STANDARD OPERATING PROCEDURE (SOP) Category: Logistics & Operations

LO-019 INTERNAL PROJECTS OPERATING PROCEDURE (INPOP)

Created by: Mr Steven LamGary Ho , IPU Manager Effective date: 01 July 20220

Vetted by: Ir Dr Robert Tam, Interim Director of Next review date: 30 June 2024
IPUIC
PURPOSE
1. The purpose of the Internal Projects Operating Procedure (INPOP) is to provide a guideline for the
administration of all Internal Projects (INP) that covers the projects initiated by departments of the PolyU
except Industrial Centre (IC).

SCOPE & DEFINITION

2. The Industrial Projects Unit (IPU) is responsible for the coordination of all Internal Projects channelled to
the Centre.

3. An INP covers consultancy, product/facility design/make, research & development work or sponsorship
for projects of values as channelled to IC by a department of the PolyU, except IC, and approved by IC
Management.

4. The graphical presentation of the INPOP is shown on page 6 of this documentas appended.

PROCEDURE
For all INPs, the following procedures should be enacted.

5. Project Inquiry
5.1. All inquiries to IC for projects works must be directed to IPU. The inquiry must be in written form
such as a letter, a memo, a note, a fax, an e-mail, etc.

6. Acknowledging the Inquiry

6.1. Acknowledgment of the Inquiry is prepared by IPU within 3 working days after the project inquiry is
received from client.

7. Feasibility Study
7.1. The inquiry will be evaluated in conjunction with workshops concerned withfor the feasibility
of its undertaking and the most desirable process. The evaluation process is also made with respect
to the value added and/or contribution to:
7.1.1. Trainees’ training value
7.1.2. R & D and project support for PolyU departments
7.1.3. Public relations/Prospective or social commitment
7.1.4. Staff development
7.2. After the study, if the inquiry is out of the capability of IC, the inquiry will be closed.

8. Rejecting Inquiries

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 8.1. Rejecting cases would be replied to the clients by IPU after the feasibility study.

9. Manufacturing Specification
9.1. IPU co-ordinator will work with workshops concerned to define manufacturing specifications
with reference to the customer’s requirements, such as:
9.1.1. Material selection
9.1.2. Appropriate manufacturing processes
9.1.3. Tooling and fixtures required

10. Manufacturing Hours and Lead-time

10.1. Stream leaders or workshop in-charges of the workshops concerned will provide information to IPU
for the estimation of working hours and lead-time required for the project.

11. Cost and Delivery Date Estimation

11.1. IPU will estimate the project cost and production time with reference to the design, the
manufacturing specification and the work hours estimated by the workshops concerned. The
attached INP Costing Policy serves as a guideline for deriving a cost quotation.

12. Quotation
12.1. The IPU co-ordinator will prepare a quotation with cost estimation.
12.2. Quantity discount will be considered for projects with continuous training value. However, the
quoted price should normally cover at least the basic expenditure including material, indirect
expenses and IPU expenses.
12.3. For sample making, or projects requiring machines with minimum set-up cost or charity projects, the
Director of IPU and the IPU Manager reserve the right to adjust the quoted price and accept jobs
according to the value and contribution of the job to the Centre or the community as stated in
Paragraph 7 – Feasibility Studies of the Internal Projects Operating Procedure (INPOP).
12.4. Stream leaders or workshop in-charges are always welcome to advisce on market price of similar
projects for the IPU’s consideration in quotation preparation.
12.5. Quotation to be sent to the client would include the followings:
12.5.1. Quotation Form (IPU-003)
12.5.2. Artwork/product drawings and/or specifications where appropriate
Quotations can be signed for by the authorized executive stipulated in the table below:

Quotation Amount Authorised 1st Alternate Delegate 2nd Alternate Delegate

(HK$) Signatory for Signatory for Signatory
Above HK$50,000 Director of IPU Not Applicable Not Applicable
Equal to or below Director of IPU IPU Manager Assistant IPU Manager
HK$50,000

