliverables
A contract strategy which fully aligns with Business and project objectives, the
aspirations of the contractor or supplier and which will help bring about a
successful project completion.
9.3.2 Design Strategy

9.3.2.1 Aims
To develop a strategy for design, which identifies and uses available in-house
skills, competencies and systems for specific non-contracted out elements of the
project scope.
Maximizes the use of the contractor for contracted out elements without
duplication of effort.
Identifies and maximizes use of effective design processes, techniques and
systems within overall project constraints of cost, schedule and scope.
Driven by the Project Manager in collaboration with the project team.
Have you:
Identified the necessary availability, levels and sources of in-house resources

and skills to complete the definition?
Considered who will do the detailed design.
Considered appropriate resourcing requirements for detailed design?
Considered the technical standards to be used?
Considered the extent of cellular design and standardization appropriate?
Considered the use of off-site pre-assembled units?
Agreed the design tools and IT systems to be used?
Considered appropriate communication arrangements?
Considered the requirements for information and document management?
Considered the requirements for design approvals?
Identified roles and contributions from the client, works, and specialist
consultants?
Considered what management arrangements are required for design?
Considered what reviews are required?
Identified the design authorities?
A project design strategy which maximizes the use of the best available design
processes and techniques, systems and skills and competencies and will help
bring about a successful project completion.
9.3.3 Construction Strategy

9.3.3.1 Aims
To provide effective control of overall site activities.
To manage technical queries and control change.
To ensure that the works are completed in accordance with project and contract
objectives of cost, time, scope and the GBHE SHE requirements.
The Project Manager in collaboration with construction specialists and other
functional specialists within the project team.

Have you considered?
The requirements of the site management and organization?
The needs of the construction health and safety plan?
I R issues particularly; what local arrangements are in place?
Site requirements such as the need for temporary services, access and local
facilities?
Competency of the (construction) contractor?
Parceling of construction work within the project contract strategy?
Requirements arising out of the extent of off-site assembly, such as specialist

lifting equipment?
Sources of Construction risk?
Requirements for specialist construction skills?
Implications of the construction program and key milestones and any site
schedule constraints?
Hand-over arrangements?
A construction strategy which maximizes available resource both within and
external to GBHE, aligns with the business and project objectives and enables
site works to be completed safely within scope, time and cost targets.
9.3.4 Commissioning Strategy

9.3.4.1 Aims
To ensure that commissioning is carried out to meet the project and business
objectives.
To ensure that commissioning is effectively managed and controlled.
To ensure that commissioning activities are always carried out in accordance
with GBHE SHE requirements.
The Project Manager in collaboration with the Commissioning Manager and site
operations.
The commissioning sequence and schedule?
Operating instructions and who will produce them?
The organization and responsibilities for commissioning and appointments of

commissioning staff?
Resource requirements?
Training requirements?
Overall requirements of the commissioning plan/schedule, particularly the

presence of time windows to meet operations requirements?
Specialist support required for commissioning, such as trades, vendors

consultants?
The interface between construction and commissioning?
Timing for and availability of raw materials required?
Arrangements for disposing of raw materials?
Requirements of the site at hand-over?
Degree of on-site inspection, testing, cleaning requirements?
Degree of inspection of vendor equipment?
Special material and equipment requirements?
A commissioning strategy, which ensures commissioning, is safely and
effectively completed, meeting business and project objectives.
9.4
Developing the Project Organization
9.4.1 Aims
To establish and develop a project organization with clear roles and individual
responsibilities defined and which will successfully deliver the project objectives.
The Project Manager in collaboration with Venture Manager.
Have you identified the individual and confirmed the role of:
At the Business level:
The person who owns/champions the project within the customer organization
(Venture Manager)?
The person setting SHE and technical standards for the project?
The person accountable for business planning who will evaluate the project
against this background?
The person who will co-ordinate the various business functions involved in the
project, ensures the project is in the Capital program and who will prepare the
Expenditure Proposal?
The person who will accept and operate the assets delivered by the project?
The person responsible for ensuring that the products manufactured on the
new asset will be marketed and sold?
The person responsible for project managing the project?
The person responsible for ensuring that SHE performance of the new asset
is acceptable?
The individual responsible for overall project finance and ensuring that there
is a Business case for the project?
The person responsible for the R&T involvement?
The person accountable for closing the project and preparing the closure
report?
At Project level:
The person who co-ordinates the various Business functions involved in the
project, ensures that the project is in the capital program and who prepares
the Expenditure Proposal.
The person responsible for project managing the project?
The person responsible for preparing and maintaining the project plan and
communicating and agreeing it with all interested parties?
The person responsible for estimating, preparing and maintaining cost reports
and communicating these as required?
The person who specifies the process requirements for the project and who
underwrites the process engineering?
The Design/Verification authorities?
Hazard Study Leader?
Engineers with the knowledge and experience to lead the design work and
who will underwrite the engineering in their respective disciplines?
The person from the works which will receive the asset, who ensures that the
operational and works needs are incorporated into the project design and
execution, and who communicates project information to the works.
The individuals who will develop the procurement strategy and assist with its
execution?
The person responsible for the site work aspects of the project?
The person responsible for managing the commissioning of the new asset and its
hand-over to the works?
9.4.4 Deliverables
An effective and integrated project organization containing identified individuals
who have clearly defined roles and responsibilities.
9.5
Cost Estimating
9.5.1 Aims
To produce a statement of project costs against a specific scope of work which
will provide the basis for investment decisions, gaining authorization to proceed
and subsequent cost control.
The Project Manager with contributions from relevant specialists within the
project team.

