Scope of Work Guide

March 2012 Rev 02

Restricted

SCOPE OF WORK WRITING GUIDE

Document History* Issue No.

Date

Reason for Change

02

March 2012

Update

01

December 2011

First issue

Prepared

B.Rogers

A.Udi

Reviewed

L. Karpova T. Castellanos K.Berends M. Igiehon, L.Karpova D.McDonald

Approved – Approved – Projects Legal

Approved – Approved – Projects CP

K.Berends

K. Berends

Notes: This Scope of Work Writing Guide is supplementary and complementary to the Project Management Discipline Standards and the Global Model Contracts Library.

Shell Global Solutions International BV

Scope of Work Writing Guide

Page 1

Contents

1.0

INTRODUCTION .......................................................................................................................................... 3

2.0

PURPOSE AND OBJECTIVE OF THIS GUIDE ............ ............. ............. ............. .............. ............. ............. ....... 3

3.0

CONTEXT OF THE SCOPE OF WORK IN A CONTRACT ............. ............. ............. ............. ............. ............. ..... 4

4.0

ROLES AND RESPONSIBI LITIES ............. ............. ............. ............. ............. ............. ............. ............. ............ 4

5.0

DEVELOPING A SCOPE OF WORK ................................................................................................................ 4

5.1

THE PROCESS .....................................................................................................................................................4

5.2

PLAN THE TASK ..................................................................................................................................................4

5.3

OUTLINE THE SCOPE ............................................................................................................................................5

5.4

ALLOCATION OF INDIVIDUAL TASKS AND RESPONSIBILITIES..........................................................................................5

5.5

WRITING THE SCOPE OF WORK ............................................................................................................................. 5

5.6

REVIEWING AND APPROVAL ..................................................................................................................................9

6.0

RELEVANT STANDARDS AND GUIDES ............. ............. ............. ............. ............. ............. ............. ............. . 9

6.1

SHELL PROJECTS STANDARDS .................................................................................................................................9

6.2

CP STANDARDS ................................................................................................................................................ 10



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1.0

Introduction

Whilst all elements of a contract are important, probably the most important is the Scope of Work (or Scope). A well written, clear Scope of Work, that is complete, consistent and unam biguous can contribute more than any other part of the Project contract, to successful delivery of a Project or WORK. The Scope of Work must define, in as much detail as necessary, the tasks that the Contractor must perform. The Scope of Work is that part of the Invitation to Tender and Contract where Shell (here and after referred to as „the Company‟) defines WHAT the Contractor must do in executing the Project or WORK under the Contract, it defines when it should be done and how performance will be judged. A poorly written Scope of Work may deter a competent contractor from tendering if he cannot understand what he will be required to do. Furthermore a poor Scope could lead to inefficient execution and an opportunity for the contractor to pursue variations and claims, postaward. This could result in value leakage with respect to project quality issues, schedule extension and cost escalation. The Scope of Work should be presented in such a way that it is easily understood by all parties involved in delivering the project, including the Contractor. Ambiguities in the Scope might lead to disputes with the Contractor that could have been avoided. The test of whether a Scope is adequate, is to ensure the Scope covers the following 4 Criteria: 1.

What needs to be done

2.

Who will do what needs to be done

3.

When will it be done

4.

How will performance be judged

2.0

Purpose and Objective of this Guide

This document provides a guide to assist in understanding the principles for development of a Scope of Work for a Capital Project contract for various types of work including base ones such as:  







BDEP - Basic Design Packages EPC – the CONTRACTOR executes detailed engineering (E), procures all MATERIALS and SUBCONTRACTS (P) and constructs (C). EPCM - the CONTRACTOR executes detailed engineering (E), prepares all MATERIAL and IMPLEMENTATION CONTRACTS for execution (signing) by the (P) and constructs (C) by managing the IMPLEMENTATION CONTRACTS (M) EPF - the CONTRACTOR executes detailed engineering (E), procures all MATERIALS and SUBCONTRACTS (P) and fabricates only (F). Major Construction – the CONTRACTOR constructs (C).

