PROCEDURE TITLE:

Page 1 of 4

SUBCONTRACTING

PROCEDURE #:

REVISION #: 0

ISSUE#: 01

PREPARED BY: HE

CHECKED BY: MR

APPROVED BY: MD/CEO

DATE: 1st July 2013

DATE: 1st July 2013

DATE: 1st July 2013

1.0

PURPOSE
The purpose of this procedure is to ensure that all subcontracts are
properly managed starting from design, component identification, bid
preparation, contract award, contract administration and contract closure.

2.0

SCOPE
-

3.0

DEFINITION OF TERMS
-

4.0

All project subcontracts as decided by ARMECO

ARMECO
GM F&A
DCE
HE
MR
SMP
HQA/QC
PM
PQE

AREWA METAL CONTAINERS LIMITED

General Manager Finance & Admin.
Design & Cost Engineer
Head Engineering
Management Representative
Subcontract Management Procedure
Head Quality Assurance / Quality Control
PROJECT MANAGER
Production Quality Engineer

RESPONSIBILITIES
The HE has overall responsibility for ensuring that this procedure is carried
out correctly.
The direct responsibility for ensuring that this procedure is carried out lies
with the PM, DCE, HQA/QC, GM F&A, Construction manager and the
site engineer

5.

Overview

The Subcontract Management Procedure (SMP) describes the process used by

the ARMECO to select qualified subcontractors and manage them efficiently. The
SMP combines the concerns of requirements management, project planning,
project tracking, and project oversight for basic management control, along with
necessary coordination of quality assurance (QA) and configuration management
(CM), and applies this control to the subcontractor as appropriate.

5.1 Technical Scope

The SMP sets forth the processes for managing and integrating project activities,
and provides methods and guidance for the selection and management of
subcontractors using proven processes and methods that assure successful
program execution. The SMP shall be updated annually or as required to reflect
changes in subcontractor management functions and/or processes.
The scope of the SMP begins at the pre-proposal stage and continues through
subcontract execution, performance management, and closeout. It provides
guidance for subcontract management activities, including:
Organization, roles, and responsibilities
Methods and processes for subcontractor management
Management oversight for all subcontractors to minimize program impacts
due to cost, schedule, or technical performance
Distribution of work
Subcontract task work order (TWO) allocation
Quality assurance of deliverables/products
Status reporting and invoice procedure
Ongoing communications

6. Organization and Responsibilities

This section describes the organization and responsibilities associated with the
subcontract management process, including:
Project management
Business management
Contracts and subcontract administration
Engineering
Environmental; health and safety; and security
Quality assurance

6.1 Project Management

The responsibility for project management lies with the Head of Engineering.
He ensures that planning is coordinated. Work is appropriately subdivided and
subcontractors appointed for each component after carefully analyzing technical
competence and commercial proposals. He ensures that the subcontractor
submits a work breakdown structure (WBS), verifies and incorporate
subcontractors WBS into the overall WBS. He ensures that subcontractors
schedules are galvanized and incorporated into the entire project schedule. He
appoints the construction manager and the site engineer and coordinates their
efforts during planning, execution and closing. He provides regular reports to

management on project performance. He serves as the interface between the

various stakeholders in the project and particularly the client.

6.2 Business Management

The GM F&A is responsible for the overall business management on the

project. Based on input from the project manager, he determines the funding
source and funding method. He ensures alignment of the profitability goals of
ARMECO to those of the project as expressed by the scope, time, cost and quality
baselines in the project plan. Constantly liaising with the project manager for
actions that could improve the projects overall business performance.

6.3 Contract and Subcontract administration

The Head of Engineering is responsible for contract administration in close

collaboration with the companys accountant and the Design & Cost Engineer.
Contracts and subcontracts are managed in such a way that after deciding the
components of a project, an invitation for bid is sent to already pre-qualified
subcontractors. The subcontractor submits method statement, work plan and
quotes for the component being considered. Subcontractors are selected after
careful analysis of bid using pre-approved criteria. The construction manager
and site engineer ensures that subcontractors perform as required in all areas of
the contract i.e. scope, time, cost, quality and documentation. All information
relating to the contract/subcontract are kept in the project file.

6.4. Engineering

The DCE is responsible for the engineering of the project. He carries out
detailed study and designs the projects product. He ensures that detailed and
work drawings are produced, approved and adequately dispatched. He handles
all cases for design reviews and approval. He liaises with the construction
manager and project quality assurance team to ensure that product elaboration
is done in accordance with design.

7. Subcontracting Plan / Subcontractor Work Distribution

This section describes the allocation/distribution of work among the projects
subcontractor team.

8. Task Work Order Management Process

This section provides the management process for TWO responsibilities,
including:
Subcontractor TWO management
Task work order staffing process

9. Quality Assurance
This section describes the key areas that may be utilized for measuring
teammate performance, including the staffing, financial, technical, and
management areas.

10. Staffing
This section describes staffing performance and how it is measured. The
performance may be measured by performing an analysis of the open/filled ratio,
and the timeframe required to fill open or vacant positions.

11. Financial
This section describes the key financial elements that are monitored for ongoing
analysis.

12. Technical
This section describes the key factors monitored for subcontractor technical
performance, including:
Delivery of excellent performance
Customer support

13. Management
13.1 Risk Management

This section describes the process where performance problems are reported to
the project management. It further establishes the process in which the project
manager responds to problems and develops an action plan to ensure problem
resolution.

13.2 Change Management

This section describes the control and exercise of all subcontract change or
modification actions.

13.3 Subcontract Closeout Management

This section describes the procedure for how closeout of the subcontract will be
managed.

14. Invoice and Financial Status Reporting

14.1 Receipt

This section describes the process for receipt of services and how invoices are
processed for payment.

15. Communications and Problem Resolution

This section establishes the key methods for subcontractor communications and
how all issues/concerns are resolved when they arise.