SAEP-367

Engineering Procedure SAEP-367 Value Improvement Practices Requirements

24 April 2011

Document Responsibility: Project Management Office Department

Saudi Aramco DeskTop Standards Table of Contents 1

Scope…............................................................ 2

2

Conflicts and Deviations.................................... 2

3

References........................................................ 2

4

Definitions of Value Improvement Practices.…. 4

5

Requirements/Instructions................................ 5 5.1

Value Engineering………………......….... 5

5.2

Value Practices (Best Practices)............. 7

5.3

Project Risk Management...................... 13

6

Other Value Improvement Practices…........… 17

7

Responsibilities............................................... 20

8

Appendices....….............................................. 22

Appendix A – Optimum Implementation Timing for VIPs…........................... 23 Appendix B – Summary of VIP Criteria..….........… 24 Appendix C – Value Engineering Guide (separate file)…............................... Appendix D – Best Practices Guide (separate file)…............................…

Previous Issue: New

Next Planned Update: 24 April 2016 Page 1 of 24

Primary contact: Abdi, Abdirahman Mohamed on 966-3-873 0156 Copyright©Saudi Aramco 2011. All rights reserved.

Document Responsibility: PMOD/Value Practices Unit Issue Date: 24 April 2011 Next Planned Update: 24 April 2016

1

SAEP-367 Value Improvement Practices Requirements

Scope This procedure outlines the requirements of value improvement practices (VIPs) during the project planning and execution phases of the project development cycle. The procedure is not intended to give instructions on the engineering effort, but covers requirements for value improvement practices that are important during DBSP, Project Proposal, Detailed Engineering, and Construction processes. In summary, it covers: 

Value Engineering (VE) requirements, including Process Simplification and Design-to-Capacity requirements during DBSP and Project Proposals.



Best Practices (BP) requirements, a project cost, schedule and quality improving techniques, during Project Proposal, Detailed Design, Procurement and Construction phases.



Project Risk Management (PRM) requirements during DBSP, Project Proposal, Detailed Design, Procurement and Construction.

This procedure is not applicable to the value engineering studies performed on engineering documents. Commentary Notes: The objective of the procedure is to consolidate all the value improvement practice requirements into one procedure. VIP requirements are also specified in other phasespecific procedures such as SAEP-1350 for DBSP phase or SAEP-14 for Project Proposal phase. The requirements specified herein supersede the provisions in the other procedures referenced in this document.

2

3

Conflicts and Deviations 2.1

Any conflicts between this procedure and other applicable Saudi Aramco Engineering Standards (SAESs), or industry standards shall be resolved in writing by the Project Execution Optimization Division Head, Project Management Office Department of Saudi Aramco, Dhahran.

2.2

Direct all requests to deviate from this procedure following internal Company procedure SAEP-302 and forward such requests to the Manager, Project Management Office Department of Saudi Aramco, Dhahran.

References The latest edition of the applicable reference documents shall be applied: 3.1

Saudi Aramco References Page 2 of 24



Saudi Aramco Engineering Procedures SAEP-12

Project Execution Plan

SAEP-13

Project Environmental Impact Assessments

SAEP-14

Project Proposal

SAEP-140

Project Training Impact Assessment

SAEP-302

Instructions for Obtaining a Waiver of a Mandatory Saudi Aramco Engineering Requirement

SAEP-329

Project Close-Out Report

SAEP-360

Project Planning Guidelines

SAEP-1350

Design Basis Scoping Paper (DBSP) Preparation and Revision Procedure

SAEP-1661

Waste Minimization Assessment Procedure

Saudi Aramco Engineering Standard SAES-A-202

Saudi Aramco Engineering Drawing Preparation

Saudi Aramco Best Practices SABP-A-005

Energy Assessment Methodology for Energy Efficiency Optimization

SABP-A-009

Pinch Technology for Energy Efficiency Optimization

SABP-A-012

New Projects Energy Efficiency Optimization Review Methodology

SABP-A-030

Energy Assessment for Efficiency Optimization in GOSP

Saudi Aramco Cost & Scheduling Manual General Instruction GI-0002.710

Mechanical Completion and Performance Acceptance of Facilities

Project Management Loss Prevention Program Saudi Aramco Project Risk Management Guide 3.2