The Objective of this Guide is to: Build an understanding of the importance of the Scope of Work. Define the roles and responsibilities of various stakeholders in creating a Scope of Work Provide principles for preparation of Scopes of Work for the various types of Capital Projects contracts Assist Project teams, Projects Engineers and Contracts Specialists/Engineers to prepare Scopes of Works that have a consistent structure, are concise and complete, and to mitigate the risk created by a poorly defined Scope. Provide guidance on style of writing and phraseology. Provide reviewers of the Scopes of Work with tools for reference during the review and verification of Scopes of Works    

 

This guide should be read in conjunction with the Shell Global Model Contracts Library, which is a repository of the models of the Projects contracts. This Guide is supplemented with the templates for specific types of Scope of Work, which are being developed and uploaded in the Group Model Contracts Library.



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3.0

Context of the Scope of Work in a Contract

The Capital Projects model contracts are generally based upon the following template: Section I Section II Section III Section IV Section V Section VI Section VII Section VIII Section IX Section X Section XI Section XII

Form of Agreement General Conditions of Contract Schedule of Prices Scope of Work Administration Instructions HSES Technical Information Performance Tests Company Provided Items Dispute Resolution Protocol Forms (Parent Company and Bank Guarantees etc) Quality Management

The Scope of Work should be written not in isolation but in alignment with the requirements outlined in all other Sections of the Contract documents. 4.0

Roles and Responsibilities

The Contract Owner is responsible for: the overall integrity of the Scope of Work. o The Contract Holder is responsible for leading the project team in drafting the Scope of Work, and coordinating its compilation o presenting the Scope of Work to the Contract Engineer, for input into the ITT and Contract. o The Contract Engineer is responsible for: overall coordination of the Contract Documents o drafting the pricing section, based on the content of the Scope of Work o reviewing and testing the Scope of Work from the standpoint of third parties, particularly the o tenderers or bidders. The Discipline Leads (Technical Authority) are responsible for: technical reviews and ownership of the particular discipline areas, technical reviews and o testing the Scope of Work. Individuals who have experience from previous contracts and projects should be part of the Scope writing team so as to ensure that lessons learned are captured and to avoid „reinventing the wheel‟. 5.0

Developing a Scope of Work

5.1

The Process

The process of developing a Scope of Work involves 5 distinct phases:     

5.2

Plan the Task Outline the Scope Allocation of individual tasks and responsibilities Writing the Scope Reviewing and Approval Plan the Task

Define the whole of the task that needs to be executed. Plan the timelines and time constraints especially having regard for what resources and expertise is readily available, and what additional resource might be required. Appoint the team to be responsible for writing the different components of Scope. Establish the rules for writing the Scope based on the agreed strategy and in alignment with other sections of a contract model document



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5.3

Outline the Scope

Before defining any particular part of the Scope create and agree, (with the Stakeholders), an outline of the Scope to ensure there is a proper understanding of what is the content and extent of coverage of the Scope. Create a list of what information is available and what additional information is required. Any risks that are perceived in the outlining phase must have associated mitigation developed in the Scope or elsewhere in the Project Risk Register. 5.4

Allocation of Individual Tasks and Responsibilities

Allocate the various tasks to individuals inclu ding identifying those who will have responsibility for obtaining or providing necessary information. If drafting particular part(s) of the scope is allocated to various individuals, ensure they are all aware of the drafting style and conventions that will be used in the final Scope. 5.5

Writing the Scope of Work

5.5.1

Structure and Content

The size, complexity, nature and contracting strategy/tactics determine the details of the Scope of Work. Nonetheless, the contents of a Scope of Work must adhere to a consistent format and basic principles: 



Introduction/Background: provide a high level description of the Project or the work, the objectives, and how it relates to previous, ongoing, and to future projects or work. The background, though brief, should give a context of the scope with that of the Project, and the principal definitions of success of the Project and the Scope. The CONTRACTOR‟s Scope of Work: give details of the work and the desired outcome or end product to be delivered by the Contractor. If the work is to be delivered in phases or sequences, delineate each phase, but show the linkage to each phase and the final product. If there are existing document, references, codes or standards that capture a specification, refer to them, rather than restating or paraphrasing the full requirement. Capture key dates or periods of performance for each specific deliverable. The Scope of Work must contain the following o o o o

o o o o

o



Key deliverables, concisely and clearly described. A clear schedule for performance and completion All responsible parties i.e. who is to do what and interfaces in a Project Items that may be provided by others or the Company, must indicate at what stage and when the items will be supplied A baseline for the Contractor performance measurement including Key Performance Indicators Mechanisms to monitor progress Requirements which the Contractor must comply with during execution of the work Clear indication of the party responsible for maintenance during work execution and after handover. Operational Readiness requirements.

