capital Projects Management

Created by: Dimitrios Thomas DT/es/cchbc/Project-Management-Guide.doc

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Capital Projects Management Guide Page 1 of 34

February 2001
 C O N T E N TS
Pages
INTRODUCTION . . . . . . . . . . . . . . . . . . . . 3

PROJECT STEPS . . . . . . . . . . . . . . . . . . . . 4

A Step-1 Capital Budget Submission and Approval Guidelines . . 5-8

P This process is copied from the CCHBC Business Plan
P
R guidelines, issued by Corporate Business Planning
O Department in year 2000.
V
A
L Step-2 Project's Risk Assessment Guidelines . . . . . . . 9 - 12
P
R Step-3 RFA Guidelines . . . . . . . . . . . . . 13 - 15
O
C This process specifies what is needed in an RFA for
E Capital projects from the operational point of view,
S
S
additionally to what is needed for Business and Finance
p.o.v.

R Step-4 STUDY, DEVELOPMENT & PLANNING . . . . . 16 - 25

E
A In this step guidance is provided regarding the following:
L
I 4.1. Project Justification . . . . . . . . . . . . 17
S
A
4.2. Project Organisation . . . . . . . . . . . 18 - 20
T 4.3. Design and Specifications . . . . . . . . . 21 - 23
I
O
4.4. Detailed design drawings (shop drawings) . . . . . 24
N 4.5. Budget . . . . . . . . . . . . . . . . 25
P
4.6. Time Schedule . . . . . . . . . . . . 25
R
O
C
Step-5 EXECUTION . . . . . . . . . . . . . . 26 - 31
E
S 5.1. Selection of suppliers (process, contracts etc.).Order . . 26 - 27
S 5.2. Project Progress . . . . . . . . . . . . . 28 - 31

A
C
C
E Step-6 ACCEPTANCE START UP & HAND OVER . . . . 32 - 34
P
T 6.1. Project Acceptance . . . . . . . . . . 32 - 33
A
N 6.2. Project start up & hand over . . . . . . . 34
C
E

APPENDISES (separate files)

APPENDIX I Risk Assessment Examples
APPENDIX II Request For Approval
APPENDIX III Contracts
APPENDIX IV Project Cost Control Template
APPENDIX V Typical Business Plan Capital Template
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February 2001
 INTRODUCTION

This document: Deals with all capital projects of the following

categories:
a. Land and land improvements
b. Buildings and building improvements
c. Production equipment
d. Returnable containers
e. Capital transfers
f. Write-offs, write downs

Provides all information needed, to complete a project

successfully and according to procedures.

Describes the steps to realise a capital project i.e.

1) Capital budget approval
2) Risk assessment
3) RFA process
4) Study, development & planning
5) Execution
6) Acceptance

It also provides a standard pack of forms to be used to

keep records and act as an aid to ensure all necessary
actions are prompted.

Purpose It is intended to be used by CCHBC personnel as tool for

of Document:
the development, planning and execution of any capital
project.

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 PROJECT STEPS FLOWCHART

Opportunity Assessment
Capital Budget Submition Capital Budget N NO PROJECT
Step 1 (country) according to Approval Process (CANCELLED)
Business Plan guidelines, Approved?
see pages 6-8

Project Risk
Step 2 Assessment
Risk Level 0, 1, 2, 3

P roject N RFA needed

Realization according to Chart
(country) of Authorities?
N
N RFA
Y
to be
Y revised?
RFA Submission
Step 3 (country) according to RFA
guidelines, pages 14-15
INDEX OF
RESPONSIBILITY
N
RFA
Country
Approved?

Y G.E.F

Risk Level 0

Involve G.E.F Risk Level 1

in Design
Risk Levels 2 & 3

Step 4
Study Development &
Risk Level 2 Planning according to Risk Level 3
pages 16-25

Project Execution Project Execution

Step 5 (country) according to G.E.F according to
pages 26-31 pages 26-31

Project Acceptance,
Step 6 Start up & Hand over
pages (32-34)

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February 2001
 Step 1

CAPITAL BUDGET
SUBMISSION AND APPROVAL

This Section gives guidelines for the submission of Capital Budgets

and the approval process of Budget Requests. It also explains the

difference between the approval of Budgets and the requirement for

additional approval through the RFA process.

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 CC HBC BP Guidelines
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CAPITAL BUDGET

The Corporate Business Planning department initiates the Capital budget process, typically
around June. The process is first agreed with Senior Management and then communicated to the
General Manager (GM) and Chief Financial Officer (CFO) of each operation with specific
submission requirements and deadlines.