Industry Codes and Standards Construction Industry Institute (CII) Publications

Page 3 of 24


4


Definition of Value Improvement Practices Within Saudi Aramco, the term Value Improvement Practices encompasses Value Engineering, a group of other value management techniques called Best Practices, and Project Risk Management. It should be noted that Independent Project Analysis (IPA) defines VIPs differently and encompasses other practices as defined in IPA’s VIP paragraph of this section. Value Engineering: is a function-oriented multidisciplinary team approach for optimizing project execution and eliminating unnecessary costs without sacrificing total project performance, quality, and/or reliability. Value Practices (Best Practices): are strategies, techniques, methods or procedures that have proven to produce results of the highest value to an organization. Within Project Management, “value” is determined by the ability to complete projects at or below targets for cost and schedule while maintaining quality and safety goals. Best Practices techniques include Project Execution Planning Workshop (an alignment practice); Project Definition Rating Index (a measure of scope definition completeness); Constructability (use of construction knowledge during planning and design); Schedule Optimization (combination of schedule reduction and compression techniques); Scope Control plus Change Management (a formal system for managing scope changes); Planning for Start-up (tools and techniques to facilitate start-up planning); and Lessons Learned (implementing, collecting, managing, archiving and using what was learned). Project Risk Management: seeks to anticipate and address uncertainties that threaten project objectives. Project Risk Management is the process concerned with conducting risk management planning, identification, analysis, response, and monitoring and control of project risks. Other VIP Practices: are practices benchmarked by IPA and considered to improve cost, schedule, and/or operational performance of capital construction projects. These practices are: 3D CAD, Customizing Standards, Energy Optimization, Waste Minimization, Design-to-Capacity, Process Simplification, Class of Facility Quality, Technology Selection, Predictive Maintenance, and Process Reliability Simulation. The first four practices are part of Saudi Aramco’s procedures. Two practices Designto-Capacity and Process Simplification have recently been added to be conducted with the Value Engineering practice. The Class of Facility Quality, Technology Selection, and Predictive Maintenance are considered to be part of the way Saudi Aramco plans for its project. The remaining practice “Process Reliability Modeling Simulation” which requires computer simulation of the mechanical reliability of the equipment in a plant is not part of Saudi Aramco’s practices. Section 5 of this procedure provides more explanation and these practices.

Page 4 of 24



Value Practices Management System (VPMS): is a web-based automated tool that enables PEOD to propose, schedule, track and evaluate the implementation of Value Improvement Practices on capital projects. 5

Requirements/Instructions 5.1

Value Engineering Value Engineering (VE) is a function–oriented, multidisciplinary team approach for optimizing project execution and eliminating unnecessary costs without sacrificing total project performance, quality, and/or reliability. The rigorous examination of what is needed to meet the business objectives of a project and the elimination of non-value adding investment is directed towards function analysis. The practice tries to systematically differentiate “wants” from “needs” and remove the “wants.” It tests for non-income producing investments, including: 

Redundancy



Over-design



Manufacturing add-ons



Upgraded materials of construction



Customized design vs. supplier standards

The Value Engineering exercise typically results in savings of 5-15% of Total Installed Cost (TIC). VE leverages the growing accumulation of more detailed project knowledge to test the value of earlier, more generalized scope assumptions. It also tests the added value of different stakeholder requirements that have influenced the evolution of the scope. The process of Value Engineering Methodology is outlined in the VE Guide (Attachment C) of this document. 5.1.1

VE Study Criteria/Implementation Criteria FPD shall initiate a formal VE study during the DBSP in accordance with SAEP-1350 “Design Basis Scoping Paper (DBSP) Preparation and Revision Procedure” when the estimated BI value exceeds $100 million. Unless waived in the DBSP, SAPMT shall initiate a formal VE study during the Project Proposal development stage when: 

The estimated BI value exceeds $100 million, or



The estimated BI value is between $30 - $100 million and a

Page 5 of 24



VE study was not conducted during the pre-planning or DBSP development stage, or 

5.1.2

The estimated BI value is between $30 - $100 million, and the pre-planning or DBSP stage VE report has recommended a Project Proposal stage VE study.

DBSP Phase During the DBSP Phase, Facilities Planning Department (FPD) initiates a Value Engineering study of the project scope at 90% of DBSP or as described in the initial draft of the DBSP. The Value Engineering study shall be facilitated by the approved consultants or the preliminary engineering contractors. VE facilitation during DBSP shall be done in accordance with the requirements stipulated in the “Project Planning Guidelines” SAEP-360 and SAEP-1350 “Design Basis Scoping Paper (DBSP) Procedure.”

5.1.3

Project Proposal Phase During Project Proposal Phase SAPMT initiates the VE Study and the study should be completed during the early phase of the Project Proposal but not later than the 30% completion milestone date. For scheduling purposes, the VE studies shall be coordinated with the Project Management Office Department (PMOD). The requirements for conducting VE studies shall be identified in the Project Proposal contractor’s scope of work and in SAEP-12.

