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Engineering Procedure

SAEP-367
Value Improvement Practices Requirements

24 April 2011

Document Responsibility: Project Management Office Department

Saudi Aramco DeskTop Standards


Table of Contents
1

Scope............................................................ 2

Conflicts and Deviations.................................... 2

References........................................................ 2

Definitions of Value Improvement Practices.. 4

Requirements/Instructions................................ 5
5.1

Value Engineering.......... 5

5.2

Value Practices (Best Practices)............. 7

5.3

Project Risk Management...................... 13

Other Value Improvement Practices........ 17

Responsibilities............................................... 20

Appendices.................................................. 22

Appendix A Optimum Implementation


Timing for VIPs........................... 23
Appendix B Summary of VIP Criteria........... 24
Appendix C Value Engineering Guide
(separate file)...............................
Appendix D Best Practices Guide
(separate file)............................

Previous Issue: New

Next Planned Update: 24 April 2016


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Primary contact: Abdi, Abdirahman Mohamed on 966-3-873 0156


CopyrightSaudi Aramco 2011. All rights reserved.

Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

Scope
This procedure outlines the requirements of value improvement practices (VIPs) during
the project planning and execution phases of the project development cycle. The
procedure is not intended to give instructions on the engineering effort, but covers
requirements for value improvement practices that are important during DBSP, Project
Proposal, Detailed Engineering, and Construction processes. In summary, it covers:

Value Engineering (VE) requirements, including Process Simplification and


Design-to-Capacity requirements during DBSP and Project Proposals.

Best Practices (BP) requirements, a project cost, schedule and quality improving
techniques, during Project Proposal, Detailed Design, Procurement and
Construction phases.

Project Risk Management (PRM) requirements during DBSP, Project Proposal,


Detailed Design, Procurement and Construction.

This procedure is not applicable to the value engineering studies performed on


engineering documents.
Commentary Notes:
The objective of the procedure is to consolidate all the value improvement practice
requirements into one procedure. VIP requirements are also specified in other phasespecific procedures such as SAEP-1350 for DBSP phase or SAEP-14 for Project
Proposal phase. The requirements specified herein supersede the provisions in the other
procedures referenced in this document.

Conflicts and Deviations


2.1

Any conflicts between this procedure and other applicable Saudi Aramco
Engineering Standards (SAESs), or industry standards shall be resolved in
writing by the Project Execution Optimization Division Head, Project
Management Office Department of Saudi Aramco, Dhahran.

2.2

Direct all requests to deviate from this procedure following internal Company
procedure SAEP-302 and forward such requests to the Manager, Project
Management Office Department of Saudi Aramco, Dhahran.

References
The latest edition of the applicable reference documents shall be applied:
3.1

Saudi Aramco References


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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

Saudi Aramco Engineering Procedures


SAEP-12

Project Execution Plan

SAEP-13

Project Environmental Impact Assessments

SAEP-14

Project Proposal

SAEP-140

Project Training Impact Assessment

SAEP-302

Instructions for Obtaining a Waiver of a Mandatory


Saudi Aramco Engineering Requirement

SAEP-329

Project Close-Out Report

SAEP-360

Project Planning Guidelines

SAEP-1350

Design Basis Scoping Paper (DBSP) Preparation and


Revision Procedure

SAEP-1661

Waste Minimization Assessment Procedure

Saudi Aramco Engineering Standard


SAES-A-202

Saudi Aramco Engineering Drawing Preparation

Saudi Aramco Best Practices


SABP-A-005

Energy Assessment Methodology for Energy


Efficiency Optimization

SABP-A-009

Pinch Technology for Energy Efficiency Optimization

SABP-A-012

New Projects Energy Efficiency Optimization Review


Methodology

SABP-A-030

Energy Assessment for Efficiency Optimization in


GOSP

Saudi Aramco Cost & Scheduling Manual


General Instruction
GI-0002.710

Mechanical Completion and Performance Acceptance


of Facilities

Project Management Loss Prevention Program


Saudi Aramco Project Risk Management Guide
3.2

Industry Codes and Standards


Construction Industry Institute (CII) Publications

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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