Since the Business Planning process is an iterative process which gets refined through several
reviews, (Country Management, Regional Directors, Corporate, CEO, Board), normally Country
operations are required to submit their Capital budgets 2-3 times to Corporate. Typically the first
submission of detailed Capital Budgets is required towards the end of September and the final
submission is required around mid-November.

This means that operations should start the process of requesting and reviewing Capital in time
for the first submission to Corporate. The operations CFO should prepare and communicate
internal deadlines for Capital submission and review.

Although the Country operation will be required to present their budgets to their Regional
Director, the Chief Financial Officer and the Chief Executive Officer of the company, FINAL
approval is only granted once the Board of Directors has approved the budget. Generally the
Board meeting for the approval of budgets takes place mid-December, following which a formal
notification of approval (or otherwise) will be sent to the GM and CFO of the country.

CAPITAL BUDGET APPROVAL & RFA PROCESS

Approval of the budget does not give the operation an automatic right to start spending Capital.
The CCHBC and Country specific (local) Charts of authority (COA) define what additional
authorisations are required for Capital prior to funds being committed. If the Capital item required
is budgeted and below the approval thresholds governed by the Corporate Chart of Authority,
then Country procedures apply and Corporate functions do not need to be further involved.

Corporate approval is required for items over a certain value (See Corporate Chart of Authority
limits) to allow Function heads and Regional directors to review specific Capital needs in more
detail. The process used to approve Capital here is known as the Request for Authorisation
(RFA) process.

During the budget cycle it is impossible for function heads to carry out in depth reviews of all
Capital Investment being requested across all the CCHBC territory. The RFA process allows
senior management to consider the investment request in more detail and to look at the more
technical aspects of the request in order to leverage experience at group level to better serve the
country and the group. Using group buying power to decrease the cost of an investment or using
under utilised assets in another country are examples of areas where we can maximise benefit to
both Country and Group.

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 CC HBC BP Guidelines
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CAPITAL BUDGET REQUIREMENTS

- Guidelines, issued by Corporate Business Planning Department -

Each year a specific set of requirements and deadlines will be sent out to the Country Managers
and CFOs. This should be read carefully, as they may supersede the requirements set out below.

The basic requirements are as follows:

- A Summary outline of Capital Requests and Cash Flows for Current Year (based on the latest
Rolling Estimate), and 2 extra years by Capital category.
- A page outlining each request by type (defined below) and by Fixed Asset category. This
same page captures:
Timing of Fixed Assets Additions (i.e. When the invoice will be processed in the
accounting system)
Timing of Cash Flows (i.e. When the expenditure will be paid). Must tie in to the Cash
Flow statement.
For each request which is EBITDA enhancing, and which are over 100,000 EUR,
financial returns must be calculated (Discounted Payback, NPV using the Country
Weighted Average Cost of Capital)
For Projects over 100,000 EUR with a payback of less than 3 years the NPV
calculation is not necessary
For each request over 100,000 EUR please indicate its impact on Y1 Volume and
EBITDA
No business or financial justifications are required for year 2

Refer to Appendix V for Business Plan Capital template

- For Year 1 requests, an executive summary which includes both business and financial
justifications, should accompany the template submissions. The criteria and content of these
additional requirements is outlined below.

CATEGORIES

Capital should be classified as follows:

- Land
- Buildings
- Production Equipment
- Returnable Containers
- Motor Vehicles / Fleet
- Computer Equipment
- Marketing Equipment which must be further subdivided into:
- Coolers
- Vendors
- Post Mix / Pre Mix
- Other Marketing Equipment (Racks, Illuminated Signs)

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 CC HBC BP Guidelines
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CRITERIA & CONTENT FOR BUSINESS & FINANCIAL JUSTIFICATION

A lot of emphasis is placed upon obtaining clear

- Business justifications for ALL Capital requests
- Financial justifications for EBITDA enhancing and Lon term payback project

Each Capital request must be allocated to one of the following types:

Type of Request Reference Code Requires

On Template Financial
Justification

a) Compliance / Regulatory
b) Maintenance / Replacement
c) Expansion / Cost Savings
Short Payback (Less than 3 yrs)
d) Long Term - Payback (Greater than 3 yrs)
Z No
R If applicable
E Yes
LT Yes

An Executive Summary should be prepared giving the following information:

I. Business Justification
Purpose of Investment
Project fit with the overall strategy
Critical Success Factors to successful completion
Investment details (Cost breakdown)
Type of Project
Disposals resulting from this submission
Timing of Cash outflows
Key Assumptions underlying forecast performance & associated risks
II. Financial Justification
Timing of Cash Inflows
Payback Period, NPV, Impact on Yr 1 Volume & EBITDA

In doing financial calculations appraisals for Capital please use the prescribed hurdle rates set by
the Treasury department. (The Group Treasury department advises on these rates which are
revised yearly).

