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Practical risk management for EPC/design-build projects : manage risks effectively -- stop the losses

Author: Walter A Salmon
Publisher: Hoboken, NJ : Wiley Blackwell, 2020.
Edition/Format:   Print book : EnglishView all editions and formats

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Document Type: Book
All Authors / Contributors: Walter A Salmon
ISBN: 1119596173 9781119596172
OCLC Number: 1110443644
Description: xix, 299 pages ; 25 cm
Contents: Foreword xiiiPreface xvAcknowledgements xix1 Introduction 11.1 The Book's Focus and Objectives 11.2 The Book's Content and Structure 41.3 Generality of Contractual Advice Given 71.4 Common Elements for Construction Projects 82 Construction Project Implementation Routes 112.1 Different Approaches 112.2 Traditional Contracting Approach 112.2.1 Design Team's Appointment and Role 112.2.2 Employer's Participation 122.2.3 Contractor's Role and Responsibilities 132.2.4 Traditional Approach Advantages 132.2.5 Traditional Approach Disadvantages 142.3 Design-Build Approach 142.4 EPC Approach 162.4.1 EPC Project Suitability 162.4.2 Contractor's Obligations 172.4.3 Employer's Participation 172.4.4 Standard EPC Contracts Available 182.4.5 General Notes of Interest 202.5 EPCM Approach 212.6 Employers Prefer Lump-Sum Contracts 232.7 Fixed-Price Lump-Sum Contracts 252.8 Selecting the EPC Contractor 263 EPC Project Risk Management Overview 293.1 Project Risk Management - Definition 293.2 Construction Project Hazards Abound 293.3 Importance of Project Risk Management 313.4 Corporate Risks Versus Project Risks 323.5 Greater Risks for EPC Contractors 333.6 Principal Disaster Areas on EPC Projects 343.7 Maintaining the Project Schedule 363.8 Departmental Interface Issues 363.8.1 Rework 373.8.2 Delayed Technical Bid Evaluations 383.8.3 Late Mobilisation of Procurement Team 383.8.4 Red-Line Drawings Left Too Late 393.9 Forging an Integrated Implementation Team 393.10 Allocating Responsibility for Handling Risks 404 EPC Project Pre-Implementation Problems 434.1 Bidding Process Pitfalls 434.2 Failure to Embrace Lessons Learnt 444.3 Failure to Understand Contract Terms 454.4 Qualifications, Deviations and Exceptions List 464.5 False Management Resourcing Plan 474.6 Underestimating the Costs 484.7 Conceptual Design Bid Pricing Problems 504.8 Agreeing to Inadequate Completion Time 504.9 Reliance on Employer's Information/Data 544.10 Late Approval of CDVR 544.11 Gateway Between FEED and Detailed Design 554.12 Extended Review Period for Deliverables 554.13 Objecting to Impractical Review Process 564.14 Underestimating Equipment Procurement Packages 584.15 Rejection of Country of Origin 594.16 Responsibility for Governmental Problems 604.17 Performance Bond Early Submission 604.18 Requirement for On-Demand Bonds 614.19 Import Duty Responsibilities 624.20 Local Content Obligations Downplayed 634.21 Contractor's Bid Modifications Ignored 644.22 Relying on Carrots 654.23 Square Pegs and Round Holes 664.24 Failure to Check the Margin 685 Overseas EPC Project Preparatory Work 715.1 Critical Path Identification 715.2 Setting Up Contractor's Administrative Systems 735.3 Determining Appropriate Management Structure 736 Project Roles, Functions and Responsibilities 756.1 The Project Management Consultant 756.1.1 Primary Functions 756.1.2 PMC's Duty and Loyalty is to Employer 