Content:: Saudi Arabian Oil Company (Saudi Aramco) General Instruction Manual

Saudi Aramco 7180 (5/89)
G.I. NUMBER Approved

202.451
SAUDI ARABIAN OIL COMPANY (Saudi Aramco)
GENERAL INSTRUCTION MANUAL ISSUE DATE REPLACES
ISSUING ORG. ACCOUNTING, POLICY, METHODS & SYSTEMS DEPT. 08-20-97 05-20-95
SUBJECT: ENGINEERING WORK ORDER AUTHORIZATION FOR APPROVAL PAGE NUMBER
PROJECT PROPOSAL PREPARATION- SAUDI ARAMCO AIA 1 OF 13
FORM SA-6891
CONTENT:
This instruction contains the procedures for the use, preparation, and distribution of the "Engineering Work
Order Authorization for Project Proposal Preparation", Form SA-6891, and the accounting for funds approved
for project proposal studies. The text includes:
1. Glossary
2. General
3. Responsibility for Preparation
4. Approvals
5. Distribution
6. Close-Out
7. Reporting and Control
Attachment No I Engineering Work Order Authorization for Project Proposal Preparation Form
SA-6891
Attachment No II Engineering Work Order Authorization for Project Proposal Preparation
Continuation Sheet (In-Kingdom)
Attachment No III Engineering Work Order Authorization for Project Proposal Preparation
Continuation Sheet (Out-of-Kingdom)
Attachment No IV Letter of Closure of Type Code 68 Account (In-Kingdom)
Attachment No V Letter of Closure of Type Code 68 Account (Out-of-Kingdom)
1.0 GLOSSARY:
1.1 ABBREVIATIONS
CEO = Chief Executive Officer

DBSP = Design Basis Scoping Paper
EPP = Engineering Work Order Authorization for Project Proposal Preparation
ER = Expenditure Request
FAWIP = Fixed Asset & Work-in-Progress Accounting Department
PAER = Prior Approval Expenditure Request
SA = Saudi Aramco
SAPMT = Saudi Aramco Project Management Team
T/C = Type Code
* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

202.451
FORM SA-6891
VP = Vice President
1.2 FORM
SA-6891 Engineering Work Order Authorization for Project Proposal Preparation.
2.0 GENERAL:
2.1 DESCRIPTION
Form SA- 6891 is used to approve the release of T/C 68 EPP funds for an engineering effort
devoted to the development of a definitive project proposal for a budget item (BI) included in the
approved 5 year Saudi Aramco Capital/Non-Capital Plans. Attachment I is a sample of Form
SA-6891.
2.2 FUNDING
T/C 68 Engineering Funds are appropriated annually by the Board of Directors at the time of
approval of the Business Plan. This appropriation is valid for a May through April release
period. Unreleased funds expire at the end of the release period. Expenditures of released funds
may continue during subsequent years. Funds released but not utilized may not be reallocated to
another project after the expiration of the release period.
2.3 RELEASE OF FUNDS
T/C 68 funds are released by the signature of the Vice President, Project Management. The
Budget Director, Facilities Planning Department maintains control of the releases of T/C 68
funds. If a DBSP is being prepared for a budget item, it must be approved before EPP funds can
be released.
2.4 REVISIONS
In any of the following situations, a revised Form SA-6891 shall be prepared and submitted for
approval:
• If the project requires additional funds.
• If the project undergoes a significant change to the scope of work, a revision

to the DBSP, or a change in the ER approval date of more than six months.

202.451
FORM SA-6891
2.5 EXCLUSIONS
EPP funds may not be used for the purchase of project material or project construction.
3.0 RESPONSIBILITY FOR PREPARATION:

3.1 ITEMIZED EXPENDITURES
The cost engineer (Form SA-6891 originator) is responsible for preparing the form and
obtaining the required approval. Expenditures are itemized as follows:
Item Description
1. Project Proposal Authorized Expenditure
2. Detailed Engineering Authorized Expenditure
3. Material Specifications
4. Other Authorized Expenditures:
Continuation of Detailed Engineering
Geotechnical Services
Survey Services
These items described do not represent the phases that are used for project expenditures. The
items mentioned are used to broadly segregate the expenditures for management's approval.
3.2 DEFINITION OF EXPENDITURES
The items in 3.1 include the following expenditures:

3.2.1 PROJECT PROPOSAL AUTHORIZED EXPENDITURE
Expenditures necessary to prepare and obtain approval of a project proposal, preparation

of the Expenditure Request Estimate, and contract bid packages as appropriate.
3.2.2 DETAILED ENGINEERING AUTHORIZED EXPENDITURE
Expenditures necessary for the continuation of detailed engineering between project

proposal completion and the date of the ER approval. In this situation, the cost engineer
shall open any available tertiary phase under 010 or 020 to collect these costs. After the

202.451
FORM SA-6891
ER approval, the cost engineer shall transfer these costs to the appropriate tertiary
phase(s) under Detail Engineering (phases 030 or 040). The organization of phase
numbers and the use of tertiary phase numbers are discussed in Section 4 of the
Engineering and Project Management Cost Manual.
3.2.3 MATERIAL SPECIFICATIONS
Expenditures related to preparing material specifications purchase requisitions and the

preparation of the contracting bid package, as required.
3.2.4 OTHER AUTHORIZED EXPENDITURES
Expenditures for other early project development work, e.g., soil borings, route surveys,
etc.
3.3 PHASES
3.3.1 CONTINUATION SHEET
The cost engineer shall attach a continuation sheet to Form SA-6891 that shall inform
FAWIP as to which phases to open. For in-Kingdom project proposals, the cost
engineer shall only use the tertiary phases under phase 010. For out-of-Kingdom project
proposals, the cost engineer shall only use the tertiary phases under phase 020.
3.3.2 CONTINUATION SHEET SAMPLE
Attachment II is a sample continuation sheet for in-Kingdom project proposals which

shows the minimum number of phases that should be opened. Attachment III is a
sample continuation sheet for out-of-Kingdom project proposals which shows the
minimum number of phases that should be opened. The project may open as many
additional tertiary phases under phase 010 or 020 as needed.
4.0 APPROVALS:
The following positions have the authority to approve the opening, closing, or cancellation of
Engineering Proposed Project Work Orders up to the amount of the annual appropriation approved by
the Board of Directors.
President & CEO
Senior VP, Producing Operations
Senior VP, Engineering and Operations Services
VP, Project Management

202.451
FORM SA-6891
5.0 DISTRIBUTION:
After obtaining proper approvals and the control number assigned by FAWIP, the originator
distributes the Form SA-6891 as follows:
Fixed Assets & Work-In-Progress Accounting Department - Original
Originator - 1st Copy
Project Management Proponent Department - 2nd Copy
Programs, Forecast & Analysis Department - 3rd Copy
Budget Director - Facilities Planning Department - 4th Copy
6.0 CLOSE-OUT:
6.1 CLOSING LETTER
The originator is responsible for closing out an EPP (T/C 68 accounts) when the future of the
project has been determined. FAWIP is advised by a letter indicating the distribution of EPP
expenditures (see paragraph 7.4 - 7.6) to Jobs and Phases within the BI and/or Expense. The
letter is signed by the appropriate approval authority as follows:
6.1.1 PROJECT NOT APPROVED OR ABANDONED
The original/delegated approval authority is responsible for requesting FAWIP to

transfer the cost to expense account(s).
6.1.2 PROJECT PARTIALLY APPROVED
The original/delegated approval authority is responsible for requesting FAWIP to

transfer the cost to a partially approved BI and expense the balance.
6.1.3 PROJECT APPROVED
Project Manager is responsible for requesting FAWIP to transfer the cost to a fully
approved ER.

202.451
FORM SA-6891
6.1.4 PROJECTS DEFERRED LESS THAN SIX MONTHS
Project Management Teams do not need to take any action for projects that are deferred
less than six months.
6.1.5 PROJECTS DEFERRED MORE THAN SIX MONTHS BUT LESS THAN TWO YEARS
6.1.5.1 The T/C 68 account should remain open only if the project proposal effort
is likely to resume. The remaining unspent T/C 68 funds shall be canceled
through the use of Form SA-6891. The expended funds will remain in the
T/C 68 account.
6.1.5.2 While the project is inactive, it is recommended that the SAPMT closes the
individual phases of the T/C 68 account to ensure the project incurs no mis-
charges.
6.1.5.3 Prior to reactivating the project proposal effort, the SAPMT will ensure that
T/C 68 funds have been set aside for the project for the release period when
the project proposal effort will resume. Prior to reactivating the project ef-
fort, the SAPMT will confirm that Facilities Planning Department has suf-
ficient funds in the current T/C 68 annual budget. Before project proposal
effort resumes, the SAPMT will secure approval for funding on the Form
SA-6891.
6.1.5.4 Upon reactivating the project proposal effort, the Cost Engineer determines
any abandoned engineering cost included in the project and opens and
transfers these charges to phase 007 under the T/C 68 account.
6.1.6 PROJECTS DEFERRED MORE THAN TWO YEARS
The cost engineer shall ensure that all expenditures have been booked to the T/C 68
account. These charges are then transferred to the appropriate abandoned engineering
expense account as stated in paragraph 7.4.
6.2 FUNDING FOR APPROVED PROJECTS
When the ER is approved or receives a PAER funding, no more T/C 68 funding or expenditure
is authorized for that ER.
7.0 REPORTING AND CONTROL:

7.1 CONTROL NUMBERS
FAWIP assigns a control number to each Form SA-6891 and maintains a register of the number,
title, and final disposition of each Form SA-6891. The number is assigned as follows:

202.451
FORM SA-6891
10000 - 19999 - Exploration & Producing
20000 - 29999 - Manufacturing Operations
30000 - 39999 - Engineering & Operations Services
40000 - 49999 - International Operations
50000 - 59999 - Finance and Relations
60000 - 69999 - Others
7.2 ACCOUNT
All costs are accumulated in a T/C 68 Account.
7.3 REPORTING
FAWIP prepares a monthly summary of all T/C 68 Accounts (Saudi Aramco Report 271 -
Engineering Proposed Project T/CÊ68).
7.4 ACCOUNTING FOR PROJECTS NOT APPROVED
Expenditures for projects that are not approved or deferred more than two years will be charged
(using original entry code) to preliminary engineering expense Account 762-911 with the
approval of the V.P. Project Management. This account closes into account 10-885-01
"Operational Investment Overhead".
7.5 ACCOUNTING FOR PARTIALLY APPROVED PROJECTS
T/C 68 expenditures for projects that are partially approved will be transferred to the ER for the
design cost of the approved portion and to abandoned engineering expense for any balance
related to the portion of the unapproved design with the approval of the VP Project
Management.
7.6 ACCOUNTING FOR APPROVED PROJECTS
Expenditures for projects that are subsequently approved will be transferred to an open T/C 60
Job Order account within the approved ER (Account No. 10-350-01 - Construction in Progress),
using original entry code, according to paragraph 6. The cost engineers will send a letter to
FAWIP instructing them to close the T/C 68 account and transfer the costs to T/C 60 account (s).
For in-Kingdom project proposals, the cost engineer will only transfer the T/C 68 charges to the
respective T/C 60 tertiary phases under phase 010. For out-of-Kingdom project proposal, the

202.451
FORM SA-6891
cost engineer will only transfer the T/C 68 charges to the respective T/C 60 tertiary phases under
phase 020. Attachment IV is a sample letter for transferring in-Kingdom project proposals and
Attachment V is a sample letter for transferring out-of-Kingdom project proposals.
7.7 T/C 68 SPENDING LIMITATION
7.7.1 The T/C 68 expenditures for an individual authorization should not exceed the amount
approved on the Form SA-6891. In the event additional funds are required then a sup-
plemental Form SA-6891 should be prepared and approved (refer to Paragraph 2.4).
7.7.2 The Budget Director is required to ensure that the total releases (sum of all T/C 68 funds)
do not exceed the amount appropriated by the Board of Directors.
Approved: Manager,Accounting Policy, Methods & Systems Department

202.451
FORM SA-6891
ATTACHMENT I
REFER TO SA FORM 6891 (ENGINEERING WORK ORDER AUTHORIZATION FRO PRJECT

PROPOSAL PREPARATION)

202.451
FORM SA-6891
ATTACHMENT II (IN-KINGDOM)
General Instruction No. 202.451
ENGINEERING WORK ORDER AUTHORIZATION FOR PROJECT PROPOSAL PREPARATION
Continuation Sheet (In-Kingdom)
Open the following phases for account 68- ____________:
PHASE DESCRIPTION
011 Projec t Proposal Contractor
012 SAPMT
019 Miscellaneous Support Costs

202.451
FORM SA-6891
ATTACHMENT III (OUT-OF-KINGDOM)
General Instruction No. 202.451
ENGINEERING WORK ORDER AUTHORIZATION FOR PROJECT PROPOSAL PREPARATION
Continuation Sheet (Out-of-Kingdom)
Open the following phases for account 68- ____________:
PHASE DESCRIPTION
021 ASC/AOC Projec t Proposal Contractor
022 ASC/AOC and OOK SAPMT
025 IK SAPMT
029 Miscellaneous Support Costs

202.451
FORM SA-6891
ATTACHMENT IV (IN-KINGDOM) General Instruction No. 202.451
______________________ Project Division

Room ___________
Building ______________
Dhahran
Date
Closure of Type Code 68 Account
68- ________________
Administrator
Projects Support Division
FAWIP Accounting Department
Room E-4300, Dhahran
Please be informed that ER _________ was approved on ___________ ___, 199X.