When conducting financial appraisals, a conservative approach should be used.

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February 2001
 Step 2

PROJECT'S RISK ASSESSMENT PROCESS

This process is followed to classify the projects in different Risk

Levels according to cost, expertise area, complexity etc.

Projects with lower Risk Level should be handled differently from

high Risk Level projects, that need more funds and expertise.

See Appendix I for examples of completed PROJECT RISK

ASSESSMENT form.

This process was communicated to the field on Oct. 2, 2000.

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February 2001
 PROCESS FOR DETERMINING PROJECTS RISK
AND INVOLVEMENT LEVEL
OF THE GROUP ENGINEERING FUNCTION
IN MAJOR CAPITAL PROJECTS

A main objective of the central engineering function is to optimise our Investment and maximise
the Use of Capital and Assets by

1) Optimising project's design, quality, operational cost and minimising investment cost
2) Utilising idle equipment
3) Exploiting and maximising group synergies and combining projects
4) Leveraging with suppliers/contractors (in conjunction with procurement)
5) Providing knowledge and expertise whenever requested or needed
6) Capitalising on learnings and best practices
7) Reducing Capital outlay through cross border reviews with supply chain.
8) Remaining current on new technologies

The scope of the proposed process is to facilitate co-operation and communication between the
Group Technical and the countries, clarify roles and responsibilities in relation to major projects, in
order to maximise the value created by the technical functions (countries and Group) and avoid
delays, confrontations, frustrations etc.

PROCESS

A. It is countries' responsibility to raise the need for a project.

B. All projects requiring Group technical review and approval via the Chart of Authority must be
reviewed with group technical in the design stage to minimise/eliminate redesign and
unnecessary delays.
C. A copy of the Capital Budgets, submitted for approval in the ABP presentations, must be sent
(by the countries) to the Head of the Group Engineering Function (GEF) before the ABP
presentations (end of September, beginning of October).
A copy of the final Capital Budget approved by the Board, must be sent by the Corporate
Business Planning Dept., to the GEF.

D. The Group Engineering Function will assess projects risk (see attached Risk
Assessment Form), and will determine the risk level of all major projects. In the same
Form the involvement of any other Group Function (Supply Chain, PET, Procurement etc)
required will be identified .
E. The Group Engineering Function will communicate the Risk Assessment Forms to the
relevant countries, and in conjunction with them will formulate a final proposal for the level
of involvement of GEF needed in each major project based on following table.

GEF's Involvement in relation to Project's Risk Level

Risk Level 0 No involvement of GEF is needed

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 Risk Level 1 The GEF must be involved in the preliminary design and it is suggested to
be involved in all important technical decisions.
Project's responsibility (and project management) remains with the
country.
Procurement has to be involved in the various project's stages
(selection/evaluation of suppliers, formulation of agreements, contracts etc.)
according to the Chart of Authority and to the relevant procedures.

Risk Level 2 The GEF must be involved in the project's design process, in the evaluation
of suppliers/contractors process, and to be informed for all major technical
issues. If requested/needed and agreed, the GEF can design the project,
develop drawings and specifications and/or supervise the technically correct
execution of works.
Project's responsibility (and management) remains with the country,
unless agreed otherwise.
Procurement has to be involved in the various project's stages
(selection/evaluation of suppliers, formulation of agreements, contracts etc.)
according to the Chart of Authority and to the relevant procedures.

Risk Level 3 In order to ensure a collaborative approach, for all level 3 projects, an
Engineering Project's Steering Committee will be formed. The
Committee will consist of members from countrys management team, from
GEF, and will be chaired by the Project Manager, unless agreed otherwise.
Central procurement function must also be represented in the steering
committee.
The Project's Steering Committee has the overall project's
responsibility.
Project Management will be conducted by the Group Engineering
Function (design, site project management, project supervision, contractors
and suppliers selection/evaluation , cost, quality of works, time etc.) unless
agreed otherwise. All projects will be managed in close co-operation with
local management.

F. Group Engineering Department will communicate its proposal to the operations, in order to get
their feedback and get consensus on the required involvement levels (roles and responsibilities).
G. Above process must be finished before the final approval of the Capital Budgets by the Board
(November for normal Capitals and August for the early Capitals).

Important Notice:
If the Capital Projects that you are developing will ultimately require Group Technical approval, in
accordance with the Chart of Authority, please ensure GEFs involvement in the preliminary design
phases to avoid unnecessary delays and expenses.
It is strongly recommended to co-operate closely with the Group Engineering Function and follow
above practice for all major projects.

