SAEP-14.pdf

Previous Issue: 20 September 2006 Next Planned Update: 15 August 2011 Revised paragraphs are indicated in the right margin Page 1 of 48 Primary contact: Branton, Minh A on phone 873-9526

CopyrightSaudi Aramco 2009. All rights reserved.

Engineering Procedure SAEP-14 18 January 2009 Project Proposal

Document Responsibility: Project Support and Controls Dept.

Saudi Aramco DeskTop Standards Table of Contents 1 Introduction......... 2 2 Applicable Reference Documents... 3 3 Proposal Contents and ER Estimate...... 5 4 Project Improvement Effort. 22 5 Reporting and Review Requirements....... 27 6 Approvals and Waivers....... 30 7 Contract Bid Package.. 33 8 Exhibits...... 34 Exhibit I Project Proposal Checklist.. 36 Exhibit II ER Estimate Package Checklist....... 38 Exhibit III Contract Development Checklist.. 40 Exhibit IV Benchmarking Data Sheet 42 Exhibit V Bid Quantification Summary............. 46

Document Responsibility: Project Support and Controls Dept. SAEP-14

Issue Date: 18 January 2009

Next Planned Update: 15 August 2011 Project Proposal

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1 Introduction

This procedure outlines the requirements for preparing the Project Proposal and

Expenditure Request (ER) Estimate package. The procedure is not intended to give

instructions on the engineering effort, but to cover requirements that are important

during the Project Proposal process. In summary it covers:

Engineering specifications, standards and selected design requirements

Quality, cost reduction and schedule improvement techniques, i.e., benchmarking, value engineering and value practices

Project Proposal reporting, review, approval & waiver requirements

ER Estimate preparation requirements

Project Proposal, ER Estimate Package & Contract Development Checklists

Contract Bid Packages

The intent of the checklists is to insure compliance with key requirements. They are not

intended to cover all detailed requirements of this procedure.

1.1 Definition

The Project Proposal is a document, which establishes the preliminary (front

end) engineering scope definition, cost estimate basis and schedule for a

proposed facility from the requirements included in the Design Basis Scoping

Paper (DBSP) and the approved Project Execution Plan (SAEP-12). This

includes the proposed facility design, general layout and the appropriate

functional and performance specifications including the recently published

applicable standards & codes. Project Proposal shall be of sufficient detail to

prepare a 10% accuracy ER estimate, provide sufficient technical information

for Saudi Aramco review and (where applicable) provide sufficient information

to obtain detailed engineering, procurement and construction contract bids in

accordance with the approved Contracting Plan.

1.2 Purpose

The Project Proposal documents the agreement on, and commitment to, the

project scope, the project cost and design basis by the Saudi Aramco Project

Management Team (SAPMT), Facilities Planning Department, Project Support

& Controls Department, Proponent and other technical support groups. This is

accomplished through careful evaluation of the project objectives during Project

Proposal preparation to ensure the optimum results. The Project Proposal

establishes the basis for Expenditure Request (ER) funding and is the baseline

from which all subsequently considered scope changes are measured.




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1.3 Preparation Timing

Project Proposals must be completed and approved in time to support the

Expenditure Request Approval (ERA) date.

A complete ER Estimate Package must be submitted to Project Support &

Controls Department / Project Controls & Estimating Division (PS&CD/PCED)

at least 4 weeks prior to the 56D Estimate submittal due date to FPD Budget

Director, as per the Capital Program ER Processing Schedule for Board

EXCOM and local approval. Refer to Section 3.4.2 through 3.4.6 for ER

Estimate Preparation requirements. Approved Project Proposal from SAPMT

Department Manager, Facilities Planning and Proponent organization signatory

is a mandatory requirement prior to issuance of the ER Estimate (Saudi Aramco

Form 56D) to Budget Director.

1.4 Application

With the exception of Master Appropriation projects, Saudi Aramco requires a

Project Proposal and ER Estimate for all Capital, Non-Capital and Expense

Projects, valued more than $2 million, under the control of Engineering and

Project Management (E&PM). The Project Proponent and SAPMT shall agree

and document the level of detail needed prior to start of the Project Proposal.

Projects that combine the preparation of DBSP and Project Proposal into one

effort shall ensure that the requirements identified in this document which are

relevant to the Project are met.

2 Applicable Reference Documents

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

Saudi Aramco Engineering Procedures

SAEP-12 Project Execution Plan

SAEP-13 Project Environmental Impact Assessments

SAEP-25 Estimate Preparation Guidelines

SAEP-31 Corporate Equipment and Spare Parts Data

Requirements

SAEP-140 Project Training Impact Assessment

SAEP-302 Instructions for Obtaining a Waiver of a

Mandatory Saudi Aramco Engineering

Requirement

SAEP-303 Engineering Reviews of Project and Detail Design

Engineering Documentation




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Saudi Aramco Engineering Report

SAER-5437 Guidelines for Conducting HAZOP Studies

Saudi Aramco Engineering Standards (SAESs)

Saudi Aramco Materials System Specifications (SAMSSs)

Saudi Aramco Cost & Scheduling Manual

Saudi Aramco Construction Safety Manual

Saudi Aramco Safety Management System

Saudi Aramco Form and Data Sheet

8362-ENG Certification of Review of Saudi Aramco Materials

Source Documents

General Instructions

GI-0005.002 Loss Prevention Policy Implementation

GI-0020.500 Expenditure Control Expenditure Request Forms

GI-0020.520 Project Change Request

GI-0202.309 Allocation of Costs New Facilities Start-up

GI-0202.451 Engineering Work Order Authorization for

Preliminary Engineering Preparation

GI-0400.001 Quality Management Roles & Responsibilities

Design Basis Scoping Paper (DBSP) and applicable Study Documents

Corporate Loss Prevention Manual

Project Management Loss Prevention Program

Supply Chain Management Manual

DC Surplus Materials - Plant M011 of SAP system

MVG076-01, DC Surplus Deferred Materials System

Unrestricted Use Materials of SAP system (for SAMS Excess Materials)

Saudi Arabian Manufactured Materials Listing from SAP




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Saudi Arabian Government Safety and Security Directives (SSDs)

Construction Industry Institute (CII) Publications

3 Proposal Contents and ER Estimate

The following sections outline the items normally included in Project Proposals.

3.1 Table of Contents

3.2 Technical Requirements

3.2.1 Project Summary

This section provides a history of the existing conditions, a brief

discussion of the proposed facilities and their justification, outlines the

project objectives/scope and schedule, and briefly describes how these

objectives will be achieved.

3.2.2 Project Description

This section provides scope and design information that establishes the

performance specifications for the facilities, process, waivers or

limitations. It shall address details concerning the design basis, proposed

facilities including equipment design, capacities, location/layouts and

other project related information. The list below provides common

elements found in a typical scope.

1) Facility/plant layout and location

Note: The project scope boundaries and interfaces with other related facilities must be clarified prior to developing the scope of the project in the project proposal phase.

2) Facility/process description, design basis and performance

specification

3) Process Flow Diagrams (PFDs) including heat and material

balances

4) Major mechanical, electrical, and utility requirements (type and

quantity)

5) Electrical one-line diagrams electrical area classification drawings

6) Piping and Instrumentation Diagrams (P&IDs)

7) Temporary and permanent on-plot and off-plot facilities

8) Site survey, topography and soil data (Geotechnical Investigation)




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9) Demolition and modifications to existing facilities/plants

10) Operating variables (as required by OSPAS)

11) Corrosion control

12) Impact on and interface with other related projects

13) Environmental Impact Assessment (see SAEP-13)

14) Security, fire protection & safety provisions (if required, Hazard

Identification Plan of Major Hazards, fire hazard zone drawings,

and fire system layout drawings)

15) Communications, including government approvals if required

16) Control systems (including SCADA) provided with Control System

Block Diagram or System Architecture, instrument index,

instrument cable routing and I/O count breakdown

17) Project Execution Plan/Schedule

18) Training requirements

19) Land use permits for new facility sites or addition of facilities

within existing plants. Include Proponent approved permits for lay-

down areas, staging areas and office sites

20) Strategy for project compliance with Project Quality Plan

requirements

21) Process & utilities system definition and turnover sequence

22) Piping, electrical and control system tie-in /hot tap plan

23) Studies & calculations developed during Project Proposal (i.e.

