Petroleum Development Oman LLC

Revision: 5.0
Effective: June 2012

Petroleum Development Oman

L.L.C.
Document Title: Project Engineering
Code of Practice

Document ID

Document Type

Security

Discipline

Owner

Issue Date

Revision

Page 1

CP-117

Code of Practice

Unrestricted

Project Engineering

Engineering Project Delivery Manager

June 2012

5.0

CP-117 Project Engineering Code of Practice

Printed 27/06/12

The controlled version of this CMF Document resides online in Livelink. Printed copies are UNCONTROLLED.

Petroleum Development Oman LLC

Revision: 5.0
Effective: June 2012

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This document is the property of Petroleum Development Oman, LLC. Neither the
whole nor any part of this document may be disclosed to others or reproduced,
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mechanical, reprographic recording or otherwise) without prior written consent of
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Page 2

CP-117 Project Engineering Code of Practice

Printed 27/06/12

The controlled version of this CMF Document resides online in Livelink. Printed copies are UNCONTROLLED.

Document Authorisation

Authorised For Issue June 2011

ii Revision History
Revision No.

Date

Author(s)

Scope/Remarks

5.0

June 2012

Paul Sanders
UEP/5

Update to reflect changes in processes and

standards, and to make the document more
accessible.

4.0

January
2011

Anton Brouwer/
Mike Turberville

Update/roll-out

4.0

May 2010

Anton Brouwer/
Mike Turberville

Major Update to reflect improvements in

processes and standards in Project Delivery
implemented since the last revision

3.0

June 2004

Austin Isaac
UEJ1

Alignment with Opportunity Realisation

Process, Minimum Standards and Global
Processes.

2.0

April 1999

Ohi Aikhoje,
OTE4

Incorporates comments from engineers,

CFDHs and recommendations from
external reviews and audits.

1.0

August
1998

Paul Hagemeijer, Initial issue.

OME1

Note: Originally conceived as an ERD and then

Jyoti Kumar Das, converted to a Code of Practice under the new

PDO Policy Cascade
OT1/32
Graham Bolam,
UEII
Various Project
Engineers

iii Related Corporate Management Frame Work

(CMF) Documents
The related CMF Documents can be retrieved from the Corporate Business Control
Documentation Register.

TABLE OF CONTENTS
i

Document Authorisation........................................................................................................ 3

ii

Revision History.................................................................................................................... 4

iii

Related Corporate Management Frame Work (CMF) Documents........................................4

Introduction........................................................................................................................... 9
1.1

Purpose........................................................................................................................ 9

1.2

Target Audience............................................................................................................ 9

1.3

When and how should CP-117 be applied?..................................................................9

1.4

Scaling the CP-117 requirements...............................................................................10

1.5

Reference documents................................................................................................ 10

1.6

Document Owner....................................................................................................... 10

1.7

Document Hierarchy................................................................................................... 10

Opportunity Realisation Process......................................................................................... 12

Project Delivery Organisations within PDO.........................................................................14

3.1

Asset Directorates, Central Project Delivery and Functional Directorate....................14

3.2

Delegated Project Delivery Responsibilities...............................................................14

3.2.1

Central Concept Engineering Team........................................................................15

3.2.2

FEED Office............................................................................................................ 15

3.2.3

Central Project Delivery.......................................................................................... 15

3.3

3.3.1

Facilities Engineering Leadership Team (FELT)......................................................16

3.3.2

Corporate Functional Discipline Heads (CFDH) Forum..........................................16

Project Governance and Assurance....................................................................................18

4.1

Project Governance.................................................................................................... 18

4.2

Project Assurance...................................................................................................... 19

4.2.1

Pre-DG4 Assurance................................................................................................ 19

4.2.2

Post DG4 Assurance............................................................................................... 19

4.2.3

Project Controls and Assurance Plan......................................................................20

4.2.4

Assurance Activities Post DG4................................................................................21

Key Project Activities........................................................................................................... 22

5.1

Asset - CPD - Function Relationship..........................................................................15

Front End Loading (FEL)............................................................................................ 22

5.1.1

Concept Engineering............................................................................................... 23

5.1.2

Basis for Design (BFD)........................................................................................... 24

5.1.3

Front End Engineering and Design (FEED) and Project Specification....................25

5.2

Project Execution Planning (PEP)..............................................................................26

5.3

Risk and Opportunity Management............................................................................27

5.4

Operations Readiness................................................................................................ 28

5.5

Management of Change............................................................................................. 28

Project Execution Activities................................................................................................. 30

6.1

Detailed Design.......................................................................................................... 30

6.2

Procurement............................................................................................................... 31

6.3
6.3.1

Construction Definition............................................................................................ 31

6.3.2

Construction Objectives.......................................................................................... 32

6.3.3

Construction Planning............................................................................................. 32

6.3.4

Mechanical Completion........................................................................................... 33

6.3.5

Pre-Commissioning................................................................................................. 34

6.4

Commissioning........................................................................................................ 34

6.4.2

Pre-Start-up Audit.................................................................................................... 35

6.4.3

Ready for Start-up (RFSU)......................................................................................36

Project Close Out....................................................................................................... 36

Contracting and Procurement............................................................................................. 37

7.1

Contracting................................................................................................................. 37

7.1.1

Contracting Governance Structure..........................................................................37

7.1.2

Contracting and Procurement Activities & Deliverables..........................................38

7.1.3

Contract Owner, Holder & Contract Engineer Responsibilities................................41

7.1.4

Tendering Process Pre Contract Award..................................................................41

7.1.5

Execution Process Post Contract Award.................................................................43

7.2

Commissioning and Start-Up.....................................................................................34

6.4.1

6.5
7

Construction............................................................................................................... 31

Procurement, Materials Management & Logistics......................................................44

7.2.1

Procurement........................................................................................................... 44

7.2.2

Vendor List Control.................................................................................................. 44

7.2.3

Inventory Management........................................................................................... 45

7.2.4

Logistics Services................................................................................................... 45

Project Services.................................................................................................................. 47
8.1

Planning and Scheduling............................................................................................ 47

8.1.1

Definitions............................................................................................................... 48

8.1.2

Schedule Development........................................................................................... 49

8.1.3

Existing Assets and Integrated Activity Planning.....................................................51

8.2

Cost Estimating.......................................................................................................... 52

8.2.1

Capex Estimates..................................................................................................... 52

8.2.2

Cost Estimate Preparation, Assurance and Approvals............................................53

8.2.3

Project Cost Estimates Build...................................................................................53

8.2.4

Base Estimate......................................................................................................... 54

8.2.5

Contingency - Cost Risk Assessment.....................................................................54

8.2.6

Future Market & EPC Premium...............................................................................55

8.2.7

Cost Analogues and Benchmarking........................................................................55

8.2.8

Estimate Data Collection......................................................................................... 55

8.3

Project Controls.......................................................................................................... 56

8.3.1

Introduction............................................................................................................. 56

8.3.2

Management of Cost............................................................................................... 56

8.3.3

Management of Progress........................................................................................ 57

8.3.4

Management of Change.......................................................................................... 57

8.3.5

Management of Risk............................................................................................... 58

8.3.6

Reporting................................................................................................................ 58

8.3.7

Project Close Out Reporting...................................................................................59

8.4

Project Assurance...................................................................................................... 59

8.4.1

Estimate and Schedule Assurance Reviews...........................................................59

8.4.2

Programme Build.................................................................................................... 59

Quality Assurance............................................................................................................... 60
9.1

10

Discipline Controls and Assurance Framework (DCAF).............................................62

HSE in Projects............................................................................................................. 64

10.1

Introduction................................................................................................................ 64

10.2

Application.................................................................................................................. 66

10.2.1 Mandatory HSE Deliverables..................................................................................66

10.2.2 Applicability............................................................................................................. 66
10.2.3 ALARP Decisions Context.......................................................................................67
10.3

Process Safety Management.....................................................................................68

10.3.1 Statement of Fitness............................................................................................... 69

10.3.2 DEM1 Mandatory Process Safety Design & Engineering Requirements................69
10.3.3 DEM-2: Process Safety Basic Requirements..........................................................70
10.4
11

Contractor HSE Management....................................................................................71

Information Management............................................................................................... 72

11.1
12

Project Management System (iPMS).........................................................................73

Finance in Projects........................................................................................................ 74

12.1

Role of Finance in Project Governance......................................................................74

12.2

The Role of Finance within the Project.......................................................................74

13

Value Improvement Practices........................................................................................ 76

13.1

Opportunity Framing................................................................................................... 76

13.2

Lessons Learned........................................................................................................ 77

13.3

Value Engineering...................................................................................................... 77

13.4

Benchmarking of Project Performance.......................................................................78

13.4.1 Project Metrics........................................................................................................ 78

13.5

Technical Standards Challenge..................................................................................79

13.6

Availability Assurance / Reliability..............................................................................81

13.7

Constructability........................................................................................................... 81

13.8

PEP-PER................................................................................................................... 81

13.9

LIRA........................................................................................................................... 81

14

Project Resourcing and Allocation.................................................................................82

15

Technical Standards...................................................................................................... 83

15.1

Technical Standards Framework................................................................................83

15.2

DEM1......................................................................................................................... 83

Appendix 1 CP-117 Mandatory Requirements........................................................................84

Appendix 2 Governing documentation, References and Tools.................................................85

Appendix 3 Abbreviations........................................................................................................ 93

1 Introduction

1.1 Purpose
This Code of Practice (CoP) is intended to be an instruction manual or recipe book for
how to manage projects in PDO.
Compliance with the requirements stated in this CoP is MANDATORY for all project
development and execution activities.
Application of this CoP is intended to:
-

Ensure a common way of managing projects within PDO.

Facilitate internal and external (shareholder) project approvals.

Enhance Project Delivery to achieve World Class performance.

This CoP supports the PDO vision:

To be renowned and respected for the excellence of our people and the value we
create for Oman and all our stakeholders

1.2 Target Audience

The target audience for this CoP is all staff involved in the development and execution
of Projects, for example:
-

Project Managers and Front End Project Managers

Project Engineers

Project Services Engineers

Project Assurance Engineers

Contracting and Procurement Staff

QA/QC staff

Technical Authorities, as defined in DCAF

Decision Executives (DE)

Business Opportunity Managers (BOM)

Members of Decision Review Boards (DRB)

1.3 When and how should CP-117 be applied?

This CoP shall be applied to all PDO Capital Projects.
The CoP requirements should be scaled to match the size and complexity of the various
Projects, and the scalability is defined in various sections of this document.
Throughout the document a distinction is made between Mandatory and Nonmandatory requirements through the use of the words shall (Mandatory) and should
(Non-mandatory). Non-mandatory activities are indicated for good practice and
guidance.
Deviations from the Mandatory requirements shall require formal approval from the
CFDH (and TA-1) for Project Engineering (in accordance with SP-2061 Technical
Authority System).
Although CP-117 does not apply to Field Change Proposals (FCPs), the elements
described here are equally applicable to FCPs.

1.4 Scaling the CP-117 requirements

In order to scale the CP-117 requirements, it has been assumed that Projects with
higher Capex values generally have higher business risks and complexity, and therefore
warrant a higher degree of project management, governance, planning and controls. A
simple categorisation of the Mandatory requirements based on Capex is given in
Appendix 1.
However, some Projects of lower Capex value may have significant complexity,
business criticality, strategic importance, HSE exposure or other factors which also
warrant a high level of attention.
The Business Opportunity Manager (BOM) or Project Manager (or Portfolio Manager) is
responsible to recommend in which category a particular Project falls, and have this
decision endorsed by the Decision Executive (DE). This decision shall provide the
guidance for level of application of processes and tools defined in this Code of Practice.

1.5 Reference documents

Appendix 2 contains links to the Corporate Management Framework portal (for PDO
Governing documents) and Shell iPMS (for Reference documents). Via these two links
the most up to date versions of the documents are available. Appendix 2 also lists the
PDO Governing Documents, Reference Information and Tools which are relevant to
each Section of this Code of Practice.

1.6 Document Owner

This document is owned by the Corporate Functional Discipline Head (CFDH) and
Technical Authority level 1 (TA-1) for Project Engineering, UEP, who is responsible for
its regular update to reflect relevant internal and external learnings and the best
practices in project delivery.
UEP holds Functional responsibility for Project Delivery.
For any questions or clarifications relating to CP-117, please contact UEP or UEP/5. For
questions on specific sections of CP-117, support contacts are indicated at the end of
each section.

1.7 Document Hierarchy

CP-117 forms part of the PDO Corporate Management Framework (CMF).
This CoP is designed to implement PDO Policies and to specify the usage of other PDO
Codes of Practice, Specifications, Procedures and Guidelines as applicable to
Engineering Projects.
This CoP is also intended to embed the principles and processes of Opportunity
Realisation as provided in the Shell Opportunity Realisation Manual (ORM). It further
reflects the intent of all Shell Project Standards (PS), and specifies the usage of certain
Shell Project Guides (PG) and Procedures, where these are consistent with PDO
strategic objectives.
PDOs strategic objectives are indicated in the Diagram below:

PDOs Strategic Objectives

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

2 Opportunity Realisation Process

Support: UCI, UEP
The Opportunity Realisation Process (ORP) is PDOs process for managing Projects.
Applying the ORP is Mandatory for all Projects and deviation from the ORP requires
approval from the relevant Project Decision Executive.
The underlying premise is that Project Success comes from:

Setting up the Project for success with realistic and achievable goals from the
outset.

Taking good quality decisions and involving the right people in a clear
governance structure.

Safeguarding the value across the entire project lifecycle.

The foundation of the ORP is the provision of:

A decision-driven, stage-gated process which encourages good preparation,

planning and appropriate assurance in the execution and delivery of an opportunity.

A clear governance structure for the opportunity.

Clear roles, responsibilities and competences for the people who lead and staff the
opportunities.

A project only moves as fast as the decisions are taken, and it is important to take
Quality Decisions.
The ORP splits the Project into six phases:

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

The objective of each Decision Gate is as follows:

Phase

Gate

Objective

Identify

DG1

Do we understand what were starting?

Do we understand how to exit, if required?

Assess

DG2

Have we identified a full range of strategies and scenarios?

Select

DG3

Have we selected the optimum alternative?

Define

DG4

Is everything in place to ensure success?

Once the Project has been operating for some time, there is a look-back (DG5) where
lessons learned are captured to be fed-back into future Projects.
The table below illustrates the ORP at a high level with key activities for each of the
ORP phases. The key deliverables for each phase are discussed elsewhere in this
document.
Identify

Assess

Select

Initiate Project:

Demonstrate
feasibility of the
Project:

Select the best

concept
solution:

Define the
selected
concept:

Assess a
complete range of
alternative
concepts against
a complete range
of possible
outcomes, in the
context of all
attendant risks:
Technical,
Economic,
Commercial,
Organizational,
Political.

Assess the best

concept for
delivering value
from the Project
and indicate
why other
choices are not
preferred.

Define technical
scope, cost and
schedule for
Final
Investment
Decision.

Generate ideas.
Verify alignment
with business
strategy,
establish
potential value
and decide
whether to fund
and staff.

Define

Execute
Deliver the
promise:
Deliver an asset
consistent with
the forecast
scope, cost and
schedule.
Leads to handover decision to
user for Operate
phase.

Operate
Start-up,
operate and
evaluate:
Ensure
performance
specifications are
met. Maximize
return to
shareholders.
Protect License
to Operate.

For further details, refer to the Opportunity Realisation Manual (ORM) and Opportunity
Realisation Guide (ORG).
The ORP specifies a number of mandatory actions and deliverables:

Project (Opportunity) Framing, and Re-Framing at each Decision Gate.

Project (Opportunity) Roadmap (Decision-Based Roadmap).

Stakeholder Management Plan.

Risk and Opportunity Management Plan.

Project Assurance Plan.

3 Project Delivery Organisations within PDO

Support: UEP

3.1 Asset Directorates, Central Project Delivery and

Functional Directorate
PDOs Projects are delivered through a matrix organisation.
Asset Directorates
The accountability for the initiation, development, business planning and execution of all
Projects, ranging from Field Change Proposals (FCP) and minor brown field
modifications to major green and brown field developments, rests with the four
respective Asset Directorates: Oil North (OND), Oil South (OSD), Infrastructure (UID)
and Gas (GD).
Functional Directorate
The Engineering and Operations Function Directorate (UEOD), and the Functional
Project Engineering Delivery Team (UEP), through the skillpool managers and the
Corporate Functional Discipline Heads, support the Assets in the delivery of Projects by;

setting and maintaining the technical and operational standards, procedures

and guidelines;

verifying compliance against these

independent technical assurance;

providing and improving the necessary technical capability (resources, tools

and systems);

ensuring PDOs resources are deployed in the best interest of the Company
and the development of individual staff concerned;

providing an effective knowledge sharing framework and delivering timely

technical expertise where necessary;

providing cost estimating, scheduling, planning and Information Management

expertise for all PDO projects

standards and

providing

effective

Central Project Delivery

The responsibility for managing the execution of major projects (> $200mln) on behalf
of the Assets has been delegated to the Central Project Delivery (CPD) department.
See section 3.2.3
In principle, the Asset Directorates and CPD are resourced to be self sufficient with a
full complement of project engineering delivery staff as necessary to deliver the
complete range of Projects. However resources may reside organisationally in one of
the Functions (e.g. cost estimating staff, rotating equipment engineers, Contracting &
Procurement, Finance technical HSE), where this helps to maintain a critical mass and
facilitates easy sharing of limited resources and expertise between assets and
projects.

3.2 Delegated Project Delivery Responsibilities

Whilst the accountability for Project Delivery ultimately rests with the Asset Directorates,
the responsibility for parts of the delivery can be delegated by the Asset to other parts of
the organisation (e.g. Concept Team, FEED office, CPD), as described below in this
section.
Other key delivery activities, executed by the Functions during the Define phase (e.g.
Resourcing, Cost estimating, Contracting & Procurement) are further described
elsewhere in this CoP.

3.2.1

Central Concept Engineering Team

The concept development and selection of all major Sour and EOR Projects (with an
estimated CAPEX above $200mln, depending on the strategic value) is normally carried
out in the Central Concept Engineering Team (CCET), co-located in the Development
Study Centre (DSC).
The decision regarding where the Concept Selection should take place (i.e. in the Asset
or in the CCET) lies with the Decision Executive (DE), supported by the DRB.

3.2.2

FEED Office
The Front End Engineering Design (FEED) of projects with an estimated CAPEX above
$100mln shall, by default, be executed by the in-house FEED office. Deviation from this
default requires UEOD approval. Projects of smaller size, but of strategic value (e.g.
sour projects) can also be carried out by the FEED office, subject to mutual agreement
between Function and Asset and subject to FEED office capacity.

3.2.3

Central Project Delivery

The Central Project Delivery (CPD) group is responsible for the execution of major
Projects (>$200mln).
CPD will be a centre of excellence for Project Delivery. CPD is designed to:

Enhance standardization, repeatability and dissemination of lessons

learned/best practices.

Manage projects according to the latest process and procedures, with

particular emphasis on risk and change management.

Major Projects (generally >$200 mln) move to the Central Project Delivery group at
DG3 and the CPD team is then responsible for delivering these Projects on behalf of
the Assets. As the centre of excellence, CPD will also run certain portfolios of projects
which fit segmentation themes (e.g. high sour, high pressure, thermal EOR, chemical
EOR, etc.). In addition, projects which are particularly complex, contain prototypes or
new technology, or have high strategic or reputational importance may also be executed
under CPD.
Pre-DG3 projects which are likely to be in the CPD portfolio should be identified and
agreed between CPD and the Asset Directors during the Program Build, and will be
assigned Project Engineering support accordingly. The final allocation decision will be
made by the DE (in consultation with the DRB) at DG3, and endorsed by the relevant
Asset Director and Technical Director (TD).