5.1.4

Additional VE Requirements VE shall be conducted with special emphasis on the following practice areas: 1. Plot Plan Analysis for expansion and grass root process plant projects to ensure that facilities are designed in the most efficient and cost-effective manner. 2. Process Simplification to search for opportunities to eliminate or combine chemical or physical process steps while satisfying needed functionality at the lowest investment and operating cost. 3. Design-To-Capacity with a level of conservatism to ensure that the overall plant will achieve its nameplate capacity while taking into account plant flexibility and expandability scenario use.

Page 6 of 24



VE studies shall only be facilitated by either a Certified Value Specialist (CVS), out of Kingdom engineering contractors, or local engineering contractor personnel who have been approved by PMOD [including Associate Value Specialists (AVS)]. Requests for VE study guidance and information on consultants and local engineering contractors approved to facilitate VE sessions should be directed to Project Execution Optimization Division (PEOD). 5.1.5

VE Proposal Implementation & Reporting Requirements The effectiveness of a VE study depends on the successful implementation of accepted proposals and on the prompt resolution of pending proposals. During DBSB, FPD modifies the initial project scope to reflect the Value Engineering study recommendations which FPD agrees would strengthen the business case. During the Project Proposal phase, the VE proposals that are accepted by the proponent organization and SAPMT are to be reviewed by FPD, and CSD if related to standards requirements, before being incorporated into the Project Proposal scope of work. The status and resolution of all accepted and pending VE proposals shall be documented in the Value Engineering section of the Project Proposal. A copy of the final VE Report shall be distributed to PMOD no later than four weeks from the completion of the VE session in the PP phase.

5.2

Value Practices (Best Practices) The use of industry best practices can significantly improve project performance in terms of cost, schedule, and operability. However, the effectiveness of these techniques depends on several factors, including the nature of the project, the project phase at which the practices are applied, and the expertise of the individuals responsible for implementing them. The elements of the best practices are outlined in the Best Practices Guide (Attachment D) of this document. Using the automated VPMS tool at the beginning of each calendar year PEOD reviews the projects approved for funding through the annual capital budgeting process and proposes the Value Improvement Practices that provide the most benefit for the individual projects based on the requirements of this procedure. The proposed practices are then sent to SAPMT for review and concurrence after which the plan is considered an obligation to the project and must be implemented. At minimum, SAPMT shall implement applicable Saudi Aramco Value Improvement Practices per the approved plan during Project Proposal

Page 7 of 24



development to optimize project planning and execution. SAPMT can initiate the implementation of any other VIP as desired at any time. The general requirements for conducting specific Value Practices shall be identified in the Project Proposal Contractor’s scope of work. Value Practice sessions shall only be facilitated by approved Value Practices Consultants, Out of Kingdom Engineering Contractors or local Engineering Contractor personnel who have been approved by PMOD. SAPMT should plan for implementing Project Management's currentlyidentified or other industry best practices in accordance with PEOD guidance or the requirements of SAEP-14, Project Proposal – as appropriate. Since best practices have the greatest impact on a project in the very early stages, it is recommended that their use be planned early and repeated, as applicable. It is the responsibility of the SAPMT to implement as many of these practices as applicable per the criteria outlined in this procedure to ensure successful project planning and execution. Should other best practices be rolled out by PEOD between revisions of this procedure, SAEP-12, or SAEP-14, project teams should investigate whether those new best practices offer value improvement to their projects, and plan their implementation accordingly. The following value practices have shown proven payback for Saudi Aramco projects: 5.2.1

Lessons Learned 5.2.1.1

Lessons Learned Implementation Lessons Learned Implementation (LLI) is a structured and systematic approach to the application of lessons learned from previous projects. It entails a systematic search of Saudi Aramco Project Management Lessons Learned knowledge base and the Pitfall Prevention Tool website and other reliable sources to identify lessons learned applicable to a specific project, development of mitigation strategies and action plans, and monitoring the implementation of the action plans with a view to minimizing repeat problems and to build on successes by other projects. Implementation Criteria Unless waived, all Saudi Aramco projects shall initiate and hold formal facilitated LLI workshops at the beginning of Project Proposal development stage (0% of PP) and preferably Page 8 of 24



at the beginning of subsequent project phases (Detailed Design and Construction). Participants in these workshops should be all individuals involved in the planning and execution of the project, including but not limited to Facilities Planning Department, Proponents, Inspection Department, Loss Prevention Department, and where possible, contractors key representatives. LLI workshops are generally recommended for the projects for which the BI value exceeds $10 million. For lessons learned implementation, SAPMT shall define the plan for finding and implementing existing lessons learned from previous projects that are applicable to the current project. As a minimum, SAPMT shall search the Project Management's Lessons Learned Knowledge Base on the Saudi Aramco intranet at the beginning of each project phase (Project Proposal, Detailed Engineering, and Construction) to review the latest lessons learned. 5.2.1.2