ETAP study, PHA study, process simulation, etc.). All required

engineering studies, including those defined in DBSP, must be

carried out regardless of contracting strategy adopted, e.g., LSTK,

LSPB, etc.

24) Site Investigation Report

25) Project Risks Assessment Report

3.2.3 Scope Change from DBSP

A) Definition of Scope Change

A scope change is defined as any deviation from the Approved

DBSP. Following are examples of typical scope changes:

1. Equipment capacity and sizing changes




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2. Addition or deletion of equipment from the original list

provided to PS&CD in conjunction with the DBSP for

preparation of the budget estimate

3. Plot plan changes

4. Process control plan or system changes (changes in I/O

counts, type of control system, etc.)

5. Other design changes as a result of the following:

Environmental Impact Assessment

Preliminary Hazard Analysis (PHA) or Hazard and Operability (HAZOP) studies

Project risk assessment

Underground obstructions such as rock or utilities interferences, etc.

Building Risk Assessment or any other Loss Prevention requirements

Savings realized from Value Engineering and other Value Practices

Site investigations

B) Notification of Scope Change

SAPMT shall promptly notify FPD, in writing, of any scope

change with the cost and schedule impact and justification as soon

as changes are identified. This allows timely assessment by FPD

of the impact of these changes to the project. Change will be

incorporated in the project scope based on FPD's assessment. All

approved scope changes shall be communicated to PS&CD.

C) Implementation of Scope Change

If accepted for implementation, FPD shall issue a formal letter or

DBSP amendment to SAPMT within two (2) weeks of the initial

submittal and distribute a copy to PS&CD.

D) Recording of Scope Change

All scope changes shall be recorded in a special section in the

Project Proposal package and ER Estimate Package. This section

shall contain a list of all scope changes with justification, cost




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impact, schedule impact, initiator organization, date

initiated/approved and any supported cost estimate documents.

SAPMT shall maintain the list of the scope changes and

continuously update it from the start of Project Proposal until the

ER Estimate is complete.

3.2.4 Communication Requirements

Saudi Aramco construction projects normally require both temporary

(during construction) and permanent communication systems. As

procurement approval for radio frequencies and materials involves long

lead times, communication systems require early identification and

coordination between Information Technology organization and

SAPMT. To facilitate these requirements, the Project Proposal shall

contain the following:

a) Summary of temporary and permanent communication system

requirements. Identification of additional communication facilities

and/or modification to existing facilities necessary to meet the

project requirements.

b) Identification of communications requirements to be handled by

Information Technology organization and those, which shall be

provided and funded by the project.

c) Schedule of communication material requirements with an

estimated site required delivery date.

d) Identification and implementation plans of all communication

disaster recovery and business continuity aspects of the projects.

3.2.5 Safety and Security Directive (SSD)

The SSD (reference SAES-O series) shall be adhered to by all projects,

with exception of home-ownership & utility projects, in accordance with

the directives given to Saudi Aramco by the Saudi Arab Government's

Supreme Commission for Industrial Security. The SAPMT shall contact

Consulting Services Department, Dhahran and the Safety and Industrial

Security organization to obtain current safety and security requirements

before proceeding with Project Proposal engineering. A separate section

in the Project Proposal shall be devoted strictly to safety and security

requirements.

3.2.6 Preliminary Hazard Analysis (PHA)

The objective in performing PHA studies is to improve process safety




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and/or minimize operability problems. The SAPMT in conjunction with

the Loss Prevention Department (LPD), and Environmental Protection

Department (EPD) shall decide which projects and specific facilities

require PHA studies. Duplicate facilities shall not require a new PHA

study. Only new or upgrade facilities that use, produce, process,

transport, or store flammable, explosive, toxic or reactive substances in

large quantities are candidates for PHA studies.

The PHA studies shall normally be conducted during the Project

Proposal stage. The Hazard and Operability (HAZOP) studies, if

required, shall be performed during the detail design when the facility

design is firm and no major design changes are forecasted.

For buildings, a building risk assessment shall be performed when

required by SAES-B-014.

Any cost impact as a result of the PHA studies or building risk

assessment must be identified and included in the ER Estimate package.

3.2.7 Environmental Impact Assessment (EIA)

EIA is required at the early stage in project planning. SAEP-13, Project Environmental Impact Assessments, establishes the procedures necessary to prepare the environmental impact assessments which shall

be submitted to Environmental Protection Department Manager by the

30% Project Proposal stage for review and approval. EPD will forward

the final EIA document to the Ministry of Petroleum and Mineral

Resources for their approval. Approval by the Ministry is required for

all capital projects prior to expenditure request. Any cost impact as a

result of the Environmental Impact Assessment must be identified and

included in the ER Estimate Package.

An environmental impact assessment:

describes and quantifies project actions

identifies those discharges and emissions regulated by environmental standards

predicts the environmental changes resulting from the project, and

demonstrates compliance with applicable Saudi Aramco and/or Saudi Arab Government environmental standards and policies.

The discovery of new information or significant project changes that

impact a previously completed and EPD approved EIA may result in




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cancellation of the existing assessment and re-submittal of an amended

EIA to EPD for approval.

The full environmental report with appropriate calculations is to be

included with the Project Proposals issued to Environmental Protection

Department, Technical Information Center (TIC) Dhahran, and

Corporate Information Center (ASC) Houston. All other volumes will

contain a summary only.

3.2.8 Obtaining a Waiver from Saudi Aramco Engineering Standards and

Materials System Specifications.

Identify standards, procedures, equipment and materials that will require

a waiver prior to incorporation into the facilities.

3.2.8.1 Projects shall meet the requirements of Mandatory Saudi

Aramco Engineering Requirements (MSAERs), which are in

effect on the Project Proposal approval date. Changes to

MSAERs approved after the Project Proposal approval date

shall be mandatory only when:

the changes affect safety, health, environment or security highlighted by the concerned organization. In this case, the

impact of the changes on the project should be reviewed by

Project Management with the Proponent, Loss Prevention,

Industrial Security Operations, Facilities Planning

Department, Project Support and Controls Department,

Process and Control System Department, Information

Technology, and others to determine applicability and

extent of implementation.

the changes result in cost savings to the project. In this case, SAPMT, Proponent and Engineering Services shall

review and decide on implementation.

A Project Change Request (PCR) shall be initiated to document

and obtain approval to implement changes after the project has

been funded (Refer to GI-0020.520, Project Change Request).

3.2.8.2 Include waivers (reference SAEP-302 Instructions for Obtaining a Waiver of a Mandatory Saudi Aramco Engineering

Requirement) that shall reduce project cost without impacting design, safety or operational integrity of the facility.




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Describe the variation in sufficient detail to permit technical

evaluation by the appropriate reviewing agency.

Include copies of waiver applications and approvals.

Any approved waiver that has an impact on the Project must be

identified in the Project Proposal and ER Estimate package.

3.2.8.3 Deviations from SSD requirements shall be submitted in a

letter format as per SAES-O-100 (General Requirements for

Safety & Security) that describes the variation in sufficient

detail to permit technical evaluation by the appropriate

reviewing agency.

3.2.9 Drawing Index and Drawings

This section provides a list and copies of the drawings that define the

scope of the project. It shall include key drawings such as PFDs, P&IDs,

plant and equipment layouts, electrical one-line diagrams and other

necessary drawings that are required to establish the design basis and

assist in producing an ER quality estimate.

3.2.10 Project Quality Plan

SAPMT shall prepare a Project Quality Plan in accordance with

GI-0400.001 (Quality Management Roles and Responsibilities). The

SAPMT shall also ensure that the specific requirements for inspection

are included in Schedule Q Attachment VI for all applicable contracts.

