Industrial Engineering Projects: Practice and procedures for capital projects in the engineering, manufacturing and process industries

318 Pages·1997·41.318 MB·\318

by  Association of Cost Engineers and the Royal Institute of Cha (Editor)

Industrial Engineering Projects
Taylor & Francis
Taylor & Francis Group
http://taylorandfrancis.com
Industrial Engineering
Projects
Practice and Procedures for Capital Projects in
the Engineering, Manufacturing and Process
Industries
by
The Joint Development Board
fBE ROYAL
~ INSTITl TION
OF CHARTERED
SURVEYORS
@
Taylor & Francis
Taylor & Francis Group
LONDON AND NEW YORK
Published by Taylor & Francis
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
270 Madison Ave, New York NY 10016
First edition 1997
Transferred to Digital Printing 2008
© 1997 Taylor & Francis
Typeset in 10'12 on 12pt Times
by On Screen, West Hanney, Oxfordshire
ISBN 0 419 22510 2
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The publisher makes no representation, express or implied, with regard to the ac
curacy of the information contained in this book and cannot accept any legal respon
sibility or liability for any errors or omissions that may be made.
No responsibility for loss occasioned to any person acting or refraining from action as
a result of the material included in this publication can be accepted by the author or
the publisher.
A catalogue record for this book is available from the British library
LCCP no: 97--B6020
Publisher's Note
The publisher has gone to great lengths to ensure the quality of this reprint but
paints out that some imperfections in the original may be apparent.
Contents
Preface Xl
Foreword xiii
1 Introduction 3
1.1 Owner involvement 6
1.2 Complexity 6
1.3 Management 7
1.4 Information control and reporting 8
1.5 Time 8
1.6 Safety, quality and environmental issues 9
1.7 Estimating and risk 10
1.8 Cost control and reduction 11
1.9 Terminology 12
1.10 Non-standard documentation 13
1.11 Conclusion 13
2 Management of engineering projects 17
2.1 Introduction 18
2.2 Project manager 18
2.3 Project organization 20
2.4 Outside influences 29
2.5 Corporate and co-venturer's requirements 31
2.6 Project execution plan (quality plan) 32
2.7 Project stages 36
2.8 ConstrUl;tion 39
2.9 Initial operations 40
2.10 Project risk analysis and management 41
2.11 Safety, environment and quality assurance 45
2.12 Latham and CRINE 48
2.13 Insurance 50
Bibliography 51
3 Estimating 53
3.1 Introduction 54
3.2 Initial actions 54
3.3 Estimating accuracy 55
3.4 Stages in estimate preparation 56
3.5 Estimate types 57
3.6 Hierarchical composite rates 63
01
Contents
3.7 Man-hour norms 64
3.8 Escalation, exchange rates and financing charges 66
3.9 Contingency allowance 67
3.10 Risk analysis and evaluation 68
3.11 Estimate content 68
3.12 Interfaces 69
3.13 Monitoring change 70
3.14 Control by estimate 71
3.15 Continued use of estimate 71
3.16 Coding and control 71
3.17 Estimate presentation 72
Bibliography 72
4 Va.lue management 75
4.1 Introduction 76
4.2 Definition of value 76
4.3 VM definitions 77
4.4 Timing of studies 78
4.5 Value management methodology and job plan 78
4.6 Conclusion 82
5 Project services 85
5.1 Introduction 86
Part 1 Cost control 87
5.2 Objectives 87
5.3 The control estimate 89
5.4 Cost segregation 90
5.5 Approval of funds 95
5.6 Cost control techniques 96
5.7 Contingency management 100
5.8 Escalation 101
5.9 The cost control report 102
5.10 Other reports 104
Part 2 Planning and progress control 106
5.11 Introduction 106
5.12 The importance of planning 106
5.13 Organization 107
5.14 Levels of planning 107
5.15 Network techniques 114
5.16 Critical path and float 114
5.17 Progress measurement 115
5.18 Continuing control 117
Part 3 Document control 119
5.19 Introduction 119