Reference Documents: All applicable documents referenced in the Scope of Work should be listed in this section. It is important to avoid using or listing unnecessary references, as they can hinder or confuse understanding of the deliverables. Similarly if reference documents or drawings are attached, ensure that the Scope of Work does not contradict those documents. The Conditions of Contract contains defined terms in a Definitions article, and if there are terms that are used specifically in the Scope of Work but nowhere else in the Contract, include a Definitions clause in the Scope as well. If references are made to other parts of the Contract document, ensure there is no contradiction with them also, e.g. Section VI – HSSE for Health and Safety requirements, Section VII – Technical Information that provides BDEP documents and Rely-Upon documents, Section XII – Quality Management, and others.



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5.5.2

Relationship to Contract Tactics

The Contract Tactics activity (see Project Guide 05C) will define the Scope of Work and should be used as the start point for development of the detailed Scope of Work. Nevertheless during development of the Scope of Work some additions could occur and these should then be agreed with the Contract Holder and other stakeholders in the Scope of Work Outlining phase before proceeding. 5.5.3

Relationship to Pricing Section

The level of maturity and degree of definition or extent of the design information will have been considered in developing the Contract Tactics. It is important to verify that, any assumptions made in the Contract Tactics phase, do actually hold true in developing the Scope otherwise the selection of the pricing type could be inconsistent with the definition that we are actually able to provide in the Scope of Work. Where more than one pricing type is being applied in the Contract, the boundaries of each of the component scopes must be clearly drawn and proper control procedures must be included, so as to avoid confusion between say a lump sum element of the work and a reimbursable element. 5.5.4

Functional vs. Prescriptive Definition

The Scope of Work in a Contract can either be described in terms of its ultimate deliverable (a functional description) or its component parts and dimensions (prescriptive). One of the dangers of being too prescriptive is that the scope description can limit the contribution that the Contractor makes to the Contract. On the other hand, being too functional does not allow for operational requirements to be adequately covered. Therefore strive to achieve a balance between the two. The choice between the extremes of a high level functional description of the work and a fully prescriptive description, or any of the shades of grey in between, is one that has to be made by the Contract Owner, but be aware that it is much easier to be inclusive with a functional description. The more prescriptive a scope becomes, the more likely it is that parts will be omitted or duplicated. 5.5.5

Description Appropriate to the Audience

The selection criteria that determine the contractor(s) that will be invited to perform the work define a certain capability and with it an expected level of competence. It is important to pitch the level of detail and technical language used to describe the work scope to the competence of the audience. This is particularly important when dealing with contractors that are unlikely to have international experience, or use English as a second language. 5.5.6

Compatibility with the Contract Risk Profile

Decisions should have been taken by the Contract Holder and Project Team, with input from key stakeholders in developing the tactics over how the execution risks in the Contract will be divided between the Contractor and the Company. Obviously the more risk passed on to the Contractor will result in higher levels of contingency sums levied by them. Therefore the more that can be done to describe the precise nature of the risk that the contractor is responsible for in the scope of work, the more accurate the pricing will be, and the more chance that the contractor will be confident to manage it. Do not assume that the less you tell a contractor the better. There will always be clauses in major contracts on the “responsibility of the contractor to inform itself ”, placing the onus on the contractor to discover information, however the less a price and execution philosophy is based on contractor ignorance the better. 5.5.7

‘Rely Upon’ Information

In many circumstances the Company will provide information in the Contract (Section VII – Technical Information) that enables the Contractor to start with a certain position of knowledge before he takes it to the next stage of completion. This can be survey data, subsurface information, or a BDEP (FEED) for example. This data can be provided to the Contractor:



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o

o

„For information‟ whereby the Company accepts no liability for its integrity or authenticity, it is up to the contractor to confirm the data or otherwise if he wishes to use it; or „Rely upon‟ whereby the Company endorses that the information is correct and can be relied upon for any subsequent development of the work.