3.3 Materials Related Requirements

3.3.1 General

The Project Proposal provides a table of major materials and equipment

identified for the project. During preliminary engineering, the

Engineering Contractor, with guidance from the SAPMT, shall review

the Company DC (9COM) Surplus and Excess (9CAT) using SAP

MMBE transaction to identify all acceptable or substitute materials

which are available in Saudi Aramco inventories for possible use on the

project, with the objective of:

a) Incorporating materials, which require the least new cash outlay to

Saudi Aramco

b) Making maximum economic use of the materials available from

surplus and excess cataloged material inventories




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c) Making maximum economic use of locally manufactured materials

d) Providing full justification for any proposed purchases of

contingent quantities or non-installed spares

During Project Proposal preparation, the SAPMT shall request review,

and may request assistance from the Materials Supply (MS) on all

portions of the plan that involve materials related aspects of the work.

SAPMT will continue to be responsible to ensure that the purchase order

is in acceptable technical compliance with relevant MSAERs during the

time the Contractor is handling the order. Purchase Orders for

inspectable materials shall be reviewed by Inspection Department prior

to placement, to ensure compliance with the Regulated Vendor List,

Technical and Quality requirements.

If procurement of major equipment and materials is on the critical path

of the project schedule, SAPMT may elect to consider novation of these items to reduce their impact on the project schedule. Novation typically involves:

1. placement of purchase order by the Management Contractor or

Project Proposal Contractor with commitment only for engineering,

and

2. after ERA, transfer the purchase order to the successful LSTK

Contractor on contract award.

The purchase order transferred to the LSTK Contractor will cover the

complete scope involving engineering and manufacture. Use of novated

purchase orders should be approved by Services Review Committee

(SRC) either as part of the contracting plan or as an individual item.

3.3.2 Material Source List

The materials source list identifies major equipment and material items.

Where possible, an estimated dollar value and quantity required shall be

indicated. Also indicate responsibility for inspection, expediting, traffic

and transportation. The Project Proposal effort shall develop Quotation

Requests (QRs) for major engineered equipment and critical items, and

issue these QRs to vendors on a For Development Only basis to determine prices and delivery schedules. For purpose of preparing the

ER Estimate, the major equipment list shall include account number, the

item number, a brief description, the data sheet, a requisition number if

available, the estimated value and other pertinent information. The

following areas shall be segregated:




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a) Surplus Materials - 9COM Materials in Plant M011

b) Excess Cataloged Materials - Unrestricted use 9CAT Materials in

SAP transaction MMBE

c) Locally manufactured materials and vendor warehoused materials

(LDOR)

d) Cataloged Materials Reservation (9CAT)

e) Non-cataloged Materials (9COM)

f) Contractor procurement Lump Sum Turnkey (LSTK) or Lump

Sum Procure/Build (LSPB)

g) Sole source materials and equipment

3.3.3 Use-up Target Values

The Surplus Inventory and the Excess Cataloged Materials Listings shall

be reviewed to prepare the listing and estimated values of possible

surplus and excess usage. During the Project Proposal development, this

list shall be further refined to set the target values for use-up of those

items that shall be reported during the life of the project. LSTK or LSPB

contracts shall use the same format and shall estimate total commodity

(9CAT) and engineered (9COM) material costs (regardless of originator)

as the basis for determining use-up values. The target values are goals

requiring extra effort to achieve rather than just a restatement of the

original major items listed in section 3.3.2.

3.3.4 Locally Manufactured Material

During Project Proposal development, the SAPMT shall obtain a current

list of approved locally manufactured products and sources from MS.

This list shall be provided to LSTK & LSPB Contractors to encourage

use of locally manufactured materials.

3.3.5 Critical Plant Equipment Unit Spares

A list of proposed installed spares for critical plant unit equipment and a

list of non-installed capital spares proposed for entry into Saudi Aramco

stores custody shall be provided along with the estimated cost for each

item and justification for purchase. Comparison shall be made between

spares specified in the Design Basis Scoping Paper and spares specified

in the Project Proposal.

3.3.6 Start-up Spare Parts

Construct-only project materials furnished by Saudi Aramco need not




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address this subject because spares shall be furnished per SAEP-31

(Corporate Spare Parts Data Requirement). For Procure/Build contracts,

the SAPMTs shall specify start-up spare responsibility including how

they shall be provided, the financial impact of purchase and final

disposition of residual spares.

The LSTK Contractor is responsible for providing start-up spares.

Residual and/or unutilized start-up spares remain Contractor's property;

such spares may not be purchased from the Contractor by Project

Management. Proponent at their discretion has the option to purchase

these residual spares against their Operating Budget for future use.

Operations shall communicate with MS (Materials Control Department)

to ensure the spares are reviewed against overall inventory needs, and do

not adversely affect existing supplies. Defined start-up spares may be

turned over to Saudi Aramco in accordance with the contract

requirements provided that the quantities and types are in accordance

with the Saudi Aramco stocking policy. For LSTK and LSPB contracts,

start-up spares responsibility for free issue equipment provided by Saudi Aramco shall be stated clearly in the contract.

SAPMT and the respective Contractors are responsible for the spare

parts as outlined under SAEP-31. In all cases, the SAPMT/Contractors

shall provide complete and accurate spare parts data packages necessary

to support Saudi Aramco procurement of operating spare parts.

3.4 Scheduling & Estimating Requirement

3.4.1 Scheduling Requirements

This section contains a Level III project summary schedule that shall be

developed during the Proposal phase based on information from the

Project Milestone Schedule, WER Schedule and other data as they

become available during the DBSP and Project Proposal.

Project Summary Schedule should be developed as soon as Preliminary

Engineering starts and will be used as a working tool in the absence of a detailed schedule by Contractor. The Project Summary Schedule shall

be used as a guide for ER estimate preparation, early identification of

long lead material procurement items, Contracting Strategy and technical

evaluation of Contractors and start-up planning. As-Built schedules

from similar projects can be made available from PC&ED Scheduling

Group to be used as a guide for the initial preparation of the Level III

schedule.




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Project Summary Schedule addresses all the project life cycle activities

in a summary format. It must be logic driven, based on the Critical Path

Method (CPM). The Schedule should contain sufficient detail to show

potential material or equipment novation, long lead items, contract procurement activities, detailed engineering by discipline leading to

major deliverables, mobilization, early works, shutdown, tie-ins, testing,

loop checks, pre-commissioning, start-up, interface with Proponent and

other projects.

Project Summary Schedule shall also include ER estimate preparation

and approval activities including Estimate Kick-off, milestone dates for

Scope Compliance and any ER Estimate reviews or any other design

reviews, MTOs for the relevant disciplines, equipment pricing,

NOVATION of equipment and/or Prior Approval Expenditure Request

(PAER), Technical Review Meetings, and the final approval of the

Project Proposal and 56D preparation and submittal to the Facility

Planning Department (FPD).

The schedule shall form the basis for the original (Rev.0) Project

Completion Schedule (PCS). The Project Summary Schedule further

expands the level of detail while still supporting critical and key

milestone dates defined and prescribed in the contract (Schedule B). Project Summary Schedule is expanded to include critical milestone

dates as well as any other key milestones that are provided by

Contractors. If novation material and equipment is included in the execution plan, the date of purchase order and required delivery date

should be incorporated in the schedule. The schedule shall include

review time requirements specified in SAEP-303 (Engineering Reviews

of Project and Detail Design Engineering Documentation). Contact

Scheduling Engineering Group of PS&CD/PCED for more detailed

information on Project Summary Schedule.

3.4.2 ER Estimate Requirements

Project Proposals must be completed and approved in time to support the

Expenditure Request Approval (ERA) date. A complete ER Estimate

Package must be submitted to PS&CD, at least four (4) weeks prior to

submittal of 56D Estimate to FPD Budget Director as per Capital

Program ER Processing Schedules for Board, EXCOM and local

approvals.