Definition of Value Improvement Practices


Within Saudi Aramco, the term Value Improvement Practices encompasses Value
Engineering, a group of other value management techniques called Best Practices, and
Project Risk Management. It should be noted that Independent Project Analysis (IPA)
defines VIPs differently and encompasses other practices as defined in IPAs VIP
paragraph of this section.
Value Engineering: is a function-oriented multidisciplinary team approach for
optimizing project execution and eliminating unnecessary costs without sacrificing total
project performance, quality, and/or reliability.
Value Practices (Best Practices): are strategies, techniques, methods or procedures
that have proven to produce results of the highest value to an organization.
Within Project Management, value is determined by the ability to complete projects
at or below targets for cost and schedule while maintaining quality and safety goals.
Best Practices techniques include Project Execution Planning Workshop (an alignment
practice); Project Definition Rating Index (a measure of scope definition completeness);
Constructability (use of construction knowledge during planning and design); Schedule
Optimization (combination of schedule reduction and compression techniques); Scope
Control plus Change Management (a formal system for managing scope changes);
Planning for Start-up (tools and techniques to facilitate start-up planning); and Lessons
Learned (implementing, collecting, managing, archiving and using what was learned).
Project Risk Management: seeks to anticipate and address uncertainties that threaten
project objectives. Project Risk Management is the process concerned with conducting
risk management planning, identification, analysis, response, and monitoring and
control of project risks.
Other VIP Practices: are practices benchmarked by IPA and considered to improve
cost, schedule, and/or operational performance of capital construction projects.
These practices are: 3D CAD, Customizing Standards, Energy Optimization, Waste
Minimization, Design-to-Capacity, Process Simplification, Class of Facility Quality,
Technology Selection, Predictive Maintenance, and Process Reliability Simulation.
The first four practices are part of Saudi Aramcos procedures. Two practices Designto-Capacity and Process Simplification have recently been added to be conducted with
the Value Engineering practice. The Class of Facility Quality, Technology Selection,
and Predictive Maintenance are considered to be part of the way Saudi Aramco plans
for its project. The remaining practice Process Reliability Modeling Simulation
which requires computer simulation of the mechanical reliability of the equipment in a
plant is not part of Saudi Aramcos practices. Section 5 of this procedure provides more
explanation and these practices.

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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

Value Practices Management System (VPMS): is a web-based automated tool that


enables PEOD to propose, schedule, track and evaluate the implementation of Value
Improvement Practices on capital projects.
5

Requirements/Instructions
5.1

Value Engineering
Value Engineering (VE) is a functionoriented, multidisciplinary team approach
for optimizing project execution and eliminating unnecessary costs without
sacrificing total project performance, quality, and/or reliability. The rigorous
examination of what is needed to meet the business objectives of a project and
the elimination of non-value adding investment is directed towards function
analysis. The practice tries to systematically differentiate wants from needs
and remove the wants. It tests for non-income producing investments,
including:

Redundancy

Over-design

Manufacturing add-ons

Upgraded materials of construction

Customized design vs. supplier standards

The Value Engineering exercise typically results in savings of 5-15% of Total


Installed Cost (TIC). VE leverages the growing accumulation of more detailed
project knowledge to test the value of earlier, more generalized scope
assumptions. It also tests the added value of different stakeholder requirements
that have influenced the evolution of the scope. The process of Value
Engineering Methodology is outlined in the VE Guide (Attachment C) of this
document.
5.1.1

VE Study Criteria/Implementation Criteria


FPD shall initiate a formal VE study during the DBSP in accordance
with SAEP-1350 Design Basis Scoping Paper (DBSP) Preparation and
Revision Procedure when the estimated BI value exceeds $100 million.
Unless waived in the DBSP, SAPMT shall initiate a formal VE study
during the Project Proposal development stage when:

The estimated BI value exceeds $100 million, or

The estimated BI value is between $30 - $100 million and a

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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

VE study was not conducted during the pre-planning or DBSP


development stage, or

5.1.2

The estimated BI value is between $30 - $100 million, and the


pre-planning or DBSP stage VE report has recommended a
Project Proposal stage VE study.

DBSP Phase
During the DBSP Phase, Facilities Planning Department (FPD) initiates
a Value Engineering study of the project scope at 90% of DBSP or as
described in the initial draft of the DBSP. The Value Engineering study
shall be facilitated by the approved consultants or the preliminary
engineering contractors.
VE facilitation during DBSP shall be done in accordance with the
requirements stipulated in the Project Planning Guidelines SAEP-360
and SAEP-1350 Design Basis Scoping Paper (DBSP) Procedure.

5.1.3

Project Proposal Phase


During Project Proposal Phase SAPMT initiates the VE Study and the
study should be completed during the early phase of the Project Proposal
but not later than the 30% completion milestone date. For scheduling
purposes, the VE studies shall be coordinated with the Project
Management Office Department (PMOD). The requirements for
conducting VE studies shall be identified in the Project Proposal
contractors scope of work and in SAEP-12.

5.1.4

Additional VE Requirements
VE shall be conducted with special emphasis on the following practice
areas:
1. Plot Plan Analysis for expansion and grass root process plant
projects to ensure that facilities are designed in the most efficient
and cost-effective manner.
2. Process Simplification to search for opportunities to eliminate or
combine chemical or physical process steps while satisfying
needed functionality at the lowest investment and operating cost.
3. Design-To-Capacity with a level of conservatism to ensure that
the overall plant will achieve its nameplate capacity while taking
into account plant flexibility and expandability scenario use.