Have you checked?
Whether the estimate includes the full scope of work relevant to its stage of
development?
Whether the quality of project definition including project strategies, has been
measured and how well the result benchmarks against industry?
Whether the policy for managing and using contingency is established?
Whether all project organization, roles, responsibilities have been defined and
allocated?
That key project roles are filled, individuals in place and routes for acquiring
those not in place, identified?
Whether the estimate has been independently validated, if not then how it
compares with other similar projects?
Whether there are any (political) pressures holding the cost down?
Whether risks have been assessed and apportioned?
What the large items of cost are and how firm are their prices? (Quotations to
be available where applicable).
Have forecast design rates been used?
What estimating base has been used (GBHE, Contractor, and industry)?
Whether process and computing design costs have been included?
Whether levels of spares have been identified, agreed and included?
Whether inflation has been adequately covered, particularly the date for the
calculation (e.g.: 2/3 S Curve)?
Whether all works costs have been identified and included? (E.g.
commissioning spares, first charge of materials etc.).
Whether pre-commissioning and commissioning needs have been adequately

allowed for and agreed with works?
Whether allowance is needed and included for special freight, duty and
insurance?
Whether appropriate contingency/reserves has been included, allocated and

agreed?
If this is a project linked with a shutdown, whether sufficient Project

Managers reserves have been allocated?
Whether appropriate exchange rates have been included and agreed?
Whether the estimate has been broken down into SHE?
Whether any functional or other specialist signatures are needed?
Whether any capitalization of pre-sanction moneys has been included and, if

so, clearly identified? If not, what value of pre-sanction has been expended?
Whether any comments are required for the estimate front sheet?
Whether the Venture Manager needs own copy of estimate front sheets and
any other (sectional) summary sheets?
Whether the Venture Manager needs marked up copies of the completed

estimate checklists?
9.5.4 Deliverables
An all-inclusive project estimate which will provide the basis for investment
decisions, gaining authorization to proceed and subsequent project cost control.
9.6
Contractor Selection
9.6.1 Aims
To pre-qualify appropriate contractors.
To select the correct contractors for the specific contract.
Project Manager in conjunction with appropriate specialist technical and
commercial staff.
9.6.3 Process
A typical selection process is as follows:
(1)
Production of the long list of potential bidders and questionnaire.
(2)
Pre-selection.
(3)
Pre-qualification visit (optional).
(4)
Short list of potential bidders.
(5)
Enquiry parcel/ tender.
(6)
Pre-selection process.
(7)
Visits, interviews (as appropriate).
(8)
Final selection.