SAPMT shall be responsible for preparation of the ER Estimate package:

in accordance with SAEP-25 (Estimate Preparation Guidelines)




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in conformance with the Work Breakdown Structure and Standard Code of Accounts (SCA) established by SAPMT and PS&CD

to achieve a quality estimate with an accuracy of (10%) of project final cost

using the Estimating Tool Aspentech Kbase, particularly for oil and gas process facilities, as a preferred estimating software. Selection of

any other estimating tool should be discussed with PS&CD.

Effective January 2008, Aspentech KBase shall be used as a mandatory

estimating tool in the preparation of the ER Estimate for oil and gas

projects greater that $100 million. Waiving this requirement must be

approved by the PS&CD Manager.

The final ER Estimate shall be jointly reviewed and approved by

PS&CD and SAPMT.

3.4.3 ER Estimate Review Meetings

Initial, Interim and Final ER Estimate review meetings will be held by

members of SAPMT, Engineering Contractor, and PS&CD during the

course of Project Proposal phase. SAPMT will be responsible for

organizing the meetings, providing the required documents to PS&CD

prior to review meetings and inviting all concerned parties to participate

in the ER Estimate Review meetings.

A) Initial Kick-off Meeting

The initial kick-off meeting will be conducted before the 30%

completion of Project Proposal. An ER Estimate Plan, as described

in Section 3.4.4, shall be prepared and completed prior to the Kick-

off Meeting. PS&CD will take an active role in defining Saudi

Aramco ER estimate preparation requirements and providing basic

information to the SAPMT and Contractor.

B) Interim ER Estimate Review Meetings

The purpose of the interim meeting is to review the progress of the

ER estimate preparation activities. The number of interim

meetings should be established during the initial ER Review

meeting.

Minimum one (1) week prior to the review meeting, SAPMT shall

provide a complete set (hardcopy and electronic file) of the ER

Estimate with support documents to PS&CD for review.




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The interim review meeting deliverables shall include, but not be

limited to:

ER Estimate as developed to date, with MTOs by Area and WBS

ER Estimate Basis

ER Estimate Detailed Schedule

Multiple Discipline Drawings including PFDs, P&IDs, Plot Plans, One Line Diagrams, etc.

A list of all scope changes from the DBSP identified to date. The list will include itemized scope changes with justification

and cost/schedule impact for each deviation item (per Section

3.2.3)

Major equipment quotations

Recent quotations for Engineering and Construction rates

All discipline Material Take-offs (MTOs) by Area and WBS

Market Outlook study, as required

Project Risk Assessment, as required

C) Final ER Estimate Review Meeting

1. A complete ER Estimate Package must be completed in

accordance with the established ER Estimate Plan and

submitted to PS&CD/PCED at least four (4) weeks prior to the

56D Estimate submittal due date to FPD Budget Director.

Refer to Section 3.4.5 for ER estimate deliverables.

2. After receipt of the ER Estimate package, PS&CD will conduct

a meeting with SAPMT and Engineering Contractor to review

and finalize the estimate as deemed necessary.

3. Minimum of two (2) weeks prior to 56D Estimate submittal due

date to FPD Budget Director, SAPMT shall provide PS&CD

the Project Proposal sheet approved by SAPMT, FPD and

Proponent and a copy of the Technical Meeting minutes with a

complete list of all finalized items with detailed cost estimate of

impacted items. These documents are required for finalizing

the 56D Estimate for submittal to FPD Budget Director.




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When the ER Estimate is over or under by more than 10% of the

Budget Estimate, PS&CD and SAPMT shall jointly prepare a

scope reconciliation and comparison between the approved Budget

and the established ER Estimate. The review shall include a list of

all scope changes from DBSP which will be part of the ER

Estimate package.

D) Scope Compliance Review Meetings

Compliance Review meetings will be conducted, as deemed

necessary, by SAPMT in coordination with FPD and PS&CD to

ensure that the scope of Project Proposal is in compliance with the

approved DBSP.

SAPMT shall prepare and provide all attendees with a complete list

of accepted scope changes and relevant supported documents for

the Scope Compliance Review meetings. PS&CD shall be

responsible for validation of cost and schedule impacts for all

scope changes.

3.4.4 ER Estimate Plan

SAPMT shall be responsible for developing an ER Estimate Plan which

will be reviewed and discussed during the initial kick-off meeting. At

the minimum, the ER Estimate Plan should contain:

Project scope of work

Site development plan and investigation

A detailed schedule with major and interim milestones for completing the ER Estimate deliverables

A quality control plan for estimate preparation

Specific plan and methodology for performing market outlook and project risk assessment for selected projects greater than $300 million

(refer to Section 3.4.6)

Methodologies for developing estimate basis, material take-offs (MTOs), pricing of material and equipment, unit rate for engineering

and construction based on current market conditions and project risk

assessment

Plan and methodology for developing internal and external benchmarking




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Identification of estimating software to be used for preparation of ER Estimate

Work Breakdown Structures (WBS) and Standard Code of Accounts (SCA) to be used for the project

A list of ER Estimate deliverables required for interim review and final review

An organization chart of the estimating team

Roles and responsibilities of all involved parties in developing the ER Estimate and identifying point of contact from each organization

3.4.5 ER Estimate Deliverables

The ER estimate will be based on 100% Project Proposal which includes

equipment lists, equipment sizing, plot plans, P&ID, single line

diagrams, cable schedules, instrument index summaries, I/O counts, bulk

material take-offs, and other related project documents and drawings.

The following major contents of deliverables should be included in the

ER estimate package:

Approved Project Proposal

Drawings, specifications, reports and other relevant documents necessary to define the project requirements

Approved Execution and Contracting Plan

Project Summary Schedule

An ER Estimate package which includes a hard-bound copy and an electronic copy on a CD with all required backup documents as

specified in SAEP-25

A complete list of all scope changes from the DBSP that will be implemented in the Project Proposal. The list will include itemized

scope changes with justification and cost/schedule impact for each

deviation item

Copies of Technical Review Meeting Minutes

Copies of ER Review Meeting Minutes with status of outstanding and implementation items

Copies of PHA or HAZOP Meeting Minutes with summary of changes, if applicable

For detailed listing of deliverables, refer to the Exhibit II, ER Estimate




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Package Checklist.

3.4.6 Market Outlook Study & Project Risk Assessment

PS&CD/PCED will coordinate with SAPMT to identify projects worth

$300 MM or greater that will be required to do a Market Outlook Study

and Project Risk Assessment. Market trends and project risks are

assessed to avert potential impacts on project development and

execution. Results of these studies shall be included in the basis of

estimate and contingency rates shall be recommended accordingly.

These shall include, but not be limited to, the following:

Worldwide demand for Engineering and Construction services

Market conditions that affect major equipment procurement pricing and delivery

Trends related to supply and demand of major equipment and bulk material in the Middle East that could affect schedule and costs on

the project

Availability of Engineering Contractors to undertake LSTK contracts in Saudi Arabia

Assessing the financial markets and institutional support for current and future Middle Eastern projects

Project risks study on constructability, tie-in execution, environmental, security and other factors related to a specific project

Forecast of Engineering Contractors Overhead and Profit Margins

Any other factor that can impact the future cost of the project

Following are some of the resources that can be used in developing a

Market Outlook study:

Trade Organizations

Trade Magazines

Financial Institutions studies and surveys

Government studies and surveys

Industry studies and surveys

Manufacturers and Suppliers data

3.5 Appendix

The Appendix shall include letters, minutes, land use permits and other pertinent




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documents written during Project Proposal development.

3.6 Numbering Project

All Project Proposals shall be numbered by the issuing office as follows:

Saudi Aramco APP Series (Numbers assigned by the Technical

Information Center, Dhahran)

ASC TPP Series (Numbers assigned by the Corporate

Information Center, Houston)

APP or TPP numbers shall be on the Project Proposal cover sheet.