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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

VE studies shall only be facilitated by either a Certified Value Specialist


(CVS), out of Kingdom engineering contractors, or local engineering
contractor personnel who have been approved by PMOD [including
Associate Value Specialists (AVS)].
Requests for VE study guidance and information on consultants and
local engineering contractors approved to facilitate VE sessions should
be directed to Project Execution Optimization Division (PEOD).
5.1.5

VE Proposal Implementation & Reporting Requirements


The effectiveness of a VE study depends on the successful
implementation of accepted proposals and on the prompt resolution of
pending proposals. During DBSB, FPD modifies the initial project
scope to reflect the Value Engineering study recommendations which
FPD agrees would strengthen the business case.
During the Project Proposal phase, the VE proposals that are accepted by
the proponent organization and SAPMT are to be reviewed by FPD, and
CSD if related to standards requirements, before being incorporated into
the Project Proposal scope of work. The status and resolution of all
accepted and pending VE proposals shall be documented in the Value
Engineering section of the Project Proposal. A copy of the final VE
Report shall be distributed to PMOD no later than four weeks from the
completion of the VE session in the PP phase.

5.2

Value Practices (Best Practices)


The use of industry best practices can significantly improve project performance
in terms of cost, schedule, and operability. However, the effectiveness of these
techniques depends on several factors, including the nature of the project, the
project phase at which the practices are applied, and the expertise of the
individuals responsible for implementing them. The elements of the best
practices are outlined in the Best Practices Guide (Attachment D) of this
document.
Using the automated VPMS tool at the beginning of each calendar year PEOD
reviews the projects approved for funding through the annual capital budgeting
process and proposes the Value Improvement Practices that provide the most
benefit for the individual projects based on the requirements of this procedure.
The proposed practices are then sent to SAPMT for review and concurrence
after which the plan is considered an obligation to the project and must be
implemented. At minimum, SAPMT shall implement applicable Saudi Aramco
Value Improvement Practices per the approved plan during Project Proposal

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Document Responsibility: PMOD/Value Practices Unit


Issue Date: 24 April 2011
Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

development to optimize project planning and execution. SAPMT can initiate


the implementation of any other VIP as desired at any time.
The general requirements for conducting specific Value Practices shall be
identified in the Project Proposal Contractors scope of work. Value Practice
sessions shall only be facilitated by approved Value Practices Consultants, Out
of Kingdom Engineering Contractors or local Engineering Contractor personnel
who have been approved by PMOD.
SAPMT should plan for implementing Project Management's currentlyidentified or other industry best practices in accordance with PEOD guidance or
the requirements of SAEP-14, Project Proposal as appropriate. Since best
practices have the greatest impact on a project in the very early stages, it is
recommended that their use be planned early and repeated, as applicable.
It is the responsibility of the SAPMT to implement as many of these practices as
applicable per the criteria outlined in this procedure to ensure successful project
planning and execution. Should other best practices be rolled out by PEOD
between revisions of this procedure, SAEP-12, or SAEP-14, project teams
should investigate whether those new best practices offer value improvement to
their projects, and plan their implementation accordingly.
The following value practices have shown proven payback for Saudi Aramco
projects:
5.2.1

Lessons Learned
5.2.1.1

Lessons Learned Implementation


Lessons Learned Implementation (LLI) is a structured and
systematic approach to the application of lessons learned from
previous projects. It entails a systematic search of Saudi
Aramco Project Management Lessons Learned knowledge base
and the Pitfall Prevention Tool website and other reliable
sources to identify lessons learned applicable to a specific
project, development of mitigation strategies and action plans,
and monitoring the implementation of the action plans with a
view to minimizing repeat problems and to build on successes
by other projects.
Implementation Criteria
Unless waived, all Saudi Aramco projects shall initiate and
hold formal facilitated LLI workshops at the beginning of
Project Proposal development stage (0% of PP) and preferably
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Document Responsibility: PMOD/Value Practices Unit


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Next Planned Update: 24 April 2016

SAEP-367
Value Improvement Practices Requirements

at the beginning of subsequent project phases (Detailed Design


and Construction). Participants in these workshops should be
all individuals involved in the planning and execution of the
project, including but not limited to Facilities Planning
Department, Proponents, Inspection Department, Loss
Prevention Department, and where possible, contractors key
representatives. LLI workshops are generally recommended
for the projects for which the BI value exceeds $10 million.
For lessons learned implementation, SAPMT shall define the
plan for finding and implementing existing lessons learned
from previous projects that are applicable to the current project.
As a minimum, SAPMT shall search the Project Management's
Lessons Learned Knowledge Base on the Saudi Aramco
intranet at the beginning of each project phase (Project
Proposal, Detailed Engineering, and Construction) to review
the latest lessons learned.
5.2.1.2