Whether you have the necessary skills you require, within the project
organization, for the selection process; and if not where you will find them?
Potential list of bidders?
The process you will use?
Responsibilities within the project team?
The criteria you need answering to complete the exercise?
The structure of the questionnaire you need for establishing suitability of the
contractors or suppliers?
The capabilities of local contractors?
Whether there is any requirement (from the site or business) to use local
contractors and are they qualified?
Experience from past projects?
Contractors workload?
Suitability of the contractors in regard of skills, competencies and alignment?
Visiting the contractors premises and interviewing their key personnel?
The formal scope of work?
The structure of the enquiry parcel?
Typically:
Invitation to tender;
Form of tender;
Form of contract;
Technical scope of the project;
Standards to be applied;
Process requirements;
Preliminary specifications and drawings.
GBHE requirements:
Site rules;
SHE standards.
The structure and content of (and prepared) the invitation to tender?
The criteria you require (and produced it) for comparing and analyzing the
bids?
9.7
Work Breakdown Structure (WBS)
9.7.1 Aims
To identify specific outputs/deliverables required at the end of the project.
To determine the resource requirements and their associated costs, timing and
duration.
Driven by the Project Manager in conjunction with the project team.
Have you:
o Identified what you want to achieve through doing this project?
o Established the project strategies?
o Identified the Major deliverables and Sub-Deliverables?
o Structured the Major and Sub-Deliverables into a hierarchical list or WBS
Chart format?
o Considered the Type, Amount and Unit Rate of Resources required to
achieve each Sub-Deliverable?
o Considered Human Resources, Facilities, Equipment, Materials?
o Identified who is responsible for each element of the WBS?
o Identified how each WBS element should be sequenced and scheduled?

o Considered what might prevent the resources/schedule from being delivered,
and assigned costs to these risks?
o Received (grade B) estimates from WBS element owners?
o Considered what opportunities exist for improving schedule timing/subdeliverable costs?
9.7.4 Communications
Have you:
Agreed ownership with those responsible for the WBS elements?
Issued WBS to the Project Team?
Agreed budgetary control with WBS element owners?
Reviewed and agreed the project plan with the project team and client?
Been clear and open with the Venture Manager about the residual risks?
Been clear and open with the Venture Manager about the estimate
accuracy?
9.7.5 Deliverables
Work Breakdown Structure; Simple List or Organization Chart format.
9.8
Planning and Control
9.8.1 Aims
To produce a plan and schedule for the project to help bring about management
control.
To establish levels of project resourcing required.
To establish effective monitoring, reporting and control.
Driven by the Project Manager in conjunction with the Venture Manager.
Have you:
Established Project Strategy?
Decided upon and acquired computer software for planning and scheduling?
Prepared a WBS?
Established appropriate measures of project performance?
Produced an integrated project master plan/schedule covering all project

phases?
Established the requirements for detailed planning/scheduling?
Established (and secured) appropriate resources (quality and numbers) to

carry out the planning/control activities?
Produced a contract plan (where suppliers/contractors are involved)?
Established systems to manage all hand-overs?
Established systems for progress monitoring and recording?
Established reporting requirements including frequency and content?
Made arrangements for formal progress meetings and produced a schedule

to operate throughout the lifetime of the project?
Have you:
Consulted (and agreed) on project strategies with the Venture Manager?
Confirmed the overall project plan/WBS with the Venture Manager?
Consulted with the project team and confirmed the level of resources
(including source, level and type) required for the project?
Consulted (and agreed) project performance outcomes/measures/key

deliverables with the project owner?
Agreed the scope of detailed planning (including resources, responsibilities,

tools and techniques), monitoring and reporting appropriate to the project and
confirmed the level of planning services required with the contractor?
Prepared the overall project control plan and associated in-house control
plans?
Established responsibility/ownership for the activities identified in the plans?
Estimated durations for the activities on the plans and gained commitment to
these?
Confirmed the use (or not) and choice of computer planning systems?
Checked (and agreed) the contractors schedule, particularly that it contains

all work included under the contract?
Distributed the Project Plan, schedules, progress reports and meeting notes?
Consulted regularly with the Venture Manager on critical issues,

contingencies available and potential changes to plan and schedules?
9.8.5 Deliverables
Project master plan/performance measures/key deliverables.
Project strategy statement.
Detailed plans.
Control schedules for managing deliverables/milestones/hand-overs.
Timetable for progress review meetings.
Progress and critical activity exception reports.
Notes of progress review meetings.
10
PROJECT IMPLEMENTATION CHECKLISTS
10.1
Cost Management
10.1.1 Aims
To account for all project costs.
Ensure that only legitimate costs are allocated to the project.
Ensure that invoices are validated.
To establish effective cost monitoring, control and reporting.
Driven by the Project Manager supported by the project team.
Have you:
Established the scope/strategy for cost management?
Prepared and developed the project estimates?
Established the project cost accounting/management structure?
Established the means for collecting cost information from both in-house and
external sources?
Established the level/frequency of project cost monitoring?
Identified requirements/mechanisms for monitoring, recording and controlling

