Page 340 - Hydrocarbon Exploration and Production Second Edition

Project and Contract Management 327

Providing a project is viable, resources are available and risk levels acceptable,
work can continue on preliminary design and tighter cost estimates. The object of the
preliminary design phase is to prepare a document that will support an application
for funds. The level of detail must be sufficient to give fund holders confidence
that the project is technically sound and commercially robust, and may also have to
be used to gain a licence to proceed from government bodies. Tried and tested
engineering issues may not need a great deal of elaboration, but issues with a high
novelty value have to be identified and clearly explained. If work is subsequently
contracted out the document can form the basis for a tender. This phase is also
referred to as front end engineering design (FEED).
Once a project has been given approval then detailed design can begin. This phase
often signals a significant increase in spending as teams of design engineers are
mobilised to prepare detailed engineering drawings. It is also quite common for oil
companies to contract out the work from this stage, though some company
staff may continue to work with the contractor in a liaison role. The detailed
engineering drawings are used to initiate procurement activities and construction
planning. By this stage the total expenditure may be 5% of the total project budget,
and yet around 80% of the hardware items will have been specified. The emphasis at
the detailed design stage is to achieve the appropriate design and to reduce the need
for changes during subsequent stages.
Procurement is a matter of getting the right materials together at the right time
and within a specified budget. For items which can be obtained from a number of
sources a tendering process may appropriate, possibly from a list of company approved
suppliers. Very exotic items, or items which are particularly critical, may be
acquired through a single source contract where reliability is paramount. Complex
items such as turbines will often be accompanied by test certification which has
to be checked for compliance with performance and safety standards. Equipment
must be inspected when the company takes delivery, to ensure that goods have not
been damaged in shipment. The procurement team may also be responsible for
ensuring that the supply of spare parts is secure. Spending at this stage can range
anywhere from 10 to 40% of the total project cost.
The character of a project construction phase can vary considerably depending
on the nature of the contract. The construction of a gas plant in a rural setting
will raise very different issues from that of a refurbishment project on an old
production platform. Construction activities will normally be carried out by
specialised contractors working under the supervision of a company representative
such as a construction manager (or resident engineer). The construction manager is
responsible for delivering completed works to specification and within time and
budget limits. When design problems come to light the construction manager must
determine the impact of changes and co-ordinate an appropriate response with the
construction contractor and design team.
As construction nears completion the commissioning phase will begin. The
objective of the commissioning phase is to demonstrate that the facility constructed
performs to the design specification. Typically a construction team will hand over
a project to an operating team (which may be company staff) once the facility or
equipment has been successfully tested. The receiving party will normally confirm