3.3 Asset - CPD - Function Relationship

The matrix delivery approach described above is reliant on a strong relationship and
good collaboration between the Asset, the Function and CPD. This requires clear Roles
and Responsibilities, interfaces and communication lines. Two formal interactions are
defined, the FELT and CFDH Forum:

3.3.1

Facilities Engineering Leadership Team (FELT)

The Facilities Engineering Leadership Team (FELT) is made up of the Engineering
Managers from the various assets (Oil North, Oil South, Gas and Infrastructure), the
Project Managers for major projects (Rabab Harweel, Yibal Khuff, Budour), the
Manager of Central Project Delivery, the Function represented by the Project Delivery
Manager (UEP), and the C&P Head of Capital Projects (FPO). Other Project Managers
or Functional representatives are called to attend as required. The FELT is chaired by
the Engineering and Operations Functional Director (UEOD).
The FELT meets on a monthly basis to share learnings and discuss project delivery and
engineering issues (either ad hoc or long term strategic in nature) that require to be
addressed through a common, unified approach. In particular it develops, agrees and
reviews the progress against the Project Delivery Improvement plans.
The FELT has five main roles and responsibilities:
1. The FELT is responsible for influencing Policies and generating Strategies:
Given the FELT overview of the entire project delivery within PDO, the FELT is uniquely
placed to provide key steer to the organization in the form of Policy and Strategy
recommendations, and translating these into Codes of Practice.
2. The FELT has accountability for Project Delivery:
All projects in PDO report via the FELT members. The FELT is jointly responsible for
project delivery within PDO. This responsibility includes accountability for annual spend,
and project schedules. The FELT is responsible for setting realistic project targets
(budget and schedule). One important aspect of this accountability is to jointly agree
staff moves to make the best use of scarce engineering resources across the various
assets and projects.
Another important aspect of this accountability is the FELT ownership of the corporate
risks relating to project delivery.
3. The FELT is responsible for disseminating information and driving initiatives:
The FELT forum is one of the most effective for disseminating information and
knowledge within the organization given the mixture of Assets, major Projects, Function
and Line in the FELT membership. The FELT has a responsibility to drive the crossfertilization of lessons learned and best practices. When new initiatives are rolled-out,
the FELT members have responsibility to drive the implementation throughout PDO.
4. The FELT is a sounding board:
The FELT provides an accessible sounding board to listen to new ideas, challenges,
suggested changes, etc. coming from the rest of the organization (e.g. CFDH forum).
5. The FELT is an early warning system for the Managing Director and TDG:
The FELT informs the MD and TDG of issues that are surfacing within the organization,
and provides advice as to how best to deal with these issues. The FELT is the
conscience of the organization.

3.3.2

Corporate Functional Discipline Heads (CFDH)

Forum
The CFDH Forum is chaired by the Engineering and Operations Functional Director
(UEOD) and made up of the Project Delivery Manager (UEP), all Engineering CFDHs
and the CFDHs for Operations / Commissioning and Start up (UOP) and Maintenance
(UOM).
The CFDH Forum meets on a monthly basis to share learnings and discuss engineering
issues (either ad hoc or long term in nature) that require to be addressed through a
common, unified approach. In particular it develops and reviews progress against the
Functional Engineering Capability Improvement plan and the annual Functional
Engineering Business Plan.
The CFDHs provide the technical assurance to projects which forms the back-bone of
the Decision Controls Assurance Framework (DCAF). They also assess the
competency levels of the various disciplines, particularly the Technical Authority Level 2
(TA2).

4 Project Governance and Assurance

4.1 Project Governance

Support: UEP
Project Governance is defined as steer, supervision, support and assurance:

Steer: giving direction to the Project Team; encouraging the Project Team to put
the right emphasis on the right decisions, deliverables and activities.

Supervision: the body providing the governance supervises the quality and
robustness of the Teams output.

Support: the DE/DRB can provide assistance to the Project Team through
expert knowledge and/or providing funds and/or resources.

Assurance: the management of a range of activities that collectively inspire

confidence in the emerging decisions.

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

For Major Projects in CPD the governance Line of Sight runs from the Project
Manager via the BOM and CPDM to the DRB. The PDO Technical Director (TD) acts as
the Decision Executive (DE).
For all other projects, the governance Line of Sight runs from the accountable Project
engineer / leader via a Head of Projects and/or the Asset Engineering Manager to the
relevant Asset Director (GD, OND, OSD, UID), who is also the DE.

4.2 Project Assurance

Support: UEP
Project Assurance is defined as the management of a range of activities that collectively
inspire confidence in the emerging decisions to be taken by the DE. It also provides an
independent view to the DE and the Shareholders on the status of the project and the
suggested actions to be taken by the Project team.
All Shareholders are invited to participate in key reviews as part of the annual
assurance review planning.

4.2.1

Pre-DG4 Assurance
Up to DG4 the Assurance of all Projects with a total estimated Capex above $100mln is
vested in a Decision Review Board (DRB), chaired by the Decision Executive (DE) with
representation from UEOD, and other Asset Directorates and Functional Directorates.
The DRB endorses the Project Control and Assurance Plan (PCAP) and the DecisionBased Roadmap, and advises the DE on key decisions; especially the decision to
proceed with a project to the next phase. The DE holds single point accountability.
In addition, the DRB:

Gives mandate to the project team and BOM.

Assigns Resources

Reviews key project documents and activities (e.g. Risk Management Plan)

Meets on a quarterly basis (or more often, if required).

Monitors progress on audit and review actions follow-up and closure,

particularly those from VARs.

Ensures all stakeholders remain fully aware of key issues and project progress.

Provides a forum for the BOM and Project Manager to seek help in resolving
issues.

The DRB structure in PDO recognises two levels:

DRB1, chaired by the TD for all projects with a total estimated CAPEX above
$200mln (i.e. all projects in CPD). UCI is the secretary of DRB1 pre-DG4.

DRB2, chaired by the Asset Director, for projects with a total CAPEX above
$100mln and less than $200mln. The DRB composition and frequency of DRB
meetings is defined by the DE. Minutes are taken by a nominated secretary
from the Asset.

The pre-DG4 assurance process for smaller projects shall take place within the existing
Asset Management structure. Projects with CAPEX less than $100mln can also be
covered by a DRB2 if justified by the risk profile or strategic nature of the project.

4.2.2

Post DG4 Assurance

Post DG4 and FID the Assurance of projects with an estimated CAPEX above $100mln
continues to be vested in the DRB 1, again chaired by the DE, but now with
representation from Asset and Functional Directorates, including UEOD. At DG4, the
DE appoints the DRB members for the Execution phase.
The DRB, chaired by the Decision Executive:

Confirms the mandate of the project team.

Owns the high level Risks and appropriate Risk Response.

Provides resources to ensure the project is sufficiently manned.

Carries accountability for effective project assurance post DG4/FID.

Meets quarterly (or more often, if necessary).

Verifies compliance with and approves deviations from the Project Control and
Assurance Plan (PCAP).

Monitors progress on audit and review actions follow-up and closure, including
those from VAR4 and Project Execution Reviews.

Ensures all stakeholders remain fully aware of key issues and project progress.

Provides a forum for the Project Manager to seek help in resolving issues.

While the DE has single point accountability, other DRB members retain shared
ownership for the quality of the decisions.
The DRB structure in PDO recognises two levels:

DRB1, for projects with total CAPEX of more than $200mln (i.e. all projects in CPD) with
TD as DE. Other DRB1 members include the Asset Director (deputy DE), UEOD, and
other Asset and Functional Directorate representatives. UEP is the secretary of DRB1
post DG4.

DRB2, for projects with total CAPEX of more than $100mln, but less than $200mln with
the Asset Director as DE. Other DRB2 members include members of the Directorate
Leadership Team, a UEP representative and an Engineering Manager from a different
Directorate. The latter to ensure cross asset exchange of learnings and challenge.
Minutes are taken by a nominated secretary from the Asset.
A key member of the DRB is the Operations representative. Representatives from other
Functions such as HSE, Legal, Well Engineering, etc. should be invited to DRBs as
required.
The assurance process for smaller projects shall take place within the existing Asset
Management structure. Projects with Capex less than $100mln can also be covered by
a DRB2 if justified by the risk profile.
For projects where the costs are dominated by well activities the DE may decide that
the DRB will be achieved through existing Well Delivery assurance bodies, and chose
not to constitute a separate DRB.

1 This used to be called the PDAB

4.2.3

Project Controls and Assurance Plan

For all Projects with CAPEX in excess of $20mln, the Project Team shall prepare and
implement a Project Controls & Assurance Plan (PCAP).
The PCAP contains the Discipline Control and Assurance Framework (DCAF)-based
deliverable QA/QC process with responsible Technical Authorities (TAs) for each
deliverable. The PCAP also specifies specific additional assurance events required for
the project.
The PCAP shall be approved by the DE and updated at the start of each new project
phase. At the end of each phase the DE must check that the PCAP deliverables have
been actioned and signed off across the applicable disciplines.

4.2.3.1

Assurance Activities Pre-DG4

Support: UPV, UEP3, UEP5
The Value Assurance Review (VAR) process is owned by the Petroleum Engineering
Directorate (UPD) and coordinated via Value Assurance Advisor (UPV). VARs provide
key Project Assurance prior to decision gates.
VARs shall be held for all projects in excess of $100mln towards the end of each ORP
phase. The VAR provides independent assurance to the DE that the opportunity is
ready to proceed to the next phase.
The Estimate and Schedule Assurance Review (ESAR) process is owned by the
Functional Head of Project Services (UEP3). ESARs provide independent assurance
that the project cost estimate and schedule accurately represent the project scope and
risks to project delivery are compliant with ORP requirements.
ESARs are held prior to VARs and are mandatory for the following projects:

Prior to DG3 for all projects with CAPEX exceeding $200mln

Prior to DG4 for all projects with CAPEX exceeding $100mln.

Projects of lower Capex with a large degree of complexity or a high risk/uncertainty
profile should also be subject to ESAR. The ESAR process is described in more detail
in section 8.4.1.
The Project Health Check (PHC) process is owned by the Project Engineering Function
(UEP5) and is recommended to be carried out as a self assessment by the project team
to assess the status of the project against a predefined set of questions. An approved
PHC facilitator shall guide the team.

4.2.4

Assurance Activities Post DG4

Support: UEP2, UPV, UEQ
The Project Execution Review (PER) process is owned by the Engineering and
Operations Director (UEOD), and coordinated via the Project Engineering Function
(UEP2). The PER provides independent assurance to the DE that the project is under
control and is being delivered in line with DG4 promises.
PERs shall be held on an annual basis for projects with Capex in excess of $200mln.
Projects of lower Capex with a high execution risk should also be subject to PER.
The Pre-Start-Up Audit (PSUA) is owned by the Engineering and Operations Director
(UEOD) and is coordinated via the CFDH Production Operations (UOP). A PSUA shall
be held for all projects to confirm to the DE that the project is ready to proceed to the
Operations phase.
A VAR5 shall be held on projects with CAPEX in excess of $200mln, approximately 1
year after the on-stream date when a full TECOP look-back picture has emerged and
performance testing has been completed.
An overview of the mandatory requirements is given in Appendix 1.

5 Key Project Activities

Although there are many activities and deliverables required for successful Project
Delivery, the five key activities are as follows:
1. Front End Loading.
2. Project Execution Planning.
3. Risk and Opportunity Management (TECOP).
4. Operational Readiness and Assurance.
5. Management of Change.

5.1 Front End Loading (FEL)

The essence of Front End Loading is to ensure that the maximum value has been built
into the Project during the early phases of design to be set-up for success in execution.
As the graph below shows, value is built into the Project during the phases Identify,
Assess, Select and Define and can only be safeguarded or eroded during Execution.

The early phases (until the end of Define) of the project are the opportunity for Value Creation.
This is where the Value Improvement Practices (VIPs) should be applied and attention given to
producing quality deliverables. The Execute phase focuses on Safeguarding the Value.

5.1.1

Concept Engineering
Support: UEP2
Concept Engineering is the pre-DG3 engineering activity in support of Project
Development and is closely integrated with the subsurface Field Development Planning
for Oil & Gas developments. Key deliverables are as per the Discipline Control and
Assurance Framework (DCAF, see section 9.1), and the Project Specific Control and
Assurance Plans (PCAPs). The main deliverables are summarized below per ORP
phase:
Identify

Assess

Select

Project Initiation Note

Feasibility Study Report

Field Development Plan*

Decision-Based Roadmap

Level 1 CES

Risk and Opportunity

Management plan

Map of solution space

Concept Selection Report

(CSR)

Stakeholder Engagement
Plan

Stakeholder Engagement
Plan
Ranked Decision Criteria/
Value Drivers

ALARP Demonstration
Execution and Contracting
Strategy
Preliminary PEP/PES
Level 2 Cost Estimate and
Schedule
Basis for Design
(*Except for infrastructure projects)

More detailed deliverables are given in DCAF.

Concept Engineering shall take place in line with PR-1358 - Procedure for Concept
Selection and Preparing Basis for Design and the key steps are hard-wired in iPMS.
Key focus areas for concept engineering are:

Clarity on Project Objectives and Value Drivers.

Effective use of Value Improvement Practices (VIPs) such as Opportunity Framing,

Risk and Opportunity Management, Concept Identification, Urban Planning, Concept
Selection, Benchmarking, Value Engineering, Contracting Workshops, Constructability
Reviews, PEP-PER, LIRA, etc. Use of the VIPs can be scaled to reflect the size and
complexity of the project. Further requirements around VIPs are detailed in section 13.

Standardization of approach and solutions: replication wherever possible.

QA/QC in line with DCAF and PCAP.

Concept Engineering will take place in the Asset and Infrastructure Directorate Concept
teams for small and conventional projects, whilst unconventional (EOR and Sour) and
major projects with an estimated Capex in excess of $200mln will take place in the
Central Concept Team.
PDO concept engineers can receive technical support from a Concept Engineering
Services Contractor (CESC) as appropriate. This provides a means to get Third Party
Support for niche applications where the capability and / or capacity are not available
within PDO or the CESC contractor. Management of the CESC contract takes place
within the Central Concept Team with UEP2T as Contractor Holder and CFDH Concept
as Contract Owner.
The Field Development Plan (FDP) and Basis for Design (BFD) are key deliverables of
the Select phase. Since the FDP will usually be completed before the Concept Select
Report (CSR) is finalised, it is recommended that the Subsurface Team engage with the
DRB at completion of FDP to obtain approval for the FDP, prior to the stage gate
approval that is DG3(a), to allow completion of the CSR and commencement of the
BFD.

5.1.2

Basis for Design (BFD)

Support: UEP2
All projects shall have a BFD. For all projects requiring engineering definition (FEED)
the BFD shall be completed prior to DG3.
The development of the BFD shall be completed in-house by PDO staff. In case of a
shortage of internal resources or specialist technical skills the Asset or Project Team
may use external contractor resources or outsource a specific aspect of the BFD but the
activity shall always be led by a competent and authorised PDO engineer, and the BFD
shall be approved at TA2 level (as per DCAF).
During preparation of BFD, the concept in the approved Concept Selection Report is
further developed to obtain a cost estimate for the project to an accuracy of +25% /
-15% (Level 2). This should also define all system and equipment requirements so that
FEED and Detailed Design can progress smoothly, and also forms the basis for the
approved Project schedule. To achieve the above the minimum information required to
be finalised and documented is given in PR-1358 - Procedure for Concept Selection
and Preparing Basis for Design. Standardisation opportunities shall be explored and a
project standardisation philosophy justified and documented. In addition, baseline
values should be defined and agreed for Management of Change (PR-1247).
At the end of the BFD all major Process, Control, Safeguarding, Instrument and HSE
philosophies shall be finalised. Where the design involves high pressure or toxic fluids,
reviews such as HAZID, course HAZOP, QRA, FEA and dispersion study shall be
conducted to develop Plot Plan and Equipment Layouts. For major projects a System
Availability study shall be conducted to finalise the equipment sparing.
A Value Engineering check for projects between $5 100mln and a proper facilitated
Value Engineering Review for projects exceeding $100mln shall be carried out prior to
DG3, incorporating the BFD.
The BFD is the basis for starting any FEED and is to be endorsed by the Concept team.
The Project team takes over the project at the end of BFD and the Project Team Lead
will be responsible for Cost and Schedule control against the agreed baseline values
beyond this point. i.e. any changes beyond this point shall be subjected to Management
of Change (PR-1247).
Certain VIPs may be applicable during the Select phase. See Section 13 on VIPs.

5.1.2.1

Close-out of the Select Phase

Support: UEP2
At the end of the Select phase of the project, there should be a formal close-out of the
pre-DG3 project activities, capturing lessons learned (positive and negative) and
recording the key technical and commercial aspects of the project so far including key
decisions.
The Project Engineer responsible for the BFD is responsible for the pre-DG3 close out
report, in accordance with PG12b Capital Project Close-out Report.

5.1.3

Front End Engineering and Design (FEED) and

Project Specification
Support: UEP1
The Front End Engineering Design develops the requirements of BFD into design
deliverables leading to a Project Specification.
The transition from Select into Define at DG3 is a key milestone in the Project Delivery
lifecycle. It is critical that the project retains continuity of key staff, budget and
understanding of any outstanding (sub-surface) risks.
The FEED shall not start until the DE mandates it, usually when the BFD and other key
Select deliverables have been approved and fully signed off. The BFD should not
contain extensive holds on information, or outstanding concept selection choices. The
FEED start is also dependent on completion of any key recommendations from the
VAR3/DG3.
The FEED shall:

provide a sound technical basis for the Execution Phase (Detailed Design,
Procurement and Construction) with minimal uncertainties;

provide a basis for a Cost Estimate with +15% / -10% accuracy (Level 3);

provide a firm schedule for the Execution phase;

identify all the risks/opportunities and sensitivities.

During the FEED all assurance reviews to meet technical integrity shall be completed,
such as: HAZID, Design Review, HAZOP, QRA, FEA, PDMS Model reviews (3 stages),
SAFOP and IPF.
3D Model Reviews or 2D General Arrangement reviews shall consider, as a minimum,
process issues, safety issues (QRA, SIMOPS, etc) maintenance and operational
accessibility (including manual handling), constructability (equipment handling
requirements and access for construction) and escape routes (on ground and at
platforms).
An update of the Risk and Opportunity Management Plan shall be made shortly after
kick-off of the FEED phase and a risk register maintained during the Define phase to
track the Risk Mitigations. Those risks/opportunities that cannot be closed out before
execution phase should be mitigated and transferred to the execution contractor for
management (see section 5.3).
It is important to have PDO approved facilitators/leaders for HAZID, Design Review,
HAZOP, IPF and Value Engineering. It is the responsibility of the Project Engineer to
ensure close out of all action items resulting from various reviews and maintain the
records for the same.
The FEED shall deliver a Project Specification which will require only addition of vendor
specific information and construction related details. For a detailed list of deliverables
and activities to be covered in FEED reference is made to the list of deliverables in
DCAF. During this stage, extensive vendor communication needs to be established so
that the Process design takes into consideration the most probable scheme in any
vendor package. A black box approach, where minimum information on vendor
packages are provided, shall be avoided. All interfaces with vendor packages shall be
finalised to avoid major changes during Detailed Design. The FEED shall also ensure
that all PDO Environmental and Sustainable Development requirements are met.
A HOLDS list shall be maintained and any residual holds shall be transferred to the
Project Team for management through the execution phase.
In FEED stage, specifications for all major equipment and Long Lead items shall be
developed. Depending on the procurement strategy these shall be used for
procurement by PDO or the contractor.

All changes to the recommendations of the BFD shall be subjected to rigorous

Management of Change to track possible Project Cost and Schedule impact (see
Section 5.5)
In PDO, all FEED for projects exceeding $100mln in total estimated Capex are carried
out by default by the in house FEED office, if capacity exists, using the FEED office
Management system and standards. Smaller project FEEDs are typically outsourced.
See also Section 3.2.2.
All outsourced FEEDs for projects exceeding $20mln shall be subject to an independent
FEED review.