The contingent liabilities associated with providing “rely upon” data cannot be overemphasised, as any error or false assumption included in it can be used as a vehicle for change by the contractor, often for very good reason. In many instances there is neither the time nor the opportunity for the contractor to be able to confirm the data, and there is no choice but to classify it as „rely upon‟. The caveat however is to ensure the integrity of the information so given. 5.5.8

Company Supplied Materials, Equipment, and Services

There are numerous reasons why the Company might make the decision to provide materials, equipment or services that would otherwise be part of the CONTRACTOR‟s Scope of Work. Whenever this is the case it must be clearly stated that such materials, equipment or services will be provided by the Company. If the types of such items are extensive then they should be included in a separate section of the Scope, whilst isolated or few items could be described in the body of the Scope. In all instances where there are Company supplied items it is vitally important that the Company is confident that the quality and delivery schedule defined in the Contract can be met. To ensure this, the Company representative should constantly review the project schedules and critical path, and ensure to make materials, equipment or services available when needed. 5.5.9

Use of Enterprise Framework Agreements (EFA’s)

The use of EFAs is mandatory for all Shell controlled capital projects and every opportunity should be explored to influence its use in non Shell controlled ventures. Enterprise Category and Supplier Management (ECS) deliver important business benefits for the Shell project portfolio. They leverage Shell‟s buying power and relationships with suppliers to enhance HSSE performance, costs, value delivery, technical innovation and where including within the EFA, operational performance. Wherever there is an EFA that could be used for part of Scope of Work then the Contractor must be directed to the EFA. More information on use of EFA‟s is provided in Project Guide 05D, Implementation of Enterprise Framework Agreements in Projects. 5.5.10 Writing Style and Consistency The style of writing and presentation of the Scope of Works will determine the ease of understanding of the Contractors in preparing their tenders. Whilst style might be individualistic it is vitally important that as a Company we follow some fundamental rules so as to preserve consistency over what we place in the market. It is important to use correct grammar, though not to over emphasise the importance of grammar and lose clarity. Use simple language, which will not be misunderstood, with correct punctuation. A good test for a Scope of Work is to ask a peer or peers to review it and then explain their understanding of the Scope.



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The following principles must be followed to achieve consistency and clarity: Avoid “over use” of “the Contractor Shall”

Always use the “Active” voice.

Correctly use “or”, and “and” Do not include quasi “legal” or “contractual” obligations in the Scope. Avoid unnecessarily long, complex or convoluted sentences Avoid the use of technical jargon. Be concise. Be committal Limit the use of abbreviations and acronyms

Be consistent and don‟t change words that appear to be used repeatedly just for the sake of variety. Avoid use of open-ended language and ambiguous language

Generally the Scope of Work is all to be executed by the Contractor unless the Scope specifically indicates otherwise i.e. “…………will be provided by the COMPANY”. In some instances it would not convey the correct meaning unless an action is preceded by “The CONTRACTOR shall”. Nevertheless, to minimize use of “the CONTRACTOR shall”, the introduction to the Scope shall state “The CONTRACTOR shall execute the following” or “The Scope of the CONTRACTOR‟s WORK is” or similar. The Active voice shall be used in preference to the Passive voice. Generally the Active voice uses fewer words and is invariably much clearer. Active v Passive is best described by example, as f ollows: Active “Provide monthly reports on progress” Passive “Monthly reports on progress shall be provided”. Not only does the Passive use more words, in this instance it would also be unclear who provides the report. Use “and” when multiple things must be done. Use “or” when there is or are alternatives that would be equally acceptable. Never use “and/or” The Conditions of Contract is the correct place for Contractual and Legal obligations. All and any such requirements must be included therein. Aim for simplicity and look for opportunity to replace lo ng words with shorter words that convey the same meaning e.g. utilise/use, demonstrate/show. If jargon must be used, use terms common to the industry or business sector, ensuring that understanding is common to everyone operating within the business sector Do not use more words than necessary. Do not use words that indicate uncertainty or lack of knowledge of the project or work requirements When the Scope of Work is developed for major international contractors, common industry terms and abbreviations can be used with the confidence that they will be understood. However if there is any possibility of misunderstanding, it is recommended to use complete words or phrases rather than abbreviations and acronyms. Always use the same term to refer to the same thing. e.g. schedule for the work, programme for the work. Don‟t use different words unless a differ ent meaning is intended e.g. submit to the engineer, provide to the engineer. Examples of open- ended language and ambiguous language to be avoided: To the satisfaction of As to be determined by In accordance with instructions of As directed by In the opinion of or judgement of Unless otherwise directed by Reasonable period of time, but not less than Include, but not limited to. Deliver to best quality, best efforts or best practice As the case may be In accordance with acceptable standards Adequate 