Lessons Learned Collection


Lessons Learned Collection (LLC) entails individual SAPMTs
and project teams collectively documenting their unique
experiences and insights from their involvement in all phases
of a project.
Implementation Criteria
All Saudi Aramco projects shall hold formal facilitated lessons
learned collection workshops at 90% completion of each
project phase (DBSP, Project Proposal, Detail Design,
Procurement, and Construction). Where this is not feasible a
formal lessons learned collection workshop should be
scheduled at 90% construction, as a minimum. Participants in
these workshops should be all individuals involved in the
planning and execution of the project, including but not limited
to Proponents, Inspection Loss Prevention Departments, and
where possible, contractors, vendors key representatives. It is
also strongly recommended that individual PMTs regularly
submit lessons to Project Management Lessons Learned
Knowledge Base during all phases of the project.
At project close-out project teams shall consolidate lessons
learned from all phases and stages of the project, including the
Project Proposal, Detailed Design, Procurement, Construction,
Mechanical Completion into a single report, including
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Document Responsibility: PMOD/Value Practices Unit


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Next Planned Update: 24 April 2016

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Value Improvement Practices Requirements

previously submitted lessons in accordance with SAEP-329,


Project Close-out Report.
5.2.2

Project Planning & Team Alignment (PP&TA)


Project Planning & Team Alignment (formerly Project Execution
Planning Workshop (PEPW)) is a half-day workshop conducted before,
or at the start of, Project Proposal (0% of PP) to promote ownership,
commitment, and alignment of all project stakeholders including
SAPMT, FPD, Proponent, Contracting, Loss Prevention, and other
involved parties.
Implementation Criteria
PP&TA sessions should be held as soon as the service order for the
preparation of the Project Proposal document is awarded and as soon as
the project key personnel are mobilized for the project.
Unless waived, SAPMT shall initiate a facilitated PP&TA Workshop
during the Project Proposal development stage for all the projects
selected for PP&TA Workshop. This is generally recommended for
process-related projects with many stakeholders or when the estimated
BI value exceeds $30 million.

5.2.3

Constructability
Constructability is the integration of construction expertise throughout
the design process to facilitate reduction of construction cycle time and
cost. It comprises an analysis of the design, usually performed by
experienced construction engineers, to reduce costs or save time.
Constructability is usually a program in which competent construction
professionals are involved as part of the project design team, working
with the engineers from conceptual stage of the project and continuing
through completion of design. Effective and timely integration of
construction knowledge into the conceptual planning, design,
construction and field operations of a project has proven substantial
benefits. Constructability efforts require a proactive approach; therefore,
the business planning (DBSP) and Project Planning phases of a project
are where Constructability efforts will yield the greatest results.
Implementation Criteria
The optimum timing of Constructability Reviews is targeted at 30% of
Project Planning and again at 20% of Detailed Design.

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Document Responsibility: PMOD/Value Practices Unit


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Next Planned Update: 24 April 2016

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Value Improvement Practices Requirements

Unless waived, SAPMT shall initiate a facilitated Constructability


session at 30% of Project Proposal and 20% of Detailed Design stage for
all of the projects selected for Constructability review. Constructability
reviews are generally recommended for the projects with an estimated BI
value exceeding $30 million or that may benefit from this practice.
This generally includes process related projects, such as Oil & Gas
facilities, and projects with planning briefs or DBSPs highlighting
constructability concerns.
5.2.4

Planning for Startup


Startup is defined as the transitional phase between facility construction
completions and on-stream, including all activities that bridge these two
phases (i.e., pre-commissioning through performance acceptance).
Overall project success is strongly related to startup success, which
depends heavily on the degree and thoroughness of early startup
planning. Saudi Aramco GI-0002.710, Mechanical Completion and
Performance Acceptance of Facilities, provides the framework for
startup planning.
The startup team (led by the Proponent) is responsible for getting the
plant safely and efficiently commissioned and started. Successful
commercial operations require successful startup and successful startup
requires effective planning for startup. The key to a successful startup is
to have a Startup Plan that defines the roles and responsibilities of the
startup team explicitly. The preparation of the Startup Plan, which
includes a Responsibility Matrix Responsibility Accountability Contact
Information (RACI), is normally performed late in the Design Basis
Scoping Paper (DBSP) and is refined during the early stages of Project
Proposal and further refined throughout the subsequent project phases.
The startup plan describes in detail the sequence of startup, integration
with shutdowns, turnover sequence, commissioning procedures, training
program, maintenance procedures, raw materials and supplies, operations
manual, documentation, required spare parts and startup team structure
including the responsibilities and accountabilities for the Proponent,
constructor, vendor representative, Project Engineer, operations and
maintenance personnel. The development and execution of the Startup
Plan is the responsibility of the Proponent, with the Project Engineer
providing oversight to ensure that startup planning is performed as an
activity that is planned and tracked in (for example) the Project
Execution Plan (PEP), project schedule, intermittent reports, etc.

