CONSTRUCTION EXECUTION DOCUMENT NUMBER

PLAN (CEP) KBP – CEP - PROC – 001

DATE ISSUED Revision:

PROCUREMENT PLAN
FEBRUARI 2014 0

PROCUREMENT PLAN
FOR
EPC FOR CONSTRUCTING PIPE LINE AND POWER LINE
FOR SANGSAM OIL DEVELOPMENT

KBP TEAM CPI

Rev Date Status
Prepared by Reviewed by Approved by
Issued for
00 Feb 2014 Review &
Approval

Status Code :
A = Issued for Review and Approval, B = Approved for Construction/Implementation, C = Issued for
As Built, I = Issued for Information, X = Document cancelled
Revision Status :
0 = original status,

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 CONSTRUCTION EXECUTION DOCUMENT NUMBER
PLAN (CEP) KBP – CEP - PROC – 001

DATE ISSUED Revision:

PROCUREMENT PLAN
FEBRUARI 2014 0

CONTENT

1. PROCUREMENT PLAN INTRODUCTION ……..…………………………......................................... 2

2. PROCUREMENT MANAGEMENT PLAN ......................................………………………………….. 3
2.1. Procurement Management....................................……………………………………………. 3
2.2. Specification Development.................................. …………………………………………….. 4
2.3. Vendor Bid Analysis............................................…………………………………………………… 4
2.4. Technical Review.............................................………………………………………………………. 5
2.5. Expediting .............................................………………………………………………………………. 5
2.6. Inspection and Testing........................................………………………………………………….. 5
2.7. Shipping and Coordination......................................……………………………………………… 6
3. PROCUREMENT PLAN DEDICATED FOR THE PROJECT..................................……………… 7
3.1. General ........................................... …………………..……………………………………………. 7
3.2. Brand Recommended...........................................………………………………………………… 7
3.3. Procurement Schedule........................................…………………………………………………. 7
3.4. Procurement Execution Strategy .................................………………………………………… 7
3.5. Expediting...............................................…………………………………………………………….. 7
3.6. Shipping and traffic..........................................……..……………………………………………… 8
3.6.1. Shipping Schedule............................................................................................. 8
3.6.2. Shipping Arrangement...................................................................................... 9
3.6.3. Shipping Document.......................................................................................... 9
3.6.4. Custom Clearance............................................................................................. 9

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 CONSTRUCTION EXECUTION DOCUMENT NUMBER
PLAN (CEP) KBP – CEP - PROC – 001

DATE ISSUED Revision:

PROCUREMENT PLAN
FEBRUARI 2014 0

1. PROCUREMENT PLAN INTRODUCTION

The following document presents KBP Procurement Plan (PP) for the project of “Engineering,
Procurement and Construction (EPC) for Constructing Pipe Line and Power Line for Sangsam Oil
Dvelopment” to be executed under Lumsum contract with PT. CHEVRON PACIFIC INDONESIA. This
document should be considered “Preliminary”. The final document will be prepared and submitted to
“CPI” at the initial stage of the project.
The objective of the PP is to provide a detailed plan for a technically successful, operationally efficient,
safe and environmentally compliant completion of the “Engineering, Procurement and Construction
(EPC) for Constructing Pipe Line and Power Line for Sangsam Oil Dvelopment”. The PP will serve to
establish key criteria in order to meet this objective. These key criteria include:
 Compliance with Owner’s specifications, corporate requirements and standards of care for the
project.
 Compliance with the standards for successful community relations with the surrounding
communities and regional requirements.
 Development and management of a safe working environment
 Implementation of a successful environmental protection plan
 Successful management of the project team, including KBP, key vendors.
 Successful management of the Project Schedule.
 Successful management of the Engineering Program.
 Successful management of the Procurement Program
 Successful management of the Construction Program
 Successful close-out and demobilization of the project team.
2. PROCUREMENT MANAGEMENT PLAN
The procurement management plan covers the process of purchasing equipment and materials for the
project. This includes the management of the process from initial design coordination with the
Engineering Team through coordination of shipping/receiving by the Site Construction Staff Key
sections of the procurement management plan include:
2.1. Procurement Management
The organization chart attached in the proposal shows the Procurement Lead reporting to the Site
Project Manager. This allows close coordination with the project team especially design team to
assure that purchased equipment and materials meet the technical requirements of the project.
A detailed Division of Work will be established at the initial stage of the project which identifies the
procurement responsibilities of each project team member. The procurement management team will

