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Engineering Encyclopedia

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INTRODUCTION TO
CONSTRUCTION MANAGEMENT

Note: The source of the technical material in this volume is the Professional
Engineering Development Program (PEDP) of Engineering Services.
Warning: The material contained in this document was developed for Saudi
Aramco and is intended for the exclusive use of Saudi Aramcos employees.
Any material contained in this document which is not already in the public
domain may not be copied, reproduced, sold, given, or disclosed to third
parties, or otherwise used in whole, or in part, without the written permission
of the Vice President, Engineering Services, Saudi Aramco.

Chapter : Project Management


File Reference: PMT-105.01

For additional information on this subject, contact


PEDD Coordinator on 874-6556

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Content

Page

VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL


PROJECT ....................................................................................................................... 1
Introduction........................................................................................................... 1
Execution Phases of a Project.............................................................................. 1
Study and Development Phase ................................................................. 2
Preliminary Engineering Phase.................................................................. 3
Detailed Engineering Phase ...................................................................... 4
Construction Phase.................................................................................... 5
Project Completion and Close-Out Phase ................................................. 6
CONSTRUCTION MANAGEMENT ACTIVITIES FROM INITIAL PROJECT
PLANNING THROUGH START-UP ................................................................................ 8
Introduction........................................................................................................... 8
Construction Management During Project Development...................................... 8
Construction Management During Engineering .................................................... 9
Constructability Studies ............................................................................. 9
Coordination with Procurement................................................................ 10
Construction Contracting .................................................................................... 10
Construction Management During Construction ................................................. 11
Construction Execution and Controls....................................................... 11
Mechanical Completion and Start-Up ...................................................... 12
PRIMARY DUTIES AND RESPONSIBILITIES OF THE PROJECT ENGINEER .......... 13
Duties and Responsibilities................................................................................. 13
Surveillance of Construction Contractors................................................. 13
Engineering Support ................................................................................ 14
Procurement Support............................................................................... 14
Monitoring Project Performance .............................................................. 14
Project Status Reporting to Management ................................................ 14
Close-out of Project ................................................................................. 15
GLOSSARY .................................................................................................................. 16

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VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL


PROJECT
Introduction
The success of a project is determined by its methodical
development and systematic execution process. A project must
progress step-by-step through several planning and execution
phases within Saudi Aramco and contractor organizations. This
systematic execution approach ensures that the project moves
from one phase to the other with proper development and
documentation. The time and effort in the execution phases
may vary, depending upon the project size, the proponent
organization, and the project execution philosophy.
Execution Phases of a Project
In this section, we will discuss typical execution phases for a
small Saudi Aramco capital project. Like any large Saudi
Aramco capital project, small projects (less than $50 million) go
through similar execution phases. The five execution phases
during the project life cycle of a Saudi Aramco project are:

Study and Development

Preliminary Engineering

Detailed Engineering

Construction

Project Completion and Close-Out

A specific project work scope must be performed in each of


these phases before a project can progress to the next
execution phase. The complete definition of the work to be
performed and the schedule milestones that are to be met
should be predetermined for the systematic development and
successful execution of a project.

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Execution Phases of a Project, cont'd


It is important to recognize that there are different company
organizations and contractors involved in the execution of a
project. It is the responsibility of the Saudi Aramco Project
Management Team (SAPMT) to ensure that there is
consistency in the project execution approach. By implementing
an effective Project Execution Plan (PEP) and instituting good
contractor coordination procedures, the Project Engineer should
channel various contractors toward focused project goals.
Study and Development Phase

This phase is also known as the project inception phase, when


the project needs are first identified. During this phase, a
project goes through the progressive development of the project
definition.
Several execution and scope ideas may be
introduced; some of these become superseded and outdated.
The earliest projections of cost and schedule must be tied
specifically to the project as scoped. The project development
activities that normally take place during this phase of project
execution are:

Identify the project needs

Define the project work scope

Evaluate the project alternatives


-

Process
Economics

Establish a project schedule

Prepare the preliminary cost estimate

Develop the project justification

Prepare Design Basis Scoping Paper (DBSP)

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Execution Phases of a Project, cont'd