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Document Responsibility: PMOD/Value Practices Unit


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Next Planned Update: 24 April 2016

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Value Improvement Practices Requirements

Implementation Criteria
Planning for Startup (PFSU) is an extensive set of tools and techniques
which are initiated at 90% of DBSP. PFSU awareness sessions for the
project team shall be conducted at 90% DBSP and again at 30% of
Project Proposal. The PFSU tools are used by all project stakeholders,
PMT, proponent, contractors, etc., to help facilitate a successful facility
start-up and stable long-term operation.
The Planning for Startup Model is currently a web-based automated
tool. The model recommends that about 15% of startup planning effort
should be completed by the end of DBSP and about 50% of the startup
planning effort should be completed by the end of the Project Proposal
phase. By the end of Detailed Design the startup planning effort should
be 80% complete.
The startup plan addresses the roles and responsibilities of key persons
and organizations, as well as the timing of startup planning and
execution activities.
Unless waived, SAPMT shall use the automated Planning for Startup
tool for all projects selected for the implementation of PFSU. This is
generally recommended for projects with an estimated BI value
exceeding $50 million or those that may benefit from this practice.
This generally includes process related projects, such as oil and gas
facilities, and projects with planning briefs or DBSPs highlighting the
criticality of facility startup.
5.2.5

Project Definition Rating Index (PDRI)


The Project Definition Rating Index (PDRI) for Industrial and Building
Projects is a powerful and simple tool that helps the project team to
measure project scope definition for completeness. This practice shall be
conducted at 60% of Project Proposal and involves SAPMT, proponent,
contractor, and other parties as needed to measure Project Proposal
completeness and clarity. PDRI consists of about 70 elements that
identify and very precisely describe each critical element in a
preliminary engineering scope definition package.
Implementation Criteria
Unless waived, SAPMT shall initiate a facilitated PDRI session at 60%
of Project Proposal for all the projects selected for PDRI
implementation. This is generally recommended for the projects that

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may benefit from this practice and for which the estimated BI value
exceeds $30 million.
5.2.6

Schedule Optimization
Schedule Optimization is the utilization of schedule review techniques to
optimize the schedule for project completion. It is not a situation
whereby an already unrealistic schedule is made shorter, more costly and
unattainable. The objective is to look for the best possible (most
realistic) performance period for the project based upon Saudi Aramco
historical experience and the capabilities of the service contractors and
material suppliers. The schedule being prepared is considered a Project
Summary Schedule (Level III) and consists of 50 200 activities.
This is a full life-cycle schedule that encompasses the Project Proposal,
Detailed Design, Procurement, Construction and Start-Up phases of the
project. This schedule is the basis for the milestone dates used in followon phases or contracts. It is also used to assess the completeness of the
schedule submitted by bidders for the Lump Sum Turnkey (LSTK),
Lump Sum Procure Build (LSPB), Lump Sum Construct Repair (LSCR)
or Time Unit Rate (TUR) contracts.
Implementation Criteria
Schedule Optimization (SO) shall be conducted at 60% of Project
proposal. SO utilizes Schedule Reduction and Schedule
Compression techniques to optimize the project schedule.
Unless waived, SAPMT shall conduct Schedule Optimization exercise at
60% of Project Proposal for all the projects selected for SO. This is
generally recommended for process-related projects with challenging
completion milestones or projects that may benefit from this practice
when the estimated BI value exceeds $50 million.

5.2.7

Scope Control & Change Management


Scope Control (SC) is a preventative process that starts with a detailed
project scope and ensures discipline in scope changes during execution.
Change Management (CM) involves establishing and communicating to
all project stakeholders a system for recognizing, evaluating, and
implementing changes during all phases of the project. SC+CM is a
facilitated session and shall be conducted at 60% of the Project Proposal.
SC+CM is typically facilitated along with the PDRI session at 60% of
Project Proposal, but can be done independently as well.