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February 2001
CCHBC
Project Risk Assessment

Country / Plant:

Project Description:

Budget:

Project Risk Assessment

Item score
Project attribute
>Euro250k= 12 Euro100k to Euro250k= 4 Euro50k to Euro100k= 2

Factory wide= 10 Area (eg. Line)= 8 Unit (machine)= 4 Minor mod= 1

New Technology or sensitive products (0-5)

GAP between skills required and skills available in country (0-5)

Heavy interrelation between disciplines (0-3)

Multiple time dependencies (0-3)

Safety (0-3)

Risk for Loss of production (0-3)

Very short timescale (0-3)

PRA Score Total

Project's Risk Level

Notes:

PRA score 19 Risk Level 0

PRA score 11 19 Risk Level 1
PRA score 20 29 Risk Level 2
PRA score > 30 Risk Level 3

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February 2001
 Step 3

RFA PROCESS GUIDELINES

All RFAs should be submitted according to the RFA Guidelines,

released by London, see Appendix II.

For projects of Risk Level 0-1, no additional information is

needed.

For projects with Risk Level 2 & 3, a Technical Documentation,

as described on pages 14-15, is additionally needed for the

operational/technical evaluation and approval of the project.

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 TECHNICAL DOCUMENTATION GUIDELINES

FOR RFA SUBMISSION

(Only for projects of Risk Level 2, 3)

In order to certify RFA submission, Group Technical requires sufficient

documentation to determine the technical adequacy and accuracy, as well as
the timing and the cost estimate for the total project (10% accuracy).
Therefore, the following information must be included in the documents
accompanying any RFA of R.L. 2 or 3 submitted for approval.

1. Project Scope

a) What generated the project? Goals and objectives.

b) Assumptions
c) What are the alternatives? What is the best alternative?
d) What are the technical and/or operating consequences of not approval?

2. Project Description

a) Land
1. Statement regarding the site, including a description of the
surrounding area which covers suitability of site for its intended
purpose, soil and underground water test results and compliance
with local codes, as well as with environmental guidelines
(environmental phase I, study).
2. Plot plan and site layout showing size, land usage and expansion
capability.

b) Buildings. Preliminary floor plan. (scaled dwg).

c) Process, Utilities and Equipment.

1. Block diagram for process, utilities and material flows.
2. Preliminary process equipment plus list with capacities/ capabilities.
3. Specs for long lead time process equipment.

d) Package, Packaging Systems.

1. Package system configuration (Packages to be produced)
2. Preliminary dwgs and specs for primary and secondary packaging.

e) Inventory. Preliminary info regarding inventory policies (raw materials,

full and empty containers), including date coding, inventory control and
stock rotation procedures.

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 f) Waste disposal. Preliminary info regarding the disposal and other
considerations of airborne, waterborne and solid wastes.

g) Energy conservation. Preliminary info concerning energy conservation

concepts and measures.

h) Product formula. Info regarding product formulation requirements and

compatibility of the product formula with the process equipment chosen.

i) Product quality. Any info regarding the effect of the project design on
product quality.

3. Project organisation
Project organisation chart, including all support personnel. If the project is
an expansion or modification include existing and projected info.

4. Project Schedule
a) Estimated start and completion date.
b) Critical timing considerations.
c) Submittal date for formal request.

5. Budget
a) Substantial documentation to justify the total project cost estimate
(10%).
b) Specific info regarding contingency and escalation factors.
c) A cost breakdown detailing major components of project by supplier and
cost. Include freight and duties separately. Ensure Total = RFA total
either in Local currency and in EUR.

Please submit the material as an attachment to the RFA

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February 2001
 Step 4

STUDY, DEVELOPMENT AND PLANNING

(For projects of Risk Level 2, 3)

After the approval of the relevant RFAs, projects move to the

realisation phase.

As mentioned before, for projects with Risk Level 0, countries have

total responsibility. For projects with Risk Level 1, again, countries

have full responsibility, but GEF must be involved at least in the

preliminary design phase.

The contents of this chapter apply to all capital projects with Risk

Level 2 or 3, (i.e. to Greenfield or Brownfield, expansion or

modification etc).

It also includes guidelines of Project Managers' and Steering

Committees' roles and responsibilities.

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 DEVELOPMENT AND PLANNING

4.1. PROJECT JUSTIFICATION

1. Project Definition
a) Narrative describing the situation, purpose of the project, the
proposed approach and the compliance with the country long
range plan.
b) Supporting documentation for the proposed approach, such
as the results of a facilities planning study and reports of
process or equipment alternatives investigated, including
reasons for rejecting alternatives.
c) Financial justification (if not included) according to the RFA
Guidelines (Appendix II).

2. Sales Information
a) Previous five-year actual sales by product, by packages and
by area (where appropriate ).
b) Percent of actual sales occurring in peak month.
c) Approved sales forecast (by product, package, area), for first
five years by year plus tenth year.