5.2 Project Execution Planning (PEP)

Support: UEP5
Planning a project properly and taking it methodically through the various ORP Phases
from Identify and Assess all the way through to the Operate Phase is key to the
successful outcome of any Project in terms of Value, Cost, Schedule and Quality.
The Opportunity Realisation Manual (ORM) sets out a rigorous approach to planning
and managing the opportunities and projects throughout the different phases. This
approach shall be documented from early in the project (i.e. at the start of Select as a
Project Execution Strategy) and shall be developed into a preliminary project-specific
Project Execution Plan prior to DG3 and a final Project Execution Plan prior to DG4.
The Project Execution Plan is a live document which shall also be updated during the
Execution phase as necessary, particularly after contract award.
At DG4 the Project Execution Plan (PEP) shall describe in sufficient detail, to the
Project team and the project stakeholders, how the project will be executed. The PEP
should cover all key project activities, resources and third party contractors involved
directly or indirectly in the delivery process. In particular it sets out what internal project
controls and external assurance steps will be put in place to ensure the desired
outcome as promised at DG4/FID. The PEP should include a realistic P50 ( i.e. 50%
probability of finishing before scheduled completion date) and P90 (i.e. 90% probability
of finishing before scheduled completion date) project schedule at sufficient level of
detail (minimum level 3) to show the inter-dependencies and logical sequence of the
various project activities and milestones.
The PEP shall also describe the proposed/approved procurement and contracting
strategy, and specific plans with respect to project reporting, project resourcing, risk
management, HSE and Quality management, Information management, Interface
management, subcontract management, Operations Readiness and Assurance,
Commissioning and Start Up, Project Hand over and Close out, etc, all of which are
needed to ensure delivery against the FID Promise.
To develop the Contracting and Procurement strategies the Project team shall conduct
a supply chain management workshop and contracting strategy and tactics workshops
with appropriate input from all relevant Functions and stakeholders.
The typical standard contents of a Project Execution Plan can be found in Project Guide
10a and examples of best practice Project Execution Plans are available in iPMS (see
section 11.1).
The Project Manager or Project Lead engineer is responsible for the preparation of the
preliminary PEP (Pre DG3) and final Project Execution Plan (pre DG4) and ensures the
necessary approvals are in place as per the Discipline Control and Assurance
Framework. The PEP is a live document and shall undergo updates as the project
progresses, particularly at the end of FEED and Detailed Design stages, to reflect any
change in strategies required due to developments in the previous phase.
In PDO all EMC/ODC projects with a total estimated CAPEX exceeding $5mln
(excluding materials) shall have a specific Project Execution Plan, prior to proceeding
to the execution phase. For EMC/ODC projects of smaller size a portfolio generic
Execution Plan can be prepared.
All other projects shall have their own specific Project Execution Plan. Note that the
PEP is scalable depending on the size and complexity of the Project.

5.3

Risk and Opportunity Management

Support: UEP31
Risk and Opportunity Management concerns the identification and subsequent
management of both Threats and Opportunities that might apply to a Project (or
portfolio of small projects), and ensures that the risk levels are kept as low as
practicable (ALARP) and that the opportunities are exploited to the fullest.
Risks are uncertain events which, if they occur, would have a negative impact on the
project objectives (e.g. cost, schedule, etc.). Opportunities are similar to Risks except
the consequences for the Project objectives are positive.
Risks are identified, usually during a risk workshop, in each of the five TECOP types:
1. Technical Risks
2. Economic Risks
3. Commercial Risks
4. Organisational Risks
5. Political Risks
Each Risk is categorised by the probability (likelihood) of occurrence multiplied by the
severity of the consequence, and the Risks are ranked in a Risk Assessment Matrix
(RAM) that allows the Risks to be prioritised relative to one another.
Once Risks have been identified and ranked, the decision can be made as to whether
or not the Risks can be accepted, transferred, mitigated or avoided. (This is also known
as the 4-Ts: Take, Transfer, Treat, Terminate).
All projects should have a Risk and Opportunity Register. For Projects above $50mln
this is Mandatory. For Projects above $50mln the Risk Register shall be maintained in
EasyRisk. In the Risk Register all Risks and Opportunities shall be recorded, assessed,
assigned an owner, and possible mitigation steps and timing. The Risk Register shall be
regularly reviewed and updated, particularly at the start of each Project phase.
The specifics of how the Risk Management process will be conducted by an individual
project (or portfolio of smaller, similar projects) are documented in the Project/Portfolio
Risk Management Plan and/or the Project Execution Plan (PEP), specifically:

The ongoing process of identification, review and (re)assessment of risks relative to

project objectives,

roles and responsibilities that enable risk management,

how risks will be managed, and

how and when risks will be reviewed, reported and communicated.

As part of assurance, the project team must also be able to demonstrate that

The Risk Register is being regularly reviewed and updated, and the risk environment
and the effectiveness of actions taken to manage identified risks are being evaluated on
an ongoing basis and

The risks in the Risk Register are reflected appropriately in the project cost estimates
and schedules, including mitigation and Opportunity cost and schedule impacts.
The development of the Risk Register, Risk Management Plan and RAM is the
responsibility of the Project Manager. These deliverables are owned by the Business
Opportunity Manager, and endorsed by the Decision Executive.

5.4

Operations Readiness
Support: UOP4
Operations Readiness (OR) is a focused, proactive and systematic approach to
successful commissioning, start up and normal operation of a new facility.
The Operations Readiness process in PDO is detailed in PR-1612 - Operations
Readiness
The purpose of OR is to assist Operations and Engineering Teams to collaborate and
ensure that Operations requirements in Engineering Projects are made sufficiently
clear, are of a high quality and are met in a timely manner. It is expected that following
the prescribed methodology will ensure that:

OR aspects and concepts are integrated into all phase of a Capital project. Support
Project Manager to deliver the project to the Asset Owner in compliance with the
minimum Operations Excellence standards. Ensure Future Asset Owner is fully
prepared to receive, operate and maintain the facilities.

Right first time commissioning and start-up is achieved.

Reduction in changes / modification to design in the latter stages of projects.

Specified operational performance over the lifecycle of the Asset can be realized.
The OR process includes important sub-processes:

Flawless Project Delivery (FPD), which is mandatory for all projects >$100mln.

Commissioning and Start-Up (CSU) (PR-1159 - Commissioning and Start-up)

Total Reliability (TR) and Technical Integrity (TI) (CP-114 - Maintenance & Integrity
Management Code of Practice)

Logistics and Infrastructure (L&I)

5.5

Management of Change
Support: UEP3
Management of Change is an important factor in ensuring that projects are completed
on time and within budget. Changing the project scope, other than developing and
defining the scope throughout the Select and Define phases and carrying out the
detailed engineering during the Execute phase, should be discouraged in principle and
by definition.
Strict scope management should be applied in order to safeguard the schedule, the
cost and the quality of the project. Any change of scope, or the transfer of scope from
one contractor to another (or one project to another) is subject to formal change control.
Proposals for changing the project baseline documents, scope, quality, schedule and
cost, should be strictly controlled at any point in time in the project once the Select
Phase has been completed.
All projects shall adopt the Management of Change (MOC) procedure PR1247. The
procedure:

Describes the process for controlling and managing technical change during the
concept definition and execute phases of PDO projects.

Sets out a series of key Baseline Value Drivers (BVD) for the projects which
shall be developed during conceptual Select phase and approved by the DRB at
Decision Gate 3 (DG3). If a change occurs through DEFINE an updated set of
BVDs are approved at DG4. These Value drivers are normally captured in the
Field Development Plan, the Concept Select Report, the Basis for Design and the
Project Specification

Describes a structured method of assessing and approving or rejecting changes

against these parameters. A change to the Baseline Value Drivers will either
increase or erode the value of the project and is therefore subject to the MOC. All
changes are documented in a Change Proposal Form.

Defines Approval Levels associated with the varying degrees of change.

Sets up the Change Review Panel consisting of senior project personnel that
meets regularly and acts as the Stage Gate screening and approval body for
change impact. The Panel will review every Level 3/2/1 change proposal and
ensure that all implications of the change are considered before being accepted
or rejected. Periodically, the Panel reviews the list of Level 4 change proposals.

The Project Change Coordinator (usually appointed from Project Services) maintains
the Project Management of Change process.

6 Project Execution Activities

The Project Execution phase commences from FID and usually starts with Detailed Design and
Procurement before moving into Construction, Pre-Commissioning, Commissioning/Start-up
and Initial Operations. Note that each of these activities may overlap:

The PEP, Risk and Opportunity Management and Management of Change (as described in
Section 5) continue to be applied and updated during the Execute phase, while the Operations
Readiness becomes increasingly important.

6.1 Detailed Design

Support: UEP
In the Detailed Design phase the Project Specification developed during FEED shall be
further detailed to the level which is needed for procurement, fabrication/construction,
testing, commissioning and handover. For deliverables to be produced in this phase
refer to SP-1134 - General Specification for Detailed Design and Engineering of Oil and
Gas Facilities.
Key assurance and design reviews are carried out during the Detailed Design phase,
after incorporating any changes to the FEED design basis and actual vendor design
data. It is important that the vendors participate in these reviews so that any
assumptions made in the design are corroborated by them and all controls and
safeguarding issues in vendor packages are addressed to PDOs satisfaction.
It is important that minimum changes are made to basic schemes, philosophies,
material, strategies etc in the Detailed Design. Any such changes shall be subject to
rigorous Change Control.
When the Detailed Design deliverables are developed to a reasonable level of detail, a
Constructability Review shall be done with participation from experienced construction
personnel. For Green field projects this may be done in a 3D PDMS model review. In
Brown field projects a site review in addition to a 3D model review will be required. For
major or complex projects, the benefits of 4D modelling should be evaluated.
During the Design the contractor will be expected to set up a Material Management
System including tracking, receipt, handling, storage and preservation and installation.
The use of Radio Frequency ID (RFID) tagging is recommended.
It is important to set up a Commissioning Team at the early stages of Detailed Design
and involve them in the review of Process schemes and participate in reviews such as
HAZOP to ensure the requirements of Commissioning are incorporated in design to
enable Flawless Start up. For large complex projects early commissioning planning
input is required in the Front End phase of the project, as the commissioning by
systems may determine the packaging of the facilities scope in FEED and subsequent
execution phases.
The Detailed Design scope shall also include development of Commissioning and Start
up procedures, Operating and Maintenance manuals, setup of the Construction
Completion Management System (CCMS), SAP Plant Maintenance System, HSE case,
Safety Critical Elements, etc. Close-out of the Detailed Design phase includes handover
of these deliverables to the Operator in the correct data format.

6.2 Procurement
Support: FPO
The Procurement phase may begin before Detailed Design, particularly for Long Lead
materials and equipment. However, the other procurement will commence during the
Detailed Design phase and continue into Construction.
Procurement is discussed in more detail in Section 7 and the Quality Assurance and
Control aspects are discussed in Section 9.

6.3 Construction

6.3.1

Construction Definition
Support: UEP
In PDO construction activities are usually contracted out to third party companies. The
size of construction scopes/projects varies from the very small plant modifications to
multi-million dollar construction projects, involving a large workforce and construction
periods of three or more years. Contracting mechanisms vary depending on size and
complexity of the work ranging from agreed day rates to lump sum prices.
Key Construction activities include but are not limited to the following:

Input in design and confirmation of work scope.

Site establishment including offices, lay down, specialist storage, welfare facilities, local
fabrication areas, workforce accommodation (e.g. onshore camp) supply base and
staging points.

Set up and maintenance of Material management system including tracking, receipt,

handling, storage and preservation and installation.

Identification and recruitment of competent contractors and resources and where

applicable the development of local content strategies and plans.

Construction sequencing and planning

competencies of personnel.

Job hazard analysis and Development of Construction methodologies e.g. stick build
versus modularisation strategies.

Development of work packs and inspection and testing plans.

Fabrication of structures, piping and installation of major items of equipment e.g.

vessels, compressors.

Specification and procurement of specialised installation/construction equipment e.g.

heavy lift equipment.

Logistics associated with the mobilisation of personnel, equipment and materials.

Mechanical completion leading on to Pre-commissioning of all utility and process

systems (Refer to sections 5.6 onwards for Mechanical Completion and Commissioning
definitions). Following pre-commissioning, handover to the Commissioning and Start-up
(CSU) Team for live commissioning , start up and operations.

and resource loading, including levels and

6.3.2

Construction Objectives
Support: UEP
-Overall: To construct the Project
as per the approved design drawings,
specifications and standards in a manner that ensures the overall project
objectives are met, typically including specific targets set for cost, schedule ,
HSE, quality and local content:
-

Safety: To design and construct the facility in a manner that minimises risk to
the construction workforce during construction and ensures a safe and orderly
start up on completion.

Schedule: To develop and pursue a proactive, realistic and sufficiently detailed

execution plan in line with overall project objectives that effectively utilises
available design deliverables labour, materials and equipment in the most
efficient manner.

Quality: To maintain rigorous quality assurance and control on all construction

activities, to ensure full compliance with project technical specifications and
standards and allow timely and efficient (pre)commissioning and start up, as
per overall schedule.

Cost: To execute the project within budget and to continuously look for the
most cost effective implementation options.

Local Content: To meet the Project local content requirements and support the
development of local capability.

Management of Change: To manage and control changes which occur during

construction (e.g. site queries/clashes) to minimise impact on Cost, Schedule,
Quality and other project objectives.

6.3.3

Construction Planning
Support: UEP3
For reliable project execution planning a Level IV Detailed Construction Schedule shall
be prepared soon after the start of the detailed design. This level IV is typically
prepared by the main Construction contractor, shall cover all subcontractor construction
activities, shall be fully aligned and integrated with the design and procurement
schedule and be fully resourced with man-hours and materials from which a progress
S curve can be constructed. Estimated construction durations shall be based on
proven local productivity levels and realistic resourcing levels. It is vital that a Level IV
Schedule is produced before work starts on site and that the plan is adequately
reviewed by all the disciplines to ensure it is a realistic and robust plan.
The absence of a detailed level IV plan is an indication of poor project planning and
control and delays and re-work can be anticipated.
The Level IV Schedule is used by the Contractor in planning, executing and controlling
his work. A Level IV Schedule can also be used in planning work to be implemented
during a plant shutdown. These detailed schedules typically consist of thousands of
activities and are updated at least weekly and in some cases daily.
The Contractor on medium to large Projects should be reporting against the following
Key Performance Indicators (KPIs) weekly but certainly monthly:

Progress % actual versus planned (this is physical progress NOT cost progress).

Construction milestones achieved versus planned.

Direct man-hours achieved versus planned.

Indirect man-hours to direct man-hours ratio.

Cost Latest Estimate versus planned and commitment.

For the more complex projects the Contractor should also produce a Level V Schedule
which gets down to job card level (see below) and includes all the man-hours, materials,
tools and equipment needed to do a particular task.
For complex multidiscipline construction scope, particularly in large Brownfield type
projects it is good practice to plan the entire construction scope at Job Card or Job
Pack level. A Job Card or Job Pack would contain the following information:

AFC Drawings/Engineering requirements.

Safety Statement/Risk assessment 9toolbox Talks).

Permit to Work requirements (including isolation requirements).

Material requirements.

Scaffolding/Rigging support.

Construction/Execution Check sheets (Quality (QC) Requirements).

System Construction handover requirements/punch lists.

It is important when pre-qualifying construction contractors to make sure they have the
capability in terms of experienced personnel, systems, labour and equipment to
undertake the scope of work being requested.
As a tool to help manage construction safety risks, Shell has introduced a set of
Wisdom packs. These wisdom packs are intended to be used as a job hazard
checklist, specific for the upcoming work phase (e.g. trenching, pipe installation, cable
terminations).
Each sheet has links to applicable Control Framework manual sections, Life Saving
Rules guidance, typical do and dont examples, training material applicable to the
activity, typical risks/hazards associated with the activity and cross-business information
related to the activity.

Sheets are developed for activities in both the construction and fabrication sites and
will be updated on an ongoing basis as deemed necessary.

6.3.4

Mechanical Completion
Support: UEP
Mechanical completion is a milestone achieved when all specified construction work is
complete and acceptance inspection and physical testing is satisfactorily performed and
documented.
Typically, inspection and testing activities performed to achieve mechanical completion
will be carried out on a single discipline basis, by construction work packs, building to
systems / subsystems. Such activities will not require equipment or systems to be
energised, but may include bench calibration of instruments, electrical insulation tests,
electrical continuity tests, hydro testing of pipes and integrity testing of valves.
Mechanical completion will be documented on check sheets known as A check sheets,
which will be generated and managed by the Completions and Certification
Management System (CCMS) to ensure that asset integrity can be verified and
demonstrated. On achievement of mechanical completion, responsibility for the facility
will transfer from those responsible for construction to those responsible for precommissioning and commissioning.

6.3.5

Pre-Commissioning
Support: UEP
Pre-commissioning activities undertaken after mechanical completion, but prior to
commissioning, are to prove and validate the functioning of equipment. Such activities
could involve the introduction of fluids into systems, but not hydrocarbons.
Typically, pre-commissioning activities will verify that documentation to support
mechanical completion is in place, and not repeat work carried out to achieve
mechanical completion. Such activities are carried out on a single discipline basis, by
system / subsystem, and require equipment or systems to be energised, but do not
require the introduction of process fluids. Activities include instrument loop checks,
panel function tests, energising electrical equipment and running motors without loads.
They are documented on B check sheets, which will be generated and managed by
CCMS to ensure that asset integrity can be verified and demonstrated.
At the start of pre-commissioning, CCMS needs to be ready, operational and
maintained up to date and the commissioning Permit to Work (PTW) System activated.
Normal dump flushing is typically a construction activity but specialist flushing and
cleaning, e.g. chemical and hydraulic cleaning, drying, oxygen freeing etc, falls within
the integrated Commissioning Teams responsibility - see SP-2051 - Specification for
Flushing, Pressure Testing, Pickling and Sensitive Leak Testing of Mechanical
Equipment and Piping.

6.4 Commissioning and Start-Up

Support: UOP4
The key principles for Commissioning and Start-up are outlined in SP-2113 Specification for Commissioning and Start-Up (Key Principles). The management,
technical preparation and subsequent execution of facility pre-commissioning and
commissioning activities, up to the point where the facility is ready for Start-up is
described in PR-1159 - Commissioning and Start-up, which also covers start-up and
testing of the facility to achieve steady-state operations and handover to the future
asset owners organisation.
It addresses preparation and execution of commissioning and related activities for all
types of developments, i.e. oil, gas or power generation projects, Greenfield or
Brownfield etc, along with execution considerations related to the execution strategies
adopted.

6.4.1

Commissioning
Support: UEP, UOP4
These activities are those undertaken after pre-commissioning to dynamically verify
functionality of equipment and to ensure that systems, or facilities forming part of a
system, are in accordance with specified requirements to bring that system into
operation.
Typically, commissioning activities undertaken after pre-commissioning will be carried
out on a system basis by a multidiscipline team of engineers and operations staff under
simulated conditions. Commissioning responsibility may necessitate nitrogen and
helium testing, which shall normally be executed by specialist contractors and
supported by the commissioning personnel.
The Commissioning Start-up (CSU) Team will start up and operate the non-hydrocarbon
systems during commissioning activities until these systems are fully proven and
provisional handover to Operations can be carried out. For hydrocarbon systems,
provisional handover will take place after all pre-commissioning and commissioning
activities have been completed up to the point of hydrocarbon introduction. The
Operations group takes responsibility for the introduction of hydrocarbons, the Start-up
activities and operation of hydrocarbon process systems. Co-ordination between the
Operations and CSU is essential and particularly so on Brownfield sites. In this
instance, a Commissioning Leader may report to an asset owner for the duration of
CSU activities.
The Commissioning plan and Start-up sequence shall be developed for the Integrated
Production System (IPS) during the Front-end Engineering Design (FEED) and detailed
design; with clear distinction between non-hydrocarbon systems (e.g. firewater, utility
air, sewage etc) and hydrocarbon systems (e.g. process system, fuel gas, drains/vents
etc.)
At some point commissioning requires the introduction of fluids (process or nonprocess) and operation of the system. This will be documented using a procedure which
shall be compiled specifically for the project and provide for signature on completion of
each step. The procedure shall form part of the Commissioning Management System
(CCMS) to ensure that asset integrity can be verified and demonstrated.

6.4.2

Pre-Start-up Audit
Support: UEP, UEQ, UOP4
For all projects, a pre-Start-up Audit (PSUA) shall be carried out prior to introduction of
hydrocarbons. The PSUA shall be carried out by an independent Function-led review
team, including representation from Operations, Engineering and HSE. UOP is the
process owner for PSUA and co-ordinates all PSUAs in PDO. The audit shall verify key
items such as:

Facilities are constructed as per design;

Operations philosophy is complied with;

Asset Integrity Process Safety (AI-PS) requirements have been met and a Statement
of Fitness has been signed;

Necessary vendor support is identified and scheduled;

Operations staff are sufficiently trained and competent;

Operations Management System (OMS) is operable and ready for steady-state

operations;

Commissioning imperatives are in place and complied with;

Project assurance in place;

HSE-MS is in place.
The Pre-Start-up Audit will be used to demonstrate the operational readiness of the
facilities and systems.

6.4.3

Ready for Start-up (RFSU)

Support: UOP4, UEQ, UEPI, MSE4
RFSU is considered as the point when all activities necessary to support the
introduction of hydrocarbons, including all utility and process utility, safeguarding and
shutdown systems have been pre-commissioned, commissioned and integrity verified.
The verification of readiness for the introduction of hydrocarbons shall require the
contractor / project and the asset owner to agree that all systems, facilities, processes,
skills and procedures required to control, safeguard and support the introduction of well
fluids / hydrocarbons for live process systems testing, and subsequent production
operations, are available, proven and commissioned (function checked and/or
dynamically tested).
All projects shall provide proof of verification of Asset Integrity Process Safety by
means of a Statement of Fitness document prior to start-up.
All the items in this section are executed under the umbrella of Operations Readiness
and Assurance (OR&A) See separate section on this subject.