II I
Contents
vii
5.20 Main activities 120
5.21 Control methods 120
5.22 As-built drawings 122
5.23 Reporting 122
5.24 Retention of documents 123
Part 4 Material control 123
5.25 Introduction 123
5.26 Traceability 124
5.27 Coordination 124
5.28 Site storage 125
5.29 Spares 125
5.30 Close-out 126
Part 5 Coordination ofp rocedures 126
5.31 Introduction 126
5.32 Management procedures 127
5.33 Design procedures 128
5.34 Site procedures 128
5.35 Production of site procedures 129
5.36 Typical site procedures 130
5.37 People and procedures 132
5.38 Changes to procedures 132
5.39 Compliance 133
5.40 Conclusion 133
Bibliography 133
6 Quality assurance 135
6.1 Introduction 136
6.2 Quality assurance 136
6.3 Total quality management 137
6.4 The standards 137
6.5 The systems 138
6.6 Procedures 140
6.7 Team quality 140
6.8 Subcontractor and supplier quality 141
6.9 Quality improvement 141
6.10 The way forward 142
Bibliography 142
7 The contract 145
7.1 Introduction 146
7.2 Types of contract 147
7.3 Forms of contract 147
7.4 Terms and conditions 148
7.5 Definitions and interpretations 148
7.6 Scope of work 149
I II
Contents
viii
7.7 Responsibilities 149
7.8 Law and statute 150
7.9 Damage, injury and insurance 150
7.10 Subcontracting 151
7.11 Time 151
7.12 Variations 152
7.13 Payment 154
7.14 Testing, take-over and liability for defects 154
7.15 Default and remedies 155
7.16 Suspension and termination 155
7.17 Resolution of disputes 156
7.18 Supplementary and special conditions 157
8 Indemnities and insurances 159
8.1 Introduction 160
8.2 General 160
8.3 Definitions 160
8.4 Need for indemnities and insurance 161
8.5 Provision of insurance 162
8.6 Specialist advice 163
8.7 Standard conditions of contract 163
8.8 Contractor/subcontractor 163
8.9 Indemnities 164
8.10 Drafting of clauses 164
8.11 Problem areas 165
8.12 Current practices 166
8.13 Amended documents 167
8.14 Non-standard conditions of contract 167
8.15 Sound legal advice 168
8.16 Insuring clauses 168
8.17 Conditions and warranties 170
8.18 Types of insurance 172
8.19 Other forms of insurance 183
8.20 Risk management 186
8.21 Constructing the team 187
Bibliography 187
9 Contractor/subcontractor selection 189
9.1 Introduction 190
9.2 Selection strategy 190
9.3 Establishing selection criteria 191
9.4 Pre-qualification 191
9.5 Evaluation criteria 193
9.6 Shortlisting 197
9.7 Examination of company reports and accounts 198
9.8 Pre-qualification interviews 202
Contents I ~
9.9 Contracting strategy 202
9.10 Tendering process 206
9.11 Types of tender 208
9.12 EC directives 208
9.13 Receipt and analysis of tender 210
9.14 Finalization of contract documents 214
9.15 Conclusion 214
10 Procurement of materials and equipment 217
10.1 Introduction 218
10.2 Scope of procurement activities 218
10.3 Requisitions 218
10.4 The procurement cycle 218
10.5 The procurement team 219
10.6 EU regulations 220
10.7 Communication 220
10.8 Terms and conditions 220
10.9 Certification and certifying authorities 224
10.10 Material traceability 224
10.11 Spares and special tools 225
10.12 Supplier data 226
10.13 Quality assurance 226
10.14 Pre-qualification of suppliers 226
10.15 Tender list 227
10.16 Enquiries 227
10.17 Expediting and inspection 229
10.18 Shipping/transport/insurance 231
10.19 Progress measurement and reporting 232
Bibliography 233
11 Operational maintenance 235
11.1 Introduction 236
11.2 Planning 238
11.3 Estimating and budgeting 242
11.4 Contracting strategies 245
11.5 Control of costs 247
11.6 Contracts/financial audits 251
12 Health and safety and the environment 255
12.1 Introduction 256
12.2 Historical summary of legislation 256
12.3 The Health and Safety at Work Act 1974 257
12.4 Construction (Design and Management)
Regulations 1994 (CDM) 260
12.5 References 264