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PLAN (CEP) KBP – CEP - PROC – 001

DATE ISSUED Revision:

PROCUREMENT PLAN
FEBRUARI 2014 0

oversee the process of preparing the following:

 Bid requests, commercial evaluations, recommendations for award and recommendation
for issuance of purchase orders and contracts
 Negotiate price, terms and conditions
 Maintain purchasing records and data input into the project tracking system.
 Administer commercial contract
 Obtain necessary CPI approvals for purchasing specifications

2.2. Specification Development

An engineer will be assigned to each procurement item to take responsibility from specification
development through shipping. This engineer will closely coordinate with the procurement
department to assure that the technical requirements are achieved.
In coordination with the engineering department, the procurement staff will develop the General
Purchasing conditions for the project. This will identify Commercial Terms, General Quality
Requirements, Shipping/Packaging Requirements, Painting Requirements, Documentation/Manual
Requirements and Testing Requirements.
The responsible engineer will cooperate with engineering and QA/QC engineers in charge to develop
the detailed specifications and data sheets and item specific quality and test requirements.
The complete specification package will be subject to an inter discipline review and Project Engineer
QA/QC review prior to release. The procurement schedule will be closely monitored by the
scheduling team to assure that equipment procurement meets the construction and engineering
requirements.

2.3. Vendor Bid Analysis

Identifying the best suppliers of equipment and bulk materials will be a key aspect of the
procurement process. This process will consider vendors that have a proven track record for
successful equipment and material supply in similar projects.
Key considerations in the bidding analysis process will be:
 Availability of competitive Indonesian suppliers
 Life Cycle cost evaluation
 Successful experience on past similar projects, including Indonesia projects
 Preferred and approved suppliers by project owner.
 Specification compliance
 Standardization of project suppliers

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PROCUREMENT PLAN
FEBRUARI 2014 0

 Ability to meet requirements of project schedule

Upon receipt of the Vendor proposal, a formal technical and commercial review will be completed.
A bid analysis spreadsheet will be developed which identifies key technical/commercial items from
the vendors proposals. Outstanding items will be clarified and resolved with the Vendors. At the
conclusion of the process the best technical and commercially acceptable Vendor will be selected.

2.4. Technical Review

Upon receipt of Vendor data and drawings, a thorough technical review will be completed. The
scheduling department will track Vendor deliverables to assure that the engineering team returns
comments to vendors by the Purchase Order required turn around dates. The technical review will
include an inter discipline review to ensure that all structural, mechanical, electrical and controls
aspects of the vendor submittal meet the project requirements.

2.5. Expediting
A formal process of Vendor expediting will be employed throughout the process. In the event that
problems are identified with the Vendor delivery of engineering data or fabrication progress,
engineering staff or inspection personnel will be dispatched to the Vendor office to develop a
corrective action plan. For key equipment and critical path equipment, independent inspectors will
provide expediting and inspection services periodically throughout the Vendor engineering and
fabrication process.
An expediting and tracking log will be maintained for all equipment items.
Responsibilities of the expediting staff include:
 Development of the expediting plan
 Participate in bid clarification meetings to ensure supplier understanding of jobsite delivery
requirements and confirmation of delivery commitment
 Regular contact with Vendors to confirm status of the schedule.
 Obtains milestone schedules and progress reports from Vendors.
 Work with Vendors to develop a recovery plan in case problems with the delivery schedule
are determined
 Provide input to the overall project schedule so that the Project Manager can determine the
impact of procurement milestones on the overall schedule. Inform project team of potential
Vendor problems.
 Maintains expediting records.
 Coordinate shipping with the transportation group.

2.6. Inspection and Testing

Inspection and Testing will be performed per the requirements of the Owner and Project.
Independent inspectors will perform periodic inspection for key items. Engineering staff will be

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PLAN (CEP) KBP – CEP - PROC – 001

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dispatched to vendor offices to witness key manufacturing and testing points.