6.5 Project Close Out

Support: UOP, UEP3, UEPI
Project Close Out is the formal process of recording technical and commercial
completion of a project.
The Project Engineer responsible for a project shall initiate the Project Close Out
process after completion of construction. It is the responsibility of the Project Engineer
to co-ordinate and ensures that all the activities indicated in PR-1150 - Project Close
Out Procedure and Work Instruction are completed and the Project Close Out
Certificate (PCC) is endorsed by all signatories that includes:

SAP TECO transaction -Technical completion of project.

Acceptance signature of completed facility by Asset Manager

List of Surplus Material.

Fixed Assets Created, Fixed Assets Made Redundant & Fixed Assets Data Acceptance.

As Built Drawing Acceptance, in the correct data format.

Details of Outstanding charges & unsettled claims (if applicable).

WBS Level 4 and 5 Close Out (including Design project close out).

Complete project file with all project data in the correct data format.

DEM1 compliance report.

In addition, for all projects >$20mln, the Project Engineer shall produce a formal Project
Close-out Report, detailing the above aspects and any relevant lessons learned.

7 Contracting and Procurement

7.1 Contracting

Contracting Governance Structure

7.1.1

Support: FPO
In PDO all Contracting and Procurement of 3rd party services and materials shall be in
full compliance with the requirements stipulated in CP-129 Contracting and
Procurement Code of Practice and in accordance with GU-425 Contracting and
Procurement Guidelines and PR-1233 Contract & Procurement Procedure.
The governance structure around Contracting and Procurement is provided through 2
different bodies, these are:

Minor Tender Board limit for Goods Procurement above $130k and for Services
above USD 50k to maximum of $2.5mln except for Government Gas
requirements the maximum limit is $650k.

Major Tender Board for all proposals above $2.5mln except for Government Gas
requirements above $650k.

Procurement and Contracting Steering Committee (PCSC) for all proposals

above $10mln

The Role of Tender Boards is to ensure the following:

Representative, qualified, suitable Vendors are invited to bid.

Bids are evaluated comprehensively and fairly.

The process of contracting is conducted ethically and transparently.

Contracts awarded at best commercial value to Company.

Awards are in accordance with Company objectives.

There is consistency of Contract award and implementation.

It is important that Ethics is maintained throughout the entire Contracts process and in
accordance with GU-529 Statement of General Business Principles..
The Project team mandate is to ensure that all essential internal as well as external
project specific approvals are obtained in time to meet the planned project delivery
schedule.
Following is a summary table of MTBC approval requirements. For full procedural
details please refer to PR1233 Contract & Procurement Procedure..

Pre Tender

Contrac
t Stage

Referral Requirement
Contract Strategies
Tender Lists
Company Estimate

Tender Period

Technical Disqualification
Technical & Commercial Evaluation Model
Company Estimate alterations
Opening Commercial Bids
Commercial Clarifications

Con

Contrac
t Stage

Referral Requirement
Failed Tender and CallIn the Tender Bond

tract
Award

Negotiation results
Contract Awards

Contract
Execution

Revised ACV Limits

Suspension/Termination
Annual reviews over USD 10 Million

Variations to Contract

Changes
Significant changes to Terms & Conditions
New scope
Extensions of Time
Claims exceeding Review Limit

7.1.2

Contracting and Procurement Activities &

Deliverables
Support FPO
The table below lists at summary level the Mandatory Contracting & Procurement
activities and deliverables per project phase. This is important in order to ensure that:

The scope of Contracting and Procurement strategy and implementation

activities for all phases of a project are defined and applied with the intent of
delivering goods and services on agreed schedule and at a commercially
competitive price without jeopardising the quality.

Market capability and capacity, category opportunities and local content

requirements are fully addressed in the acquisition of goods and services.

Capital Projects C&P Mandatory Activities & Deliverables:

Identif
y

Assess

Select

** General
Market
Analysis up
to date /
revised.

** Identify major
factors that influence
the project
Execution strategy.
** Identify
standardization and
repeatability
opportunities across
the project portfolio
including category
options.

** Assign Project CP
support personnel.
** In depth and current
market analysis completed.

** Identify ICV
opportunities

** Develop Project
Contracting Strategy
aligned with project drivers
including standardization
and repeatability
opportunities.
** Select appropriate ICV
options
** Identify Procurement List
of Major Long Lead
equipment and critical
materials.

Activitie
s

** Concept Executability
realistic assumptions
(demand & supply).

Define
** CP team fully established and
ready for execute.

**
**

** Contracting strategy updated.

**
Exe
per
Ma

** Define Scope of Work for

execution contracts.
** Risk-based tactics developed
for main contracts.

** M

** Define ICV targets

** B

** Prepare Post-Award Contract

Management Plan.

**
var

** Compile ITT document.

**
con

** RFQ & Award Long Lead

items & Mobilize early works.
** Prepare Tender Evaluation
Plan with approved Technical
Evaluation Model.

** I
com

** P
ma
lev

** C

** Commence Internal &

External approval &
governance process.
** Prepare Contract Plan.
** Provide input into Project
Execution Plan.
** Stakeholder engagement
and acceptance of strategy.

Identif
y

Delivera
bles

Assess
** CP Objectives
and CP
Assessment of
feasible concept
under
consideration.
** Project Category
Assessment (to be
finalized after
Contracting
Strategy
Workshop).

Select

Define

** Pre-Award Contracting
Activities clearly defined
and dates allocated.
** Project resourced.

** Project Contracting &

Procurement Strategy.
** Pricing Scheme from
Contract Tactics Workshop.

**
** C
Do
Pla

** Governance in place.

** Post Award Contract

Management Plan.

**
Tra

** ITT, Evaluation Reports &

Award documentation.
** Long Lead items & early
works Contracts.
** Project Execution Plan.

7.1.3

Contract Owner, Holder & Contract Engineer

Responsibilities
Support: FPO
Three key roles are associated with managing contracts:

Contract Owner:
o

Integrity management of the contract by having level of authority to direct

contracting process to protect overall Company & Asset objectives.

Legally responsible for all aspects of the control of the contract.

Should attend Tender Board presentations to support Contract Holders.

Should at all times be aware of HSE and Quality issues in each contract.

Contract Holder: Shall have single point responsibility for:

o

Activity management of the Contract and verification that controls are in

place.

Advising contractor and/or contractor personnel of activities requiring their

action.

Contract Engineer.
o

Shall support and provide Commercial advice to the Contract Holder during
the development and implementation of contracts.

Contract Holdership Scheme:

It is mandatory for all Contract Holders & Contract Owners to attend the Contract
Holdership Course and to get assessed and certified for competency.
Appointments of Company personnel:

The Contract Owner shall nominate in writing a competent Contract Holder to manage
the contract.

The Contract Holder shall nominate the Company Representative and the Company
Site Representative if required. The responsibilities delegated to them shall be well
defined in writing and the Contractor shall be informed of the same.

The Contract Engineer shall be nominated by his supervisor based on competence.

For further procedural details please refer to the PR-1233 - Contract & Procurement
Procedure (CPP).

7.1.4

Tendering Process Pre Contract Award

Support: FPO
The tender process shall be carried out in compliance with the PR-1233 - Contract &
Procurement Procedure (CPP) and is summarised as follows:

Planning & Scheduling

o

The Contract Holder shall prepare the pre & post contract plan & schedule.

Development of Contracting Strategy

o

Contracting Strategies shall be developed for contracts with an estimated

value in excess of US$10 million. The Contract Holder is responsible for the
development of the Strategy and has to seek Tender Board endorsement.
PCSC (Procurement and Contracting Steering Committee) approval is
required prior to visiting Tender Board.

These Contracting strategies shall clearly identify;

o The top five solution attributes or objectives that the project will strive
to achieve referred to as the Value Drivers (and derived from the
Project Drivers).
o Alternative contract scenarios/options for delivering the project
requirements.
o Tactics Workshop to identify the contract pricing structure to be
utilised.
The output will be in the form of a Contracting Quilt see example below showing
possible different contracting options for various Capital Project phases:
PDO Projects Portfolio Contracting Strategy

Selection of Tenderers
o

There are various options for selecting Tenderers to participate in a tender

such as PDO Public Tender (PPT), Prequalification, Registered contractors,
Pre-select and Unregistered contractors. The default approach is PDO
Public Tender. The option is selected based on the Preliminary Cost
Estimate and Risk Profile of the contract.

The Contract Holder shall seek Tender Board endorsement of the selected
Tenderers.

Tender Document Preparation

The Tender & Contract documents are prepared by the Contract Holder and
Contract Engineer.

The Contract Holder has the overall responsibility.

The Contract Engineer shall be the single focal point for all correspondence
with the Tenderers at the pre-contract award stage.

Tender Period
o

The Tender document has to be issued only to the approved Tenderers.

The Contract Holder has to ensure that all Technical queries from
Tenderers are clarified.

All Tenderers have to be informed equally of any changes in the tender

document in the form of addenda.

The Contract Holder has to arrange for pre-tender submission meetings

and Site meetings if necessary.

The Contract Holder has to prepare the Technical Evaluation Model and the
Contract Engineer has to prepare the Commercial Evaluation Model.

The Models have to be presented to Tender Board for endorsement.

Tender Evaluation
o

The Contract Holder carries out the Technical Evaluation and the Contract
Engineer carries out the Commercial Evaluation. Results of evaluation with
award recommendation are to be presented to Tender Board for
endorsement.

7.1.5

Execution Process Post Contract Award

Support: FPO
Post contract award processes are covered in PR-1233 - Contracting and Procurement
Procedure.
Post Contract award the Contract holder shall be aware of the following steps and
minimum requirements:

Mobilisation
o

The Contract Holder is responsible for ensuring that the Mobilisation is

carried out in accordance with Contract and HSE Procedure PR-1171 and
that Contractor Quality and HSE management Plan are approved and in
place.

Contract Holder has to ensure that the Kick-off meetings (Internal &
External) are held.

The Contractor cannot start work unless the HSE Commencement

Certificate is issued.

Execution
o

The Contract Holder has to manage the progress of the work, the
performance of the Contractor and has to be competent in identifying &
managing contract risks and claims.

The Contract Holder has to monitor spend against approved contract value
(ACV) and timely address MTBC in case of foreseeable overspend.

The Contract Holder has to minimise the changes in contract and claims.

For contract above $10M the Contract Holder has to ensure that Annual
Reviews are prepared and presented to Tender Board.

Completion and Close out

o

On completion of the contract, the Contract Holder has to ensure that the
Completion certificates, the Site Restoration Certificates and the Final
Account are issued, As-Built drawings & data are received from the
contractor and the Contract Holder has to prepare the final performance
report of the contractor.

7.2 Procurement, Materials Management & Logistics

7.2.1

Procurement
Support: FPO
Procurement of both materials and services are covered in PR-1233 - Contracting and
Procurement Procedure.
There are four Procurement Options that a project may decide to adopt as part of its
procurement strategy, namely:
1. EPC Projects: Contractor is fully responsible for all aspects of projects
procurement requirements. In this case, PDO involvement is limited to providing
technical support and other relevant clarifications on the materials
requirements.
However, PDO may decide (depending on the approved contracting strategy) to
place the Purchase Orders (POs) of the long lead items then novate the POs to
the EPC Contractor at the award time.
In addition, PDO may opt to Tender the long lead items during the pre-award
phase then handover, at post award, the Tender to the EPC Contractor who
places and manages the PO. In all cases management fees for placing the PO
are included in the EPC Lump-Sum Price.
2. EpC (small p) Projects: This is similar to option 1 but PDO is responsible for
procurement of the critical items. For this type of work, PDO shall arrange
procurement of such materials and free issue to the contractor for installation as
appropriate.
3. EMC/ODC Projects: Contractor performs procurement on behalf of PDO. For
this type of jobs, the respective contractor is expected to use PDO SAP/IX2
systems to perform both the Sourcing (Tender) and Procurement of materials.
PDO will pay the material supplier (not the contractor) directly after the
successful processing of goods receipting in SAP. Good receipting and
transportation of materials to contractors storage sites or work locations will be
done via PDOs nominated LSP (Logistics Service Provider).
4. Stock and Project specific items: PDO C&P Organisation performs the
procurement. This is mainly for standard or project specific items that need to
be stored at PDO logistics warehouses, prior to being (free) issued to
contractors. For stock items, the project pays for the material at the time of
goods issue to the project, while ordering of materials as project items
requires upfront payment by project at time of goods receipting.

7.2.2

Vendor List Control

Support: FPO, UEQ
The Approved Vendors, Manufactures Equipment (AVME) list is mandatory to all assets
and projects in PDO. In order to provide vendor registration transparency and clarity
PDO has developed and implemented a formal framework including but not limited to
CP-129, PR-1233, GU364, GU398, Vendor Registration and Complaints Board (VRCB)
and AVME listing : A listing of approved vendors, manufactures who supply products
and/or services to PDO Assets with Product Group Service Codes (PGSC). The listing
is maintained and managed by FPM / FPS, although the CFDHs are the
custodian/authorized approvals to register/deregister the vendors from the AVME list.
Prior to inclusion within the AVME/PGSC (used interchangeably) listing the applicant
vendor must be formally approved and capabilities verified.
A Vendor Registration and Complaints Board has been established in order to
implement and operate a formal framework of Vendor registration transparency,
evaluate received complaints and review, approve/reject registration and suspension/de
registration requests (prior to submission to the Tender Board).
A yellow, red card system has been developed and is being implemented to manage
issues associated with non-performing Vendor and/or Manufacturer.

7.2.3

Inventory Management
Support: FPC3
CP-193 - Inventory Management provides a mandatory set of guidelines pertaining to
stock levels determinations to ensure that PDO inventory levels are maintained at an
appropriate level consistent with both Company and accounting policies and required
customer service levels.
DEP 70.10.90.11 Gen Spare Parts provides guidelines for the management of spares.
In PDO, all commissioning & insurance spares shall be treated as Property, Plant &
Equipment and orders placed by project under CAPEX. Initial and normal operation
spares shall be ordered under stock account as OPEX and users will be charged on
consumption basis.

7.2.4

Logistics Services
Support: UWL
Logistics services comprise the following:

Cargo haulage and handling services, including water haulage, loading/unloading and
rigs & well test units moves.

Warehousing storage and preservation of all types of material including special projects
material. For further details please see PR-1858 Procedure for Material Handling,
Storage and Preservation

Passenger Commuting by land and air, including scheduled and chartered flights,
international land transport, directors land transport and interior land transport
(villages).

Fleet Management including pool and permanently allocated vehicles, ad-hoc and
specialised and emergency vehicles.
With the exception of materials storage & handling (warehousing) and some coastal
driving activities, all logistics services are contracted out. Logistics employees in UWL
are responsible for managing and monitoring these contracts. The contractors are
responsible for executing the logistics services in accordance with PDOs contract terms
and conditions. Materials storage and handling is managed directly by Logistics,
although warehouse/yard labour resources are contracted out.
More details on Logistics can be found in CP-132 - Logistics Services - CoP.

7.2.4.1

Fourth Party Logistics (4PL)

Support: UWL
PDOs Cargo Haulage strategy has the primary objective of reducing km driven through
better load utilization, and reduction of logistics costs through consolidating Primary
(PDO) and Secondary (Service Contractors) Logistics and managing all cargo
operations (including rig moves) via a contractor consortium working on behalf of PDO,
who will in addition, integrate the system nationally and regionally so that other
companies and governmental agencies can take advantage of it. This strategy is known
as fourth party Logistics, 4PL.
All cargo haulage and related activities, such as Rig moves and all EMC-ODC materials
transportation are channelled into the 4PL by default. For all those services not covered
within 4PL scope, customers have to obtain a waiver by filling in a waiver form available
on the Logistics website and get it signed by the Logistics CFDH unless otherwise
stated in any other project strategy development.

8 Project Services
Support: UEP3
Project Services will provide resources, processes, systems and tools to deliver:

Robust estimates that allow for the uncertainties of our complex reservoirs and
novel development options in a volatile market.

Realistic achievable plans that still provide challenge to our project teams.

Effective controls that manage the work and show where we are and future
possibilities.

Valid up to date project management information that allow informed

management decisions.

Useful close-out processes that capture the lessons and data for future
improvement.

Benchmarking against our peers to demonstrate top quartile performance.

Active project wide risk management and analysis.

Baselined cost and schedule that enables active change management; impact
of changes to be communicated and understood.

Application and consistent use of Standards, Guides, PCSPs and adherence to

PDO business processes.

The CFDH for Project Services is the TA1 for the above areas and is responsible for the
setting and maintenance of the associated standards and processes. Once their
competence is proven, the TA1 appoints TA2s who sign off all their Project Services
documents specified as such in DCAF.
Project teams are required to have the above subject areas covered as appropriate to
the current project phase, with suitably competent staff, either directly or as part of a
matrix, as agreed with the CFDH.
Depending on the organisational make up of the project team, responsibility for
Information Management may also reside with Project Services on a day to day basis,
while under the overall management of the Engineering and Operations Information
Management office (UEPI), as described in section 11.

8.1

Planning and Scheduling

Support UEP31
Failing to Plan is Planning to Fail (Alan Lakein)
The objective of work planning is to develop a schedule for the project that is:
o

realistic, yet challenging;

transparent with regard to understanding the critical path and the possible
impact of project risks;

at the appropriate level of detail to enable effective monitoring and control;

owned by the Project Team and approved by their Decision Review Board
(DRB); and

based on historical performance norms, yet taking into account as best as

possible the impact of current market, location factors and any other resourcing
constraints.

Projects should develop an integrated schedule during the Assess phase, which will be
refined as the project progresses through Select and Define. It should be based on
appropriate lower level schedules and used as the basis for all progress measurement
plans and reports. It should reflect all project activities needed to realise the project
objectives at the appropriate level of detail.
It is essential that the basis on which any schedule is made is clearly defined and
recorded, so that any consideration of the schedule is in the context of these
qualifications. In particular, decision makers should be made fully aware of any
limitations or risks inherent in such plans.

8.1.1

Definitions
Planning: Laying out the course of action, including all interfaces, studies, surveys,
reviews, decisions, approvals etc, to achieve the desired objective.
Scheduling: Incorporating time and resources into the plan to form a schedule network
from which control mechanisms can be derived.
Work Breakdown Structure (WBS): A deliverable-oriented hierarchical decomposition of
the work to be executed by the project team to accomplish the project objectives and
create the required deliverables.

8.1.1.1

Work Breakdown Structure

Typical steps in developing the WBS are:
o

divide the assets to be delivered into components (e.g. facilities, offplot,

pipelines etc);

identify the activity types that need to be done on each of the assets (concept
definition, design, procure etc);

map the activities and assets to identify unique activities that need to be
managed;

define work packages for these individual activities (e.g. design compressors)
or groupings of them (e.g. design topsides); and

it may be helpful to break down the activities by project phase.

The design of the WBS should be a collaborative effort between the Project Engineers,
Project Services, Supply Chain and Finance as these parties have a vested interest in
ensuring that the WBS is adequate to meet their needs for planning, monitoring and
control.
Other factors that may influence the design of the WBS are the:
o

the project Contracting Strategy;

standard cost structures used in SAP;

granularity of cost data required for asset definition in the financial system.

PDO will develop local standard WBS templates that are suited to the type of projects
executed. Use of standard WBS templates, where possible, facilitates the comparison
and benchmarking.

8.1.1.2

Costs, Time and Resources (CTR)

The Costs, Time and Resources (CTR) required to execute the work package activities
in line with the proposed execution strategies should be estimated, and should be
captured on CTR sheets. It is important that the basis for the estimates is clearly
recorded.
The CTR sheets are combined to form a CTR catalogue, which forms the basis for
monitoring and controlling the work at a later date. The CTR sheets and catalogue also
provide clear documentation of the project scope, and provide a mechanism for
communicating and gaining agreements with the customer.

8.1.2

Schedule Development
Previous similar project plans and templates may be used to help develop a new project
schedule. The normal steps in developing a schedule are:
o

Activity Definition: identifying the specific schedule activities that need to be

performed to produce the various project deliverables, using the WBS as an
input;

Activity Sequencing: identifying and documenting dependencies among

schedule activities, creating a precedence network;

Activity Resource Estimating: estimating the type and quantities of resources

required to perform each schedule activity (CTR development);

Activity Duration Estimating: estimating the number of work periods required to

complete individual schedule activities (CTR development); and

Schedule Development: analysing activity sequences, durations, resource

requirements and schedule constraints to create the project schedule
determining the start and finish dates for the project activities.