3.7 Training Impact Assessment

SAEP-140 (Project Training Impact Assessment) requires that a Training Impact

Assessment be prepared as part of the Project Proposal for all projects for which

training programs for operations and/or maintenance personnel will be required.

These training programs will not be provided by the project and costs for training

are not be paid for by capital funds. (Refer to GI-0202.309, Paragraph 4.5)

The Proponent is responsible for identifying any training requirements for a

project by preparing a Training Requirement Statement prior to the start of the

Project Proposal.

If training is to be required, a Training Impact Assessment is to be prepared in

accordance with SAEP-140. SAPMT is responsible for incorporating the

findings of the Training Impact Assessment in the final Project Proposal.

SAPMT may also be required to implement the findings of the Training Impact

Assessment as included in the approved Project Proposal. These may include:

3.7.1 Incorporating contract provisions that require the Contractor to develop

multiple quotations for specified equipment so that the cost of training

can be taken into consideration when selecting the life-time, low-cost

supplier. These provisions will allow Saudi Aramco to direct the

Contractor to place its order with one of the proposed technically

acceptable suppliers and will provide for additional payment to the

Contractor if the selected supplier did not offer the lowest base price to

the Contractor.

3.7.2 Incorporating requirements for the Contractor to include provision in its

purchase orders for specified equipment that establish fixed prices for

training services or material to be procured at a later date by Saudi

Aramco. This will reduce the possibility of a supplier overcharging




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Saudi Aramco when training services or materials are procured on a

single-source basis.

4 Project Improvement Effort

This section comprises of activities that on implementation would optimize project cost &

schedule, improve quality of the Project Proposal and assure project execution success.

4.1 Value Engineering

Value Engineering (VE) is an organized analytical process that can be used to

optimize the life cycle cost and performance of a facility or system. The VE

process systematically identifies opportunities to increase value by removing

unnecessary costs without sacrificing quality, function, or reliability.

4.1.1 VE Study Selection Criteria

SAPMT shall initiate a formal VE study during the Project Proposal

development stage when:

The estimated BI value exceeds $50 million, or

The estimated BI value is between $10 $50 million and a VE study was not conducted during the pre-planning or DBSP development

stage, or

The estimated BI value is between $10 $50 million, and the pre-planning or DBSP stage VE Report recommends that a Project

Proposal stage VE study is required.

4.1.2 VE Study Planning & Coordination

VE studies should be completed during the early phase of the Project

Proposal, but not later than the 30% completion milestone date. For

scheduling purposes only, VE studies shall be coordinated with the Capital

Program Optimization Division of Project Support & Controls Department

(PS&CD/CPOD). The requirements for conducting VE studies shall be

identified in the Project Proposal Contractors scope of work.

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

(CVS), or local Engineering Contractor personnel who have been

certified by PS&CD/CPOD to conduct VE sessions.

Requests for VE study guidance, and information on Consultants and

local Engineering Contractor personnel certified to facilitate VE sessions

should be directed to PS&CD/CPOD.




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4.1.3 VE Proposal Implementation & Reporting Requirements

The effectiveness of a VE study depends on the successful

implementation of accepted proposals and on the prompt resolution of

pending proposals. VE proposals that are accepted by the Proponent

Organization and SAPMT are to be reviewed by FPD, and CSD if

related to standards requirement, before being incorporated into the

Project Proposal Scope of Work.

The status and resolution of all accepted and pending VE proposals shall

be documented in the Value Engineering Section of the Project Proposal.

A copy of the final VE Report shall be distributed to the PS&CD/CPOD

Division Head.

4.2 Benchmarking

Benchmarking is an improvement process used to discover and incorporate

project cost, schedule, front-end loading, value improvement and operability

into project execution strategy.

The benchmarking process will be centralized so that all benchmarking activities

are managed through PS&CD/PCED. Benchmarking will be conducted at

study, late stages of the DBSP, early stages of the Project Proposal as well as

towards the completion of a project. Projects will be selected by PS&CD for

either external or internal benchmarking.

The objective of Benchmarking analysis at the early stage of Project Proposal is

to identify and compare key project parameters such as project scope, quantity,

cost, schedule, value practices and execution strategy, against the Companys internal historical statistics of similar projects. The project data also are used for

benchmarking against the industry world class projects with similar scope. The

result of the benchmarking analysis can be used for improving project execution

plan.

4.2.1 Internal Benchmarking Requirements

For all projects except community projects, school and home-ownership,

SAPMT shall provide key project data to PS&CD/PCED for internal

benchmarking purposes. A sample of benchmarking data sheet is shown

in Exhibit IV. This internal benchmarking data will be part of the ER

Estimate package.

4.2.2 External Benchmarking Requirements

PS&CD/PCED will coordinate with SAPMT to identify projects with




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value of $100 MM or greater to be benchmarked. Projects less than

$100 MM may be benchmarked if related to core business.

PS&CD/PCED will perform the leading role for the selection of the

Consultant, development of benchmarking criteria, and implementation

of the formal benchmarking study.

The analysis starts as early as the study phase and DBSP, or at any

appropriate stage of the Project Proposal development, but no later than

90% Project Proposal progress, comparing key parameters of the project

with an external industry-wide database. The analysis would address

key project outcomes and associated risk based on the Project Proposal

effort to date. As a minimum, the following areas should be addressed

and compared to industry norms, the Gulf Region and Best in Class:

Status of front-end loading (FEL), i.e., project definition, at the time the benchmark analysis is prepared

Use of value improvement practices

The projected total installed cost (TIC) of the project

An analysis of the contingency requirement based on project scope and FEL

Engineering as a percentage of TIC

Time required for total project execution (ERA through Onstream)

Time required for the construction phase

Expected time required for start-up

Long lead material deliveries comparison

General or specific requirements included in the Project Proposal Scope of Work that are non- industry standards

Execution strategies

A Benchmarking section shall be included in the Project Proposal book

to include the summary benchmarking report prepared by an outside

Consultant or by the Engineering Contractor.

4.3 Energy Optimization Study

Capital projects involving the addition of or modifications to industrial

processes with combined fuel and power consumption exceeding $2 million per

year (combined) shall be optimized for the efficient use of thermal and electrical

energy.




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For purposes of the energy study, an industrial process is defined as one that

includes fired heaters, boilers, pumps, compressors, steam turbines, or gas

turbines. Non-industrial facilities such as buildings, roads, warehouses, storage

depots, and non-process operations such as IT or instrumentation upgrades are

excluded.

The technical approach and work scope for the energy study should address one

or more of the following issues:

Process Integration, using Pinch Analysis techniques

Equipment Load Management policies

Adjustable Speed Drives

Driver Selection

4.3.1 A preliminary Process Integration study of the project facilities shall be

conducted only when the combined fuel consumption of the in-scope

process units exceeds 100 MM Btu/h. It is necessary only to provide the

optimum practical utility consumption targets in comparison to the utility

requirements for the un-optimized process design; detailed design of the

heat exchanger network and combined heat/power system to achieve

these targets is not required.

4.3.2 For energy consuming or conversion equipment (pumps, compressors,

turbines, boilers, and furnaces) in parallel operation, the study shall

identify the optimum number of equipment that should be operated over

the expected range of plant operating rates, considering the trade-off

between energy consumption and meeting production goals. Load

management policies are required only when the energy consumption for

a particular service or application exceeds 1000 HP (if rotating

machinery) or 16 MM Btu/h (if fuel-fired equipment).

4.3.3 The economic feasibility of Adjustable Speed Drives (ASDs), whether

variable frequency type or other, shall be evaluated for individual

motors/drivers of 2000 HP or greater. Capital costs should be balanced

against the combined energy and non-energy benefits.

4.3.4 Rotating machinery with individual power loads of 5000 HP and higher

shall be evaluated for selection of optimum driver type electric motor, steam turbine, or gas turbine.

4.3.5 Energy efficiency for individual items of equipment (e.g., motors,

boilers, etc.) is covered separately by Saudi Aramco equipment

standards. Evaluation of alternative equipment options is not required as

part of the energy study scope.