13. Registration and Approval

13.1. The accepted quotations must be registered as Internal Projects (INP) by completing the Project
Requisition Form (IPU-001). The Project Requisition Form must be approved by the authorized
executive stipulated in the table below:

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 Project Amount Authorised 1st Alternate Delegate 2nd Alternate
(HK$) Signatory for Signatory Delegate for
Signatory
No Limit Director of IPU IPU Manager Assistant IPU
Manager

14. Open Project File

14.1. The IPU co-ordinator will raise a project file for every approved internal project with appropriate
project number and name assigned. To ensure the real work concept is implemented in the IC
training and avoid surge loading, stock file will be issued by IPU for standard IC products or
corresponding components.

15. Receive Confirmation

15.1. Upon receiving confirmation on acceptance of quotation by the client, IPU co-ordinator(s) and the
approval will get approvalis got from the Director of IPU for the registration of the inquiry, IPU co-
ordinator(s) will inform stream leaders or workshop in-charges to commence with the related
project work.
15.2. For urgent cases, the project is allowed to proceed in parallel with the project file preparation and
approval provided that verbal agreement has been reached with the client and the IPU Manager
and/or Assistant IPU manager is informed.

16. Materials Requisition

16.1. Project materials are either arranged by IC Procurement & Logistic Office (P&L Office) or supplied
from stock of the stream.
16.2. Materials or stock items arranged by IPU
16.2.1. IPU will issue Material Requisition Form (MRF) (IPU-004) to P&L Office for each
project. The P&L Office has to deliver the material to the workshops according to
instructions specified in Materials Requisition Form (IPU-004). If the materials are not
available from stock, P&L Office will purchase those items and advise IPU the delivery time.
For finished goods or components from the stock, the items will be delivered to the IPU for
delivery or further process. Material Requisition Form (IPU-004) form should be approved
by the IPU Manager or his/her delegates.
16.2.2. For project cost control, P&L Office will feed back to IPU the total material cost
spent for each project via Material Requisition Form (IPU-004)MRF.
16.3. Materials supplied by streams
16.3.1. If the material is available in the workshops of IC, the workshops concerned can
supply the material and be reimbursed accordingly.
16.3.2. For project cost control, the workshop in-charges will claim for the material
consumed by filling in the work order and return it to IPU upon its completion.

17. Work Order Issuance

17.1. Work orders that specify the job content of various tasks of the INP is prepared by the IPU
coordinator and approved by the IPU Manager or his/her delegates. The Work Order (IPU-005) is
then released to the workshops with relevant drawings, specifications, instructions, etc. attached.
However, any deviation in the manufacturing processes, such as machine break down or facilities
occupied for training must be reported to IPU for amendment.

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 17.2. The expected completion date of each task will be clearly marked in the Work Order (IPU-005) to
indicate its priority assigned by IPU in the Industrial Project list.
17.3. The IPU has full authority to control the priority of each project and its job tasks in accordance with
the urgency and importance of the projects and the availability of resources.

18. Manufacturing/Assembly
18.1. Having received the work orders and the materials, workshops shall immediately start to plan and
process the jobs according to the instructions and target date specified in the work orders.
18.2. Stream leaders or workshop in-charges of the workshop concerned should monitor the progress and
quality of the job to ensure the project is on the right track to meet the committed delivery date.
Upon the completion of the tasks, stream leaders or workshop in-charges shall report variation, if
any, to IPU by filling in the work order with:
18.2.1. Actual man-hours spent
18.2.2. Actual material consumed

18.3. For inventory control and cost control, all unused material and scrap material must be returned to
P&L Office with IPU informed for future applications or scrap.
18.4. For defective material, WIP and products, a Material Review Form (IPU-009) will be prepared by the
IPU for IPU Director’s review for re-usability. The Director of IPU will then decide on the disposal of
the defective items and the P&L Office will then dispose of the defective items according to
relevant SOPs.