8.1.2.1

Planning Levels
Schedules for controlling and monitoring large projects are produced to different levels
of detail.
Level 1 Summary Schedule (also called Project Management Schedule)
Includes the main functional activities (e.g. design, procurement, fabrication,
construction, commission) for the total duration of the project for the main hardware
items (onshore plant, pipelines) as well as significant business activities (e.g. approvals,
strategy formation, marketing etc) and any key milestones (e.g. FID, first production).
This level of schedule usually fits on a single page and is often used in project status
reports as a simple tool for conveying overall schedule status. This level of schedule is
not detailed enough to show the true critical path but often a high-level, simplified
depiction of the critical path will be shown on this schedule to help communicate which
elements of the project the critical path runs through.
Level 2 Integrated Master Schedule
This is a network-driven schedule, which breaks the project down by phase and
elements and identifies the contractor interfaces. The critical path should be made
visible and major milestones should be identified. This schedule sets the framework for
detailed schedules and resource scheduling.
Level 3 Detailed Integrated Schedules for Major Project Phases
Separate Level 3 schedules are typically prepared for the major phases of a project,
such as engineering and procurement, construction and system testing, and
commissioning, start-up and performance testing.
This level of schedule provides a more detailed representation of the activities,
interfaces and milestones involved within these phases of the project and is better
suited for monitoring progress versus plan. Often this level of schedule is maintained by
the owner, as the owner is in the best position to fully appreciate the interfaces of the
various owner and contractor resources, and the involvement of the owner and partner
organisations in such things as approvals and operations support and handover.
Levels 4 and 5 Work Lists and Detailed Schedules
These levels of detailed planning and scheduling usually lie within the contractors
domain and are used for planning, executing and controlling the contractors work. They
are used for detailed planning, such as the scheduling of work to be implemented
during a plant shutdown or the scheduling of work in a fabrication yard. These detailed
schedules may consist of thousands of activities and are typically updated at least
weekly and in some cases daily.

8.1.2.2

Activity Planning Tools

Specialised project management software is widely used to assist with schedule
development and control. PDO has selected Primavera P6 as the standard project
management software for projects and allows Integrated Activity Planning.
The project management software uses the schedule model and various analytical
techniques, such as the critical path method, to calculate the early and late start and
finish dates, and scheduled start and finish dates for the uncompleted portions of
project schedule activities. The project management software makes the critical path
activities for the project visible.
Activities within the Planning Tool are assigned to specific calendars (e.g. 5 day week,
7 day week, 24 hrs working) to ensure the activity durations from the CTR catalogue are
accurately translated into the correct start and finish timings in the planning software.
The project team should review and validate the schedule logic and the critical path
prior to the project schedule being finalised and accepted as the performance target for
the project.

8.1.2.3

Optimisation
The project management software also provides the functionality to evaluate options for
accelerating the schedule, using techniques such as crashing and fast tracking. The
impact of resource constraints can also be evaluated using techniques such as
resource levelling. The project team should be closely involved in any such schedule
optimisation exercise to ensure that the schedule stays grounded in reality.

8.1.2.4

Risk Analysis
Schedule risk analysis is used to evaluate and communicate the possible range of
schedule outcomes taking into account the impact of project opportunities and risks.
The basic premise of schedule risk analysis is that the project team estimates not only
the most likely activity durations, but also the likely range of activity durations based on
the identified project opportunities and risks. These likely ranges of activity durations
are then modelled using the scheduled risk analysis software. The software uses Monte
Carlo simulation techniques to predict the expected (~P50) activity durations, as well
as the P10 and P90 durations (see 8.3.5).
This allows the project team to consider and communicate a range of possible project
schedule outcomes instead of just a single schedule outcome. This analysis also helps
the team evaluate what risk mitigation and avoidance strategies and tactics can be used
to improve the chances of a desirable schedule outcome.
Any schedule risk analysis should be carried out before cost risk analysis. This is
because schedule drives cost and not vice versa. The standard software that PDO has
selected for schedule risk analysis is Primavera Risk (previously Pertmaster).
Schedule risk analysis shall be carried out for all projects >$100mln.

8.1.2.5

Checks and Reviews

The following checks should be applied when performing scheduling activities:
o

the project objectives are clearly stated and understood by those preparing the
schedule (e.g. project policies, strategies, philosophies, objectives and
constraints);

there is an appropriate WBS for the project and it has been used as the basis
for organising the schedule. The WBS is logical and it avoids overlapping
activities;

project approval processes are defined in the schedule, including Company,

partner and statutory approvals, and permits and consents;

the project scope and the basis for the schedule development are well defined
and documented;

the overall project duration and key activity durations are benchmarked against
Company (and, if required, external) experience;

key resource constraints (e.g. drilling rigs/ shutdowns) have been considered in
the schedule development, including shutdown timings;

the schedule logic and constraints are realistic;

the resulting critical path is logical and correct. The activities just off the critical
path (e.g. activities with less than 1 month of float) have been evaluated to
determine how small changes in their durations or logic could impact the critical
path;

several key interim milestones have been identified so that they can be used
during the life of the project to aid in progress measurement;

a schedule risk analysis has been performed and is closely linked to the key
risks in the project risk register;

representatives from all segments of the project team are involved in the
schedule development;

each schedule is peer reviewed to ensure accuracy and completeness; and

a team of knowledgeable engineering, construction and project control

individuals, including the designated Project Manager, should be assembled to
review the schedule.

A formal Estimate and Schedule Assurance Review (ESAR) shall be completed prior (34 weeks) to VAR 3 for all projects with a total Capex greater than $200mln (including
drilling), and at least prior to VAR 4 for projects with a Capex larger than $100mln.

8.1.2.6

Owners Schedule Development

Responsibilities
To properly plan and control a project, substantial effort is required from the owner as
well as the contractor. Typically, only the owner has full knowledge of the full scope of
work, as the owner is usually responsible for undertaking some activities such as frontend development and study work, surveys, organisational, commercial and other
management activities. The owner is usually responsible at the back end of the project
for commissioning, start-up and handover to the operating organisation and therefore a
full project overview is usually not obtainable outside the owner organisation.
Commissioning is usually driven by system completion, hence the structure of the
schedule must have the flexibility to change from a construction/ area to commissioning/
system focus.
Regardless of the contracting strategy, the owner should develop and maintain an
overall project schedule of sufficient detail to allow the full project scope to be properly
planned, monitored and controlled. This should be at least a Level 2 schedule. The
owner should specify the content, format and organisation of the more detailed
schedules required of the contractors so that the monthly updates of the owners
schedule and subsequent schedule analysis can be performed as efficiently as
possible.

8.1.3

Existing Assets and Integrated Activity Planning

When implementing a project on an existing asset, the project management task is to:
o

integrate the new project activities with the other approved activities to be
executed on the asset, taking account of resource constraints; and

prepare the detailed execution procedures.

Primavera P6 allows all the activities on an Asset to be integrated into one plan.

8.2 Cost Estimating

Support: UEP32

8.2.1

Capex Estimates
The quality of an estimate is largely determined by the following:

the project scope definition or development scenario being considered should

be as complete and as accurate as possible.

a well-considered and sufficiently detailed Project Execution Assessment/

Strategy (PES)/PEP as appropriate for the development phase, should be
available even in preliminary format for early estimates;

the associated risks and opportunities of the project should be recognised and
reflected in the estimate;

complete and correct local cost data, at an appropriate level of detail, should be
available covering:
o

equipment;

bulk materials;

labour and engineering services;

drilling rigs and services;

other relevant data should also be sought such as:

import restrictions;

duties and taxes applicable;

local content targets etc.; and

adequate contingency levels, based on the risk profile of the project

and historical performance data, are being used.

All estimates should correspond to the requirements for the ORP stage and the defined
accuracy levels, which are highlighted in the below table.
ORP
Stage

Type

Accuracy

Engineering prepared

(target)

DG1

+40%/-25%

at end of Identify phase

DG2

+25%/-20%

at end of Assess phase

Preliminary 2

+20%/-15%

at end of Select phase

DG3

Final 2

+20%/-15%

at end of BFD phase

DG4

+15%/-10%

at end of Define phase

+10%/-5%

During 'Execute' phase

Table: ORP stage vs. Estimate Accuracy Target

Be aware that immature engineering deliverables are a major risk for under-estimating
the true costs of a project. The DG3b estimate must be based on a signed off Basis for
Design. Whilst the above table is a guide, the real accuracy of the estimate should be
assessed by either performing a TECOP analysis or executing a probabilistic risk
assessment (see 8.2.5).
Any estimate that is classified as Type 3 should for at least 70% of the build-up be
supported by costs coming from Frame Agreements, Bids, Quotes, etc. to secure the
robustness at DG4. Only a Type 3 estimate endorsed by the Technical Authority (TA) is
suitable for a Budget proposal, request or award.

8.2.2

Cost Estimate Preparation, Assurance and

Approvals
The Cost Estimating applications CES, Capco$t and CCES are used in PDO by the
engineers and cost estimators to produce their estimates for Oil & Gas projects. In 2012
Front End cookbooks to assist the estimation in early phases of a project will be
developed. For off-plot flowlines and well hook-up work, annual catalogues are
produced by the Function for engineers to use. Well Engineering maintains a Well
catalogue with actual Drilling & Completion cost/duration per field/cluster for future wells
in the same area.
All estimates require assurance reviews and approvals before presentation to the DRB
or Tender Board authorities as outlined in the table below.
ORP Stage

Indentify
&
Assess
DG1

Identify
&
Assess
DG2

Select
DG3a

Select
DG3b

Define
DG4

Execute

Estimate
Type
Purpose of
estimate

Type 0

Type 1

Type 2
(initial)

Type 2
(final)

Type 3

Type 4

Identify
opportunity

Compare
opportunity

Select
option

Budget
proposal or
TB Contract
Award

Changes

Estimating
Tool
Cost
Contingency

CES +
cookbooks

CES +
cookbooks

Capco$t

Costs
aligned with
BfD go
forward to
FEED
Capco$t

Contractor
quotes

Contract
data

TECOP

TECOP

TECOP

Concept/
Process
Eng

Concept/
Process
Eng

Project/
Function
Estimator
ESAR Peer

TECOP,
Proby
>$100
Project/
Function
Estimator
ESAR4
>$50mln
Function
TA2

TECOP

Estimated by

TECOP,
Proby
>$100
Project/
Function
Estimator
ESAR3
>$ 200mln
Function
AT2

Assurance

NA
NA
Project/
DCAF
Asset TA2
endorsement
Table: Estimate overview preparation & assurance

Project
Estimator
Project
estimator
Project/
Asset TA2

Please note project teams must schedule their assurance reviews at least 3 months in
advance with the UEP/3 Function.

8.2.3

Project Cost Estimates Build

A Capital cost estimate is built up from the following components (see diagram): and
use various type of money, for example: Constant Value Money (CVM), Money of the
Day (MOD) or Real Terms (RT).

Diagram: Build-up of Project Estimate

The 50/50 estimate contains the following cost categories:
Base estimate (incl. Allowances, Provisional Sums and Owners Costs)
Future Market (market factor by indices)
Contingency
EPC Premium
Inflator (Escalation)

8.2.4

Base Estimate
The Base Estimate is first calculated in Estimate Date Money (EDM), which is NOT
the date an estimate is compiled, but the date when the estimation database was last
re-baselined. EDM is then converted to the Money of the Day (MOD) by application of
inflation indices referenced to the Cost Reference Date (CRD).
The Base estimate also includes allowances, usually expressed as percentages, to
allow for the known unknowns for example design growth that could occur in future
phases.
The Base Estimate is recorded in $US and MOD. Within a Base estimate some
equipment quotes may be in another currency, these should be converted to $US using
the prescribed exchange rates. To establish MOD costs the phased estimate is
converted with specified inflation factors. Both Exchange rates and inflation factors are
confirmed each year by UEP/32 in the Programme Build guidelines.

8.2.4.1

Base Estimate - EMC-ODC work

Cost Estimates for the Integrated Engineering and Construction Services (EMC-ODC
contractors) are produced by the Contractors. Company cost estimators are tasked with
the verification and endorsement of these cost estimates, to support for the Project
Engineers approvals. The EMC-ODC contractor will produce all estimates for work
>$50k in the web based application Contract Cost Engineering System (CCES),
maintained by the Function.

8.2.5

Contingency - Cost Risk Assessment

To achieve a 50:50 cost estimate in a project & pro-forma estimates Contingency is
added to the Base estimate.
Contingency is to cover for scope omission errors that may emerge in the next project
stage and any as yet unidentified risks. Contingency should in general decrease in the
later project stages as the scope definition and execution strategies become more
mature.
All estimates including type Updated 2 shall be subject to a deterministic cost risk
assessment covering the Technical, Economics, Commercial, Organisation and Political
(TECOP) risks. This exercise is mandatory and is supported by the Function. The risks
and opportunities identified through the TECOP exercise are input to the deterministic
accuracy and contingency tool maintained by the Function.
For type 3 & 4 estimates with cost larger than $100mln a Monte Carlo simulation shall
be carried out by the Function, in order to predict the cost probability distribution. A
deterministic TECOP assessment shall also be run in parallel as a check on these
probabilistic results.

8.2.6

Future Market & EPC Premium

As the Base estimate is for a specific scope and for a specified duration the costs for
commodities over time may fluctuate because of market movement. To compensate for
fluctuations of volatile markets a Future Market allowance is introduced to the estimate.
Future Market indices are applied to the phased Base estimate.
The Function monitors published market trends and determines the Future Market
indices to be used on Company estimates. Lastly an EPC contracting premium is added
that is determined by the Function and FPB (Contracting & Procurement). These
factors, Future Market and EPC Premium, are published in the Programme Build
guidance note once approved by the Contracting Tender Board (TBC).

8.2.7

Cost Analogues and Benchmarking

Estimators often use various analogues to establish the costs of estimated items with
reference to a suitable metric (for example weight). Analogues metrics are often
referenced to Quantities (Qty) and Unit of Measurement (UoM) used for Progress
Management of the Plan and Schedule.
Benchmarking is executed on project activity level, either by internal or with external
projects, which is not a normal estimator responsibility. The project team must provide
clear benchmarks for references at ESARs and PEER reviews.

8.2.8

Estimate Data Collection

It is key that the Company estimating systems are kept live with feedback from ongoing
and completed projects. Many projects are completed by lump sum contractors who are
reluctant to share costs information, therefore the provision of detailed feedback of
costs data must be included in the tender instructions. The WBS, CTR and C5 contract
price breakdown structure (incl. Procurement details) for any project or contract shall be
developed in such a way that at various milestones through the project life actual cost
are fed back to the Function to update their estimate databases for future
projects/contracts. This requirement is valid for any EPC, EpC, EC and E or C
Contracts, and single Purchase Order (PO).
Additionally Quantities tables used for the management of progress shall be
maintained and fed back at various quantity updates/milestones to the Function. See
Project Guide 60 Data Collection procedure that describes this process in more detail.

8.3 Project Controls

Support: UEP31, UEP32

8.3.1

Introduction
The key focus areas of Project Controls are

Management of Costs;

Management of Progress;

Management of Risk & Opportunities;

Management of Change;

Project Reporting;

Project Closeout;

Management of Resources.
Each is covered in a separate section below.
Project Controls provide a series of processes, based on these six focus areas, which
assist in executing a project in the most efficient and economical way. Secondly, but not
less importantly, project controls provide the mechanism to inform management at any
point in time during the project about the actual status of the project, both in cost and
time, so that, if required, corrective actions can pro-actively be prepared and ultimately
exercised in a timely fashion.
The Project Controls Plan (PCP) documents the minimum standards of project controls
systems and processes required to manage the project and provide a clear and concise
explanation of how project controls shall be implemented on a project including all key
references to applicable project procedures, standards and guidelines.

8.3.2

Management of Cost
Support: UEP32
Cost control during any phase of a project comprises the setting up of the cost
procedures and systems and the monitoring and the reporting of the actual project
expenditure and commitments against the approved project budget. The early
identification and registration of deviations together with the following of trends enables
project management to control the project.
All project activities should be broken down into controllable items. For Cost Control
purposes it is important that Cost Estimates shall be carried out in accordance with the
approved Cost Breakdown Structure (CBS).This will ensure that the data can be
retrieved for Cost Control purposes in a systematic manner.
Regular reporting of the Value of Work Done, Commitments and assessment of the cost
of work remaining should detect any potential over or under expenditure in good time
for proper management action. Project progress is continuously monitored, in physical
and financial terms. In addition to these primary objectives of cost control throughout
the various phases of a project, it should provide data for:

Capital expenditure phasing reflecting the anticipated progress of the Value of Work
Done.

Cash flow forecasts, based on the expenditure phasing taking due account of the
payment conditions.

A breakdown of the value of the final fixed assets.

Future estimating and planning purposes.

Contingency management is a key part of cost control. As change occurs, contingency
should be run down and trended to ensure the correct amount of contingency is
maintained. At 6 monthly intervals the remaining project contingency must be reassessed to ensure there are sufficient project funds available to pay for the probable
outstanding risks.
PDO uses SAP to hold the financial data of all its projects, including budget, VOWD and
forecasts. It is important that SAP is maintained by the Project team to accurately
reflect the latest cost status of all projects, even if the detailed cost control is managed
in other systems.

Management of Progress

8.3.3

Support: UEP31
Schedule control is essential to project success, enabling measurement and report
progress relative to the promises made. An effective control system will also provide
timely warning of variances to inform stakeholders and allow remediation.
Schedule control requires scope and execution control. Signs that the schedule is
deviating from plan is usually evidence that the scope and execution are not under
control and/or that external circumstances have not been fully understood and
accounted for.
The basic requirements on schedule (or cost) control are:

establish milestones and targets;

measure actual performance, typically monthly;

analyse performance and trends;

update the forecast;

compare forecast to target;

analyse and communicate variances or trends to allow corrective actions; and

repeat the cycle, checking for effectiveness of earlier actions.

Although schedule control is most prominent after Final Investment Decision (FID), it is
also required in earlier phases when significant time is consumed and promises (e.g. on
the FID date) are already made.

Management of Change

8.3.4

Support: UEP3
Management of Change is a key activity in Project Controls and is described in Section
5.5.
All projects >$US50 million will adopt the Management of Change (MOC) procedure
PR1247.
The procedure:

Describes the process for controlling and managing technical change during the
concept definition and execute phases of PDO projects.

Sets out a series of key Baseline Value Drivers (BVD) for the projects which
shall be developed during conceptual Select phase and approved by the DRB
at Decision Gate 3 (DG3). If a change occurs through DEFINE an updated set
of BVDs are approved at DG4. These Value drivers are normally captured in the
Field Development Plan, the Concept Select Report, the Basis for Design and
the Project Specification

Describes a structured method of assessing and approving or rejecting

changes against these parameters. A change to the Baseline Value Drivers will
either increase or erode the value of the project and is therefore subject to the
MOC. All changes are documented in a Change Proposal Form.

Defines Approval Levels associated with the varying degrees of change.

Sets up the Change Review Panel consisting of senior project personnel that
meets regularly and acts as the Stage Gate screening and approval body for
change impact. The Panel will review every Level 3/2/1 change proposal and
ensure that all implications of the change are considered before being accepted
or rejected. Periodically, the Panel reviews the list of Level 4 change proposals.

The Project Change Coordinator (usually appointed from Project Services)

maintains the Project Management of Change process.

8.3.5

Management of Risk
Support: UEP31
Risk and Opportunity Management is a key activity in Project Controls and is described
in Section 5.3.
Risk Management involves the identification of the risks and opportunities on the project
and ensures that the risk levels are kept as low as practicable (ALARP) and that the
opportunities are exploited to the fullest.
The process includes:
o

A risk work shop at a predefined stage of the project to identify the risks and
opportunities,

Assessing the severity of risks against the Risk Assessment Matrix (RAM a
two dimensional grid of scaled probability and impact for the various
consequences)

The systematic recording of the identified risks & Opportunities in a Risk

Register,

Reviewing the risks for mitigation actions and the possibility of utilising
opportunities,

Implementing the mitigation actions identified according to the plan

Periodically reassessing the risk register and communicating the status to the
stakeholders

The risk management plan or the Project Execution Plan should explain in detail how
Risk Management will be conducted by the specific project.
The information held in the Risk Register will be used as the inputs to the quantitative
(probabilistic) cost/ schedule risk analysis and to ensure more realistic targets are set.
The development and maintaining of the Risk Management Plan, Risk Register and the
RAM are the responsibility of the Project Manager.