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The optimum time to conduct such a study is the earliest possible date after

preliminary PFDs, including heat and material balances, are available, and the

plant fuel/power consumption estimates have been determined. Generally, this

would be after 30% completion of the Project Proposal, but no later than 60%

Project Proposal completion.

The full energy optimization study report, including all supporting data and

calculations, must be submitted to the Energy Systems Unit of Consulting

Services Department for review.

4.4 Other Value Practices

SAPMT shall implement applicable Saudi Aramco and other industry value

practices during Project Proposal development to optimize project planning and

execution. PS&CD/CPOD is available to assist SAPMT in selecting the

appropriate value practices and facilitating their implementation.

The requirements for conducting specific Value Practices shall be identified in

the Project Proposal Contractors scope of work. Value Practice sessions shall only be facilitated by either approved Consultants, or local Engineering

Contractor personnel who have been certified by PS&CD/CPOD. For

information on approved Consultants and local Engineering Contractor

personnel certified to facilitate Value Practice sessions, contact PS&CD/CPOD.

The following value practices have shown proven payback for Saudi Aramco

projects.

Constructability

Effective and timely integration of construction knowledge into the

conceptual planning, design, construction and field operations of a project.

Optimum timing during project proposal phase is at 30% Project Proposal.

Project Definition Rating Index (PDRI)

Held at 60% Project Proposal involving SAPMT, Proponent, Contractor, and

other parties as needed to measure project proposal completeness and clarity.

PDRI consists of about 70 elements that identify and very precisely

describes each critical element in a preliminary engineering scope definition

package.

Lessons Learned

Systematic search for applicable existing lessons learned from Saudi

Aramco Project Management Lessons Learned database and other sources.

Implement applicable lessons to avoid repetition of problems and build on




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successes experienced by other projects. Also collect and submit new

lessons learned per SAEP-329 Project Close-out Report.

Project Execution Planning Workshop (PEPW)

Half-day workshop to promote ownership, commitment, and alignment of all

project stakeholders including SAPMT, FPD, Proponent, Contracting, Loss

Prevention, and other involved parties.

Schedule Optimization

Utilization of Schedule Reduction and Schedule Compression techniques to optimize the schedule for project completion.

Planning for Startup

Extensive set of tools and techniques used by all Project Stakeholders, PMT,

Proponent, Contractors, etc., to help facilitate a successful facility start-up

and stable long term operation.

Scope Control & Change Management

Scope Control is a preventative process that starts with a detailed project

scope and ensures discipline in changing the scope during execution.

Change Management involves establishing and clearly communicating to all

project stakeholders a system for recognizing, evaluating, and implementing

changes during all phases of the project.

Other

PS&CD will identify and implement other value practices that become

available between revisions of SAEP-14 that offer value improvement to the

project.

5 Reporting and Review Requirements

5.1 Project Proposal Distribution for Review and Meetings

Draft Project Proposals shall be distributed for review to the appropriate

members of Saudi Aramco Management and attendees of the Technical Review

and Project Proposal Meetings. Distribution of the Project Proposal narrative

shall be in electronic format (in Microsoft Word).

The E-Review electronic review system is the Companys standard method for review of engineering drawings and documents. SAPMT should submit review




Page 28 of 48

packages through this system unless there is a compelling reason to do

otherwise. The E-Review procedures and guidelines are provided in SAEP-303.

The SAPMT and proponent are responsible for determining the recipients. As a

minimum, the following represents a list of various organizations that shall be

considered for receipt of the Project Proposal. However, only those

organizations with direct involvement shall receive the Project Proposal.

Executive Management:

- Proponent Organizations, i.e.

Ras Tanura Refining

Northern Area Producing

Southern Area Producing

Jeddah/Riyadh Refining

Yanbu Refining

Distribution Operations

Abqaiq Plants & Pipelines

Gas Operations

Medical Services

Employee Relations

- Petroleum Engineering and Development

(for production-related projects)

General Management:

- Industrial Security Operations

- Proponent organization

Management:

- Oil Supply Planning and Scheduling Department

(for all proposals related in any way to oil, gas, NGL and/or refined product

movement and handling)

- Computer & Communications Engineering Department

(for all projects involving communications)

- Purchasing Department

- Power Distribution Department

(for all projects related to power facilities at 2.4 kV and above)

- Abqaiq, Dhahran or Ras Tanura Utilities Department

(for the area community projects only)




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- Facilities Planning Department (mandatory)

- Project Support & Controls Department (for information only)

- Consulting Services Department

- Inspection Department

- Loss Prevention Department

- Environmental Protection Department

- Process & Control Systems Department

- Roads & Heavy Equipment Department

- Industrial Security Department

- Fire Protection Department

5.2 Technical Review Meeting

The Technical Review Meeting shall be held no sooner than ten (10) working

days after distribution of the Project Proposal for review. Location, date, and

time of the meeting shall be announced in the cover letter distributed with the

Project Proposal. The Technical Review Meeting shall discuss all technical

aspects of the Project Proposal, resolve technical questions, address

environmental issues and review the Project Summary Schedule. Interim

technical review meetings shall be conducted as required by SAPMT depending

upon the type and complexity of the project. Items not resolved at the final

technical review meeting shall be addressed in the Project Proposal Meeting.

Substantive changes resulting from the technical review meeting shall be

incorporated as appropriate into the Project Proposal documents.

SAPMT shall prepare minutes of the Technical Review Meetings and distribute

the minutes, electronically whenever possible, to all persons who either received

the Project Proposal or attended the Technical Review Meeting. The minutes

shall include the estimated cost and schedule effects of major changes from the

DBSP/Project Proposal as originally prepared. Refer to 3.2.3 for definition of

major scope change.

The subject of critical plant equipment unit spares (capital spares) per section

3.3.5 shall be addressed, and proposed purchases shall be reviewed.

5.3 Project Proposal Meeting

The purpose of the Project Proposal Meeting is to resolve any outstanding items

remaining after the Technical Review Meeting and to finalize the project scope.

The Project Proposal Meeting shall be scheduled no sooner than five (5)

working days after distribution of the minutes of the Technical Review Meeting.




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The delegated representatives of the Project Proposal approval authorities

(section 6.1.1) shall attend this meeting in order to make decisions on matters

not resolved in the Technical Review Meeting.

SAPMT shall be responsible for preparing and distributing the minutes of the

Project Proposal Meeting to those persons who either received a copy of the

Project Proposal or attended the Project Proposal Meetings.

For selected small projects, the Technical Review and Project Proposal

Meetings can be combined into one meeting if concurred by Proponent and

FPD. In this case, the reviewing organizations should send personnel authorized

to make decisions to attend the meeting.

5.4 Distribution & Storage of Approved Project Proposals

Following the approval of the Project Proposal, a final approved copy shall be

distributed as follows:

5.4.1 ASC

An electronic copy of every Project Proposal shall be sent to Corporate

Information Center (CIC), Houston.

5.4.2 Saudi Aramco

SAPMT shall send copies of the approved Project Proposal to:

- Facilities Planning Department (FPD) - one hard copy, to be used as

a "working" document for five years or for the duration of the

project, whichever is longer.

- Technical Information Center (TIC), Room E-3100, EOB, Dhahran -

one electronic copy for archival purpose.

- Project Support & Controls Department (PS&CD) - one electronic

copy, for input in the Electronic Image Document Management

System.

The electronic file submissions shall be on CD-ROM and contain an

index at the beginning of each file medium to facilitate retrieval of stored

data. The electronic text, spreadsheet, and graphical data shall be in

Microsoft format, and drawings shall be in accordance with Saudi

Aramco standards and formats. Scanned documents shall be in Acrobat

format in accordance with the corporate standard maintained by

EK&RD/Drawing Management Unit.