766.1.3 PMC's Different Take on Time 776.1.4 Employer's Direct Personnel in Lieu of PMC 786.2 The Board of Directors 796.2.1 Primary Functions 796.2.2 Ethical Compliance Responsibilities 796.2.3 Shop Floor Compliance Problems 816.2.4 Corporate Directives for Limiting Compliance Transgressions 826.2.5 Speeding Up Financial Decision-Making 836.2.6 Ensuring Veracity of Reporting 846.3 The Project Director 866.3.1 Standing of Project Director 866.3.2 PD's Functions and Responsibilities 866.3.3 Good Communication and Quality Reporting 876.3.4 Importance of a Good PD 896.4 The Project Manager 906.4.1 Primary Functions 906.4.2 PM's Reporting Duties 936.4.3 Preparation of Project Execution Plan 956.4.4 PM's Responsibility for Risk Management 966.4.5 PM's Key Considerations for Minimising Risks 976.4.5.1 Identifying and Managing the Project's Major Risks 976.4.5.2 Helping to Develop the Project Execution Plan 986.4.5.3 Organising, Monitoring and Controlling the Project's Resources 986.4.5.4 Ensuring Safe Working at All Times 996.4.5.5 Directing and Monitoring the Project's Management Staff 1006.4.5.6 Monitoring and Reporting on the Project's Actual Progress 1016.4.5.7 Developing/Implementing Appropriate Plans to Redress Delays 1046.4.5.8 Completing within the Agreed Time-Frame 1056.4.5.9 Delivering the Expected Quality of Finished Product 1076.4.5.10 Completing within the Approved Budget 1086.4.6 PM's Preferred Communication Style 1106.5 The Project Controls Manager 1106.5.1 Range of Functions May Vary 1106.5.2 PCM's Primary Functions in the Wider Role 1116.5.3 Importance of the PCM's Reporting 1126.5.4 Overloading the PCM's Responsibilities 1136.6 The Project Controls Department 1136.6.1 The Department's Objectives 1136.6.2 Planning and Controls Explained 1156.6.3 PCD's Planning and Controls in Practice 1166.7 The Planning/Scheduling Team 1176.7.1 Unrealistically Short Project Schedules 1176.7.2 Importance of a Sound Project Schedule 1186.7.3 The Project Schedule's Owner 1196.7.4 Managers Must Embrace the Project Schedule 1206.7.5 Compiling the Work Breakdown Structure 1216.7.6 Determining the Planning Strategy 1216.7.7 Finalising the Baseline Project Schedule 1226.7.8 Schedules Beyond the Project Schedule 1226.7.9 Major Risks for the Planning Manager 1236.7.10 Retrospective Compilation of Project Schedule 1256.8 The Engineering Manager 1256.8.1 Primary Responsibilities 1256.8.2 The Engineering Department's Customers 1276.8.3 Key Preparatory Activities for Engineering Work 1276.8.4 Primary Risks for Engineering Work Activities 1306.8.4.1 Late Delivery of Engineering Documentation 1306.8.4.2 Gradual Scope Creep 1316.8.4.3 Inadequate Monitoring of Engineering Subcontractors 1316.8.4.4 Disruption of Information Management Tasks 1326.8.4.5 Failure to Rationalise the Information Management System 1326.8.4.6 Reliance on Document-focused Progress Reporting 1336.8.4.7 Problems Caused by Employer's Non-readiness 1346.9 The Procurement Manager 1356.9.1 Primary Responsibilities 1356.9.2 The Procurement Department's Prime Customer 1366.9.3 Deciding Equipment/Deliverables Delivery Dates 1366.9.4 Considerations for Long-Lead Items 1376.9.5 Late Engineering Deliverables 1386.9.6 Risk of Corruption Occurring 1386.9.7 Tracking Manufacturing and Delivery Status 1396.9.8 Effective Use of Expediters 1406.9.9 Avoiding Delays from Employer's Side 1406.9.10 Due Diligence