19. Delivery
19.1. When delivery is ready, IPU would inform the client to pick up or make arrangement with P&L
Office for the delivery. Three documents are prepared for delivery:
19.1.1. Delivery Note (two copies)
19.1.1.1. Upon receiving the goods, clients are requested to sign on the Delivery Note
Form (IPU-006). One copy will be kept in the project file by IPU while the other
copy will be retained by the client.
19.1.1.2. The Delivery Note must be signed by the authorized executive stipulated in the
table below:

Project Authorised 1st Alternate 2nd Alternate 3rd Alternate

Amount Signatory Delegate for Delegate for Delegate for
(HK$) Signatory Signatory Signatory
No Limit Director of IPU IPU Manager Assistant IPU IPU Coordinator
Manager

19.1.2. Invoice (one copy)

19.1.2.1. Invoice Fform (IPU-007) will be sent to the client together with the products to
be delivered or sent to the client separately. Clients are requested to sign on the

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 lower portion of the Invoice Form (IPU-007) and send back the original copy to
IPU together with payment when the goods conform to the agreed
specifications/requirements.
19.1.2.2. Invoices must be signed by the authorized executive stipulated in the table
below:

Invoice Amount Authorised 1st Alternate Delegate 2nd Alternate Delegate

(HK$) Signatory for Signatory for Signatory
Above HK$50,000 Director of IPU Not Applicable Not Applicable
Equal to or below Director of IPU IPU Manager Assistant IPU Manager
HK$50,000

19.1.3. Customer Satisfaction Survey (one copy)

19.1.3.1. A Customer Satisfaction Survey Form (IPU-010) will be sent to randomly selected
clients together with the invoice for the purpose of service feedback data
collection. The returned survey forms should be filed for future analysis.

20. Settlement of Payment

20.1. For all INPs, IPU co-ordinator will prepare a Work and Cost Break Down using INP Form (IPU-002) for
the commencement of closing INP file. The INP Form (IPU-002) form must be signed and approved
by the IPU Manager or his delegates.
20.2. For all INPs, IPU co-ordinator will prepare a Request for Settlement of Payment (IPU-008) with
client’s cheque or payment to FO. FO will then cash the payment and put it into a specified pool
and wait for IPU’s distribution instructions. Instruction will be provided in Request for Settlement of
Payment for Internal Projects (IPU-008) for appropriate account transactions. Also, a receipt will be
sent to the client by FO. The Request for Settlement of Payment form (IPU-008), when applied,
must be signed and approved by the Director of IPU.

21. Unsettlement of Payment

21.1. In the case of payment not received from the client within 30 days after the issue of invoice, the IPU
co-ordinator will issue a First Reminder for Settlement of Payment (Attachment 4) to the client by
phone call, facsimile, email or internal mail.
21.2. In the case of payment not received from the client within 3 months upon the issue of invoice, the
IPU co-ordinator will issue a Second2nd Reminder for Settlement of Payment (Attachment 5) to the
client by phone call, facsimile, email or internal mail.
21.3. In the case of payment still not received from the client within 6 months upon the issue of invoice,
the IPU co-ordinator will issue a Third3rd Reminder for Settlement of Payment to client (Attachment
6) by phone call, facsimile, email or internal mail.
21.4. If payment is not settled within 30 days from the date of issue of the Third3rd Reminder for
Settlement of Payment, the project will be classified as bad debt with the approval of the Director of
IPU. Bad debt procedure will then be followed as per details stated in Attachment 3.
21.5 If payment is received after issuing the Reminder, normal settlement of payment procedure will

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 follow as stated in Clause 20.