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Implementation Criteria
Unless waived, SAPMT shall conduct a Scope Control & Change
Management session at 60% of Project Proposal for all the projects
selected for the implementation of SC+CM. This is generally
recommended for complex projects where scope control may be an issue
and the estimated BI value exceeds $30 million.
5.3

Project Risk Management


5.3.1

Risk Management Process


Project Risk Management (PRM) is a structured and systematic approach
for decision making. It is conducted continuously over the life of the
project from initiation to close-out. The process is embedded in the
stage-gate approval process prior to ERA and also in standard project
practices after ERA. The process is defined by the combination of seven
specific risk events, as well as the continuous process of monitoring and
control.
Unless waived, PRM shall be conducted on all capital projects during
DBSB and Project Proposal no later than the following seven specific
risk events:

Project initiation and business case preparation (50%)


At 10% DBSP
At 30% Project Proposal
At 90% Project Proposal
Commencement of Detailed Design (30%)
Commencement of Construction (10%)
Prior to Mechanical Completion

At each risk event, a six-step model is used to evaluate and plan for the
risk. This six-step model is:

Plan the approach to risk management


Identify risks
Assess risk qualitatively
Assess risk quantitatively
Develop response plans
Monitor and control the risk

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The six-step model is repeated at each of the seven risk events identified
above, and the Monitoring and Control step is a continuous process
conducted over the entire life of the project. Refer to Appendix A for a
graphical depiction of this process.
The PRM process provides for efficient use of resources and reduction in
the use of contingency and management reserves. The process is
described in detail in the Saudi Aramco Project Risk Management Guide.
5.3.2

PRM Implementation
While the PRM process is applicable to all capital projects, the number
of activities within the process, and the depth of the activities performed,
depends on the size, complexity, uniqueness and level of importance of
the project. The activities required to implement PRM for a specific
project will be jointly decided between the project and PMOD. Smaller
projects will benefit from pre-defined templates and desktop reviews,
while larger projects will benefit from facilitated group workshops.
PRM uses a Risk Register at the center of the process. The Risk Register
captures all information related to project risks and provides the
justification for, and definition of, all activities required to monitor and
manage the risk. Dedicated Risk Management software is used to
manage the Risk Register and this software makes risk management an
efficient and time-effective process.
All risk information captured by the risk software over the life of the
project is captured as a knowledgebase. This knowledgebase will
provide future projects with an initial risk register and risk specific
lessons learned.

5.3.3

PRM Coordination
Each project is responsible for its own risk management. PMOD can
provide mentoring and support activities to enable the project to
commence risk management. PMOD can provide the software and
training required to effectively perform risk management on all projects.
All projects that conduct risk management must inform PMOD to ensure
that the process used is adequate, and to ensure all risk learning on the
project is captured.

5.3.4

Key Risk Management Documents


The PRM produces four key documents as described in the Saudi
Aramco PRM Guide. They are:
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PRM Plan:

Documents the project context, existing risk information, project


constraints, background risk information, major assumptions,
project uniqueness, risk strategy and risk tolerance.

Identifies cross-functional risk team (including subject matter


experts), risk relationships, escalation, process of enacting risk
responses, risk activity scheduling, risk reporting, and risk
training requirement.

Defines the depth of analysis required during the PRM process


and the interval and detail required for reporting.

Risk Register:
The repository for all risk information and response planning. It captures
risk decisions and risk trends, and is the primary tool used to understand
and plan the management of risk. This is managed by software.
Risk Reports:
Regular reports summarizing the risk status of the project. Risk trends
are reviewed and key risk information is distilled into simple outcomes.
Estimates of future risk are included along with recommended response
plans and actions that should be performed to reduce or eliminate risk.
Risk Management Study:
A study is provided at key stage gates prior to ERA so that risk
information can be included in any stage gate decision. The study
provides the following analysis:

Current level of risk in the project and whether it is within the


tolerances acceptable to Saudi Aramco

Actions that will be performed by the project team to further


reduce risk

Contingencies are recommended for the project

Major outstanding risks for the project

Recommendations for changes to project objectives to maximum


value to the company.

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Other Value Improvement Practices


PMOD will identify and implement other value practices that become available between
revisions of this procedure that offer value improvement to the project. Twelve (12)
Value Improvement Practices benchmarked by IPA are defined in the following section.
Two of the practices are already part of the portfolio of value improvement practices
addressed in sections 4 and 5 of this procedure. The remaining ten practices are defined
in this section. The section also maps the IPA practices to Saudi Aramcos way of
doing things and establishes basis for the practices that are already part of Saudi
Aramcos standard procedures or part of the responsibilities of specific departments.
6.1

Technology Selection
A formal systematic process by which a company searches for production
technology outside of the company (or within the company) that may be
superior to that currently employed. It is a method to ensure that technology
used by projects is the most competitive available technology that meets the
business objectives.
In Saudi Aramco, the Facility Planning Department (FPD) partners with
business lines to evaluate capital investments, both technically and
economically, and provide an independent assessment as to how they can best
contribute in the attainment of the Companys business objectives. Technology
selection is part of the planning efforts led by FPD during the planning phases.
P&CSD and CSD support this effort through the Technology Selection
Roadmap and Engineering Services Technology Program respectively.
The application of Technology Selection as a practice would be redundant with
these efforts and would not be beneficial to capital projects.

