CM-PE-402 General Procedure for The Preparation of Process Performance Guarantees

Table of Contents

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

1. Purpose

This procedure describes the methods that are to be followed for the preparation of performance guarantees.

2. General

2.1 Definitions

"Performance Guarantees" are those operating data that are guaran­teed by Company or the Licensor of the Process.

"Proprietary Processes" in this procedure are defined as processes of which the technology belongs to Company or to a Company with which Company holds an agreement to sell and design such technology. Examples of such processes are: Process1, Process2, etc.

2.2 Confidentiality

Performance guarantees are process data that are always considered to be of a confidential nature. Therefore reference 6.3 is applicable in all cases.

2.3 Description of Performance Guarantees

A. Content of Guarantees

A set of performance guarantees may include all or some of the following:

- Plant capacity.
- Specifications of feeds, products and by-products.
- Consumptions of catalysts, chemicals and utilities.
- Cycle times, yields, recoveries, etc.
- Hydraulics.

The performance guarantees must, of course, be consistent with the Contract, which is the basic job document. The Performance Guarantees Exhibit always becomes a formal Contract document.

B. Type of Document

Typically two forms of guarantees exist:

Separate Guarantees

All items, feed and product rates, consumptions and/or production of utilities, etc. are guaranteed separately.

Global Guarantees

In a global guarantee all or part of the process data that are guaranteed are lumped together into one guarantee. An example of such a guarantee is a global guarantee for utilities. In such a case Company guarantees the total costs of utilities per unit of product.

Reference should be made to a recent licence agreement on ethylbenzene/styrene for examples of typical process guarantees (see Process or Legal department files).

3. Responsibilities

3.1 Process Data

The Process Department is responsible for establishing the basis for and the calculation of the Performance Guarantees.

For Proprietary Processes the final approval of the guaranteed data (except hydraulic guarantees) is with the responsible manager of Company or the Licensor of the Process. For other processes the final approval is with the Process Department Manager or his designate.

3.2 Coordination/Submission to Client

The Sales Department is responsible to coordinate the preparation of the Performance Guarantees and is responsible for updating the contract and communicating the information to the client. The Sales Department together with the assigned Proposal Project Manager are also responsible to assure compliance of the Performance Guarantees with the commercial aspects of the Contract.

3.3 Legal Department

The Legal Department in The Hague is responsible to ensure compliance of the Performance Guarantees with the legal aspects of the Contract.

3.4 Project Execution

The Project Manager on the job is responsible to define the impact of the Performance Guarantees on the execution of the project.

4. Procedure

4.1 Requirement for providing Performance Guarantees

Performance Guarantees are usually required by a client as part of the negotiations of a contract with Company before commencing a project. However, it is possible that a requirement for guarantees is brought forward by a client during project execu­tion, e.g. the basic design phase.

Upon receipt of a requirement for Performance Guarantees from a client, the involved Company representative shall promptly inform the following Company (department) managers and engineers:

- Management.
- Sales Department.
- Legal Department.
- Process Engineering Department.
- Job project manager and engineering manager.
- Lead process engineer on the job.
- Any other department manager as required.

4.2 Process Department

When calculating guaranteed process data it is necessary to first of all determine:

- The basis that was used for the calculation of the normal process data, such as plant throughput, feed and product specifications, consumptions of raw materials and utilities, etc.

- The calculated normal process data.

- The process data used for design (design reflux rates, design equipment duties, etc.), maximum or peak values of flows of process streams, utilities, etc.

After the above has been sufficiently well defined, the process engineer shall determine the basis for calculating the guaranteed process data.

Guaranteed plant capacity, yields, consumptions of raw materials and utilities, etc. are calculated by multiplying/dividing the expected throughputs/consumptions by (Company determined or negotiated) safety factor(s). Alternatively these guarantees are based on a set of conservative operating conditions.

Guaranteed product qualities are determined by allowing a margin between the expected or design quality and the guaranteed product quality or the guaranteed quality is based on conservative operating conditions.

The process engineer shall always check that the guaranteed specifications of feeds, products and by-products shall contain sufficient margin over the expected data. For this it is necessary to review Company's contractual requirements and the liability imposed on Company.Further to the above it is essential to exactly define the basis and qualifications of the guaranteed process data. The qualifications shall be submitted as an integral part of the guarantees to the client. Examples of qualifications are:

- Minimum required qualities of raw materials.
- Types of catalysts applied.
- Assumed or client supplied utility specifications and caloric value(s) of fuel(s).
- Assumed or vendor supplied furnace efficiencies, pump hydraulic efficiencies, motor efficiencies, etc.
- Applicable exclusions such as: utilities for regenera­tion, tracing, fuel atomizing, lighting, flare, lube oil pumps, storage requirements, control room etc.

Some of the qualifications are often dependent on the phase of the project during which the performance guarantees were determined. Therefore some of the guarantees may have to be updated in later phases of the project when information has become available such as:

- Final process flow diagram.
- Final utility specification.
- Vendor information for equipment.
- Project scope changes.
- Finalized hydraulic calculations.

All the above information, including the basis and qualifications, is checked by the lead engineer. The approval of the guarantees is the responsibility of the process department manager or his designate.

For proprietary processes final approval of the guarantees is by the responsible Technology Manager or the Licensor of the process.

4.3 Sales Department

The Sales Department coordinates the preparation of the Performance Guarantees, takes care that the guarantees are included in the Contract and is the prime communication channel between Company and the client.

Upon receipt of the Performance Guarantees proposed by the Process Department, the sales engineer checks and confirms compliance with the Contract. Also he assesses that the involved risks for Company are acceptable from a commercial point of view.

4.4 Legal Department

The Legal Department checks and confirms compliance of the guarantees with the Contract from a legal point of view.

4.5 Project Manager

The Project Manager is responsible to evaluate any consequences for the project execution as a result of the proposed performance guarantees, such as schedule, manhours, design and engineering aspects, etc.

4.6 Proprietary Processes

The procedure for preparing and submitting Performance Guarantees of Proprietary Processes is the same as for other processes.
However, for each proprietary process specific requirements apply:

Process1

Prior to submission to a client all guarantees need approval by the responsible technology manager of Company. Performance Guarantees for ethylbenzene and styrene plants are always included in the License Agreement between Company and the client.

Process2

The guarantees of feeds and products, raw material consumptions and plant capacity are the responsibility of the Licensor of the process. The guarantee of the utility consumptions is the responsibility of Company, with the exception of the refrigeration duty, which is guaranteed by Licensor. Prior to submission to a client, all guarantees need approval by Licensor.

etc.

The preparation of guarantees and the submission of these data to clients is the sole responsibility of Company.

Licensor2, however, shall always receive a copy of the executed License Agreement between Company and the client.

5. Flowchart

6. References