3. Production Information
a) Previous five-year actual production, by product, package,
facility.
b) Production capacities of present facilities (by product,
package, facility ) for the first five years plus tenth year.
Indicate efficiencies assumed for calculations. Document and
indicate the limiting factors
c) Expected production capacities after the proposed project is
implemented (same breakdown as 1.3.2).

4. Distribution Information
a) Geographical area served by present operations.
b) Geographical area to be served after implementation of the
proposed project.
c) Present and expected vehicle loading, transporting and
delivery schedules.

5. Labour Availability and Utilisation

a) Manning table including all support personnel. If the project is
an expansion or modification, include existing and projected
info.
b) Production Program: i.e. hrs per shift, shifts per day, working
days per week and work weeks per year. If the project is an
expansion or modification , include existing and projected
information.

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February 2001
 4.2. PROJECT ORGANIZATION (Project Chart)

Steering
Committee

Project Manager

Assistant Legal
Procurement
Corporate Engineering

Technical Coordinator
(from the main supplier)
Chief Project Engineer *

Support from Local

Site Manager Assistant Operations
from the Contractor -
Supplier

Civil Engineer Mech., Elec. Engin.

* The Chief Project Engineer can also fulfil the position of the Mech., Electr.
Engineer of Civil Engineer, depending on his qualifications.

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 It is important to clearly define the roles of the owner, the steering committee and
the project management in order to facilitate a successful project. There is a
tendency for owner/clients and others to participate in project management, i.e.
owners and/or owners representatives may give instructions directly to contractors
or request reports directly from contractors. The Project Manager must manage
upward and insist that all contacts with the contractors or suppliers are through him.
Anything else will leave the project vulnerable and subject to unnecessary risk.

An example role sort is shown in the tables below.

Steering Committee Project Management

Scope Definition Scope Compliance
Approve Scope Changes Project Staffing
Design Philosophy Design Development
Schedule Requirements Schedule Management
Financial Analysis / Feasibility Cost Estimates
Project Funding Procurement Plan
Design Parameters Approval Budget Management / Cost Control
Headcount Contractor Selection / Contract Mgmt
Organisation Start Up
Office Requirements
Support / Service Requirements
Security Requirements

Owner / Client Representative

Define Design Parameters
Headcount
Organisation
Office requirements
Support / Service Requirements
Security Requirements
Disruption Planning
Employee Briefing
Grievance Handling

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 JOB DESCRIPTION
PROJECT MANAGER
Responsibilities

Manage all phases of the capital project, work with minimal support on smaller simple projects, or
supervise project teams made up of internal and external resources on larger projects. Duties will include,
but not be limited to the following:

Project development including scope definition, A&E brief/design parameters, administrative

procedures and parameters, and documented operating parameters.

Project planning including design development, scheduling, cost estimating and budgeting,
developing construction and other service contracts, and preparation of funding request documents.

Procurement.

Project execution including construction management, equipment installation, cost control, quality
control and schedule management.

Start-up including debugging, providing and co-ordinating training resources.

Hand-over and close-out including reorganisation of project documentation and files, updating design
drawings to as-built status, budget reconciliation and issuance of project closing report.

Timely documentation and communication of project status throughout all phases of the project.

Qualifications

The project manager must be dynamic and flexible, take a proactive approach to the work, and must be
able to function under stress.

Other qualifications include but are not limited to the following:

Successful project management experience is required. This experience is preferably in the food and
beverage industry. It is essential that a part of this experience is international.

Education requirements include a degreed qualification in engineering from an accredited university

and a post graduate degree in a business field is advantageous.

Outstanding oral and written communication skills are essential.

Bilingual skills are required and include a command of the English language, and a working
knowledge of the local language at the job site.

Proficiency with a personal computer is required including project management, spreadsheet, and
word processing software packages.

Negotiation skills must be well developed.

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February 2001
 4.3. CONCEPT DESIGN AND SPECIFICATIONS

1. Land
a) Statement regarding the location of the proposed new
location including a description of the surrounding area,
which covers suitability of site for its intended purpose, soil
and water test results and compliance with the local codes.
b) Plot plan showing size, land usage and expansion
capabilities.
c) Topographical map.
d) Drawing showing available utility services.
e) Environmental Due Diligence (Environmental Phase II
study) conducted by certified consultants.

2. Buildings
a) Plant layout showing material flow.
b) Dimensioned scaled layout dwg with indication of ceiling
height showing existing and/or new equipment. If the project
is an expansion, the details of the proposed modifications
should include a drawing showing how it fits into the existing
facility.
c) Space requirements and allocations for:
- Offices, canteen, lockers, W.C, etc.
- Production
- Storage of raw materials, ingredients, packaging materials,
sanitizers, finished goods.
- Services such as utilities, maintenance, labs, mech. and
electrical workshops.
- Other operating groups as vending op.
- Inside truck parking and manoeuvring.
- Receiving and shipping.
d) Room finish schedules.
e) Info regarding construction materials, finishes, compliance
with local codes and climatic conditions.