The completion of DBSP constitutes a major milestone of the
study and development phase. With the above information
generated, the project progresses to a stage where it obtains
funding (TC-68) for the next phase, i.e., Preliminary Engineering
Phase.
Preliminary Engineering Phase

Preliminary engineering is defined within Saudi Aramco as the


engineering activity that leads up to Expenditure Request
Approval (ERA). It begins after the issuance of a DBSP which
supports the project proposal by defining the Budget Item (BI)
scope and its schedule. The preparation of the DBSP is the
responsibility of the Facilities Planning Department (FPD). The
project proposal is the major product of the Preliminary
Engineering effort.
Before Preliminary Engineering can begin, the capital program
development sequence is completed and a preliminary study is
entered in the capital programs.
The Facilities Planning
Department (FPD), in conjunction with the proponent, develops
a DBSP which keys the SAPMT to begin the Preliminary
Engineering effort. Funding is provided by TC-68 funds.
Activities - The Preliminary Engineering phase includes those

activities that lead up to Expenditure Request Approval (ERA).


Those activities include (but are not limited to):

Performance of initial studies

Preparation of the Project Execution Plan (PEP)

Preparation of the project proposal

Production of a detailed Expenditure Request (ER) estimate

Preparation and award of the contract for design


engineering, procurement assistance and Construction (in
the case of an Lump Sum Turn Key [LSTK] contract).
Moneys are committed only after approval of ER

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Execution Phases of a Project, cont'd


The work performed during the Study and Development Phase
and the Preliminary Engineering Phase has a significant impact
on the work activities during the later phases of the project
execution, i.e., Detailed Engineering, Construction, Mechanical
Completion, and Project Close-Out. The documents developed
during this phase result in establishing the project baselines,
and the actual performance which will be compared to these
baselines. These include budget, schedule and project work
scope, etc.
defines the objectives, plans,
requirements, and related information necessary for optimum
project execution.
The PEP communicates the Project
Manager's front-end project planning to the Saudi Aramco
Executive Management for their review and approval, and
provides information to the proponent. It relates the project
scope to the contracting and material plans, cost information
and schedule in a comprehensive review document.
Project

Execution

Plan

Project Proposal establishes the design basis and scope of the


proposed facilities, including size, general layout, types of
material, estimated funds required and the completion schedule.
The approved project proposal document is the final design
basis from which the ER is developed and from which all
approved scope changes are measured.

Project proposals range from those requiring minimal detail to


those involving extensively detailed documentation. The extent
of project proposal needed is agreed upon in the PEP by both
the project department and the project proponent.
ER Estimate is a definitive estimate prepared in support of a

request for Budget Item (BI) funding and is used as the basis for
project cost control.
Detailed Engineering Phase

Formal award of an engineering contract for the detailed design


usually occurs directly after the ER Approval (ERA). If the
contract needs to be awarded before ERA, funding may be
obtained by the use of additional TC-68 funds.

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Execution Phases of a Project, cont'd


Detailed engineering includes engineering and drafting activities
associated with design functions and other engineering required
to accomplish the project work scope. Progress of 95% should
be achieved by no later than Mechanical Completion, including
completion of drawings, material take-offs, requisitions,
purchase orders, Saudi Aramco Material Stock (SAMS)
allocations, start-up and operating manuals. The final 5% of
engineering activities generally consist of as-built drawings (if
done in the design office), technical support to Construction by
home-office engineering and final close-out activities, including
demobilization. At 100% progress, technical and Construction
support activities are complete; the engineering staff, including
contractor project management and support personnel, are
completely demobilized.
The SAPMT has the responsibility for the engineering and
design of the project facilities.
Construction Phase

The Construction Phase begins when the contract development


sequence for the Construction contract is initiated, and is not
complete until financial close-out. The period between the two
events will vary with the type, size, and complexity of a project.
The major activities occurring during the Construction Phase are
the same for any project. Major variations among projects arise
from the timing and responsibility associated with those
activities that depend on the selected contracting alternative.
The Project Manager should make sure that the construction
should start at an appropriate time. Early field mobilization
without adequate engineering and materials can be costly and in
fact detrimental to the project schedule. The construction start
date should be developed after detailed analysis of engineering
and material schedules.
In addition, it is essential to
Construction success that the construction contracting plans are
in place. The Project Engineers should ensure that the work of
contractors and/or subcontractors does not interfere, resulting in
conflicts and claims.