costs at detailed level, including the maintenance of AFCs?
Established systems for integrating the affects of project change into cost
management and reporting?
Established systems for approving/validating payments to the

contractor/suppliers and also for internal costs incurred on the project?
Established systems, format and frequency for project cost reporting?
Established (and secured) appropriate resources (quality and numbers) to

carry out project cost control activities?
Made arrangements for formal cost review meetings?
Have you:
Shared your requirements for the project cost structure with the project team?
Agreed the policy for management and use of contingency?
Gained a working knowledge of the contractors cost management systems?
Agreed the type and extent of computer cost management systems to be

used?
Agreed the scope of contractors cost management services to the project?
Agreed the format/frequency of cost reports required from the contractor?
Consulted with the client and agreed the scope, format and frequency of cost
reporting required?
Consulted with the client on (potential) movements in AFC's?
Agreed a schedule for production of cost reports?
Agreed a timetable for cost review meetings?
Agreed arrangements for the production of control estimates?
Consulted regularly with the project owner on critical cost management

issues?
10.1.5 Deliverables
Contractors cost/exception reports.
Project cost/exception reports.
Client cost/exception reports.
Notes from project cost review meetings.
Timetable for production of cost reports.

Timetable for cost review meeting.
10.2
Change Control
10.2.1 Aims
To help manage change, avoiding uncontrolled growth in scope and also
supporting effective cost and schedule control.
Formalize recording and reporting of changes including Technical Queries.
Driven by the Project Manager supported by the project team.
Have you:
Established a source(s) of appropriate local procedure/good practice?
Established the change control process appropriate to the project, including

arrangements for incorporating the impact of pending/unapproved change
into reporting?
Established the means to estimate cost, schedule impact and risk associated
with the change?
Established the process for controlling Technical Queries?
Agreed/set up appropriate proforma for recording changes and technical

queries?
Set up a change control register/log?
Set up a register of Technical Queries?
Established monitoring and reporting requirements for changes and technical

queries?
Have you:
Consulted with the Venture Manager client and confirmed strategy for
managing project change appropriate to the project?
Checked the contractors internal change management/technical query

system and confirmed they will operate within the project system?
Agreed responsibilities for levels of authorization of change with the Venture

Manager and within the project team?
Agreed arrangements for rapid response to requests in emergency

circumstances?
Agreed arrangements for authorizing Technical Queries?
Distributed copies of the proforma for change and technical queries?
Distributed the change register/log?
Distributed the Technical Query register/log?
Agreed requirements for reporting change and technical queries?
10.2.5 Deliverables
Project specific Change and Technical Query control process statement.
Change log/register.
Technical Query log/register.
Proforma for Change and Technical Queries.
Change and Technical Query reports.
10.3
Document Management
10.3.1 Aims
To help manage approval of, and change to, documents throughout the lifetime
of a Project.
Provide for security of electronic and paper and electronic information.
To define requirements for storage, recovery, distribution and archiving/disposal
of documents.
Driven by the Project Manager in conjunction with the project team.
Have you:
Established a document management strategy for in-house and, where

appropriate, externally produced documents?
Established a system for uniquely referencing documents, including

identifying status of revisions/amendments?
Set up a document register?
Pre-allocated blocks of document numbers to specific groups within the

project team, including external organizations?
Established an appropriate filing structure (including cross-indexing of

documents held remotely) and considered using it on each document?
Selected a location for the project filing system and considered using an
electronic document system for storage, retrieval and distribution?
Considered appropriate back-up and security/administration arrangements for

electronic filing systems?
Established the approvals process for documents, particularly considering

requirements requiring formal external approval, e.g.: statutory approvals,
SHE, critical designs/calculations?
Listed items requiring formal calculations, statutory approvals and others as

specified by the design authorities?
Identified items where vendor data is required?
Established a process for controlling the production of vendor data, including

such things as responsibilities, logging receipt, receipt and turn round time,
number of copies?
Established the location of the project archive and archive retention time?
On completion of the project, stripped the project file, transferred key

documents to the client and securely disposed of all others?
Have you:
Identified applicable sources of local good practice?
Referred to GBHE Standing Instructions on security of documentation?
Agreed system, responsibilities and nominated the individuals involved in

document checking and approval?
Agreed document management requirements with external organizations?
Agreed the requirements for archiving documents with the Venture Manager?
Issued the list of file codes and revision references?
Issued the pre-allocated document numbers?
Issued the (up to date) document register?
Issued the document transmittal proforma?