3. Process
a) Process flow sheet showing major pieces of equipment.
b) Process control details and instrumentation shown on above
flow sheet or other document. Include modes of operation
(automatic or manual ) and variables.
c) Heat and material balance showing flow rates and conditions
(composition, temperature, pressure) for all operations.
d) Utilities flow sheet i.e. compressed air, CO2, water (treated
and raw), steam, fuel, cooling.

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 4. Equipment
a) Equipment list showing each item of new process equipment
(including capacity, utility requirements, material of
construction, supplier). Include sufficient detail to evaluate
equipment cost.
b) Equipment list showing each item of existing process
equipment to be relocated (including capacity, present and
new location, utility requirements ).
c) Other equipment:
- Furniture and fixtures.
- Lab equipment.
- Workshop equip.
- Motor vehicles listed by type.
- Spare parts.
- Vending and dispensing equip.

5. Electrical
a) Layout dwg showing substation location and plant electrical
entrance. Primary voltage and type of service overhead or
underground ) documented.
b) Building layout showing location of control panels.
c) Estimate of total process kW required. Indicate phase and
voltage.
d) Estimate of total building KW required. Indicate phase and
voltage.
e) Lighting schedule for all rooms, work areas, warehouses, etc.

6. Utilities and Services

Documentation supporting the requirement, availability and adequacy
of the following:
a) Road Access
b) Electrical power
c) Heating fuel
d) Potable water. Sanitary Sewer
e) Storm sewer
f) Water for fire protection

7. Metrication implications
Statement regarding compatibility and compliance of the Design
criteria with the Corporate Metrication Plan including specific
references to equipment implications.

8. Waste Disposal
Documentation regarding disposal and other considerations for
waterborne, airborne and solid wastes.

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February 2001
 9. Energy conservation
Information concerning energy conservation including the following:
a) Alternative fuel sources and systems.
b) Lighting and power factors and peak demands.
c) Other conservation steps i.e. insulation, air curtains,
recirculation, etc.

10. Good Manufacturing Practices

Documentation accompanying dwgs to show compliance with GMP.

11. Employ health and safety

Documentation which shows compliance with local safety and health
laws.

NOTE: All drawings should include all relevant detailed specifications

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 4.4. COMPLETE DESIGN & SPECIFICATIONS
(DETAIL SHOP DRAWINGS)

- TOPOGRAPHICAL SURVEY
- YARD LAYOUT
- YARD STORM DRAINAGE
- BUILDING LAYOUT
- ARCHITECTURAL SECTIONS
- FACADES
- OFFICE LAYOUT
- STRUCTURAL DRAWINGS
- PRODUCTION & WAREHOUSE EFFLUENT
- DOMESTIC EFFLUENT
- WATER SUPPLY
- GAS SUPPLY
- LINES LAYOUT
- SYRUP ROOM CIP
- WATER TREATMENT
- REFRIGERATION
- VENTILATION
- HEATING
- COOLING
- FIRE PROTECTION PIPING
- WATER TANKS AND PUMPING HOUSE
- BOILER ROOM
- FUEL TANKS AND PUMPING HOUSE
- BOILER ROOM
- FUEL TANKS AND PUMPING HOUSE
- COMPRESSORS ROOM
- AIR PIPING LAYOUT AND DIAGRAM (P & ID)
- CO2 PIPING LAYOUT AND DIAGRAM (P & ID)
- STEAM PIPING LAYOUT AND DIAGRAM (P & ID)
- TREATED WATER PIPING LAYOUT (P & ID)
- CHLORINATED WATER PIPING LAYOUT (P & ID)
- SOFTENED WATER PIPING LAYOUT (P & ID)
- RAW WATER PIPING LAYOUT (P & ID)
- DOMESTIC WATER PIPING LAYOUT (P & ID)
- CAUSTIC PIPING LAYOUT (P & ID)
- FIRE ALARM
- YARD LIGHTING
- HIGH VOLTAGE POWER SUPPLY
- GENERATORS
- INTERIOR LIGHTING
- LOW VOLTAGE ROOM
- TRAYS LAYOUT AND SUPPORTS
- ELECTRICAL PANELS LAYOUT
- LIGHTS AND RECEPTACLES

P & ID = Process and identification Diagram

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Capital Projects Management Guide Page 24 of 34

February 2001
 4.5. BUDGET

Budget must include all related to the project capital expenditures, i.e. for:

1. Land
2. Land Improvements
3. Buildings
4. Process Equipment
5. Utilities
6. Electrical Installations
7. Piping
8. Other Equipment
9. Spare parts (if included in the original purchasing invoice of equipment)
10. Duties
11. Taxes
12. Freight
13. Architect and Engineering fees
14. Project Management fees
15. Escalation
16. Insurance
17. Contingency

4.6. TIME SCHEDULE

A general schedule should be presented on a GANT CHART indicating:

1. Project start date.

2. Project completion date.
3. Info regarding site preparation, building construction phases, acquisition
and installation of equipment, raw materials acquisition and start up.
4. Critical timing considerations (MILESTONES).