8.3.6

Reporting
Support: UEP31, UEP32
Project Reporting shall provide a true and honest reflection of the status of the project at
the cut off date by reporting of all cost and scheduling elements plus the main project
highlights and areas of concern (without unnecessary details) and including forecasts
and remedies.
For Large (>$50mln) and Major (>$200mln) projects, the project team shall issue a
progress report on a monthly basis, including a Project One Pager that shall be stored
on Project Livelink. All reports must be approved by the project manager before issue.
For specific Flagship Shell projects, each quarter the Shell Business One templates
shall be completed and loaded into the Shell system.

8.3.7

Project Close Out Reporting

Support: UEP31, UEP32
It is important for continuous upgrading the quality of PDOs projects in general on
estimating, planning and controls in particular that all learnings are collected and
shared at the end of each distinct phase of the project to the Function Project Services.
Feedback of this data is the responsibility of the project team.
A Project Close Out Report shall be produced for all projects above $50mln during the
Execution phase before the project team disband. The Function will review the project
Close Out reports to secure consistency across all reports.

8.4 Project Assurance

8.4.1

Estimate and Schedule Assurance Reviews

Support: UEP32
A formal Estimate and Schedule Assurance Review (ESAR) should be done prior (3-4
weeks) to VAR 3 for all projects with a total Capex greater than $200mln (including
drilling), and at least prior to VAR 4 for projects with a Capex larger than $100mln. For
specific projects < $100mln a peer review can be considered.
The ESAR review format will follow the Shell ESAR guideline. Project teams are
responsible for informing the ESAR coordinator in the Function, at least 3 months prior
to when an ESAR review is required. Function is responsible for appointing a team
from suitably experienced personnel and to prepare a draft ToR. The ESAR leader shall
be TA2 rated.

8.4.2

Programme Build
Support: UEP3
All projects provide input to the Programme Build each year. Project teams must ensure
their schedule, costs and resources are realistic and achievable and that their updates
are in line with the Programme Build cost assumptions (Escalation, Exchange rates and
Market factors). For major projects >$US200M the update must include a probabilistic
(Monte-Carlo) re-assessment of the Schedule and Cost contingency that is linked to the
latest project risks and opportunities. To tie in with Programme Build Functional
assurance, the project update exercise must be completed by end March each year.
The Project Services Functional team is responsible to assure the project schedules
and cost estimates created for each years Programme Build by the Asset and Project
teams:

Have been developed in line with PDO procedures & guidelines.

Are achievable both individually and collectively (including that Company

manpower is sufficient).

Have taken into account the contractors capability and experience.

9 Quality Assurance
Support: UEQ
PDOs requirements for Quality
Management Policy PL-15 and;

Management have been defined within Quality

CP-190 - Quality Management System for Project Delivery: Ensures that quality is
applied and consistently implemented in PDO projects by supporting the ORP to
provide a standardised Governance, Assurance and Delivery process and give direction
to Project Management).
SP-1122 - Project Quality Assurance Plans: Details the minimum requirements for
preparation and implementation of Project Quality Plan (PQP) for all projects.
SP-1171 - Specification for Quality Assurance Requirements for Product and Service :
Provides instructions which combined with the PQP specify the Companys minimum
requirements for Quality Assurance in all contracts and purchase orders and provides
guidelines on the contents and development of a Contract Quality Plan and Quality
Control Plan.
SP-2061 Technical Authority System: Provides information on Technical Authorities
(TA) system operates by PDO.
However, the existence of a good management system does not in itself guarantee a
quality product; this has to be accomplished via a combination of technical competence
and, most importantly, adherence by all contributors to the system.
The commitment and active involvement of the functional leadership team(s) in
developing and maintaining the project Quality Management System (QMS) is therefore
essential for the system to be effective.
The BOM/PM/PE has overall responsibility for quality and its implementation at every
stage of the project. The BOM/PM/PE should ensure that the project QMS is reviewed
at regular intervals ensuring its continuing suitability, adequacy and effectiveness.
Where repetitive projects (portfolio of projects) are covered within a single contract
scope, a single QMS / PQP may be developed (see CP-190, sections 2.4, 2.6, 2.7),
underpinned by level 3, 4 documents / deliverables.

Suitability is judged by its ability to sustain current performance.

Adequacy is judged by its ability to deliver the project that satisfies requirements,
standards and regulations.
The review output should include decisions and actions related to the improvement of
the effectiveness of the project QMS, its processes and related resource needs.
Further responsibility and authority include;

Ensuring that project quality requirements are addressed and included within the PEP;
CP-190 Appendix 1, 2 and 4. SP-1122.

Establishing, implementing and maintaining the project QMS including quality strategy
and PQP; CP-190 section 2.3, SP-1122 and DCAF.

Establishing the budget, resource estimate for quality and ensuring that appropriate
quality resources are available within their respective project team and contractors
organisations in order to achieve PDOs Quality Policy & Objectives: Identifying the
objectives and providing the infrastructure and quality resources, clearly defining Roles
& Responsibilities and motivating personnel to improve the processes and product. CP190 section 2.3, 2.6 and 2.8.

Ensuring that project quality requirements are included within contract documents and
that contractors, subcontractors and vendors comply with project QMS requirements.
CP-190 all sections, SP 1122 and SP1171.

Team development to ensure all project personnel are aware of quality responsibilities.
CP-190 section 2.9.

Promoting a consistency of approach & sharing learning across projects and for
promoting continuous improvement within their project organisation. Planning for future
preventative actions (identify, collect, store, update, retrieve and review information).
CP-190 section 2.7, 2.11, 2.12, 1.13 and 2.15.

Taking the appropriate action necessary to address quality issues impacting project
delivery including document reviews, and corrective and preventive actions are
completed in a timely manner (Delivering the project by complying to standards and
developing, implementing fit for purpose processes). CP-190 section 2.12, 2,13, 2.14
and 2.15.

Making use of available quality related information to evaluate options and make
decisions. CP-190 all sections.

Identifying and implementing quality KPIs and applying rewards/penalties as applicable

under established contracts. CP-190 section 2.13 and Appendix 5.
Written procedures shall be developed in order to adequately control the quality of the
work and to ensure compliance with all aspects of the work and applicable codes,
standards and legislative requirements. Procedures required to complete the works
shall be made available at the point of use prior to commencement of the relative
section of the Work.

9.1 Discipline Controls and Assurance Framework

(DCAF)
Support: UEQ2
Compliance with DCAF is mandatory for all Projects and Assets within PDO. However, it
is possible for a Project to justify not using DCAF for Projects under $20mln in value,
but this should be CAPEX and TECOP Risk based and auditable, and approved by the
CFDH (TA-1). An example of where DCAF may not apply is a like-for-like replacement
of a piece of equipment.
The intension of the DCAF framework / process is to detail and standardise the way
PDO executes Quality Control (QC) and Quality Assurance (QA) across all PDO
technical disciplines through each ORP phase. It is a simple and structured approach,
scaled at the Project (PCAP) and Asset (ACAL) level focusing on business-critical
deliverables (control points) and Assurance: Controls are routine, risk-based, 'internal'
steps to confirm the effectiveness of a prescribed process. Assurance is an objective
and independent review to ensure objectives are met, and policies, procedures and
processes are adhered to.
The four Key components of DCAF are:

Discipline Standards (DS): Defining the controls and Tools of a discipline, these have
been defined by the Functions (CFDH). CFDH is responsible for the discipline
standards, local rules and appointment of Technical authorities.

Discipline Authority Manual (DAM): A list which records who can sign what. Reference
SP-2061 - Technical Authority System.

Project / Asset Controls and Assurance Plan (PCAP / ACAP) template: A plan listing, of
what needs to be quality assured and controlled.

Project / Asset Controls and Assurance Schedule (PCAP / ACAP) template: A template
that translates the PCAP/ACAL into a resourced schedule of Quality Control and
Assurance activities / events.
Each Discipline has a Standard (DS), which lists the decisions and deliverables that the
Discipline head contributes to in each phase of the Opportunity Realisation Process
(ORP), plus the required authority-level for sign off for the Discipline decisions and
deliverables in a precise and auditable manner.

There is no pre-ordained scaling in DCAF. Controls and tools for each discipline have been
base-lined by the Functions (CFDH), but scaling / applicability is left to the Project or Asset, as
ultimate accountability for Controls and Assurance resides with the line of site of that project or
Asset.
The Business Opportunity Manager (BOM), Project Manager (PM) or Asset Manager (AM),
dependent on phase/gate, is responsible for the full day-to-day management of the Opportunity
(Project) or Asset and is responsible (supported by disciplines) for the PCAP/ACAL framing and
maintenance. The BOM/PM/AM or delegate uses the standard PDO template to draw up the
PCAP/ACAL (Mandatory Assurance events and specific controls, including deviations). This
shall be a team effort with all the required disciplines attending.
DCAF works by assigning accountability (ATA) for an overall decision or deliverable to a single
discipline (Competence based Technical Authority SP2061) whilst recognizing that the
contribution from other disciplines (responsibilities, RTA) may be a control in their own right,
finally DCAF acknowledges that other disciplines may have an impact and therefore may need
to be consulted and/or informed (C/I).
In signing off on a business-critical element and/or deliverable the individual is:
ATA Signing as being ultimately accountable for the control: Control Point owner, accountable
for exercising the right Controls are properly identified/ implemented by qualified individuals.
May not claim full competence in all aspects, but he or she is considered to be responsible
enough to pull in necessary counsel to take on the accountability Signs off the end control
deliverable.
RTA - Signing as being responsible for their respective Discipline input into the Control Point on
behalf of their Discipline: Shares in the accountability, personally accountable for their
input/action, the role of an RTA is to QC and sign-off the input of his/her Discipline into the
Control Point (deliverable/decision), he/she must fully understand the requirements
(CoP/SP/PR/DEP) and deliverables to be produced and ensure the Discipline Standard is
properly implemented.
C/I - Most Decisions and Deliverables are multi-disciplinary, signing as being consulted and/or
informed states that you have read the document and any known discrepancies, impacts have
been highlighted and discussed with the RTA/ATA.
PCAP/ACAL adherence will be required to be submitted to the DRB at each DG in order to
proceed to the next gate. Where controls have not been achieved, the BOM, PM, AM will
require to demonstrate (endorsed by CFDH as applicable) that the control has been mitigated
and will not impact the Project progression, delivery and Asset integrity.

10 HSE in Projects

10.1 Introduction
Support: MSE4
Getting HSE (Health, Safety and Environment) right in projects means identifying the
risks, managing them, and being able to demonstrate that they are under control. To do
so, the right organisation, plans and resources need to be in place.
The business expectation for effective management of HSE risks and opportunities is
set out in the PDO HSE Policy (PL-04) and supporting HSE Management System (CP122). In practice this involves working to deliver benefits and reduce impacts through
our operations. Meeting this commitment requires a particular mindset: one where we
balance short and long term interests; integrate economic, environmental and social
considerations into business decisions; and regularly engage with our many
stakeholders.
An HSE Technical Authority must be appointed by the Project Manager. He or she
shall establish, maintain and execute the appropriate HSE studies and/or activities in
order to adequately identify, assess, and document the HSE risks of the project, in line
with the HSE Management System (CP-122).
It is important to recognise that the HSE Function and Technical Safety Engineering
Discipline do not operate in isolation from the Project Team, the existing Asset team or
the wider community in which the Project is operating. Integration of the HSE Technical
Authority into the Project Team is essential to ensure that risks and opportunities are
identified and managed early.
The activities and deliverables required to ensure that HSE risks and opportunities are
appropriately managed will vary depending on the Project. The following table lists the
mandatory HSE activities for every project.

Identify

Assess

Select

Define

Execute

Identify
an
HSE
Technical Authority

Confirm/identify HSE
Technical Authority

Confirm/identify HSE
Technical Authority

Confirm/identify HSE
Technical Authority

Confirm/identify HSE
Technical Authority

Ensure major HSE

Risks are identified,
assessed & managed
during initiation and
first framing of the
project

Ensure major HSE

Risks are identified,
assessed & managed
during
scoping,
feasibility assessment
and short listing of
project concepts

Ensure major HSE

Risks are identified,
assessed & managed
to
ALARP
during
further scope detailing
and concept selection

Ensure major HSE

Risks are identified,
assessed & managed
during Basic Design of
the selected concept

Ensure major HSE

Risks are identified,
assessed & managed
during
Detailed
Design, Construction,
Commissioning
&
Start-up

Provide HSE input

into
DCAF
deliverables including
risk management and
stakeholder
engagement
and
assurance plans

Provide HSE input into

DCAF
deliverables
including
risk
management
and
stakeholder
engagement
&
assurance plans, GHG
&
Energy
Management,
Feasibility Report and
logistics
&
infrastructure
assessments

Provide HSE input into

DCAF
deliverables
including
Concept
Selection
Report,
Basis for Design, GHG
&
Energy
Management,
and
logistics
&
infrastructure
strategies

Provide HSE input into

DCAF
deliverables
including Basic Design
&
Engineering
Package,
GHG
&
Energy Management,
operations procedures
and
logistics
&
infrastructure plans

Provide HSE input into

DCAF
deliverables
including
GHG
&
Energy Management,
operations procedures,
content of the project
handover to operations
and
logistics
&
infrastructure plans

Conduct Safety Risk

Studies defined in the
HSE Plan

Conduct Safety Risk

Studies defined in the
HSE Plan

Conduct Safety Risk

Studies defined in the
HSE Plan

Conduct Safety Risk

Studies defined in the
HSE Plan

Define HSE roles in

the
project
organisation

Define HSE roles in

the
project
organisation

Define HSE roles in

the
project
organisation

Define HSE roles in

the
project
organisation

Assess & manage the

HSE consequences of
scope
&
design
changes

Assess & manage the

HSE consequences of
scope
&
design
changes

Develop Project HSE

leadership / Goal Zero
program

Execute Project HSE

leadership / Goal Zero
program

Include
HSE
contracting
procurement

Include HSE in Pre

Start Up Audit

in
&

Table: Mandatory HSE Activities by Project Phase

Project HSE Assurance shall be provided through Technical Authority contributions to
formal Design Reviews, Stage Gate reviews (VARs and PERs), Peer Reviews (2 nd and
3rd party) and Audits (Level 1 Project HSE MS Audits and Pre Start Up Audits)
contributing to the Decision Gate process.

10.2 Application
Support: MSE4
The application of the full suite of HSE activities presented in DCAF is designed for
major capital projects. Some of the activities will not be applicable to smaller projects.

10.2.1

Mandatory HSE Deliverables

The mandatory HSE deliverables are summarised below and correspond with
deliverables identified by DCAF:

The HSE activities and deliverables shall be documented in the HSE Plan,
which shall ensure that the Project complies with the requirements of the HSE
Management System (CP-122) and with DCAF where appropriate.

All risks shall be identified as early as possible in the project. A Hazards and
Effects Register (refer to SP-2062) shall aid the active management of these
risks. throughout the design phases, such that they are reduced to tolerable
and ALARP levels at handover to the operators. HSE shall be integrated into
project decisions and associated project deliverables.

A HSE Philosophy document shall be developed to identify all the relevant and
agreed external and internal requirements, including regulatory constraints.

The FEED and Detailed Design shall be subject to a HAZOP (refer to PR-1696)
to formally and systematically assess the process hazards and a subsequent
IPF Classification (refer to DEP 32.80.10.10-Gen) to determine the SIL of any
identified instrumented protective functions.

An ALARP Demonstration Report or Design HSE Case (refer to SP-2062)

shall be developed to demonstrate the integrated decisions taken by the project
to reduce risks and mitigate consequences to ALARP levels. This shall first be
used to support Concept Selection (DG 3) and subsequently developed to
support the Final Investment Decision (DG 4). The Report/Case shall be
updated during the Execute phase to a final deliverable to provide design
information into the operating Asset. Prior to introduction of hydrocarbons, the
Statement of Fitness (refer SP-2062) shall be signed by the Asset Director.
The Operations HSE Case (refer to SP-2062) shall be maintained throughout
the operating life of the asset.

The Performance Standards for Safety Critical Elements (SCE) must be

developed during the Define phase to confirm that each selected SCE has been
designed according to the relevant Shell DEPs, PDO specifications, and HEMP
studies (refer to SP-2062). The Performance Standards should mature further
during the Execute phase and shall verify that the SCEs have been constructed
as designed. The Performance Standards will evolve into Operate phase
Performance Standards before project handover.

An Impact Assessment and the resulting Environmental, Social & Health

Management Plan are required to minimise negative impacts and optimise
positive benefits (refer to GU-447).

10.2.2

Applicability
It is essential that at the beginning of each project phase, the Business Opportunity
Manager/Project Manager reviews the HSE activities with an HSE Technical Authority to
determine and agree on the studies and deliverables that are required, their timing and
scope as applicable to that Project. Not all the studies in DCAF will be applicable,
depending on the nature of the Project. The following may apply to some Projects:

a low degree of complexity and novelty of the project;

straightforward context of the design decisions (type A in the Diagram

Framework of Risk Based Decisions below);

maturity of the location;

no high risk issues (e.g. hazardous process, H2S, social unrest or

environmentally sensitive location, Green House Gas emissions exposure or
their abatement);

specific scope issues (e.g. brownfield /greenfield);

small projects such as maintenance, expansion or technology changes as well

as abandonment of existing facilities or process units; and

accelerated (fast track) projects where project stages are combined.

Project size/cost is not the major indicator of HSE scope; rather the key driver is the
exposure to specific HSE risks. For example, a small project within an existing plant
that cannot impact outside the existing fence-line may not require an Impact
Assessment.
This is not however always the case. Brownfield projects and a few plant modifications
may be small projects but they can often have complex HSE issues associated with
simultaneous operations (SIMOPS) layout, noise, additional effluent streams, etc.
Accelerated projects may combine project phases that will affect the timing and scope
of the HSE activities. For such cases, reduction of HSE scope should be regarded with
caution, as the company assurance requirements will remain.

10.2.3

ALARP Decisions Context

In the context of Process Safety Management the term Unusual Risk is used to
describe a type of risk identified for a project, arising from novelty of technology,
geology or location that represents factors that may affect the success of the project.
The Diagram Framework of Risk Based Decisions below illustrates how novel or
challenging projects require decisions based on a variable mixture of company or
societal values. This differs from the traditional codes and standards or good practice
and engineering judgement, which form the basis of engineering decisions for
established or familiar projects.

Type A (technology based) decisions are those involving well-understood

hazards and proven solutions.

Type B decisions involve less well-understood hazards where established good

practice has to be supplemented by more detailed risk analysis techniques,
especially to address the uncertainties of novel aspects of designs.

Type C (judgement based) decisions are those involving hazards that may
create Societal Concerns.

Type A decisions may characterise a small upgrade project in an existing location

designed to existing codes and standards. The requirements for assurance studies or
ALARP justification may be reduced in these cases. However, many of the projects
undertaken in recent years have required a large number of Type B or C decisions, and
the HSE analysis required to support such decisions is significant.
Projects involving the application of new technology or applying proven technology in
new applications need special attention; risk studies (quality, safety, environment,
operability, etc.) and sign off on highest level (TA-1 or delegated TA-0).

Diagram: Framework for Risk Based Decisions

10.3 Process Safety Management

Support: MSE4
Process Safety Management is the prevention and mitigation of unplanned releases of
highly hazardous process fluids, including natural gas, volatile crude oil, LPG, and
Hydrogen Sulphide (H2S). Process Safety Management is achieved by concept
selection and definition, engineering, procurement and construction, as well as later
during the Operate phase. The Project Manager is accountable for the project meeting
the Process Safety requirements. Guidance on Process Safety requirements is
available in GU-648 and individual deliverables are embedded in the CMF and DCAF
system. The accountabilities of the Project Manager include:

Identifying and documenting Severity Five and High Risk process hazards for
new and existing assets.

Reducing identified process risks As Low As Reasonably Practicable (ALARP).

Managing the competence of employees in HSE (Process Safety) Critical

Positions identified in HSE Cases.

Managing the fitness to work of employees.

Verifying that Contract Holders monitor the HSE (Process Safety) requirements
of the contract that are relevant to the competence and fitness to work of
contractor staff.

Providing supervision of HSE (Process Safety) Critical Activities appropriate to

the complexity of the activity including multiple concurrent tasks, and nonroutine and unexpected activities; and the competence of the individuals
performing the activity.