We request that all the below listed charges be transferred as specified and that the type code 68 account be
closed.
FROM TO
68- _________ 60- __________
PHASE E/C AMOUNT PHASE E/C AMOUNT
011 387 011 387
012 977 012 977
019 429 019 429
If you have any questions, please contact ________________ at ______-______.
__. __. ____________, Project Manager

___________________Projects Division
________________________________

202.451
FORM SA-6891
ATTACHMENT V (OUT-OF-KINGDOM) General Instruction No. 202.451
______________________ Project Division

Room ___________
Building ______________
Dhahran
Date
Closure of Type Code 68 Account
68- ________________
Administrator
Projects Support Division
FAWIP Accounting Department
Room E-4300, Dhahran
Please be informed that ER _________ was approved on __________ __, 199X. We request that all the below
listed charges be transferred as specified and that the type code 68 account be closed.
FROM TO
68- _________ 60- __________
PHASE E/C AMOUNT PHASE E/C AMOUNT
021 308 021 308
022 875 022 875
025 977 025 977
029 429 029 429
If you have any questions, please contact ________________ at ______-______.
__. __. ____________, Project Manager

___________________Projects Division
________________________________

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Saudi Aramco 7180 (5/89)

G.I. NUMBER Approved

CEO = Chief Executive Officer

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

SA-6891 Engineering Work Order Authorization for Project Proposal Preparation.

2.3 RELEASE OF FUNDS

• If the project requires additional funds.

• If the project undergoes a significant change to the scope of work, a revision

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

3.0 RESPONSIBILITY FOR PREPARATION:

1. Project Proposal Authorized Expenditure

2. Detailed Engineering Authorized Expenditure

4. Other Authorized Expenditures:

Continuation of Detailed Engineering

3.2 DEFINITION OF EXPENDITURES

The items in 3.1 include the following expenditures:

Expenditures necessary to prepare and obtain approval of a project proposal, preparation

Expenditures necessary for the continuation of detailed engineering between project

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

Expenditures related to preparing material specifications purchase requisitions and the

3.3.1 CONTINUATION SHEET

Attachment II is a sample continuation sheet for in-Kingdom project proposals which

President & CEO

Senior VP, Producing Operations

Senior VP, Engineering and Operations Services

VP, Project Management

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

Fixed Assets & Work-In-Progress Accounting Department - Original

Originator - 1st Copy

Project Management Proponent Department - 2nd Copy

Programs, Forecast & Analysis Department - 3rd Copy

Budget Director - Facilities Planning Department - 4th Copy

6.1.1 PROJECT NOT APPROVED OR ABANDONED

The original/delegated approval authority is responsible for requesting FAWIP to

6.1.2 PROJECT PARTIALLY APPROVED

The original/delegated approval authority is responsible for requesting FAWIP to

6.1.3 PROJECT APPROVED

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

6.1.4 PROJECTS DEFERRED LESS THAN SIX MONTHS

6.2 FUNDING FOR APPROVED PROJECTS

7.0 REPORTING AND CONTROL:

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

10000 - 19999 - Exploration & Producing

20000 - 29999 - Manufacturing Operations

30000 - 39999 - Engineering & Operations Services

40000 - 49999 - International Operations

50000 - 59999 - Finance and Relations

60000 - 69999 - Others

All costs are accumulated in a T/C 68 Account.

7.4 ACCOUNTING FOR PROJECTS NOT APPROVED

7.5 ACCOUNTING FOR PARTIALLY APPROVED PROJECTS

7.6 ACCOUNTING FOR APPROVED PROJECTS

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

7.7 T/C 68 SPENDING LIMITATION

Approved: Manager,Accounting Policy, Methods & Systems Department

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

REFER TO SA FORM 6891 (ENGINEERING WORK ORDER AUTHORIZATION FRO PRJECT

* CHANGE ** ADDITION NEW INSTRUCTION COMPLETE REVISION X 13

General Instruction No. 202.451

ENGINEERING WORK ORDER AUTHORIZATION FOR PROJECT PROPOSAL PREPARATION

Continuation Sheet (In-Kingdom)

Open the following phases for account 68- ____________:

011 Projec t Proposal Contractor

Please be informed that ER _ was approved on _ _, 199X.

If you have any questions, please contact ________ at -.

. . ____________, Project Manager

If you have any questions, please contact ________ at -.

. . ____________, Project Manager