Distributed the list of documents requiring design calculations and external
approval?
Issued the document distribution chart?
10.3.5 Deliverables
Document filing structure.
Hard copy files / electronic system.
Distribution chart.
Document register.
Document management strategy.
List of documents requiring critical approval/design calculations.
List of pre-allocated document numbers.
Transmittal proforma.
10.4
10.4.1 Aims
To ensure that appropriate GBHE standards for SHE and specific construction
health and safety requirements are met.
To manage and control change and technical queries.
To ensure GBHEs interests in terms of business and project objectives are
achieved during construction.
The Project Manager in collaboration with site construction management.
Are you managing the site contractors effectively and:
Monitoring construction progress in terms of the schedule, physical

completion and costs on a regular basis?
Updating the project schedule with information received?
Updating the cost forecasts and, where appropriate, projecting a new AFC?
Checking that sufficient site supervision and resources are available?
Obtaining statutory approvals?
Maintaining the construction health and safety plan?
Complying with labor agreements?
Maintaining safe operating practice?
Managing arrangements for off-site assemblies?
Managing interface issues with the local site in terms, for example, of access,
security, siting of compounds, safety, interfaces with operating plants, permits
to operate etc.?
Keeping everyone informed on the progress of construction?
10.4.4 Deliverables
An installed and tested plant which fully meets the business and project
objectives.
11
PROJECT REVIEW CHECKLISTS
11.1
Project Review, Reporting and Close-Out
11.1.1 Aims
To ensure the project is financially closed with all records complete.
To review beneficial operation, including examination of identified deliverables.
To review effectiveness of project delivery strategy, including control of design,
construction and commissioning.
Venture Manager in conjunction with the Project Manager and the project team.
Have you:
Included the costs for conducting reviews within the project estimate?
Identified project reviews required at intermediate stages of the project?
Considered who should attend the review?
Considered what the review format should be (e.g. brainstorming, what went
well and what could be done differently)?
Structured Review of each project stage/activity?
Linked learning to a particular project stage?
Identified an improvement action against any learning?
Reviewed delivery against planned timing?
Reviewed actual savings against any Value Analysis savings identified presanction?
Analyzed working relationships with all groups/contractors involved in the

project?
Reviewed the quality of workmanship throughout the project?
Reviewed the scale and effect of post-sanction change on the project?
Reviewed the extent to which the project/business objectives have been met?
Completed hazard studies 4, 5 and 6 and produced a SHE Dossier?
Have you:
Completed hand-over documentation?
Updated project documentation to as-built status as required?
Updated works record systems to incorporate the new project?
11.1.5 Deliverables
You must have produced:
Hazard Study 4, 5 and 6 reports.
A SSHE Dossier.
Project closure report.
Project acceptance certificate.
Updated works records.
Financial closure request forms.
11.2 Measurement (Learning Log)

11.2.1 Aims
To collect project information to help increase learning and improve performance.
To test the viability of a project at critical stages in its development.
To carry out specialist project audits and objective performance bench-marking.
Driven by the Project Manager in conjunction with the Venture Manager and
supported by appropriate specialist auditors.
Have You:
Established the strategy for performance reviews, measurement and auditing

appropriate to the project?
Established the key project stage gates and built these into the schedule?
Established a performance measurement process (including identifying

appropriate stage gates) and specific measures appropriate to the project and
built these into the project schedule?
Identified the requirements for appropriate specialist audits and built these
into the project schedule?
Established the basis/protocol for all audits and performance reviews?
Established sources of (and secured) resource for performance reviews,

measurement and auditing and made appropriate allowance in the project
budget?
Completed the performance measurement and auditing activities including

production and submission of information?
Carried out appropriate validation of estimates and quotations?
Prepared and submitted the end of project report?
Provided the project contribution to the post event review?
Have you:
Accessed the GBHE Project Management good practice databases on Lotus