6.2

Classes of Facility Quality


A structured team review to validate and modify, if necessary, the facility
characteristics needed to meet the business objectives. These include the facility
life, expected reliability or uptime, likelihood of expansion, production rate
changes with time, feedstock type and availability, product quality, product
demand, product flexibility, and degree of automation. The purpose of this
practice is to establish a balance between each of the facility characteristics and
the capital, as well as operating costs associated with the proposed investment.
In Saudi Aramco, the Facility Planning Department (FPD) partners with
Corporate Planning, Finance, and Project Management to ensure that capital
investments have sound business cases, meet corporate strategic objectives, and
are executed in a cost-effective manner. The planning efforts led by FPD during
the qualitative assessment, preliminary evaluation, and study phases are similar

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to the Classes of Facility Quality practice. The application of the Classes of


Facility Quality as a practice would be redundant with FPDs efforts.
6.3

Customization of Standards and Specifications


A systematic evaluation of the specific needs of a facility before it is designed
with the objective of meeting the facilitys needs by employing the minimum
required standards. CSS seeks to ensure that the facility costs are not increased
by applying codes and standards that exceed the actual needs of the plant.
In Saudi Aramco, Consulting Services Department (CSD) conducts periodic VE
studies to customize standards and specifications. The efforts undertaken by the
Standards Globalization Teams led by CSD which includes CSD, P&CSD,
Engineering Knowledge & Resources Division and Aramco Services Company
(ASC) practically covers the intended objectives of the Customization of
Standards and Specifications practice.

6.4

Energy Optimization
A technical analysis aimed at optimizing the capital cost, operating cost, and
operability of a process unit, utility system, or manufacturing site to achieve an
optimal balance between capital and energy costs. The practice evaluates the
thermal efficiency of a process and/or multiple units in a production complex for
the purpose of improving the utilization of energy. This optimization is done to
achieve a process/facility configuration that is economically optimal.
In Saudi Aramco, the Energy Systems Unit (ESU) of P&CSD is responsible to
ensure optimum energy efficiency design and operation for all facilities.
Requirements for Energy Optimization are specified in SABP-A-005,
SABP-A-009, SABP-A-012, SABP-A-030 and SAEP-14.

6.5

Process Simplification
A rigorous, structured, and formally facilitated process to search for
opportunities to eliminate or combine chemical or physical process steps while
satisfying needed functionality at the lowest investment cost, and often
operating cost as well.
Process Simplification is closely related to the VIPs that focus on process
optimization and function analysis such as Value Engineering. Process
Simplification is Value Engineering 1 performed during FEL-2 according to
IPA. In Saudi Aramco, Value Engineering is perfomed during DBSP, which
corresponds with IPAs VE1 during FEL-2, therefore this practice is essentially
performed in Saudi Aramco. In addition, Process Simplification is required to

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be performed along with Value Engineering studies during the Project Proposal
stage. Section 5.1 of this procedure specifies the requirements.
6.6

Waste Minimization
A formal process stream by process stream analysis to identify ways to
eliminate or reduce, at the source, the generation of wastes or non-useful streams
from a chemical process. Such an approach might add additional equipment or
examine alternate process technologies that have lower waste side-streams. For
those streams not eliminated or converted into saleable by-products, it provides
the method for managing the resulting wastes. The practice incorporates
environmental requirements into the facility design.
In Saudi Aramco, the Environmental Protection Department (EPD) is
responsible for the waste minimization and hazardous material control function.
SAEP-13 specifies that during DBSP it is EPDs responsibility to evaluate
potential opportunities for waste minimization as part of the Environmental
Impact Analysis (EIA). SAEP-1661 also outlines the requirements for Waste
Minimization Assessment procedures.

6.7

Design to Capacity
A structured evaluation to determine the true required maximum capacity of
each major piece of equipment, piping, valves, and instrumentation, relative to
the desired overall facility capacity with the objective of minimizing
uneconomic excess capacity. Often equipment is designed with a safety factor
to allow for additional catch-up capacity of some production increases. Design
to Capacity optimizes the use of capital to meet nameplate capacity.
Certain discussions that take place in Value Engineering (VE) are very similar to
the DTC process; therefore, Saudi Aramco requires this practice to be performed
with Value Engineering. Section 5.1 of this procedure specifies the
requirements.

6.8

Process Reliability Simulation Modeling


A computer-based simulation technique to examine operability targets for a
facility. The objective is to determine the most economical sizing, spacing, and
storage conditions that meet operability goals while minimizing cost. Typically,
PRSM uses actual failure data and repair times and requires specialized
computer software and/or consultant involvement.
Saudi Aramco relies on human capital and institutional knowledge in this
practice area.