 

        



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

Is it “shall”, “must”, “should” “may” or “will” ? Avoid Inconsistency and Redundancy Approval

5.6

Excessive

Use “shall” or “must” to express a binding obligation. Use “should” or “may” for non-mandatory actions i.e. the Contract may – but it is not compulsory and it is his option. Use “will” where futurity is intended. If you state something more than once then there is always the possibility that inconsistency might occur. State it once and state it clearly Avoid assigning “approval” to a specific individual e.g. the Project Engineer, unless this the absolute intention

Reviewing and Approval

Regardless of the size of the Work or the complexity of the Scope of Work it is invariably a requirement that the Scope must be reviewed by a peer group. If the scope is large or complex then the peer review team must be multi-disciplinary and representative of all stakeholders. If the scope is small and straight forward the review team should be appropriately sized. In reviewing the Scope the reviewers shall test – Does the Scope: 

 

     

    

Fulfil the 4 Criteria mention in the Introduction? o

What needs to be done

o

Who will do what needs to be done

o

When will it be done

o

How will performance be judged

Suit to purposes of the particular Project and scope type? Comply with the other applicable Shell approved Project Standards and Guides, and functional processes? (See 7.0 Functional Discipline Links). Comply with the structure and model contract for the contract type? Align with other sections of the contract document? Distinguish clearly background information and contract objectives? Include all necessary and required works to deliver the desired result? Set out logical sequence/phases for delivery, to enable early benefits? Properly cite and include where necessary reference materials for required standards and specifications? Identify and allocate responsibilities to the contracting parties? Clearly define performance standards and performance indicators to check work progress? Exclude dependence on extraneous items and undeterminable factors? Include inputs/comments from cross-functional discipline reviews and challenge sessions? Include a clear delivery Schedule and Execution Plan?

The Contract Holder must ensure that all comments and changes proposed in the review phase are fully considered and where appropriate they are incorporated in the final Scope of Work. The final Scope of Work must be approved by the Contract Owner. 6.0

Relevant Standards and Guides

6.1

Shell Projects standards

The Scope of Work must properly and adequately align with the mandatory requirements in the Projects Discipline Standards and Functional Guides, including DEPs, DEMS and DCAF.



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The Shell Standards for application on Capital Projects that are to be followed in preparation of Scope of Work are outlined in a single repository, called iPMS. The link you can find on a P&T Projects webpage: http://sww.shell.com/pt/projects/standardisation/. For detailed requirements and examples on different scope components please refer to relevant Standards owners and discipline focal points. For projects where these standards are not applicable please refer to the local discipline heads or focal points for advising on the local standards. Any instance of divergence from or variance to the Standards requires a waiver f rom an appropriate authority outlined in that Standard or process. 6.2

CP Standards

The Model Contract Library is a single Group repository for model contracts templates, used to develop Shell business contracts. The templates are defined according to contract category (e.g. project category), and allow for customization to include specific clauses relative to the determined risk level, and relevant for business within a region. The Scope of Work must always align with the specifics of the Model Contract category from Model Contracts Library: https://a100.sharing.shell.com/sites/ac34798b2aba456cb76969daa25a348a/mcl/default.aspx Templates for base Scope of Work for Capital Projects contracts are being developed and placed in the Model Contracts library. For examples of the different scopes you can refer currently to the Strategy, Assurance and Standards team in CP Projects.



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Scope of Work Guide

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