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Capital Projects Management Guide Page 25 of 34

February 2001
 Step 5
EXECUTION
5.1. SELECTION OF SUPPLIERS ORDER

5.1.1. Prepare Technical Requirements and specifications (TRS)

Include requirements of how the supplier undertakes his own
design/manufacture controls.

5.1.2. Prepare invitation to tender and choose the appropriate contract

documents in accordance with the Contract Selection Chart.

"000" Euro S ystem Contract

1000
Standard
Medium Value Agreement
Construction for
Contract Services
(+ Check list)

Equipment
250 Supply
Contract Private
(+ Check list) Contract
150 for
Construction Private Contract Services
** Level to be specified by **
P.O. P.O.
the Steering Committee
M&E Contr. Construction Contr. Services Contr.

- For relevant contracts, see Appendix III -

Complete invitation to Tender Check-List (M&E or Civil).

5.1.3. Invite at least three tenders from approved (or recommended) suppliers.

5.1.4. Review tenders versus the Technical Requirements Specification and

Contract Documents.
If a supplier proposes any significant changes, alternatives or variations
from the invitation to tender, conduct a PRA (Project Risk Assessment)
to determine if there needs to be any change in level of contract control
or of personnel skills to consider the implications.

5.1.5. Proceed to evaluation of tenders.

5.1.6. Secure appropriate approval according to chart of authority.

5.1.7. Place order and sign relevant contract.

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Capital Projects Management Guide Page 26 of 34

February 2001
 Order Stage Flow Chart

Produce Technical Initial Requirements

Requirements +
Specification (TRS) Involve Required Skilled Personnel

Prepare Invitation to
Tender Documents

Invite Tenders
from Recommended
Suppliers or others
(at least three)

Review tenders
versus
TRS and Contract
documents

Evaluate
Tenders

Place Order
Obtain
Authorized
&
Approvals Sign Contracts

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Capital Projects Management Guide Page 27 of 34

February 2001
 5.2. PROJECT PROGRESS

It is Project Manager's responsibility to establish an adequate cost control

system in order to monitor and control all areas of project cost to reach the goal
of finishing the works within Budget.

An example of a project cost control form is presented in Appendix IV that can

be used for complicated projects.

The project progress should follow the "Project Progress Flow Chart" (see
page 31) as described analytically below.

5.2.1. Select the level of supplier monitoring required on the project. If the
project refers to the supplier's internal activities, then a full monitoring is
needed. For Low Risk, "Supply only" projects, no supplier monitoring is
needed.

5.2.2. If it is decided that it is necessary to monitor design, manufacturing,

P.M. or Q.A. activities through the project address the following points:
5.2.2.1 Plan what needs to be monitored in order to provide a
reasonable assurance that the equipment / services will be to
the correct level of quality.
A. Supplier Quality Plan
A quality plan is a document that states how the
supplier will ensure that the product or services
delivered will be of the required quality. Therefore it
refers to procedures used to control design,
manufacture, testing etc.
Additionally, the quality plan will show how these
activities are monitored and approved in a step by step
process.
Key aspects of a quality plan are:
a) Contract review to ensure all customers stated
requirements are understood and achievable.
b) Adequate control of design including verification
and validation of designs by competent and
qualified persons.
c) Design review / Changes.
d) Documentation control to ensure that everybody
works using from approved drawings and
documents only.
e) Control and review of sub-specs and materials.
f) Tests and inspections
g) Control of sub-contractors / suppliers.
h) Who is authorised to approve what?

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Capital Projects Management Guide Page 28 of 34

February 2001
 B. Design Documents
View and/or approve suppliers design documentation.
It is not expected that all aspects of design should be
viewed and/or approved, therefore it must be identified
what aspects need such high degree of control and
monitoring.
When viewing suppliers' design documents, develop a
list appropriate for the task.
C. Build Inspection
Inspect and/or approve stages of building or
manufacture at the supplier's premises.
It is not expected that all stages of building or
manufacture should be inspected and/or approved,
therefore, it must be identified what aspects need such
high degree of control and monitoring.
When inspecting suppliers systems, develop a
checklist, appropriate for the task.
Civil work should always be inspected at stages stated
in the project programme (i.e. foundation, support
structure etc.).
5.2.2.2. Ensure that appropriately qualified personnel undertake the
inspection, testing and auditing of the supply.
5.2.2.3. Continuously monitor site work to ensure that it is carried out
in accordance with the contract and specs.
5.2.2.4. Record the results of inspections and tests.