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6.9

SAEP-367
Value Improvement Practices Requirements

3D CAD
The use of three-dimensional computer aided design (3D CAD). The objective
is to generate computer models of the physical arrangement of the facilities
being designed. The 3D model must ultimately capture fraction of an inch
design detail, not just an artistic rendition of the proposed facility.
The principal benefits of utilizing 3D CAD for the design of process plants is the
ability to produce an electronic model that accurately resembles the completed
facility. This enables project teams, clients and constructors to review and agree
on the plant design before construction starts.
In Saudi Aramco, Standard SAES-A-202 establishes a uniform means of
Computer Aided Design & Drafting (CADD) standards used, in producing and
modifying Saudi Aramco engineering drawings in electronic format.
Furthermore, it specifies the use of a SmartPlant model using intelligent P&IDs by
populating a database with relevant plant data. This method provides valuable
information throughout the plant life cycle. As a data-centric, rule-based solution
for the P&ID life cycle, SmartPlant P&ID helps users improve design quality,
data consistency, and standards compliance. With quick access to supporting
engineering data, SmartPlant P&ID significantly cuts design and modification
time and increases accuracy with its exclusive data-centric approach and use of
design rules, automatic checks, and drag-and-drop capabilities.
The Engineering Knowledge and Resources Division of the Engineering
Department is responsible for providing technical services in the area of
engineering drawing design standards and development procedures.

6.10

Predictive Maintenance
A technique used to monitor the condition of equipment during operations to
predict failure before it occurs. The practice anticipates when and what type of
maintenance is required to prevent failures stemming from deterioration.
Typically, this approach requires adding various measurement devices to evaluate
operating characteristics. This additional instrumentation is generally
economically justified in the case of critical equipment items and key operations.
Saudi Aramco uses time based preventive maintenance provided by the SAP
Plant Maintenance Module.

Responsibilities
7.1

Procedure Updates
PMOD is responsible for updating this document. The next planned update is
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5 years from the issuance date.


7.2

Implementation of Practices
The responsibilities for the implementation of the requirements of this procedure
are as follows:
PMOD is responsible to:

Propose to SAPMT, at the beginning of each year, the recommended


VIPs to be implemented for the individual BIs.

Monitor the quality and the timeliness of the VIP sessions.

Report the performance of the VIP implementations using KPIs that


measure the quality and success of the VIP program.

Provide assistance in the selection of facilitators.

Provide facilitation services to the extent possible.

SAPMT is responsible for:

Reviewing the recommended VIPs for the individual BIs during the PP
phase and providing feedback to PEOD.

Soliciting and scheduling the facilitation services from engineering


contractors, approved facilitators or from PEOD prior to the optimum
timing of the recommended practices.

Implementing the VIP recommendations and providing status and study


reports to PEOD.

FPD

Reviewing the recommended VIPs for the individual BIs during the
DBSP and providing feedback to PEOD.

Soliciting facilitation services from engineering contractors, approved


facilitators or from PEOD prior to the optimum timing of the
recommended practices.

Incorporating the accepted VIP recommendations into the DBSP.

Facilitators

At the request of FPD, PMT or PEOD conduct the facilitation and


prepare the final report within the required timeframe.

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Other departments including the proponents

Ensure that the invited participants attend the required facilitation


sessions.

Attachments Appendices
Appendix A Optimum Implementation Timing for VIPs
Appendix B Summary of VE Workshops
Appendix C Value Engineering Guide
Appendix D Best Practices Guide

24 April 2011

Revision Summary
New Saudi Aramco Engineering Procedure.

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Appendix A Optimum Implementation Timing for VIPs

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Appendix B Summary of VIP Criteria

Item

VIP

Implementation
Time

VIP Selection Criteria


Value
Other

Participants

$100 Million &


$30 Million

All project
types

FPD, CSD, SAPMT,


Project Stakeholders,
PMOD

$10 Million

All project
types

SAPMT

N/A

All project
types

SAPMT, Contractor,
Proponent

Multi
stakeholders

SAPMT, Contractor, ID

VE

90% of DBSP
& Again at 30% of PP

LLI

0% of PP

LLC

100% of Phases

PP&TA

0% of PP

$30 Million

CONST

30% Project Planning


& 20% Detail Design

$30 Million

Complex
projects
Process
related
projects

SAPMT, ID, Contractor


Project Stakeholders,
PMT, Proponent,
Contractors, etc.
SAPMT, Proponent,
Contractor, and other
parties as needed

PFSU

90% of DBSP
& again 30% PP

PDRI

60% of PP

$30 Million

Complex
projects

SC+CM

60% of PP

$30 Million

Complex
projects

SAPMT

SO

60% of PP

$50 Million

Complex
projects

SAPMT, Contractor,
Proponent

N/A

Mutual
agreements

SAPMT, Proponent,
Contractor, and other
parties as needed

PRM

1. 10% of DBSP
2. Twice during PP 30%
& 90%
3. 30% of Detail Design
4. 10% Construction
Phase
5. One during Startup

$50 Million

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