22. Closing Project File

22.1. Any cost of direct materials prepaid when Materials Requisition Form (IPU-004)MRF or customer
order is received and cost of indirect expenses incurred by workshops will be reimbursed to IC One-
line GE A/C/C after IPU co-ordinator is informed by FO that the client’s cheque is cashed and IC is
credited. The man-hour spent in IPU jobs will be reflected in the Shop Load Report in IP Report
Summary. After these transactions are completed, the project file can be closed.
22.2. The IPU Manager summarizes the profit and loss for each project by comparing the income against
the expenses with reference to the following sources:
22.2.1. Quotation/invoice
22.2.2. The material cost from P&L Office
22.2.3. Total material consumption
22.2.4. Total man-hour spent
22.2.5. Cost reimbursement
22.3. In case of loss incurred in the Industrial Projects and significant great variation in material/man-hour
consumption against the estimation, review will be conducted with the workshops concerned and
reported to the Director of IPU.
22.4. Finally, the IPU co-ordinator closes the project file and keeps the documents in folder for records.

23. Scrap material or swarf

23.1. For cost saving, some scrap material or swarf with good resale value will be resold in lieu of normal
disposal. With the approval of the Director of IPU, the scrap material or swarf will be resold using
normal purchasing procedures. The income will be transferred to the IC One-line GE to cover the
expenses for scrap, stock material and consumables supplied by P&L Office or workshops.

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 ATTACHMENT 1

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 ATTACHMENT 2

INP COSTING POLICY

1. The generic Internal Project costing formula is:

Quoted Price = (Material + Indirect Expense) * (1 + IEP Rate) + Professional Charge

Where:
 Materials
Materials consist of all the direct materials required in the project including materials supplied by P&L
Office or workshops, purchased parts, sub-contracting parts and sub-contractor’s fee, if any.
 Indirect expenses
To simplify the calculation, a shop rate in terms of working hours is used to calculate the indirect
expenses in a workshop. It covers the indirect material; tooling and consumables used by the
concerned workshops. Machine maintenance of expensive equipment, such as the laser tube in RP
and Design Realisation Studio, laser plotter in PCM, etc, is also charged under this category.
 IEP Rate
IEP rate is a factor used to cover the expenses for scrap, inventory holding cost and consumables
supplied by P&L Office to workshops. It is 5% as effective since July 2000. To prevent surge loading
and ensure real work concept is implemented in the IC training, the IEP rate is also used to pre-pay for
all stock orders issued by the IPU for some standard parts or products. Re-imbursement will be made
to the IC One-line GE A/C when the WIP and/or finished goods are ordered by the customers.
 Professional charges
Professional charge includes the labour cost for both staff and students/trainees. The labour cost
includes Engineer, Technical Staff, Trainees and IEP support cost. The Professional Charge will be
reimbursed to IC One-Line (Staffing) A/C.

In case of bad debt, with the approval of Director of IPU, expenses of the project will be covered by the IEP
rate as stated in Attachment 3.

2. PolyU one-line funded projects with training values (Internal Projects):

Costing:
Project cost = (Material + Indirect Expense) * (1 + IEP Rate) + Professional Charge
Quoted Price = Project cost

Action journal:
Dr. Project expenses A/C or cheque
Cr. IC One-line GE = (Material + Indirect Expenses) x (1 + IEP Rate)
IC One-line (Staffing) A/C = Professional charge (Engineer, Technical, Trainees & IEP)

Reimbursement:
Concerned workshops (One-line GE) = (Material + Indirect Expense)
IEP Charges (One-line GE) = (Material + Indirect Expense) * IEP Rate
IC One-line (Staffing) A/C = Professional charge (Engineer + Technical + Trainee & IEP)

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 To ensure REAL WORK and MODEL FACTORY concept is successfully implemented in the IC, the Director of
IPU and the IPU reserve the right to adjust the quoted price so as to provide full supports to departmental
research activities. Quantity discount will be considered for projects with continuous training value.
However, the quoted price should normally cover the basic expenditure including material, indirect
expenses, IPU expenses and IC Overhead.