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Execution Phases of a Project, cont'd


Project Completion and Close-Out Phase

New plants and/or units acceptance involves distinctive


procedures and responsibilities for each of the following
activities, which occur during the completion phase of a project:

Mechanical completion

Performance acceptance (start-up and commissioning)

Final acceptance

Financial close-out

The engineering and project management business line is


responsible for delivering a completed facility, which includes
the completion of all exception items listed on the "Mechanical
Completion Certificate." Once start-up activities commence,
construction work schedules from that point to final completion
are subject to the approval of operations. Any design or
construction
deficiencies
found
during
start-up
and
commissioning are corrected by the agency designated by
operations and charged to the start-up phase. After the plant or
unit is accepted as mechanically complete, start-up,
commissioning and performance acceptance become the
responsibility of operations, operations engineering and
mechanical services.
Mechanical Completion for a facility, or any separable portion

thereof, is achieved when:

The facility, or portion thereof, has been completed


mechanically and structurally put in a tight and clean
condition, and otherwise constructed as provided in the
project specification.

All deficiencies, including those that could prevent or delay


safe and orderly prestart-up/start-up procedures by Saudi
Aramco or timely achievement of facility operation at the
conditions specified in the project specification have been
corrected.

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Execution Phases of a Project, cont'd


Partial Mechanical Completion may be achieved with an
"exception items" listing of all unfinished items of work giving
dates for their completion. This Mechanical Completion status
is only established if the work can be finished thereafter without
impeding prestart-up activities.
Performance Acceptance - After Mechanical Completion, but prior

to final acceptance, a Performance Acceptance Certificate


(Form 7214) is usually required. The performance acceptance
should entail the start-up, commissioning and demonstration of
acceptance performance of the facility based on strict
compliance with the project plans and specifications.
Partial performance certificates may be used on larger projects
where phased-in completion is required.
Final Acceptance - Upon completion of all work and only after all

exception items are accepted, a final acceptance is approved by


the operating organization and the construction agency. Saudi
Aramco accepts the completed facilities from a contractor (final
acceptance) when all work, including remedial work, is complete
and the facilities have been successfully operated at the
conditions specified in the contract job specification.
Financial Close-Out formalities normally begin after Mechanical
Completion and during the start-up and commissioning of a
facility.

Financial close-out of projects that are essentially complete, in


service, and against which the major elements of cost have
been recorded, should not be unreasonably delayed. If the cost
of minor exception amounts, additional materials, or outstanding
change orders and contract payments can reasonably be
estimated, the Fixed Assets and Work-in-Progress Accounting
Department may approve the handling of such costs using a
special account called SP account.

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CONSTRUCTION MANAGEMENT ACTIVITIES FROM INITIAL PROJECT PLANNING


THROUGH START-UP
Introduction
The Construction Phase is typically perceived to start after the
completion of the Detailed Engineering Phase. In many cases
the field work starts earlier with the initial construction activities
as site preparation, and civil work overlapping with the Detailed
Engineering Phase. Some people relate the construction
management function with the field work. But in reality, the
construction management function begins during the earliest
phases of the project development and lasts through the Project
Close-out.
The projects which fail to recognize the role of the construction
management function during the initial phases of the project
study and development phase, invariably feel the adverse
impact during the later phases of execution. The construction
input in the earlier phase can be incorporated in important
documents, e.g., the DBSP, the ER Estimates, PEP, etc. In this
section, we will discuss the role of the construction management
from the initial planning through the project completion.
Construction Management During Project Development
The construction management involvement during the project
study and development will result in getting valuable
construction input prior to finalizing important documents during
the execution phase. For example, the construction input is
useful in establishing project schedule during the study and
development phase. Construction input is also beneficial in
developing the following decision-making activities and
documents:

Preliminary Cost Estimates

Design Basis Scoping Paper

Project Schedule

Long-lead and Engineered Equipment

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Construction Management During Engineering