5.2.3. Changes during Supply

Any changes during supplier monitoring, should be assessed for their
likely impact.
Where it is considered that changes might have an impact, a combined
assessment of risk and any subsequent action should be completed.
This may mean changing the level of supplier monitoring, for a
particular aspect that has become obvious as higher risk than initially
considered or possibly gaining further more expert assistance in a
particular field.

5.2.4 "Supply only" Orders

For simple "supply only" orders, which are low risk, or any contract,
where supplier monitoring has been deemed to be unnecessary, a
phase review is also unnecessary.

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February 2001
 5.2.5 Review Phase
Where supplier monitoring has been considered necessary, a phase
review should be performed, including the following:
Supplier monitoring effectiveness.
Actual status of equipment (satisfactory for delivery?).
If phase review is not approved, decide what corrective action is
required.

5.2.6 If review phase is satisfactory, or a corrective action has been agreed,

delivery may be formally approved.

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Capital Projects Management Guide Page 30 of 34

February 2001
 PROJECT PROGRESS FLOW CHART

Select level of supplier

monitoring required

Monitor supplier as
appropriate

Any significant
changes ?
YES

NO

Enroll relevant
skills and make
necessary changes

"Supply only"
order
YES

NO

Review Phase

Accept Delivery

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Capital Projects Management Guide Page 31 of 34

February 2001
 Step 6
ACCEPTANCE, START-UP AND HAND-OVER
6.1. PROJECT ACCEPTANCE
6.1.1. Conduct a Project Control Assessment according to below flow chart.
6.1.2. Enrol appropriate skill personnel
Enrol the assistance of individuals with the appropriate skills and skill
levels meeting the requirement that are set either from the "justification"
stage or as a result of re-assessment.
6.1.3. Inspection and test
The degree of inspection and testing is dependent on the complexity of
the project, equipment and the risks. For electrical equipment of any
kind, supplier's / installers test certificates will always be required.
It is expected that installation contractors and/or suppliers will conduct
all the necessary electrical, mechanical, pressure etc. safety tests with
competent persons and clear records of the results, according to the
following chart:

Dimensions, clearances, Visual inspection

hygienic surfaces, documentation...

Satisfactory? Corrective action or

NO concession
YES
Torque, isolation, tension,
mechanical load, guarding integrity, Static Tests
I/O tests...

Satisfactory?
Corrective action or
NO concession
YES
E-Stop, calibration, metering,
sequences, function... Dynamic Tests

Satisfactory
Operational Safety Review & safe to Corrective action or
operate? NO concession

YES

Proceed to
Commissioning &
Performance Trials
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Capital Projects Management Guide Page 32 of 34

February 2001
 6.1.4. "Dry" Commissioning
"Dry" commissioning is the functional and sequential operation of the
equipment (without product) in accordance with the requirements stated
in the contract.

6.1.5. "Wet" Commissioning

"Wet" commissioning is the functional and sequential operation of the
equipment (with product) in accordance with the requirements stated in
the contract.

Both "dry" and "wet" commissioning should follow the following chart of
activities:

Functional testing versus Commissioning

Acceptance test specification

Satisfactory? Corrective action

Commissioning Review NO

YES

Availability, reliability, reject Performance Trials

rates...

Satisfactory?
Phase Review Corrective action
NO

YES

Acceptance

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Capital Projects Management Guide Page 33 of 34

February 2001
 6.2. PROJECT START-UP AND HAND-OVER

Project start-up should be carefully planned and defined just the same as
project execution. A number of items should be clearly defined in terms of
responsibility and scheduling. This is not as easy as it sounds. The reason
for it being somewhat more complex than project execution lies in the fact that
start-up is usually a joint effort between the project team and the new
operations staff. Responsibility for project execution was with the project
team on. Thus it is critical to clearly define start-up requirements and who is
responsible for what.

Also, it is equally important to pre-plan project hand-over. That is the transfer

of responsibility for the facility from the project manager to the operation
manager. It is not uncommon for project managers to attempt to hand-over a
project before it is considered complete by the client. Similarly, it is not
uncommon for an operations manager to hold on to a project team past a
reasonable completion because the operations staff is not fully capable.
Either situation results in difficult relationships and can cast a negative image
on an otherwise successful project.

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Capital Projects Management Guide Page 34 of 34

February 2001