CM-PE-701 Procurement Progress Measurement

Table of contents:

1. Purpose
2. General
3. Responsibilities
4. Procedure
5. Flowchart
6. References

1. Purpose

This procedure describes the Company progress measurement system for procurement activities as are part of the scope of work. The objectives are described as follows:

• To provide a reliable estimate of the progress completion of procurement tasks and to be able to relate actual progress to planned progress.

2. General

The overall procurement scope ofcapital investment project can be divided in three main phases:

1. Order placement
2. Inspection and expediting during fabrication
3. Final documentation

The three phases are applicable forprocurement progress measurement depending the project scope of work.For the detail description refer to the Purchasing, Subcontractingand Inspection and expediting procedures.

3. Responsibilities

The Project Procurement Manager isresponsible for the procurement progress control. He can delegate theprogress measurement and reporting activities to one of hisdelegates. The Project Procurement Manager will maintain closecontact with the Project Control Manager related to procurementprogress and cost control of purchased services and hardware.

4. Procedure

4.1 Progress Measurement

The progress measurement of procurementis based on the completion of individual activities.

For order placement the individualactivities could be

• Selection of Bidders
• Prepare inquiry package
• Issue for inquiry
• Pre-bid meetings
• Acquire quotations
• Bid tabs issued for approval
• Bid tabs approved
• Submission of order

For expediting and inspection the individual activities will be assignedper individual order. Some orders need more inspection and expeditingthan others. The inspection and expediting activities will alsodepend on the criticality of the order. Activities could be asfollows:

• Design document expediting
• Pre-inspection meeting
• Fabrication expediting
• Intermediate inspection
• Final inspection
• Order received at site

The final documentation part is usually omitted from the procurementprogress measurement. However the final documentation packagesrequire more manhours (and also aggravation) than is expected at thestart of the project. The main activity is as follows:

• Final documentation expediting and receipt

The procurement progress for the three phases is calculated using thefollowing formula:

progress(order based) = sum(Wi * POi / EOi) * 100%

Wi = weight factor for each order

POi = earned manhours per order (based on completed order activity)

EOi = estimated total manhours per order

Critical equipment orders orsubcontracts for example have a higher progress contribution thannone critical contracts and will have a larger weight factor.

The earned manhours per order can bethe sum of manhours of completed activities or can be calculated as apercentage of the total estimated manhours per order.

4.2 Summary information to be prepared

A summary level progress report will beprepared for the over project progress report. For the relevant information to be provided refer to CM-PE-306. Per equipment type andbulk material the following figures need to be prepared:

• Estimated quantity
• Issued for inquiry
• Purchased
• Received at site

For the status of order placementactivities the following information needs to be prepared per groupof equipment (static, rotating, etc.) and the subcontracts:

• Estimated requisitions
• Issued for inquiry
• Bid tabs issued for approval
• Bid tabs approved
• Purchase order placed

5.Flowchart

(Not applicable)

6. References