Modular Design Options
Since the drawings and other engineering decisions have a
great influence on the Construction Phase, the construction
management's participation should be a project requirement
during both the Preliminary Engineering and Detailed
Engineering Phases. The key construction management staff
(e.g., the construction manager and the construction engineer)
should work closely with the engineering group. Some of the
activities of the construction team during the engineering
execution include:

Coordinate job-site information with engineering

Constructability analysis

Rigging studies for major lifts

Construction schedule development

Coordination with procurement group

Input in the ER estimate development

Assist in construction contracting

Constructability Studies

Constructability is the necessary examination throughout the


project that asks, "Are we planning to do the most efficient, least
expensive, and highest quality work in the field while aiming to
achieve the expected results?" It is during the engineering
phases of the execution that maximum benefits can be gained
from this technique.
Constructability concepts that influence the engineering work
include:

Designs are configured to enable efficient construction

Design elements are standardized

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Construction Management During Engineering, cont'd

Construction efficiency
development

is

considered

in

specification

Module/pre-fabrication options are considered to improve


construction schedules

Design promotes construction accessibility of personnel,


material, and equipment

Design facilitates the construction under prevalent weather


conditions

Coordination with Procurement

Construction management provides valuable information to the


project procurement staff to ensure efficient construction. The
construction team can help in reviewing the vendor drawings
from the construction point of view. The construction team can
also act as a liaison between the engineering and maintenance
groups. Construction management activities in support of
procurement groups include:

Provide field requirement dates

Identify the specific quantity requirements and field priorities

Decisions related to modular/pre-fabrication procurement

Transportation and material handling requirements

Construction Contracting

Involvement of construction management during the


engineering phase helps in the timely procurement of
construction contractors.
Major decisions related to the
construction are made during the engineering phase. Some of
the activities where the construction group provide valuable
information are:

Breakdown of the number of construction contracts

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Construction Management During Engineering, cont'd

Ensuring completeness of the bid package

Screening and selection of the contractors

Review and approval of construction plans

Ensuring efficient field move-in and contractor mobilization

Construction Management During Construction


Obviously the construction management plays its most
important role during the Construction Phase of the project. The
construction management team is responsible for the safest and
most efficient execution of field work in order to achieve the
project goals and company objectives. Depending upon the
size of a project, day-to-day management of field activities is the
responsibility of the construction contractor.
The Saudi
Aramco's construction management team ensures the
construction work is getting done safely and in accordance with
the contractual requirements. The SAPMT ensures that the
Saudi Aramco supplied materials are issued to contractors as
per the construction plans, and there are no schedule conflicts
among the construction contractors.
Construction Execution and Controls

To achieve successful execution of the Construction Phase of a


project, effective management controls should be implemented.
The SAPMT should require the contractor to produce periodic
reports showing the actual status and its comparison with the
construction performance baselines such as:

Construction Schedule Milestones

Construction Critical Path

Cost

Manpower Plans

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Construction Management During Construction, cont'd

Safety Performance

In addition to the contractor's construction reports, the Saudi


Aramco construction management team also produces its own
project status report to keep Saudi Aramco Executive
Management informed about the project performance.
Mechanical Completion and Start-Up

The construction management team plays a pivotal role in the


transition phase from the construction Mechanical Completion to
the transfer of the facilities to the operations for start-up. The
construction team is responsible for the completeness of the
work performed prior to the transfer of facilities. Some of the
construction management activities during the Mechanical
Completion and start-up phase are:

Identify the sequence of facilities transfer

Ensure completeness of the constructed facilities by:


-

Testing alignment of equipment

Checking calibration

Run-in of motors

Adjustments and fine tuning

Energizing the equipment

Develop punch-list of incomplete work and institute plans to


complete this work list

Complete all the formalities related to the transfer of facilities


to proponents and the Project Close-out

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PRIMARY DUTIES AND RESPONSIBILITIES OF THE PROJECT ENGINEER


Duties and Responsibilities
The Project Engineer plays an important role in the planning
and execution of a small Saudi Aramco project. During the
Construction Phase, the Project Engineer's performance as the
role of a monitor in ensuring that the project is progressing per
the plans. The Project Engineer does not get involved in the
day-to-day construction planning and execution. That role is
typically performed by the construction contractor. Some of the
responsibilities of the Project Engineer during the Construction
Phase include:

Surveillance of Construction Contractors

Engineering Support

Procurement Support

Monitoring Project Performance

Project Status Reporting to Management

Close-out of Project

Surveillance of Construction Contractors

The Saudi Aramco Project Engineer on a small capital project is


responsible for monitoring construction contractor's field
activities and performance. In this role, the Project Engineer
ensures that the contractor is performing the work as per the
contractual requirements and in accordance with the project
procedures and guidelines. The Project Engineer provides
necessary guidance and clarification, resolves any conflicts, and
ensures that the construction contractor is performing to the
best of his capabilities.

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Duties and Responsibilities, cont'd


Engineering Support

During the Construction Phase, the Project Engineer acts as a


liaison between the engineering contractor and the construction
contractors. He ensures timely availability of design drawings
and provides the necessary design clarification to the
construction contractor. He is also responsible for getting the
engineering drawings updated with any field changes and in
finalizing the as-built drawings for project documentations.
Procurement Support

The Project Engineer ensures that all the project materials


reach the site according to the field required days. He
coordinates any expediting efforts, if necessary, to get the
materials on time. The Project Engineer also monitors the
contractor's procurement during the Construction Phase.
Monitoring Project Performance

The Project Engineer is responsible for monitoring the project


performance, and initiating necessary actions, if necessary, to
ensure that the project is completed in accordance with the
project goals. The Project Engineer, with the support of the
project controls staff, analyzes the project information to
evaluate the current progress status as compared to the project
performance baselines. He constantly seeks opportunities and
implements actions to enhance project performance.
Project Status Reporting to Management

The Project Engineer is responsible for communicating the


project status information to the company management. The
company project management procedures dictate that the
Project Engineer must develop and update project status
reports and submit them to the company management. The
Project Engineer is responsible for collecting the necessary
construction status information from the company sources and
contractors, and presenting it to the Saudi Aramco Executive
Management in a timely fashion.

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Execution Phases of a Project, cont'd


Close-out of Project

The Project Close-out is the final milestone in the life of a typical


Saudi Aramco small project. It consists of several activities, as
follows:

Transfer of facilities to operations

Commissioning

Performance acceptance

Final acceptance

Financial close-out

Different Saudi Aramco departments get involved in testing the


facilities and completing procedural documentation. The Project
Engineer acts as a liaison from the project management team in
transferring the facilities to the proponent, and in completing the
various close-out documents.

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GLOSSARY
BI

Budget Item

DBSP

Design Basis Scoping Paper

DC

Direct Charge materials

ER

Expenditure Request

ERA

Expenditure Request Approval

ER Estimate

An ER estimate is a definitive estimate prepared in support


of a request for Budget Item (BI) funding and is used as the
basis of the project cost control.

Final Acceptance

Saudi Aramco accepts the completed facilities from a


contractor (final acceptance) when all work, including
remedial work, is complete and the facilities have been
successfully operated at the conditions specified in the
contract job specification.

Financial Close-Out

Financial close-out formalities normally begin after


Mechanical Completion and during the start-up and
commissioning of a facility. Financial close-out of projects
that are essentially complete, in service, and against which
the major elements of cost have been recorded.

FPD

Facilities Planning Department

LSTK

Lump Sum Turn Key contract

Mechanical Completion

Mechanical completion for a facility, or any separable portion


thereof, is achieved when the facility, or portion thereof, has
been completed mechanically and structurally put in a tight
and clean condition, and otherwise constructed as provided
in the project specification.

Project Execution Plan

The Project Execution Plan (PEP) defines the objectives,


plans, requirements, and related information necessary for
optimum project execution.

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Project Proposal

The project proposal establishes the design basis and scope


of the proposed facilities, including size, general layout,
types of material, estimated funds required and the
completion schedule.

Performance Acceptance

The performance acceptance should entail the start-up,


commissioning
and
demonstration
of
acceptance
performance of the facility based on strict compliance with
the project plans and specifications.

RPD

Resource Planning Department

SAMS

Saudi Aramco Materials Stock

SAPMT

Saudi Aramco Project Management Team

TC-68

Preliminary engineering funds

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