Notes for good practice references?
Made certain that you know what specialist (SHE) audits are required on your
project?
Determined whether the project is to be carried out under a local QA

registered system and, if it is, what procedures are applicable?
Consulted and confirmed with the client on the form of measurement and
auditing appropriate to the project (including the key project stage gates)?
Consulted with the client and confirmed the project contribution to the post
event review?
Confirmed validation requirements?
Agreed the measures of project performance that are to be made?
Agreed the form and structure of the end of project report?
Compared project measures with best (external) practice?
Consulted with the client and confirmed the project requirements for the post
event review?
11.2.5 Deliverables
Project performance measures.
Benchmark reports (vs best in class industry performance).
Specialist Audit reports.
Reports of peer performance reviews.
Critical project learning (transferred to VULCAN database).
End of project report.
12
REFERENCES & FURTHER READING
(i)
GBHE Technology Project Procedures
(ii)
Factors Affecting Small Projects in Asia Pacific; R. Levine/S. D. Price,

Cranfield University 1997
(iii)
IPA Benchmarking Approach.
DOCUMENTS REFERRED TO IN THIS INFORMATION FOR ENGINEERS

This Information for Engineers document makes reference to the following
documents:
GBHE RESPONSIBLE CARE MANAGEMENT SYSTEM
GBHE Safety, Security, Health and Environmental Policy (referred to in clause 0)
GG 4.01 Auditing Conformance with SSHE Standards (referred to in 6.2.2)
GBHE ENGINEERING PROCEDURES

GEP 1 General Requirements for Group Engineering Procedures (referred to in
6.2.2)
GBHE INFORMATION FOR ENGINEERS
GBHE Engineering Audits of Manufacturing Sites, Auditors Guide (referred to in
6.2.2) PSG-001 Hazard Study Methodology (referred to in 5.6).

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Process Information Disclaimer

GBHE PROJECT PROCESS

PROJECT MANAGEMENT PRACTICES - PROJECT DEFINITION

PROJECT MANAGEMENT PRACTICES PROJECT

Team Building and Team Management

PROJECT MANAGEMENT PRACTICES - PROJECT REVIEW

VALUE IMPROVING PRACTICES

SECTION 2 CHECKLISTS AND REFERENCES

INTRODUCTION TO THIS SECTION

PROJECT DEFINITION CHECKLISTS

PROJECT REVIEW CHECKLISTS

DOCUMENTS REFERRED TO IN THIS INFORMATION FOR ENGINEERS

SECTION ONE PRINCIPLES AND PRACTICES

This Information for Engineers document comprises two sections.

GBHE PROJECT PROCESS

Following the sanction decision, project implementation proceeds in accordance

Appropriate monitoring, validation and control measures are employed to track

Measurement and Auditing

These can take the form of self-assessments or may be peer assessments or

In order to successfully complete projects there are a number of key

The key skill areas are as follows:

Adoption of a project process and appropriate procedures to ensure that

Since projects usually involve the integration of related activities in a

It is a key requirement in all projects that knowledge in the technology is

Some knowledge and skills can be developed through training and

PROJECT MANAGEMENT PRACTICES - PROJECT DEFINITION

Business Opportunity Testing & Objectives Setting

Developing the Project Scope

Project Specification and Strategy.

By reviewing the project proposal and specification documents with the

4.2.3 Getting the Right Project

Engineering, Design and Construction.

Purchasing, Tax positions for overseas projects.

4.2.4 Value Improving Practices (VIPs)

BETA Studies - (Business, Engineering and Technical Assessment):

4.2.5 Definition Phases

This involves further developing understanding and optimizing the project

This is concerned with developing definition, improving implementation strategies

Careful planning is essential, and preparing a contract plan which

It is essential to reflect the kind of constraints (some of which are identified

Consider and promote strategy that includes innovative approaches to

If the project is part of a joint venture or other type of co-operative alliance,

A project is different from a manufacturing operation. In addition to direct

Eliminating mark ups by eliminating layers of subcontracting;

Eliminating mark ups through selection of competitive bidders who are

Reducing construction costs through proper evaluation and selection of

Reducing engineering design costs through leadership and complimentary

Availability of client personnel;

Risks connected with the project;

Technical complexity of the project.

Capabilities of available contractors;

Location of the project;

Quality of the work;

Point in life cycle of product.

4.3.2.2 Types of Contract

Construction Installation Contracts:

Lump Sum Construction Contract:

Main Contractor (sometimes called Coordinating Contractor):

Similar to coordinating contractor, with the difference being that the

The key to commercial success must be in acquiring commercial awareness.

Lump Sum (or fixed price).

FIGURE 2 COMMERCIAL STRATEGY & RISK RELATIONSHIP