Lessons Learned Collection Lessons Learned Collection (LLC) entails individual SAPMTs and project teams collectively documenting their unique experiences and insights from their involvement in all phases of a project. Implementation Criteria All Saudi Aramco projects shall hold formal facilitated lessons learned collection workshops at 90% completion of each project phase (DBSP, Project Proposal, Detail Design, Procurement, and Construction). Where this is not feasible a formal lessons learned collection workshop should be scheduled at 90% construction, as a minimum. Participants in these workshops should be all individuals involved in the planning and execution of the project, including but not limited to Proponents, Inspection Loss Prevention Departments, and where possible, contractors, vendors key representatives. It is also strongly recommended that individual PMTs regularly submit lessons to Project Management Lessons Learned Knowledge Base during all phases of the project. At project close-out project teams shall consolidate lessons learned from all phases and stages of the project, including the Project Proposal, Detailed Design, Procurement, Construction, Mechanical Completion into a single report, including Page 9 of 24



previously submitted lessons in accordance with SAEP-329, Project Close-out Report. 5.2.2

Project Planning & Team Alignment (PP&TA) Project Planning & Team Alignment (formerly Project Execution Planning Workshop (PEPW)) is a half-day workshop conducted before, or at the start of, Project Proposal (0% of PP) to promote ownership, commitment, and alignment of all project stakeholders including SAPMT, FPD, Proponent, Contracting, Loss Prevention, and other involved parties. Implementation Criteria PP&TA sessions should be held as soon as the service order for the preparation of the Project Proposal document is awarded and as soon as the project key personnel are mobilized for the project. Unless waived, SAPMT shall initiate a facilitated PP&TA Workshop during the Project Proposal development stage for all the projects selected for PP&TA Workshop. This is generally recommended for process-related projects with many stakeholders or when the estimated BI value exceeds $30 million.

5.2.3

Constructability Constructability is the integration of construction expertise throughout the design process to facilitate reduction of construction cycle time and cost. It comprises an analysis of the design, usually performed by experienced construction engineers, to reduce costs or save time. Constructability is usually a program in which competent construction professionals are involved as part of the project design team, working with the engineers from conceptual stage of the project and continuing through completion of design. Effective and timely integration of construction knowledge into the conceptual planning, design, construction and field operations of a project has proven substantial benefits. Constructability efforts require a proactive approach; therefore, the business planning (DBSP) and Project Planning phases of a project are where Constructability efforts will yield the greatest results. Implementation Criteria The optimum timing of Constructability Reviews is targeted at 30% of Project Planning and again at 20% of Detailed Design.

Page 10 of 24



Unless waived, SAPMT shall initiate a facilitated Constructability session at 30% of Project Proposal and 20% of Detailed Design stage for all of the projects selected for Constructability review. Constructability reviews are generally recommended for the projects with an estimated BI value exceeding $30 million or that may benefit from this practice. This generally includes process related projects, such as Oil & Gas facilities, and projects with planning briefs or DBSPs highlighting constructability concerns. 5.2.4

Planning for Startup Startup is defined as the transitional phase between facility construction completions and on-stream, including all activities that bridge these two phases (i.e., pre-commissioning through performance acceptance). Overall project success is strongly related to startup success, which depends heavily on the degree and thoroughness of early startup planning. Saudi Aramco GI-0002.710, Mechanical Completion and Performance Acceptance of Facilities, provides the framework for startup planning. The startup team (led by the Proponent) is responsible for getting the plant safely and efficiently commissioned and started. Successful commercial operations require successful startup and successful startup requires effective planning for startup. The key to a successful startup is to have a Startup Plan that defines the roles and responsibilities of the startup team explicitly. The preparation of the Startup Plan, which includes a Responsibility Matrix “Responsibility Accountability Contact Information (RACI)”, is normally performed late in the Design Basis Scoping Paper (DBSP) and is refined during the early stages of Project Proposal and further refined throughout the subsequent project phases. The startup plan describes in detail the sequence of startup, integration with shutdowns, turnover sequence, commissioning procedures, training program, maintenance procedures, raw materials and supplies, operations manual, documentation, required spare parts and startup team structure including the responsibilities and accountabilities for the Proponent, constructor, vendor representative, Project Engineer, operations and maintenance personnel. The development and execution of the Startup Plan is the responsibility of the Proponent, with the Project Engineer providing oversight to ensure that startup planning is performed as an activity that is planned and tracked in (for example) the Project Execution Plan (PEP), project schedule, intermittent reports, etc.