A witness test plan will be developed. Per the requirements of this witnessed test plan, technical
staff will be dispatched to the Vendor factory to observe key equipment final performance tests.
Activities and responsibilities of the Vendor Inspection group include:
 Define the level of quality inspection required by owner specifications and additional
inspection requirements per KBP standards.
 Evaluate historical Vendor performance, schedule importance, specification requirements
and current Vendor performance for increased level of inspection
 Develop the project factory test and inspection plan
 Coordinate technical inspection issues between the Vendor, Inspector and Engineering
Design Staff.
 Coordinate resolution of any issues or non-conformances
 Provide input to the project management team on potential Vendor problems
 Ensure that necessary Vendor generated inspection data is reviewed and approved prior to
shipment. Collect Vendor inspection data and provide to the Site Construction team and
permanent project records.
 Maintains inspection records
2.7. Shipping and Coordination
The procurement department will coordinate with the Vendor, transportation department and Site
Construction staff to coordinate vendor shipping and transportation logistics. The shipping will
consider the requirements for transportation to the port of departure, requirements for ocean
freight, importation custom clearance, off-loading at destination port and inland transportation to
the project site. At the project site, the purchased items will be turned over to the Site Construction
Staff and appropriate transfer of ownership will be completed.
Activities and responsibilities of the Transportation department include:
 Preparation of a transportation execution plan, including inland and ocean transportation
 Coordinate purchasing and Vendor delivery to accommodate freight consolidation and
shipping schedules.
 Develop shipping and contingency plans for oversize and overweight shipments.
 Develop a plan for required special equipment to accommodate off-loading at the
designated Port and the Project Site
 Coordinate the selection and management of a freight forwarding company
 Works with Vendor to develop necessary pro-forma invoicing, packing lists, crating
requirements, notification requirements.
 Evaluates tax, duties and customs clearance charges and manages this responsibility for
handling and clearance of freight
 Maintains transportation records and data input into the materials tracking system. Provides
regular update to the Construction Department Receiving Staff.
 Provides input to Project Manager for equipment and materials transportation.

3. PROCUREMENT PLAN DEDICATED FOR THE PROJECT

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PLAN (CEP) KBP – CEP - PROC – 001

DATE ISSUED Revision:

PROCUREMENT PLAN
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3.1. General
KBP will assign a procurement coordinator for this project and the assigned procurement coordinator
will prepare more detail procurement plan to ensure all procurement activities during project
execution are well planned. The procurement plan prepared shall also include the coordination work
with the head office procurement team since procurement activities for specification development,
technical review, expediting, Inspection & testing and Shipping & Clearance will be handled by Head
Office procurement team. By the assistance of the head office team, the procurement coordinator
could work out to support the project execution.
The basic understanding of KBP for the procurement work is overall scope of work defined by CPI as
shown in the following matrix:

3.2. Brand Recommended

In case of any branded materials, tools and equipments to purchase, KBP will refer to CPI
recommended brand and or KBP will propose the brand to be approved by CPI. The basic
consideration is all materials, tools and equipments to purchase shall be approved by CPI.

3.3. Procurement Schedule

Considering the scope of procurement is not a critical items, KBP will refer to Overall Project Schedule
and Milestone. If considered necessary, KBP will prepare a detail procurement schedule at the initial
stage of the project.

3.4. Procurement Execution Strategy

Procurement execution process shall refer to KBP procurement procedure and in line / meet with CPI
procedure. The main consideration is, KBP will meet all technical requirements as per CPI
specification and KBP will ask for approval for such technical matter. The following is the basic concept
of procurement execution;
3.4.1. During requisition stage, KBP has to ensure that all technical specifications and technical
data’s such as datasheet, drawing should be on IFC status, or at least IFR if the process
simultaneously with technical clarifications.
3.4.2. The entire bidders selected shall be following CPI ACCEPTED / RECCOMENDED BRAND LIST, or
otherwise Request for Vendor Approval shall be propose for optional brand.
3.4.3. All procurement risk shall be identified and manageable such as delay on delivery, liquidated
damages, and material damage during shipping and handling.
3.4.4. For shipping and traffic, packing and marking and spare parts arrangement, shall follow CPI
procedures and or vendor recommendation (in case of approved by CPI).
3.4.5. For subcontracting works shall follow KBP sub-contracting procedures, all subcontracting work
shall be approved by CPI.
The procurement execution and policy shall be considered but not limited to minimum 5 (five) items
above, to get the best quality, competitive price and on time delivery.