Developing a Statement of Fitness for the assets before starting or

commissioning a new asset or a modification to an existing asset.

Establishing Technical Integrity in design and construction.

Designing and constructing new assets and making modifications to existing

assets in line with DEM1 engineering specifications identified in GU-611.

Meeting Process Safety Basic Requirements (PSBRs) relevant to onshore

operations.

Creating and making available the documentation for Safety Critical Equipment
(SCE).

Performing Pre-Start Up Audits (PSUA) for new assets and for modifications to
existing assets.

10.3.1

Statement of Fitness
The purpose of the Statement of Fitness is to uniformly and consistently ensure that key
Asset Integrity Process Safety activities and deliverables have been completed and
verified by competent persons ensuring that hydrocarbons can be introduced safely with
an acceptable level of risk (ALARP).
The Statement of Fitness is an asset level business record required by the PDO HSE
Management System (CP-122) and further defined in the PDO HSE Case specification
(SP-2062). For the majority of projects, it is included in the Operations HSE Case and
signed by the Asset Director, but may in some cases be a stand alone document as
shown in Table below.
The key elements identified for the Statement of Fitness are:

Process Safety Risks have been identified and documented and are managed
to ALARP;

Employees or Contractors executing HSE Critical Activities are competent and

fit to work;

Safety Critical Equipment meets its Technical Integrity requirements, and

modifications are complete and have been authorised as specified by
Management of Change CP-206;

The design and construction of new assets and modifications to existing assets
meet design and engineering requirements (DEM1);

Process Safety Basic Requirements are met; and

Procedures are in place to operate Safety Critical Equipment within its

Operating Limits

Type
of
Statement of
Fitness (SoF)

Business Control

Signatory

Frequency

New asset

SP-2062,
Case

HSE

Asset Director

Prior to introduction of
hydrocarbons

Restart
following
modifications

For major modifications

(material changes): SP2062, SoF in HSE Case

Asset Director

Prior to introduction of
hydrocarbons

For planned shutdowns:

PR-1721, SoF form

Operations Manager on
behalf of Asset Director

Prior to introduction of
hydrocarbons

SoF

in

Table: Types of Statement of Fitness for Projects

10.3.2

DEM1 Mandatory Process Safety Design &

Engineering Requirements
A PDO Specification or PDO-adopted DEP shall be designated as DEM1 if it contains a
minimum of one statement relating to prevention of, or managing risk associated with, a
Process Safety related incident significantly contributing to a preventative control or
mitigating measure for Severity Five or High Risk hazards to People, Environment,
Assets or Reputation. The shall statements that refer to Severity Five or High Risk
hazards are shown as SHALL [PS] and these are mandated requirements.
SHALL [PS] statements are mandatory unless a deviation is approved by the
discipline engineering TA-1 or chief engineer (delegated TA-0). Deviations shall be
submitted in accordance with PR-xxxx Procedure for Deviation from Standards (still
under development) and require supporting ALARP assessments that:

Demonstrate at least an equal standard of control as the SHALL [PS]

requirement (e.g. if the SHALL [PS] required an engineered control, then the
derogation should also rely on an engineered control rather than a procedural
control or PPE). See the Hierarchy of Control in CP-122;

Be supported by a suitable and sufficient risk assessment; and

Demonstrate that the risk to people, assets, environment and reputation is no

greater than would have been achieved through adoption of the SHALL [PS]
requirement.

10.3.3

DEM-2: Process Safety Basic Requirements

The purpose of the Process Safety Basic Requirements (PSBR) is to prevent reoccurrence of known major Process Safety incidents by focussing on their main causes
and key barriers. The eight identified PSBRs applicable to onshore oil and gas facilities
are:

Safe Siting of Portable Buildings: Portable blast-resistant modules shall be

rated for a peak side-on over-pressure of at least 55 kPa with a duration of at
least 100 ms. Their location shall be assessed and approved in accordance
with DEP 34.17.10.33-Gen. Their design shall be in accordance with DEP
34.17.10.33-Gen. All other portable buildings shall be located in accordance
with DEP 34.17.10.35-Gen.

Permit To Work (PTW): The PDO Permit To Work system (refer to PR-1172)
shall be applied.

Management of Change (MoC): All project changes (process, procedural and

organisational) shall be managed in accordance with MoC procedures i.e. CP206, PR-1247. The effectiveness of the MoC system of the project shall be
subject to a tiered approach ranging from daily monitoring to less frequent selfassessments. The effectiveness of the MoC system shall be included in
external project assurance.

Avoid Liquid Release Relief to Atmosphere: In accordance with DEP

80.45.10.10-Gen., a risk assessment shall be performed and demonstrate
ALARP for any atmospheric relief streams that might include toxic, flammable,
or combustible liquids to determine the appropriate safeguards to prevent
hazardous releases to atmosphere.

Avoid Tank Overfill Followed by Vapour Cloud Release: Identify all storage
tanks containing fluids that have the potential to overfill resulting in a vapour
cloud explosion and design safeguarding in accordance with DEP 34.51.01.31Gen. and DEP 32.80.10.10-Gen. Examples of such fluids are natural gas
liquids (condensates) and crude oils with a Reid Vapour Pressure RVP > 2.5
psi.

Avoid Brittle Fracture of Metallic Materials: Design all unfired pressure

vessels, heat exchangers, piping, piping components and valves (including
control valves) or rotating equipment, containing liquefied gas or compressed
flammable low molecular weight hydrocarbon gas, in accordance with DEP
30.10.02.31-Gen.

Alarm Management: The alarm management system shall be designed in

accordance with the work process defined in DEP 32.80.10.14-Gen.

Sour Hydrocarbons (H2S): The facilities design & engineering, operating

organisation, procedures and PPE shall be classified and developed in
accordance with SP-1190 and PR-1078.

10.4 Contractor HSE Management

Support: MSE1, MSE2, MSE4
In accordance with Contract HSE Management requirements (refer to PR-1171 Parts I
& II), each contract shall be subject to a risk assessment at the contract strategy phase.
This high level HSE risk assessment shall categorise the contract in terms of Low,
Medium or High, in line with the PDO Risk Assessment Matrix (refer to CP-122).
Contracts categorised as Medium or High Risk shall necessitate a fully fledged HSE
evaluation of the potential contractors using the HSE capability questionnaire.
Each proposed contractor shall be required to provide information to support their HSE
capability. As part of their submission the contractor shall provide both historical and
current HSE performance. The questionnaire and supporting submission shall be
reviewed in line with predetermined criteria agreed by the Tender Board. The
subsequent scoring will band the contactors within their capability. The overall scoring
system is detailed below:

Maximum score 280

Green Banded Contractors > 178

Amber Banded Contractors score between 103 and 177

Red Banded Contractors <103

In principal only companies in Green and Amber band shall be allowed to tender for
Medium and High risk contracts. In the case of Amber banded contractors, the Contract
Holder (CH) shall develop a strategy and plan for mitigating the shortfalls. This shall
identify extra costs to be incurred in mitigating the shortfalls, e.g. additional PDO
personnel, the possible decrease in HSE performance and the CH shall quantify the
increased exposure to PDO by taking on the contractor.
During the strategy phase, the contract mode shall be assessed. The contract mode
shall be set at mode 1, 2 or 3 in accordance with the following definitions:

Mode 1 means the contractor operates within the PDOs HSE Management System
(HSE MS). The contractor provides people and tools for the execution of the work
under the supervision, instructions and PDO HSE MS. The contractor has a
Management System to provide assurance that the personnel for whom they are
responsible are qualified and healthy for the job and that the tools and machinery they
are providing are properly maintained and suitable for the job.

Mode 2 means the contractor operates within its own HSE MS that interfaces with the
PDOs HSE MS and is required to report HSE performance data including incidents to
PDO. The contractor executes all aspects of the job under its own HSE Management
System, provides the necessary instructions and supervision and verifies the proper
functioning of its HSE MS. PDO is responsible for verifying the overall effectiveness of
the HSE management controls put in place by the contractor, and assuring that both the
PDOs and the contractors HSE MS are appropriately compatible.

Mode 3 means the contractor operates within its own HSE MS that has no interfaces
with the PDOs HSE MS and is not required to report HSE performance data including
incidents to PDO. However, this does not exclude the possibility that PDO may wish to
guide and influence HSE performance under the contract.

11 Information Management
Support: UEPI
Designing and managing a project is a business activity that delivers two main assets,
the physical asset and the Information Asset
This Information Asset exists in 2 forms:

Documents (printed or electronic): to be read by people e.g. Reports, Specifications.

Data: to be manipulated by tools e.g. Spare Parts, Tag Register & Maintenance
Routines.
Proper implementation of Project IM achieves two main objectives and serves two
masters:

The Project Team: Support for the engineering processes that deliver the physical asset
(i.e. design, review, approval, and handover between phases)

Operations (Maintenance, Engineering): Delivery of the information asset itself (i.e. final
handover to Operations).
The Information Asset is created in the same way as the Physical Asset and must be
designed, specified, implemented, controlled and handed over with the same attention
to detail and quality as the Physical Asset it represents. It will support commissioning,
start-up, maintenance, Operations, and future engineering activity, and is the
responsibility of the project team to deliver.
The recently (Q42010) established central Engineering and Operations Information
Management office (UEPI) sets the standards and processes to be used by projects,
and provides the resources, support and assurance to carry out these processes on
behalf of the project. Some of those resources will reside in a back office while others
will be co-located with the project team.
PDO engineering function has adopted an Information Management (IM) strategy that
delivers a common framework for IM practice in PDO based on Shell DEP 82.00.10.30Gen Engineering Information Specification (EIS)
This strategy, and the Document and Drawing Management requirements for Projects
are defined in the specifications SP-2065 - Document Management for Projects and
SP-2047 - Preparation & Content of Engineering Drawings.
The various tools used in Information management (which are a requirement for all new
projects) are:

Livelink (Document Management System)

Assai (Document Control System)

IDB (consolidation, quality checking and loading tool)

AHA4P (Engineering Data Warehouse)

11.1 Project Management System (iPMS)

Support: UEP3
roject roadmap aligned with the Opportunity Realisation Manual and Opportunity
Realisation Process.
iPMS provides quick access to standard project processes, governing documents,
templates, examples and tools.
It is updated and maintained by UEP3 with PDO corporate project management
knowledge.
When used in conjunction with the Project Assurance Plan, and DCAF, it is scalable for
all projects.
iPMS additionally links to project specific deliverables once they have been created.
It is accessed via the PDO Intranet under Applications on the PDO home page.

12 Finance in Projects
In PDO, the Finance contribution to projects is delivered through:

Establishing and implementing a risk based controlled project environment, aimed

at achieving business objectives, providing honest, timely, objective and transparent
Management and Financial Information and promoting effective risk management.
Providing guidance on Finance/ Accounting implications in accordance with
established internal and external Accounting Policies & Procedures.
Ensure compliance with PDOs internal controls including compliance with
Corporate Management Framework, Company Policies Work Practices, Discipline
Control & Assurance Framework, Procedures and Guidelines as defined by
Corporate Finance and International Accounting Standards.
To ensure that all Investment Decision Manual requirements are followed, support
all Investment Proposals and assure that proper due diligence and independent
review have been performed. Thorough understanding and disclosure of economic
assumptions, contingencies, risks and accounting, contractual, insurance, tax and
treasury implications.
Independent challenge as custodian of the Business Controls and Assurance
framework.

12.1 Role of Finance in Project Governance

Support: FBE
The relevant Finance Manager has access to key assurance processes (such as cost
and schedule reviews, VARs and peer reviews) and decision-making bodies such as
the DRB. Within PDO the Business Finance Manager sits on all DRB1 panels, and the
Directorate Finance Manager performs the same role for respective DRB2 scope
projects.
Finance is the custodian of the investment decision (Capital Budgeting or EBP)
process. In line with this, each investment proposal (EBP) requires the support of the
Finance line reporting to or supporting the person submitting the proposal. In the crucial
phase around FID (firming up the entire project budget), Finance has a specific
accountability for sign-off on control, accounting, treasury and tax aspects of the
proposal, and co-ordinates the overall capital budget and requests for revision /
approval of the capital budget by shareholders.

12.2 The Role of Finance within the Project

Support: FBP
Within a project, Finance is accountable:

For rolling out and implementing a risk based financial and project control
framework;

To ensure management information systems are fit for purpose and produce the
relevant project cost/progress information required for the project, managers
and functional directors to manage their business effectively in order to comply
with budget, forecast, bottom line, cash flow and expenditure requirements and
also complying the requirements of Central Finance.

To provide accurate, timely and quality project management information on

actual performance, VOWD, budgets, Latest Estimates and Contingency Draw
Downs both within the Project Team as to other stakeholders. Monitor
performance against set target KPIs and the promise in the Investment
Proposal and ensure potential overruns are highlighted and addressed.

To promote effective risk-based decision taking.

To ensure that all Investment Decision Manual requirements are followed,

support all Investment Proposals and assure that proper due diligence and
independent review have been performed. Thorough understanding and
disclosure of economic assumptions, contingencies, risks and accounting,
contractual, insurance, tax and treasury implications.

For Major stand alone projects, the Project Finance Manager (PFM) is part of the
Project Management Team and will have a functional reporting line to the Business
Finance Manager.
For smaller projects executed in the Line, the Finance Manager for the respective
Directorate assumes this role across multiple projects (and usually delegates a senior
management accountant as focal point).
An integrated approach to cost management, work planning, finance, and contracting
and procurement will strongly contribute to a well controlled project environment. In
reality, these activities are often split between the Project Services organisation and the
Finance organisation.
In addition, the Project Finance will provide project teams with a robust set of global
standard processes, controls and tools supporting effective project execution:

Procedures defining the global project execution process and control

requirements.

Tools and instructions supporting the process & control requirements

o

Budget Management

Management of Invoices

Project Cost Allocation

Exchange Rate Application

Manual Of Authorities

13 Value Improvement Practices

Support: UEP2
What distinguishes VIPs from other Best Practices is that each VIP has a measurable
and statistically demonstrated effect on cost, schedule, and/or reliability of the
constructed facility.
VIPs are also different from other practices, such as team building or partnering, in the
following ways:

Each VIP must follow a distinct and defined work process.

The VIP is not merely a detailed review of some portion or aspect of a project.

The results of VIPs exercises must be documented so that the project team is
accountable for incorporating those results into the project.
The manner in which these VIPs will be used on any project is dependent on scale, but
all projects should discuss the following list with the Value Improvement Co-ordinator
(currently UEP2), who will advise which VIPs should be undertaken by the project, and
thus included in the Project Controls and Assurance Plan (PCAP). The main VIPs in use
in PDO are as follows:

Opportunity Framing

Lessons Learned

Value Engineering

Benchmarking of Project Performance

Technical Standards Challenge

Availability Assurance / Reliability

Constructability

PEP-PER
The Value Improvement Coordinator can also provide guidance on other VIPs available
(e.g. First Contact Meeting), and give guidance on who in PDO can provide the VIP
support.

13.1 Opportunity Framing

Support: UPV, UEP5
Opportunity Framing (OF) is a process to align the project team, and their Decision
Executive (DE) and Decision Review Board (DRB) on the purpose, perspective, and
scope of the Opportunity.
All projects >$100mln shall carry out Opportunity Framing or (re)Framing prior to each
Decision Gate to ensure alignment for the next phase.
OF achieves such alignment by having a structured dialogue between relevant
stakeholders and disciplines, resulting in a standard set of deliverables that form the
basis of the project plan, which can be seen as the contract between team and their
governors (DE/DRB).

13.2 Lessons Learned

Support: UEPI1
The aim of the Lessons Learned process is to ensure that projects repeat successful
behaviour from the past whilst avoiding making the same mistakes.
Lessons Learned should be captured at key moments in the project lifecyle, for
example:

VAR3 / DG3

VAR4 / DG4

End of Detailed Design (with contractor)

VAR5

The Lessons Learned are captured in a number of ways, the most important of which
being updates to procedures and standards (where required). Other methods of capture
include the Lessons Learned database, video story capture, project close-out
documentation, knowledge networks, etc.
This VIP enables learnings from previous and current projects to be applied in order to
increase value, and provides assurance that projects have taken on board the
opportunities for improvement and best practices.

13.3 Value Engineering

Support: UEP2
Value Engineering (VE) is the systematic application of recognized and structured
techniques which;

Identify the primary function of a design, product or service,

Establish a monetary value for that function, and

Provide the necessary primary and supplemental necessary secondary function(s)

reliably, at the lowest overall cost.
Value Engineering (VE) is therefore concerned with increasing value by removing
unnecessary cost without loss of function. It differs from the traditional approach to cost
control in that it focuses on achieving value rather than simply reducing cost.
Value Engineering is a review tool that can be used at various stages during the project
development from Identify/Assess phase to Execute phase, depending on the project
needs. However there should be appropriate information available so that the review
would be beneficial. Thus value engineering is mostly applied at select phase and mid
of define phase (BFD stage).
Note that as for the project investment, the highest flexibility for implementing Value
Improvement changes is at the identify/assess and select phases where there is more
influence on the project specification and design. In subsequent phases there will be a
high resistance to changes and significantly higher cost impacts, therefore the aim and
focus of Value Engineering in various project phases varies. However there should be
appropriate information available so that the review would be beneficial. Value
Engineering as a specific Value Improvement Practice is best applied within the Select
and Define phases.
The principles and process of this VIP need to be applied to all projects. The VE needs
to be applied in such a way as to be fit for purpose for the scale and complexity of the
project. How the VE is applied is agreed as part Project Assurance Plan.

13.4 Benchmarking of Project Performance

Support: UEP2
Project Benchmarking is a structured process that is used to add value to a project by
comparing a specific project to projects of similar characteristics executed by the
industry.
The objective of Benchmarking of Project Performance is to compare PDO projects
against other projects, using both qualitative and quantitative aspects, in order to learn,
improve and implement best practices. On a project level, benchmarking of project
performance assesses:

Project practices, compared to the standard defined in the CoP, and

Project metrics (cost, schedule and first year production), compared to metrics from
projects (internal and external to PDO) of similar size and complexity.
In addition, by continuous benchmarking of PDO projects, we can improve the
effectiveness of our practices defined in this CoP in order to achieve top quartile
performance in project delivery.
NOTE: benchmarking does not replace effective project management practices but
provides a degree of confidence in the work being done.

13.4.1

Project Metrics
Project benchmarking assesses project metrics related to EP business priorities:

Effective Project Delivery - setting realistic schedule targets and meeting them. The key
metrics here are schedule duration and schedule slip (%).

Competitive Cost Structure - setting competitive cost targets and achieve better than
industry average cost performance. The key metric here is $/BOE.

Production & Operational Excellence setting realistic production targets and meeting
them. The key metric is production attainment (%).
Different projects should focus on different metrics: repeat projects should focus on
beating the performance of the competition, whilst first-off projects should focus on
delivering as per promise.
PDO faces the following special challenges with respect to benchmarking:

The need to benchmark the delivery of a large number of small brown-field projects on
a portfolio rather than a per project basis. Many projects carry CAPEX of less than
$20mln.

The unconventional and novel nature of its major projects, i.e. sour and steam projects
in a desert environment, without many regional or worldwide analogues.
There are 3 different types of external benchmarking conducted at DG3, FID, and after
start-up.