Page 11 of 24



Implementation Criteria Planning for Startup (PFSU) is an extensive set of tools and techniques which are initiated at 90% of DBSP. PFSU awareness sessions for the project team shall be conducted at 90% DBSP and again at 30% of Project Proposal. The PFSU tools are used by all project stakeholders, PMT, proponent, contractors, etc., to help facilitate a successful facility start-up and stable long-term operation. The “Planning for Startup Model” is currently a web-based automated tool. The model recommends that about 15% of startup planning effort should be completed by the end of DBSP and about 50% of the startup planning effort should be completed by the end of the Project Proposal phase. By the end of Detailed Design the startup planning effort should be 80% complete. The startup plan addresses the roles and responsibilities of key persons and organizations, as well as the timing of startup planning and execution activities. Unless waived, SAPMT shall use the automated Planning for Startup tool for all projects selected for the implementation of PFSU. This is generally recommended for projects with an estimated BI value exceeding $50 million or those that may benefit from this practice. This generally includes process related projects, such as oil and gas facilities, and projects with planning briefs or DBSPs highlighting the criticality of facility startup. 5.2.5

Project Definition Rating Index (PDRI) The Project Definition Rating Index (PDRI) for Industrial and Building Projects is a powerful and simple tool that helps the project team to measure project scope definition for completeness. This practice shall be conducted at 60% of Project Proposal and involves SAPMT, proponent, contractor, and other parties as needed to measure Project Proposal completeness and clarity. PDRI consists of about 70 elements that identify and very precisely describe each critical element in a preliminary engineering scope definition package. Implementation Criteria Unless waived, SAPMT shall initiate a facilitated PDRI session at 60% of Project Proposal for all the projects selected for PDRI implementation. This is generally recommended for the projects that

Page 12 of 24



may benefit from this practice and for which the estimated BI value exceeds $30 million. 5.2.6

Schedule Optimization Schedule Optimization is the utilization of schedule review techniques to optimize the schedule for project completion. It is not a situation whereby an already unrealistic schedule is made shorter, more costly and unattainable. The objective is to look for the best possible (most realistic) performance period for the project based upon Saudi Aramco historical experience and the capabilities of the service contractors and material suppliers. The schedule being prepared is considered a Project Summary Schedule (Level III) and consists of 50 – 200 activities. This is a full life-cycle schedule that encompasses the Project Proposal, Detailed Design, Procurement, Construction and Start-Up phases of the project. This schedule is the basis for the milestone dates used in followon phases or contracts. It is also used to assess the completeness of the schedule submitted by bidders for the Lump Sum Turnkey (LSTK), Lump Sum Procure Build (LSPB), Lump Sum Construct Repair (LSCR) or Time Unit Rate (TUR) contracts. Implementation Criteria Schedule Optimization (SO) shall be conducted at 60% of Project proposal. SO utilizes “Schedule Reduction” and “Schedule Compression” techniques to optimize the project schedule. Unless waived, SAPMT shall conduct Schedule Optimization exercise at 60% of Project Proposal for all the projects selected for SO. This is generally recommended for process-related projects with challenging completion milestones or projects that may benefit from this practice when the estimated BI value exceeds $50 million.

5.2.7

Scope Control & Change Management Scope Control (SC) is a preventative process that starts with a detailed project scope and ensures discipline in scope changes during execution. Change Management (CM) involves establishing and communicating to all project stakeholders a system for recognizing, evaluating, and implementing changes during all phases of the project. SC+CM is a facilitated session and shall be conducted at 60% of the Project Proposal. SC+CM is typically facilitated along with the PDRI session at 60% of Project Proposal, but can be done independently as well.

Page 13 of 24



Implementation Criteria Unless waived, SAPMT shall conduct a Scope Control & Change Management session at 60% of Project Proposal for all the projects selected for the implementation of SC+CM. This is generally recommended for complex projects where scope control may be an issue and the estimated BI value exceeds $30 million. 5.3

Project Risk Management 5.3.1

Risk Management Process Project Risk Management (PRM) is a structured and systematic approach for decision making. It is conducted continuously over the life of the project from initiation to close-out. The process is embedded in the stage-gate approval process prior to ERA and also in standard project practices after ERA. The process is defined by the combination of seven specific risk events, as well as the continuous process of monitoring and control. Unless waived, PRM shall be conducted on all capital projects during DBSB and Project Proposal no later than the following seven specific risk events:       