For sample making, or projects requiring machines with minimum set-up cost or charity projects, the IPU
Manager and Director reserve the right to adjust the quoted price and accept jobs according to the value and
contribution of the job to the Centre or the community as stated in Paragraph 7 – Feasibility Studies of the
Internal Projects Operating Procedure (INPOP).
Working Material Indirect IEP Charges (3) Professional Professional Professional Project Cost Quoted
Hours (1) Expenses = [(1) + (2)] x Charge Charge Charge (1) + (2) + (3) Price
(2) 5% (Engineer) (Technical & IEP) (Trainees) + (4) + (5) +
(4) (5) (6) (6)
(RPM) ($60/hr) (5%) ($500/hr) ($120/hr) ($30/hr)
5hrs $500 $300 $40 $0 $360 $60 $1,260 $1,260

Example:
Concerned workshop (One-line GE) = (Material + Indirect Expense) = $800
IEP charges (One-line GE) = (Material + Indirect Expense) x IEP Rate = $40
IC One-line (Staffing) A/C = Professional charge (Engineer, Technical, Trainee & IEP) = $420

3. Shop Rate for processes /workshops in IC

Shop rate is accounted for the rate of indirect expenses of the workshop/process for INP jobs and is
related to the time spends on the job.

Item Workshops / Processes Shop Rates / hr

(HK$)
1. Rapid Prototyping (RPM)* $60†
2. Technical Application in Biomedical $60†
3. Non-conventional Machining (Wire-cutting, EDM etching and metallic $60†
laser cutting)*
4. CNC Press (Turret & Forming)* $50†
5. CNC Machining * $50†
6. Rapid tooling (RT&M)* $60†
7. Non-metallic laser cutting and engraving* $40†
8. UV printing* $20†
9. Precision Machining* $60†
10. Reverse Engineering* $50†
11. Fibres Composite Workshop* $80†
12. Photo-Chemical Machining (PCM)* $60†
13. Machining* $30†
14. Electrical Engineering Workshop* $30†

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 15. Automation* $30†
16. Electronic Engineering Workshop* $50†
17. Plastic Workshop* $30†
18. Surface Finish Workshop* $60†
19. Drawing Office* $20†
20. Design Realisation Studio* $20†
21. Welding* $20†
22. Hot Metal* $20†
23. Maintenance* $20†
24. Woodwork* $20†
25. Civil Works* $20†
26. Sheet Metal* $20†
27. Procurement & Logistics* $20†
28. Documentation (IPU)* $20†
29. Inspection (IPU) $20†
30. Assembly (IPU) $20†
31. Metallic laser engraving* $40†
* Material will be charged separately as direct material
† If special tools and/or processes are required by a particular project, part of the tooling/indirect cost will
be charged as direct material cost or by changing the shop rates of concerned processes/workshops.

4. Professional Charge for processes/workshops in IC

The professional charge is to account for the professional staff hours, technical staff hours and student
hours contributed to the internal project. To simply the costing process, the cost is charged at the
following rates:

Group Trainees Technical Staff Engineer

Hourly Rate HK$30 HK$120.00 HK$500.00

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 ATTACHMENT 3

Procedures for BAD DEBT

Under one or more of the following conditions, an internal IP will be regarded as bad debt:
1. Three Reminders for Settlement of Payment have been sent to client without response and payment is
not received from client within 10 months; and,
2. The client cannot settle the payment due to:
(i) Insufficient funds in client’s project account;
(ii) Client’s project account is outdated and become invalid; and,
(iii) The client does not respond to the Reminders for Settlement of Payment.

Once an INP is classified as bad debt, the concerned staff of the client department will be black-listed. No further
jobs from a black-listed staff will be accepted unless at the discretion of the Director of IPU, and IC may undertake
jobs requested by black-listed staff with prepayment. With the approval of the Director of IPU, the material
consumed and indirect expenses of the bad debt project will be absorbed by IEP rate and the indirect expenses
will be reimbursed to the workshops accordingly. The project will then be closed.

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 Attachment 4

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 Attachment 5

Attachm
ent 6

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