Pacesetter

Prospective

Close Out

Pacesetter (DG3) benchmarking helps the team set define phase targets by providing
project definition status in the form of front end loading factors (reservoir, facilities, and
wells) and provides recommendations to close the gaps before FID. It also provides
performance information in cost & schedule.
Prospective (FID) benchmarking provides project team and stakeholders objective info
about the status of the project and its underlying risks. It also provides performance
benchmarks for cost, schedule, project controls, operability, and predicted outcomes.
Closeout (after start-up) benchmarking provides actual project outcomes (including
production attainment) and lessons learned in order to improve future projects.
PDO uses independent external benchmarking in the following manner:
1. Project CAPEX > $500mln - Mandatory External Benchmarking for all projects
2. Project CAPEX between $100mln and $500mln - Mandatory External
Benchmarking campaigns of all projects in this category at 3 yearly intervals.
This will provide regular snapshots, and will enable long-term tracking of project
delivery performance for the portfolio of medium sized projects.
3. Sample of (10) small (brown field) projects to be benchmarked at 3-yearly
intervals to track project delivery of small projects portfolio (close out
benchmark only)

13.5 Technical Standards Challenge

Support: UEP1
A Technical Standards Challenge shall be performed on all projects > $100mln. For
smaller projects consideration should also be given to performing a Technical Standards
Challenge on project clusters (a group of similar scope projects).
The Technical Standards Challenge involves an evaluation of the specific needs of a
facility before it is designed. Engineering standards and specifications can affect
manufacturing efficiency, product quality, operating costs, and employee safety.
However, the application of codes, standards, and specifications sometimes exceeds
the business needs of a facility and unnecessarily increases cost. The objective of the
Technical Standards Challenge is to meet the facilitys needs by employing the
minimum required standards.
Project teams should ensure an appropriate balance between the value of the
standards and specifications being used for the project and the facility requirements for
health, safety, environment, operations, and maintenance. When procuring equipment
a unique process design during early development of a technology often demands
equipment that is built according to a specific design specification. However,
procurement of equipment meeting a specific design specification is undoubtedly more
expensive and time-consuming than buying similar equipment off-the-shelf. Therefore,
project teams should review all pertinent design standards before deciding what
standards to use on a project. This involves developing a set of minimum required
standards and specifications that combine elements of existing and customised
standards to meet the needs of the facility.
PDO baseline standards are detailed on wallchart GU-611 - PDO Engineering
Standards & Procedures. This wallchart represents the starting point for the challenge
process.
Any proposed deviations to PDO baseline standards shall be subject to PR-1247 Project Change Control & Standards Variance.
The Technical Standards Challenge shall consist of a preliminary review during the
Concept phase, followed by a comprehensive structured review during early FEED
(Define) phase.
Key actions/tasks shall include the following:

Conduct a structured, multidisciplinary review.

Involve or solicit comments from key service contractors, vendors, and
suppliers.

Eliminate standards, specifications, and procedures not applicable to the

project.

Agree on precedence of company and industry standards and specifications.

Where feasible, replace general specifications with preferred alliance vendor
model numbers.
Simplify applicable standards, specifications, and procedures:
-

Remove extra wording (boiler plate text) and use standardized

datasheets.

Eliminate duplication from international and national standards.

Minimise cross-referencing with the intent that each standard or

specification is standalone.

Challenge remaining standards and specifications for which there is no clear

value-justified basis and evaluate the costs and benefits of company standards on a life
cycle basis.

The structured Technical Standards review should involve interactive meetings attended
by representatives from the engineering disciplines, operations, maintenance, and
construction. Consideration should be given to inviting key contractors and vendors.
The review should eliminate the standards and specifications that are not applicable to
the project, and the team should achieve consensus on the precedence of company
and industry standards and codes.

Technical Standards Challenge

13.6 Availability Assurance / Reliability

Support: UEP2
The Availability Assurance / Reliability VIP is tied to the project delivery schedule and is
the main control mechanism of the Project Team on the future availability performance
and Life Cycle Value of the facilities.
The Availability model is the red thread of the process which is carried through all
project phases to enable the assessment of the impact of proposed design changes
and to evaluate the impact of new information produced during the project development.
The Availability Assurance process is initiated during the Identify & Assess or Select
phase of a new project and continues in the subsequent phases.

13.7 Constructability
Support: UEP2
The Constructability VIP is intended to ensure optimum use of construction knowledge
and experience in planning, design, procurement and field operations to achieve the
overall project objectives.
This VIP ensures that construction considerations are identified and properly
incorporated throughout the full course of a project, in line with the project success
criteria.

13.8 PEP-PER
Support: UEP2
The Project Execution Planning using Project Execution Risk (PEP-PER) tool is a VIP
for evaluating and managing execution-specific risk in major projects from early in
Select with further follow-up in the Define phase. The VIP focuses on prevention of
major execution risks as well as mitigation of risk events that may occur.

13.9 LIRA
Support: UWL
The Logistics, Infrastructure and Resource Assessment tool is a VIP for evaluating and
managing logistics and infrastructure risks for capital projects. Further guidance can be
found in PG-19 Capital Project Logistics.

14 Project Resourcing and Allocation

Support: UEP4
The Function (UEOD), through its skillpool managers UEP4 (Engineering), UOP5
(Operations) and UOP5M (maintenance), is responsible for the timely resourcing of the
Assets and major project teams with competent engineering and operations staff, for
the control of engineering and operations staff positions and job group levels (baskets),
for coordination of the job group evaluation by HRD3, and for managing the
competence and personal development of its staff.
The size and structure of the Project and Asset organisation and each position within
(and any subsequent changes to the organisation, including staff moves and changes in
reference indicator) requires prior Functional (UEOD) approval and shall be recorded by
the skillpool manager. As the project matures and new resource requirements are
becoming clearer, the Project manager shall submit for Functional review/approval a
proposed project organigram with additional position request, in accordance with PR1088 - Organisational & Staff Changes Process Control, including a ramp up/ down plan
and indication of core and non-core positions, as per the Guidelines for use of
Manpower Services, held by the Skillpool manager. It is vital that this is planned
sufficiently in advance to take account the length of time required to recruit suitable staff
for key positions.
In the design of the Project organisation the Project manager shall be guided by the
generic project organisation templates, developed and maintained by UEP3, for the
different phases of Project delivery.
Job description templates are prepared by the relevant CFDH and held by the Skill Pool
Managers. The Project Lead shall use these templates to form a Job Description
appropriate to project needs.
The skillpool managers are responsible for resourcing the projects teams, (including the
coordination of external recruitment through MOR or by the HR Directorate or by using
the Manpower Service Contracts, held by the MPS Contract Holder UEP2T.
Final staff selection is the responsibility of the relevant CFDH or nominated deputy.
An internal matching panel, comprising members of the Facilities Engineering
Leadership Team (FELT) or Production Leadership Team (PLT) is arranged and chaired
by UEOD respectively on a regular basis. This panel reviews the matching proposals
made by the skillpool manager and the CFDHs from both a pan-PDO business
perspective as well as an individual staff development point of view. UEOD (or as
delegated to his Skillpool managers) can force a decision in case of non-alignment
between Matching panel members. All staff and position moves shall require Functional
(UEOD, skillpool manager and CFDH endorsement) as per PR-1088.

15 Technical Standards

15.1 Technical Standards Framework

Support: UEP1
The PDO Engineering & Technical Standards hierarchy consists of the following
elements:

PL (Policy) - Statement of PDO's attitude in response to a business need - provides the

course of action stating intentions and principles Mandatory

CP (Code of Practice) - Translates a policy into practical activities to be executed

repeatedly - Provides rules and an overview of the required Procedures & Guidelines Mandatory

SP (Specification) - Prescribes requirements to be fulfilled by a product, process or

service in line with a Code of Practice - Provides rules and an overview of the required
Procedures & Guidelines. DEM1 denotes that the SP contains AI-PSM elements
Mandatory (see section 5.2.4.2 hereafter).

PR (Procedure) - Formal description for executing an activity to achieve a result in

accordance with the specification - Describes the purpose & scope of an activity and the
specific way the activity is to be performed to achieve a satisfactory result Mandatory

DEP (Shell Design & Engineering Practice) - Sets the recommended standard for good
design and engineering practice and thereby achieves maximum technical and
economic benefit from standardisation. DEM1 denotes that the DEP contains AI-PSM
elements Mandatory when DEP is specified.

GU (Guideline) - Advises on how an activity or task is best performed Non-Mandatory

EP95 & EP-2005 Shell EP Business HSSE Control Framework

PDO baseline standards are detailed on wall chart GU-611 - PDO Guide to Engineering
Standards and Procedures. This wall chart represents the starting point for the
challenge process.
Any proposed deviations to PDO baseline standards shall be subject to PR-1247 Project Change Control & Standards Variance Procedures.
For Value Improvement Practice (VIP) Technical Standards Challenge see section
16.6.

15.2 DEM1
Support: UEP1, MSE4
DEM1 is mandatory for all projects and guidelines can be found in GU648 Guideline
for Applying Process Safety in Projects.
DEM1 is discussed in more detail in Section 10.3.2.

Appendix 1 CP-117 Mandatory Requirements

The following table indicates the Mandatory activities required scaled to project (Capex) size. If
a project is relatively small in Capex terms, but requires a higher level of Project Management,
governance, planning and controls (e.g. due to complexity, strategic value, etc.) then the
Project Manager is responsible to decide in which category the project falls and have this
endorsed by the Decision Executive. (N.B. not applicable for FCPs).

Appendix 2 Governing documentation, References and

Tools
NOTE: All documents are available via the following links:
PDO governing documents: http://sww4.pdo.shell.om/CMFportal/Default.aspx
Reference documents: http://sww-ipms.shell.com/ipms/standards-and-guides.htm
The following standards, procedures, codes of practice and guides are referenced by Chapter
as follows:
2

Opportunity Realisation Process

PDO Governing Documents

ORM and Supporting Documents
Opportunity Realisation Guide (ORG).
Reference Information:
ORM Website
Tools:
iPMS
3

Project Delivery Organisation

PDO Governing Documents

FELT Charter, CFDH Forum Charter (in preparation)
Reference Information
Project Guide 11 Project Organisation
Tools
UEOD and UEP website
4

Project Governance and Assurance

PDO Governing Documents

DRB in the CMF
DCAF
Reference Information
Project Guide 11 Project Organisation
Project Guide 2a Project Assurance
Project Guide 2B Project Execution Review
Project Guide 2c Estimate and Schedule Assurance Review
PDO VAR Website
Shell Value and Project Assurance Website
Tools
PHC Tool
DCAF Tool
5
5.1

Key Project Activities

Front End Loading (FEL)

5.1.1

Concept Engineering

PDO Governing Documents

PR-1358 - Procedure for Concept Selection and Preparing Basis For Design

Reference Information
Concept Selection Handbook
5.1.2

BFD

PDO Governing Documents

PR-1358 - Procedure for Concept Selection and Preparing Basis For Design
Reference Information
Concept Selection Handbook
5.1.2.1 Close-out of the Select Phase
Reference Information
PG12b Capital Project Close-out Report
5.1.3

FEED

PDO Governing Documents

PR-1728 - Preparation of Project Specification for FEED Office
Reference Information
FEED Office Engineering Management System
Tools
PDMS
5.2

Project Execution Planning (PEP)

PDO Governing Documents

Opportunity Realisation Manual
Reference Information
Project Guide 7 Project Premise
Project Guide 10a Project Execution Strategy and Planning
Tools
iPMS
5.3

Risk and Opportunity Management

PDO Governing Documents

CP-131 - Risk and Opportunity Management
Reference Information
Risk Management Resources
Tools
Easy Risk
5.4

Operations Readiness and Assurance

PDO Governing Documents

PR-1612 - Operations Readiness and Assurance
PR-1159 - Commissioning and Start-up
PR-1809 Production Measurement Management system
CP-114 - Maintenance & Integrity Management Code of Practice
Reference Information
PG 14 Capital Projects Operations Readiness
PG14a Operations Readiness

Tools
Operations Readiness Portal, ORSAT
5.5

Management of Change

PDO Governing Documents

PR-1247 - Project Change Control & Standards Variance Procedures
Reference Information
PG 06 Capital Project Controls & Management of Change
Tools
Change Control System
Cost and Planning Toolbox
6

Managing Project Execution

6.1
Detailed Design
PDO Governing Documents
PR-1134, Specification for Detailed Design of Oil & Gas Facilities
Tools
PDMS
6.3

Construction

Reference Information
PG 17a Constructability
PG 17b Construction Management
Shell Wisdom Packs
6.4

Commissioning and Start-Up

PDO Governing Documents

PR-1159 - Commissioning and Start-up
SP-2051 - Specification for Flushing, Pressure Testing, Pickling and Sensitive Leak Testing of
Mechanical Equipment and Piping
SP-2113 - Specification for Commissioning and Start-Up (Key Principles) Awaiting Issue
PR-1073 - Gas Freeing, Purging & Leak Testing of Process Equipment (Excluding Tanks)
PR-1809 Production Measurement Management system
Reference Information
PG 14 Operations Readiness
Tools
CCMS
ORAKLE
6.5

Project Close Out

PDO Governing Documents

PR-1150 - Project Close Out Procedure
Reference Information
Project Services and Finance Handover
7

Contracting and Procurement

7.1

Contracting

PDO Governing Documents

CP-129 - Contracting and Procurement - CoP

PR-1233 - Contracting and Procurement Procedure
GU-425 - Contracting and Procurement Guidelines (CPG)
PR-1171 - Contract HSE Management Part II - Mandatory for Contractors & Contract Holders
PR-1171 - Contract HSE Management Part I - Mandatory for PDO Personnel involved in
Contract Management
PR-1171 - Contract HSE Management Part II - Mandatory for Contractors & Contract Holders
GU-529 - Statement of General Business Principles
SP-1262 - SP-1262 - PCI 001 GC for Goods & Services, Rev D 201003
Tools
Omnicon (used for Pre-Award contract administration),
ProCon (used for Post-Award contract administration)
IX2 (used for Purchase Order administration both pre and post award)
SAP
7.2

Procurement, Materials Management & Logistics

PDO Governing Documents

CP-129 - Contracting and Procurement - CoP
CP-193 - Inventory Management
PR-1233 - Contracting and Procurement Procedure
GU-425 - Contracting and Procurement Guidelines (CPG)
DEP 70.10.90.11 Gen Spare Parts
Vendor List Control (AVME or PGSC List)
GU-364 Vendor Registration Guidelines
GU-398 Guidelines on Scope and Areas Covered during Vendor/Contractor Evaluation and
Assessment
SP-1262 PCI 001 GC for Goods & Services, Rev. D 201003
PL-12 - Logistics Policy
CP-132 - Logistics Services CoP
SP-2024 - Logistics Management System
PR-1858 Procedure for Material Handling, Storage and Preservation
Reference Information
PG 19 Capital Project Logistics
Tools
IX2
8

Project Services

8.1

Planning and Scheduling

PDO Governing Documents

GU-484 - Planning and Scheduling Guidelines
Reference Information
Shell Project Guide 04 Capital Project Scheduling
Shell Project Guide 03 Integrated Activity Planning
Tools
Primavera
Primavera Risk Analysis
8.2

Cost Estimating

PDO Governing Documents

GU-469 Capital Project Estimating (update underway)
Reference Information
Shell Project Guide 06

Cost and Schedule Risk Analysis guide (ref. PG-03)

Tools
CES, Capco$t, CCES
Type 1 Cookbooks (under development)
Contingency and Accuracy Tool
@Risk
8.3

Project Controls

PDO Governing Documents

GU-667 Project Controls Plan
Reference Information
Further guidance is available in many external texts the Guide to the Project Management
Body of Knowledge (PMBOK) from Portfolio Management and Integration (PMI) is perhaps the
most widely used.
Shell Project Guide 06 Project Control
Tools
SAP, Primavera, Excel
8.3.2

Management of Cost

Reference Information
Shell Project Cost Reporting Procedure PSM-I-U-001182-FA-6180-0020
Shell Cost Contingency Procedure PSM-I-U-001182-FA-6180-0021
Shell Value of Work Done Procedure PSM-I-U-001182-FA-6180-0022
Shell Earned Value Management Procedure PSM-I-U-001182-FA-6180-0025
Shell Cost Management Procedure PSM-I-U-001182-FA-6180-0028
Shell Management of Invoices Procedure PSM-I-U-001182-FA-6180-0044
Tools
SAP, Dassian
8.3.3

Management of Progress

PDO Governing Documents

GU-484 Planning and Scheduling Guidelines
Project One-Pagers
Reference Information
Shell Progress Management Procedure PSM-I-U-001182-FA-6180-0011
Tools
Primavera
8.3.4

Management of Change

PDO Governing Documents

PR-1247 Project Management of Change
8.3.5

Management of Risk

PDO Governing Documents

CP-131 Risk and Opportunity Management (to be updated)
Reference Information
PG 20 Capital Project Risk Management
Shell Project Process Project Cost & Planning Risk Procedure : Cost & Schedule Risk
Analysis

Tools
Easyrisk
8.3.6

Reporting

Reference Information
PG 06 Capital Project Controls & Management of Change
Cost and Planning Toolbox
Shell Business One project reporting
Tools
PDO Project One Pager
Shell Major Projects Business One
8.3.7

Project Close Out Reporting

PDO Governing Documents

PR-1150 Project Close-out
Reference Information
Project Guide 12b Project Close Out Report procedure
8.4
8.4.1

Project Assurance
Estimate and Schedule Assurance Reviews

Reference Information
Shell PG 02c Capital Project Estimate Schedule & Assurance Review (ESAR)
9

Quality Assurance

PDO Governing Documents

PL-15 - Quality Management Policy
CP-190 - Quality Management System for Project Delivery
SP-1171 - Specification for Quality Assurance Requirements for Product and Service
SP-1122 - Project Quality Assurance Plans
PR-1866 Quality Auditing Procedure
Reference Information
ISO Standards
PG 13 Quality Assurance & Control
Tools
Variance and Audit Tracking System
9.1

Discipline Controls and Assurance Framework (DCAF)

PDO Governing Documents

PDO DCAF
SP2061 Technical Authorities System
Reference Information
User Reference Guide
Tools
DCAF Tool
10

HSE in Projects

PDO Governing Documents

PL-04 HSE Policy
CP-122 Health, Safety and Environment Mgmt System - CoP
CP-206 Management of Change - CoP

SP-1190 Design for Sour Service Specification

SP-2062 Specifications for HSE Cases
PR-1078 Hydrogen Sulphide Management Procedure
PR-1171 Contract HSE Management Part I and II
PR-1247 Project Management of Change Procedure
PR-1696 HAZOP Procedure
PR-XXXX Procedure for Deviation from Standards (still under development)
DEP 30.10.02.31-Gen. Metallic materials - Prevention of brittle fracture in new assets
DEP 32.80.10.10-Gen. Instrumented protective functions (IPF)
DEP 34.17.10.33-Gen. Design of blast resistant onshore buildings, control rooms and field
auxiliary rooms
DEP 34.17.10.35-Gen. Siting of onshore occupied portable buildings
DEP 34.51.01.31-Gen. Vertical steel storage tanks - Selection design and construction
(amendments/supplements to EN14015)
GU-447 Integrated Impact Assessment Guidelines
GU-611 PDO Guide to Engineering Standards and Procedures
Reference Information
GU-648 Guide for Applying Process Safety In Projects
PG-01 Capital Project HSSE & SP Management
Tools
DCAF
11

Information Management

PDO Governing Documents

SP-2065 - Document Management for Projects
SP-2047 - Preparation & Content of Engineering Drawings
Reference Information
PG 15 Capital Project Information Management
IM Toolbox
Tools
Livelink, Assai, AHA4P
11.1

Project Management System (iPMS)

PDO Governing Documents

ORM
Tools
PDO iPMS
12

Finance in Projects

PDO Governing Documents

Manual of Business Authorities
Reference Information
FBM Business Finance Website
FBC Capital Budgeting
Shell Global Procedures
13

Value Improvement Practices

Reference Information
Opportunity Framing Resources
Value Engineering Resources
PG 16 TQ for Capital Projects, including Benchmarking
PG 19 Capital Project Logistics

14

Project Resourcing and Allocation

PDO Governing Documents

CP-152 - Resourcing and Leadership Development CoP
CP-174 - Omanisation CoP
CP-180 - Recruitment Code of Practice
PR-1088 - Organisational & Staff Changes Process Control
Contracting / Agency Staff PR 1784
GU-642 Generic Project Staffing Requirements
Reference Information
PG 11 Capital Project Organisation
15

Technical Standards

PDO Governing Documents

GU-611 PDO Engineering Standards & Procedures
PR-1247 Project Change Control & Standards Variance
Reference Information
GU-648 Guide for Applying Process Safety in Projects
EP95 & EP-2005 Shell EP Business HSSE Control Framework

Appendix 3 Abbreviations
BOM

Business Opportunity Managers

CFDH

Corporate Functional Discipline Head

DE

Decision Executives

EMC

Engineering Management Contractors

ODC

Offplot Development Contractors

CAPEX

Capital Expenditure

PS

Project Standard

PG

Project Guide

TECOP

Technical, Economical, Commercial, Organizational and Political

ORP

Opportunity Realization Process

ORM

Opportunity Realisation Manual

ORG

Opportunity Realisation Guide

DG

Decision Gate

FCP

Field Change Proposals

CCET

Central Concept Engineering Team

DSC

Development Study Centre

FEED

Front End Engineering Design

FELT

Facilities Engineering Leadership Team

PCAP

Project Control and Assurance Plan

VAR

Value Assurance Review

PEP

Project Execution Plan

FID

Final Investment Decision

VIP

Value Improvement Practice

DCAF

Discipline Control and Assurance Framework

BfD

Basis for Design

Denotes USD unless otherwise stated

mln

million