Project initiation and business case preparation (50%) At 10% DBSP At 30% Project Proposal At 90% Project Proposal Commencement of Detailed Design (30%) Commencement of Construction (10%) Prior to Mechanical Completion

At each risk event, a six-step model is used to evaluate and plan for the risk. This six-step model is:      

Plan the approach to risk management Identify risks Assess risk qualitatively Assess risk quantitatively Develop response plans Monitor and control the risk

Page 14 of 24



The six-step model is repeated at each of the seven risk events identified above, and the Monitoring and Control step is a continuous process conducted over the entire life of the project. Refer to Appendix A for a graphical depiction of this process. The PRM process provides for efficient use of resources and reduction in the use of contingency and management reserves. The process is described in detail in the Saudi Aramco Project Risk Management Guide. 5.3.2

PRM Implementation While the PRM process is applicable to all capital projects, the number of activities within the process, and the depth of the activities performed, depends on the size, complexity, uniqueness and level of importance of the project. The activities required to implement PRM for a specific project will be jointly decided between the project and PMOD. Smaller projects will benefit from pre-defined templates and desktop reviews, while larger projects will benefit from facilitated group workshops. PRM uses a Risk Register at the center of the process. The Risk Register captures all information related to project risks and provides the justification for, and definition of, all activities required to monitor and manage the risk. Dedicated Risk Management software is used to manage the Risk Register and this software makes risk management an efficient and time-effective process. All risk information captured by the risk software over the life of the project is captured as a knowledgebase. This knowledgebase will provide future projects with an initial risk register and risk specific lessons learned.

5.3.3

PRM Coordination Each project is responsible for its own risk management. PMOD can provide mentoring and support activities to enable the project to commence risk management. PMOD can provide the software and training required to effectively perform risk management on all projects. All projects that conduct risk management must inform PMOD to ensure that the process used is adequate, and to ensure all risk learning on the project is captured.

5.3.4

Key Risk Management Documents The PRM produces four key documents as described in the Saudi Aramco PRM Guide. They are: Page 15 of 24



PRM Plan: 

Documents the project context, existing risk information, project constraints, background risk information, major assumptions, project uniqueness, risk strategy and risk tolerance.



Identifies cross-functional risk team (including subject matter experts), risk relationships, escalation, process of enacting risk responses, risk activity scheduling, risk reporting, and risk training requirement.



Defines the depth of analysis required during the PRM process and the interval and detail required for reporting.

Risk Register: The repository for all risk information and response planning. It captures risk decisions and risk trends, and is the primary tool used to understand and plan the management of risk. This is managed by software. Risk Reports: Regular reports summarizing the risk status of the project. Risk trends are reviewed and key risk information is distilled into simple outcomes. Estimates of future risk are included along with recommended response plans and actions that should be performed to reduce or eliminate risk. Risk Management Study: A study is provided at key stage gates prior to ERA so that risk information can be included in any stage gate decision. The study provides the following analysis: 

Current level of risk in the project and whether it is within the tolerances acceptable to Saudi Aramco



Actions that will be performed by the project team to further reduce risk



Contingencies are recommended for the project



Major outstanding risks for the project



Recommendations for changes to project objectives to maximum value to the company.

Page 16 of 24


6


Other Value Improvement Practices PMOD will identify and implement other value practices that become available between revisions of this procedure that offer value improvement to the project. Twelve (12) Value Improvement Practices benchmarked by IPA are defined in the following section. Two of the practices are already part of the portfolio of value improvement practices addressed in sections 4 and 5 of this procedure. The remaining ten practices are defined in this section. The section also maps the IPA practices to Saudi Aramco’s way of doing things and establishes basis for the practices that are already part of Saudi Aramco’s standard procedures or part of the responsibilities of specific departments. 6.1

Technology Selection A formal systematic process by which a company searches for production technology outside of the company (or within the company) that may be superior to that currently employed. It is a method to ensure that technology used by projects is the most competitive available technology that meets the business objectives. In Saudi Aramco, the Facility Planning Department (FPD) partners with business lines to evaluate capital investments, both technically and economically, and provide an independent assessment as to how they can best contribute in the attainment of the Company’s business objectives. Technology selection is part of the planning efforts led by FPD during the planning phases. P&CSD and CSD support this effort through the Technology Selection Roadmap and Engineering Services Technology Program respectively. The application of Technology Selection as a practice would be redundant with these efforts and would not be beneficial to capital projects.