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6 Approvals and Waivers

6.1 Approval Process

6.1.1 Approvals

SAPMT shall be responsible for obtaining Saudi Aramco approval for

the Project Proposal from the appropriate individuals listed. Executive

Management may delegate the approval authority to General

Management level. Obtaining these signatures constitutes full Project

Proposal approval. The recommended order for routing and approval

will be as follows, however, SAPMT may seek parallel approval from

more than one organization at the same time where appropriate.

- Manager, Facilities Planning Department

- Manager, Loss Prevention Department

- Manager, Power Distribution Department

(for all projects having power facilities of 2.4 kV and above)

- Manager, Consulting Services Department

- Manager, Environmental Protection Department

- Manager, Oil Supply Planning and Scheduling Department

(for all proposals related in any way to oil, gas, NGL and/or refined

product movement and handling)

- Manager, Process and Control System Department

(for Instrumentation & Control Systems)

- General Manager, Industrial Security

- Vice President, Petroleum Engineering and Development

(for production-related projects)

- Vice President, Engineering Services

- Vice President/Executive Director, Proponent Organization

- Vice President, Project Management

6.1.2 Unresolved Items

If unresolved items exist that would preclude obtaining approvals as

described in section 6.1.1, SAPMT shall refer any unresolved item(s)

through appropriate channels of authority until resolution is obtained.

The Project Proposal minutes shall show the estimated cost and schedule

effects of any changes from the DBSP/Project Proposal as originally

prepared.




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6.1.3 Obtaining Changes to an Approved Project Proposal

For a project with an approved Project Proposal which has not yet

received Expenditure Request (ER) approval, scope changes shall be as

follows:

SAPMT will document and estimate all scope changes approved by FPD and submit the revised ER estimate to PS&CD as an addendum

to the approved Project Proposal

The proposed change in the meeting minutes or an addendum shall include justification and the cost/schedule impact

The required minimal approval authority for the proposed change is Project Manager level

SAPMT shall distribute the approved changes to PS&CD and all those that received the original Project Proposal

6.2 Project Proposal Waiver

6.2.1 Request

For selected projects, Project Management may request to waive the

requirement for a Project Proposal / Front End Engineering Design

(FEED) and proceed directly with detailed design using preliminary

engineering funds. This request will permit SAPMT to use TC-68 funds

to carry out detailed design, perform selected project proposal

requirements and to prepare an ER quality estimate for funding approval.

Project Proposal waiver does not exempt ER Estimate and any other

Value Practices requirements.

6.2.2 Approval

The following steps are required to obtain a waiver of project proposal

and proceed with detailed design:

SAPMT Department Manager shall prepare a formal letter requesting to carry out detailed design during Project Proposal. The letter shall

be addressed to Vice President, Project Management and Vice

President Proponent. The letter should state the present situation,

scope of work, justification for the waiver and identify what project

proposal requirements, if any that will be performed during detailed

design, i.e., value engineering, CII concepts, etc.

SAPMT shall obtain Vice Presidents, Project Management and Proponent approval for this request.




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On receiving approval, SAPMT shall prepare an Engineering Work Order Authorization for Project Proposal Preparation (Form 6891-

ENG) to request approval of TC-68 funds to carry out detailed

engineering and contract preparation based on GI-0202.451,

(Engineering Work Order Authorization for Preliminary Engineering

Preparation).

Approval is accomplished on obtaining the signature on Form 6891-ENG.

7 Contract Bid Package

The Contract Bid Package will be developed in close coordination with the Contracting

Department. Refer to Exhibit III, Contract Development Checklist, for key activities in

developing Contract Bid Package.

A complete Contract Bid Package shall be prepared in accordance with Contracting

Manual and typically contain the following:

Invitation for Bid documents

Technical Proposal documents

Commercial Proposal documents

As part of Commercial Proposal requirements, Bidders shall be required to submit a Bid Quantification Summary as shown on Exhibit V for bid analysis purposes.

Copies of the final Bid Quantification Summary from the awarded Contractor will

be provided to PS&CD

Fully developed and approved Contract documents which include Schedules A through H, and Q

Issue for Bid package (normally prepared by Engineering Contractor) which includes,

but is not limited to, drawings, specifications, applicable reports, and other relevant

documents necessary to define the project requirements and clearly describes the

contract scope of work. SAPMT should take into consideration the current project

execution plan and responsibilities of all contractual parties when revising the Project

Proposal package to Issue for Bid Package.

The following Sections in the Project Proposal should be reviewed carefully to

determine if they are applicable for inclusion in the bid package. If they are to be

included, SAPMT shall modify as required to ensure that Contractors scope of work is clearly defined in the Issue for Bid Package:

Project Schedule

Training requirements




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Land Permits

Operating Variables (as required by OSPAS)

Strategy for projects compliance with quality requirements

Project Risk Assessment

Temporary construction and communications

8 Exhibits

The intent of the checklists is to facilitate the review and ensure all key requirements

are considered, but not to cover all detailed requirements as stated in this procedure.

8.1 Project Proposal Checklist

8.2 ER Estimate Package Checklist

8.3 Contract Development Checklist

8.4 Sample of Benchmarking

8.5 Bid Quantification Summary

Revision Summary

28 June 2000 Major revision. 29 January 2003 Editorial revisions. 15 August 2006 Major revision. 20 September 2006 Editorial revision to paragraph 3.7. 18 January 2009 Editorial revisions.




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EXHIBITS

TABLE OF CONTENTS

EXHIBIT I PROJECT PROPOSAL CHECKLIST EXHIBIT II ER ESTIMATE PACKAGE CHECKLIST EXHIBIT III CONTRACT DEVELOPMENT CHECKLIST EXHIBIT IV BENCHMARKING DATA SHEET EXHIBIT V BID QUANTIFICATION SUMMARY SHEET




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EXHIBIT I PROJECT PROPOSAL CHECKLIST

Item Ref.

Section Description Included

1 3.2.2 Project Proposal documents as described in Section 3.2.2.

Obtain necessary land use permit

Obtain proponent approved permits for construction site area

Complete piping tie-in and hot tap plan

Complete electrical and control system tie-in plan

Prepare site investigation report

2 3.2.4 Temporary and Permanent Project Communication Requirements

3 3.2.5 Comply with Safety and Security Directive (SSD)

4 3.2.6 Perform of PHA or HAZOP Study

5 3.2.6 Perform of Building Risk Assessment

6 3.2.7 Perform of Environmental Impact Assessment

7 3.2.8 Apply Waivers from SA Engineering Standards and Material

System Specification

8 3.2.9 Include a list of drawings and drawings define project scope

9 3.2.10 Prepare Project Quality Plan as per GI-0400.001 including

Schedule Q Att. VI

10 3.3.1 Identify project major material and equipment to be reviewed by

Inspection Dept.

11 3.3.2 Develop a Material Source List of major material and equipment

12 3.3.3 Develop a Surplus Inventory and Excess material Listing

13 3.3.4 Obtain a list of approved locally manufactured products and source




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Item Ref.

Section Description Included

14 3.3.5 Develop a list of critical plant equipment spares

15 3.3.6 Identify required start-up spares with Proponent with concurrence

of MS

16 3.4.1 Prepare Level III Project Summary Schedule

17 3.4.2 Prepare ER Estimate Package ( See Exhibit II - ER Estimate

Package Checklist)

18 3.7 Review Project Training Impact Assessment (SAEP-140) and

identify required implementation

19 4.1 Perform Value Engineering Study

20 4.2.1 Provide project data for Internal Benchmarking

21 4.2.2 External Benchmarking Analysis

22 4.3 Perform Energy Optimization Study

23 4.4 Perform Value Practices

1. Constructability Study

2. Project Definition Rating Index (PDRI)

3. Lesson Learned

4. Project Execution Planning Workshop

5. Schedule Optimization

6. Planning for Startup

7. Scope Control and Change Management




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EXHIBIT II ER ESTIMATE PACKAGE CHECKLIST

Following are minimum documents required to accompany the ER Estimate Request

to PS&CD:

Item Description Included

1 100% Project Proposal package ( Project Proposal must be approved prior to

issuance of 56D)

2 Approved technical review meeting minutes

3 Project Scope summary including new as well as demolition of existing

facilities.