3.5. Expediting
KBP realize that expediting is one of a factor to succeed the procurement works, the expediting
activities to be performed for the project is expediting vendor’s documents such as engineering
documents and forwarded to COMPANY for review or approval, expedite the status of review and

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approval drawing and others related documents in order to get the vendors starting the fabrication
works, supervision, inspection in the vendors workshop, factory acceptance test, shipment
preparation until the material hand over in the job site and also the inspect the shipment for the non-
engineered material or ex-stock material.
Expediting activities will be handled by an expeditor for the purposes of the surveying and anticipate
any problem happened during the material preparation or fabrication process which potential to
make delay for the fabrication works it self and also delay in the shipment. In case of any potential
problem happened, the expeditor has to act promptly to look for the proper corrective action and
coordinate with related function.
The duties of an expeditor for shall be at least below;
Responsibilities of the expediting staff include:
 Development of the expediting plan
 Participate in bid clarification meetings to ensure supplier understanding of jobsite delivery
requirements and confirmation of delivery commitment
 Regular contact with Vendors to confirm status of the schedule.
 Obtains milestone schedules and progress reports from Vendors.
 Work with Vendors to develop a recovery plan in case problems with the delivery schedule
are determined
 Studied and understand the material specification and understand the term and
condition as mention in the purchase order.
 Provide input to the overall project schedule so that the Project Manager can determine the
impact of procurement milestones on the overall schedule. Inform project team of potential
Vendor problems.
 Maintains expediting records.
 Coordinate with QC inspector to meet quality requirement
 Coordinate shipping with the transportation group.

Expediting activities are organized based on the level of priority, such as critical path for delivery and
the level of tight or un-tight supervision/ inspection required.

3.6. Shipping & Traffic

The Shipping/ Traffic team are responsible for all the shipping or transportation activities and all
administration works of shipping formalities either coordination with the forwarder agent or custom
clearance third party.
The shipping/ Traffic team shall prepare the shipping plan and strategy for any local and import
material to avoid any unconditional condition and delay.

3.6.1. Shipping Schedule

The shipping schedule is prepared by the shipping staff as per information available in the
purchase order and other related discipline such as engineering and expediting, minimum

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PLAN (CEP) KBP – CEP - PROC – 001

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but not limited to :

 Material/Equipment Description, Type of material which content with weight
and Volume
 Point of Delivery
 Time of Delivery
 Schedule Material/Equipment required at site
Shipping schedule is periodically monitored and refer to shipping schedule or delivery
point as mention in the term and condition purchase order and the schedule of delivery
commit by related vendor.

3.6.2. Shipping Arrangement

Shipping arrangement is prepared based on below condition;
 Meet the overall project schedule
 For local material, considered to use freight forwarder which consolidated in
Batam, Tanjung Priok Jakarta and or Tanjung Perak – Surabaya or which having
more periodic shipment and directly shipped to project site via Dumai or land
transport.
 For the import material, all the goods are consolidated in Port of Export (Vendor
country of origin) and shipped directly to Tanjung Priok – Jakarta. Customer
clearance will be done in Tanjung Priok Jakarta and re-transported through land
transport to project site, upon the level of urgency. In case of urgency it is
allowed to restore the packing in Jakarta and transported by air (up to minimum
weight) to project site.
 For general cargo will be organized as per forwarder shipping schedule, and if
necessary for urgency reason, it is allowable to shipp by air limits up to 50 kgs or
1 m3.

3.6.3. Shipping Document

The most important thing to be considered by the shipping/ traffic team is to check and
review the shipping documents from the related party.
Shipping documents is consist of :
 Vendor’s invoice
 Packing list
 Bill of Lading (B/L) or Air Way Bill (AWB)
 Certificate of Origin
 Marine Insurance Certificate
 Declaration of dangerous goods - if any
At least 7 (seven) days from before the import material arrived at the port of
destination, the shipping documents has reach by the shipping/ traffic team.

3.6.4. Customs Clearance

KBP will appoint third party custom broker to do the customs clearance, which the documents has to be
reach the material control at the job site minimal 10 (ten) days before the arrival