6.2

Classes of Facility Quality A structured team review to validate and modify, if necessary, the facility characteristics needed to meet the business objectives. These include the facility life, expected reliability or uptime, likelihood of expansion, production rate changes with time, feedstock type and availability, product quality, product demand, product flexibility, and degree of automation. The purpose of this practice is to establish a balance between each of the facility characteristics and the capital, as well as operating costs associated with the proposed investment. In Saudi Aramco, the Facility Planning Department (FPD) partners with Corporate Planning, Finance, and Project Management to ensure that capital investments have sound business cases, meet corporate strategic objectives, and are executed in a cost-effective manner. The planning efforts led by FPD during the qualitative assessment, preliminary evaluation, and study phases are similar

Page 17 of 24



to the Classes of Facility Quality practice. The application of the Classes of Facility Quality as a practice would be redundant with FPD’s efforts. 6.3

Customization of Standards and Specifications A systematic evaluation of the specific needs of a facility before it is designed with the objective of meeting the facility’s needs by employing the minimum required standards. CSS seeks to ensure that the facility costs are not increased by applying codes and standards that exceed the actual needs of the plant. In Saudi Aramco, Consulting Services Department (CSD) conducts periodic VE studies to customize standards and specifications. The efforts undertaken by the Standards Globalization Teams led by CSD which includes CSD, P&CSD, Engineering Knowledge & Resources Division and Aramco Services Company (ASC) practically covers the intended objectives of the Customization of Standards and Specifications practice.

6.4

Energy Optimization A technical analysis aimed at optimizing the capital cost, operating cost, and operability of a process unit, utility system, or manufacturing site to achieve an optimal balance between capital and energy costs. The practice evaluates the thermal efficiency of a process and/or multiple units in a production complex for the purpose of improving the utilization of energy. This optimization is done to achieve a process/facility configuration that is economically optimal. In Saudi Aramco, the Energy Systems Unit (ESU) of P&CSD is responsible to ensure optimum energy efficiency design and operation for all facilities. Requirements for Energy Optimization are specified in SABP-A-005, SABP-A-009, SABP-A-012, SABP-A-030 and SAEP-14.

6.5

Process Simplification A rigorous, structured, and formally facilitated process to search for opportunities to eliminate or combine chemical or physical process steps while satisfying needed functionality at the lowest investment cost, and often operating cost as well. Process Simplification is closely related to the VIPs that focus on process optimization and function analysis such as Value Engineering. Process Simplification is Value Engineering 1 performed during FEL-2 according to IPA. In Saudi Aramco, Value Engineering is perfomed during DBSP, which corresponds with IPA’s VE1 during FEL-2, therefore this practice is essentially performed in Saudi Aramco. In addition, Process Simplification is required to

Page 18 of 24



be performed along with Value Engineering studies during the Project Proposal stage. Section 5.1 of this procedure specifies the requirements. 6.6

Waste Minimization A formal “process stream by process stream” analysis to identify ways to eliminate or reduce, at the source, the generation of wastes or non-useful streams from a chemical process. Such an approach might add additional equipment or examine alternate process technologies that have lower waste side-streams. For those streams not eliminated or converted into saleable by-products, it provides the method for managing the resulting wastes. The practice incorporates environmental requirements into the facility design. In Saudi Aramco, the Environmental Protection Department (EPD) is responsible for the waste minimization and hazardous material control function. SAEP-13 specifies that during DBSP it is EPD’s responsibility to evaluate potential opportunities for waste minimization as part of the Environmental Impact Analysis (EIA). SAEP-1661 also outlines the requirements for Waste Minimization Assessment procedures.

6.7

Design to Capacity A structured evaluation to determine the true required maximum capacity of each major piece of equipment, piping, valves, and instrumentation, relative to the desired overall facility capacity with the objective of minimizing uneconomic excess capacity. Often equipment is designed with a “safety factor” to allow for additional catch-up capacity of some production increases. Design to Capacity optimizes the use of capital to meet nameplate capacity. Certain discussions that take place in Value Engineering (VE) are very similar to the DTC process; therefore, Saudi Aramco requires this practice to be performed with Value Engineering. Section 5.1 of this procedure specifies the requirements.

6.8

Process Reliability Simulation Modeling A computer-based simulation technique to examine operability targets for a facility. The objective is to determine the most economical sizing, spacing, and storage conditions that meet operability goals while minimizing cost. Typically, PRSM uses actual failure data and repair times and requires specialized computer software and/or consultant involvement. Saudi Aramco relies on human capital and institutional knowledge in this practice area.