4 Internal/External Benchmarking data

5 Piping and Instrument Diagrams (P&IDs)

6 Plot plan showing major facilities/buildings

7 Proposed Piping lay-out and routing

8 Electrical scope with one-line diagrams, MTO quantities for Transformers,

Switchgear, etc,

9 Field Instrument specifications and Data Sheets

10 Control system (DCS) scope with I/O counts, Block Flow Diagrams and Vendor

Quotations

11 Communications System scope including, MTO and quotations

12 Fire Protection, Safety and Security requirements

13 Building/Equipment data sheets

14 Material specifications including Materials Diagram.

15 DC Surplus, etc,

16 Identify Start-Up and Capital Spares




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17 Catalyst, Chemicals & Licensor Fee costs.

18 HAZOP Review report if applicable.

19 Site survey and soil data report

20 List of Deviations from DBSP with cost/schedule impact

21 Copy of Approved Waivers

22 SAPMT/PMC, Insp., CMT & other related costs

23 Exploratory Trenching

24 Environmental Assessment (Contamination)

25 Approved Project Schedule

26 Approved Project Execution Plan

27 Contracting and Material Procurements Plans. Identify customs duties.

28 Detail Engineering Equivalent A size Drawings count and man hours

29 Detail Design Location i.e., (IK or OOK)

30 Draft ER brief and BISI from FPD

31 Facility Location and Camp Requirements

32 Identify Commissioning and As-Built Requirements

33 Quality Material take-off (MTO)

34 Process Equipment list, sizes, capacities & specifications.

35 Recent (valid for 3 months) quotations for major equipment & material




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EXHIBIT III CONTRACT DEVELOPMENT CHECKLIST

Following are the list of key activities for developing the contract package.


Contracting Strategy

1

Develop and Approve Contracting Strategy Required as part of the Abbreviate PEP for all projects (SAEP-12). Strategy is to be updated if there are changed

during the progress of the project.

2

Enter and maintain data on all contract action covered by the Contracting

Strategy in to the PMIS Contracting Action Development and Administration

(CADA) module.

Pro Forma Contract & Specific Instructions to Bidders (SIB)

3 Complete preliminary Evaluation Plan so appropriate technical and commercial

questions are included in the SIB.

4 Secure approvals for all singe source procurement and included appropriate

language in Schedule H.

5 Complete Schedule Q language in accordance with approved Quality Plan (GI 400.001) and review proposed language with Inspection as needed.

6 Include language relating to approved training requirements, if any

(SAEP-140).

7 Review any language related to contractor-supplied LAN and PC equipment

with the appropriated IT office(s).

8 Include requirements for bidder price breakdowns as part of the Commercial

Proposals and quantity lists as part of the Technical Proposals.

Hypothetical Quantities and Bid Conditioners

9 Prepare hypothetical quantities to be used to evaluate rates proposed by the

bidders (e.g., change order rates).

10 Prepare, in conjunction with other members of the Bid Review Team, data to be

used for allowed bid conditioner (e.g., different PMT cost for various locations).




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Review of Contract and Contract Supplement as Part of the Bid Review Team

11

Ensure the Contract is structured correctly for SAP SRV releases (for lump

sum, three items lump sum price, change orders, and other expenditures; and use of VAL with the amount in the quantity column).

12

Ensure that that AEL includes reasonable amounts for all applicable Other Expenditures (e.g., incidental services, Saudi manufacturer equalization, stand-by time, reimbursable start-up and commissioning assistance, variations from

target quantities, etc.).

13 Ensure the Contract Supplement includes an appropriate Change Order limit

(percent).

14 After award of the contract, provide copies of the bidders price breakdowns and quantity lists to PS&CD.

Note: For a project using an LSTK contracting strategy, these actions are required during or just after the Project

Proposal period. For other strategies (e.g., GES + LSPB) some of the activities take place at later stages of

the project.




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EXHIBIT IV BENCHMARKING DATA SHEET for

CRUDE PRODUCTION FACILITY (GOSP)

BUDGET ITEM (BI) : ERA :

JOB ORDER (JO) : ERC :

DESCRIPTION :

AREA NAME PARAMETER UOM QUANTITY COST UNIT COST

INLET FACILITY

QUANTITY OF SCRAPER TRAPS EACH $ $

QUANTITY & SIZE (INCHES) OF TRAP A EACH

QUANTITY & SIZE (INCHES) OF TRAP B EACH

QUANTITY & SIZE (INCHES) OF TRAP C EACH

TOTAL INSTALLED COST (INLET FACILITY) DOLLARS $ $

PRODUCTION TRAP

UNIT CAPACITY MBD $ $

NUMBER OF HIGH PRESSURE TRAPS EACH

NUMBER OF INTERMEDIATE PRESSURE TRAPS EACH

NUMBER OF LOW PRESSURE TRAPS EACH

WATER CUT % VOL

GAS OIL RATIO

CRUDE TYPE (AL/AM/AXL/ASL) or API

TOTAL INSTALLED COST (PRODUCTION TRAP) DOLLARS $ $

GAS GATHERING

UNIT CAPACITY MMSCFD $ $

HP COMPRESSORS QUANTITY EACH

HP COMP DRIVER TYPE (MOTOR/CGT) EACH

IP COMPRESSORS QUANTITY EACH

IP COMP DRIVER TYPE (MOTOR/CGT) EACH

LP COMPRESSORS QUANTITY EACH

LP COMP DRIVER TYPE (MOTOR/CGT) EACH

HP COMPRESSORS TOTAL HP HP

IP COMPRESSORS TOTAL HP HP

LP COMPRESSORS TOTAL HP HP

TOTAL INSTALLED COST (GAS GATHERING) DOLLARS $ $




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WET CRUDE HANDLING &

WOSEP

NUMBER DESALTING STAGES EACH


TOTAL INSTALLED COST (WET CRUDE HANDLING & WOSEP) DOLLARS $ $

CONDENSATE STABILIZATION


TOTAL INSTALLED COST (CONDENSATE STABILIZATION) DOLLARS $ $

CRUDE STABILIZATION UNIT CAPACITY MBD $ $

WATER INJECTION FACILITY


QUANTITY OF PUMPS EACH

PUMPS TOTAL HP HP

PUMP DRIVER TYPE (MOTOR/CGT) EACH

TOTAL INSTALLED COST (WATER INJECTION FACILITY) DOLLARS $ $

COGENERATION FACILITY ISO RATING MW $ $

PIPERACK & PIPING

TONNAGE STEEL (PIPERACK) TONS $ $

TONNAGE PIPE TONS $ $

WIDTH OF PIPERACK LM

LENGTH OF PIPERACK LM

HEIGHT PIPERACK LM

LEVELS OF PIPERACK EACH

TOTAL LENGTH OF ALL PIPES LM

TOTAL INSTALLED COST (PIPERACK) DOLLARS $ $

TOTAL INSTALLED COST (PIPING) DOLLARS $ $

SUPPORT INFRASTRUCTURE

SITE PREPARATION SM $ $

CONCRETE CM $ $

STRUCTURAL STEEL TONS $ $

FENCING LM $ $

CONTROL BUILDINGS (ALL BLDGS) SM $ $

PIBS (ALL BLDGS) SM $ $

OTHER TYPES OF BUILDING SM $ $

SUBSTATION SM $ $

TOTAL INSTALLED COST (SUPPORT BLDGS ONLY) DOLLARS $ $

TOTAL INSTALLED COST (INFRASTRUCTURE) DOLLARS $ $




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OFFSITES & UTILITIES

BOILER QTY EACH $ $

BOILER CAPACITY LBS/HR

BOILER PRESSURE PSIG

COOLING TOWER CAPACITY GPM $ $

AIR COMPRESSOR QTY EACH $ $

A