Page 19 of 24


6.9


3D CAD The use of three-dimensional computer aided design (3D CAD). The objective is to generate computer models of the physical arrangement of the facilities being designed. The 3D model must ultimately capture “fraction of an inch” design detail, not just an artistic rendition of the proposed facility. The principal benefits of utilizing 3D CAD for the design of process plants is the ability to produce an electronic model that accurately resembles the completed facility. This enables project teams, clients and constructors to review and agree on the plant design before construction starts. In Saudi Aramco, Standard “SAES-A-202” establishes a uniform means of Computer Aided Design & Drafting (CADD) standards used, in producing and modifying Saudi Aramco engineering drawings in electronic format. Furthermore, it specifies the use of a SmartPlant model using intelligent P&IDs by populating a database with relevant plant data. This method provides valuable information throughout the plant life cycle. As a data-centric, rule-based solution for the P&ID life cycle, SmartPlant P&ID helps users improve design quality, data consistency, and standards compliance. With quick access to supporting engineering data, SmartPlant P&ID significantly cuts design and modification time and increases accuracy with its exclusive data-centric approach and use of design rules, automatic checks, and drag-and-drop capabilities. The Engineering Knowledge and Resources Division of the Engineering Department is responsible for providing technical services in the area of engineering drawing design standards and development procedures.

6.10

Predictive Maintenance A technique used to monitor the condition of equipment during operations to predict failure before it occurs. The practice anticipates when and what type of maintenance is required to prevent failures stemming from deterioration. Typically, this approach requires adding various measurement devices to evaluate operating characteristics. This additional instrumentation is generally economically justified in the case of critical equipment items and key operations. Saudi Aramco uses time based preventive maintenance provided by the SAP Plant Maintenance Module.

7

Responsibilities 7.1

Procedure Updates PMOD is responsible for updating this document. The next planned update is Page 20 of 24



5 years from the issuance date. 7.2

Implementation of Practices The responsibilities for the implementation of the requirements of this procedure are as follows: PMOD is responsible to: 

Propose to SAPMT, at the beginning of each year, the recommended VIPs to be implemented for the individual BIs.



Monitor the quality and the timeliness of the VIP sessions.



Report the performance of the VIP implementations using KPIs that measure the quality and success of the VIP program.



Provide assistance in the selection of facilitators.



Provide facilitation services to the extent possible.

SAPMT is responsible for: 

Reviewing the recommended VIPs for the individual BIs during the PP phase and providing feedback to PEOD.



Soliciting and scheduling the facilitation services from engineering contractors, approved facilitators or from PEOD prior to the optimum timing of the recommended practices.



Implementing the VIP recommendations and providing status and study reports to PEOD.

FPD 

Reviewing the recommended VIPs for the individual BIs during the DBSP and providing feedback to PEOD.



Soliciting facilitation services from engineering contractors, approved facilitators or from PEOD prior to the optimum timing of the recommended practices.



Incorporating the accepted VIP recommendations into the DBSP.

Facilitators 

At the request of FPD, PMT or PEOD conduct the facilitation and prepare the final report within the required timeframe.

Page 21 of 24



Other departments including the proponents 

8

Ensure that the invited participants attend the required facilitation sessions.

Attachments – Appendices Appendix A – Optimum Implementation Timing for VIPs Appendix B – Summary of VE Workshops Appendix C – Value Engineering Guide Appendix D – Best Practices Guide

24 April 2011

Revision Summary New Saudi Aramco Engineering Procedure.

Page 22 of 24



Appendix A – Optimum Implementation Timing for VIPs

Page 23 of 24



Appendix B – Summary of VIP Criteria

Item

VIP

Implementation Time

VIP Selection Criteria Value Other

Participants

$100 Million & $30 Million

All project types

FPD, CSD, SAPMT, Project Stakeholders, PMOD

$10 Million

All project types

SAPMT

N/A

All project types

SAPMT, Contractor, Proponent

Multi stakeholders

SAPMT, Contractor, ID

1

VE

90% of DBSP & Again at 30% of PP

2

LLI

0% of PP

3

LLC

100% of Phases

4

PP&TA

0% of PP

$30 Million

5

CONST

30% Project Planning & 20% Detail Design

$30 Million

Complex projects Process related projects

SAPMT, ID, Contractor Project Stakeholders, PMT, Proponent, Contractors, etc. SAPMT, Proponent, Contractor, and other parties as needed

6

PFSU

90% of DBSP & again 30% PP

7

PDRI

60% of PP

$30 Million

Complex projects

8

SC+CM

60% of PP

$30 Million

Complex projects

SAPMT

9

SO

60% of PP

$50 Million

Complex projects

SAPMT, Contractor, Proponent

N/A

Mutual agreements

SAPMT, Proponent, Contractor, and other parties as needed

9

PRM

1. 10% of DBSP 2. Twice during PP 30% & 90% 3. 30% of Detail Design 4. 10% Construction Phase 5. One during Startup

$50 Million

Page 24 of 24

SAEP-367

Recommend Documents