on Vendors and Subcontractors 1426.9.11 In-Country Services Problems 1426.9.12 Customs Clearance Problems 1436.9.13 Reducing the Risks of Non-Performing Service Providers 1436.9.14 Obtaining All Available Discounts 1446.9.15 Arranging On-Site Support Services 1446.9.16 Ordering More Spares than Necessary 1456.10 The Expediting/Logistics Manager 1456.10.1 Primary Responsibilities 1456.10.2 The Expediter's Role 1466.10.3 Where Vendors Can Fail 1466.10.4 Spare Parts Documentation 1466.10.5 The Logistics Support Activities 1476.11 The Construction Manager 1476.11.1 Principal Function and Responsibilities 1476.11.2 Working Quickly, Effectively and Safely 1496.11.3 Poor Quality Work Delays Pre-Commissioning 1496.11.4 Implementation Pitfalls 1506.11.4.1 Not Following the Project Schedule 1506.11.4.2 Not Holding Regular Formal Meetings 1506.11.4.3 Not Preparing for Mobilisation Adequately 1506.11.4.4 Not Making Surprise Work Area Visits 1516.11.4.5 Not Holding Job Performers Accountable 1526.11.4.6 Not Documenting Changes Adequately 1526.11.4.7 Not Limiting Authority for Managing Resources 1526.11.4.8 Not Assessing Productivity Properly 1536.11.4.9 Not Progressing Completion Certification Adequately 1536.11.5 Subcontracting Risks 1566.11.6 Permit to Work Compliance 1586.11.7 Delay Risks Caused by Suppliers 1586.11.8 Controlling Wastage 1586.12 The Commissioning Manager 1606.12.1 Primary Responsibilities 1606.12.2 Major Risks 1616.12.2.1 Spare Parts Availability 1616.12.2.2 Commissioning Safely 1616.12.2.3 Commissioning Equipment Jointly with the Employer's Team 1626.12.3 Emergency Vehicles Requirements 1626.13 The Operational Readiness Manager 1626.13.1 Primary Function 1626.13.2 Reliance on the Information Management Team 1636.13.3 Inputs from the Operational Readiness Manager 1636.13.4 Lack of Operational Readiness Information from Others 1646.13.5 Operational Readiness Documentation Focus 1646.13.6 Employer Pressure to Improve Facilities 1646.14 The QA/QC Manager 1656.14.1 Quality Assurance Versus Quality Control 1656.14.2 QA/QC Manager's Primary Responsibilities 1656.14.3 Main Risks for QA/QC Manager 1666.14.4 Avoiding Quality Assurance Risks 1666.14.5 Reducing Quality Control Risks on the Site 1666.14.6 Reducing Vendor Quality Control Risks 1676.15 The HSE Manager 1676.15.1 Importance of HSE Inputs from Everybody 1676.15.2 Primary Responsibilities 1686.15.3 Safety Provisions and Training 1686.15.4 Enforcing HSE Rules to Prevent Accidents 1696.15.5 Motivating On-Site HSE Officers 1706.15.6 Off-Site HSE Incidents 1706.15.7 Safety Moment Chats 1716.16 The Camp Boss 1716.16.1 Primary Responsibilities 1716.16.2 Major Risks 1726.17 The Project Information Manager 1736.17.1 Importance of Information Management 1736.17.2 Information Overview 1736.17.3 Electronic Document Management Systems 1746.17.4 PIM Role and Primary Responsibilities 1766.17.5 Major Risks for the PIM 1776.17.6 Dedicated Data Inputters 1776.17.7 Information Management Support Personnel 1786.18 The Document Control Manager 1796.18.1 Standardised Document Management System 1796.18.2 Controlling Communications 1806.18.3 Vetting Documents Before Issuing 1806.18.4 Restricting Email Usage 1816.18.5 Benefits of a Standard Documents Library 1816.19 The Information Technology Manager 1826.19.1 IT System Security 1826.19.2 Backing Up Work from Personal Computers 1826.19.3 Ensuring Integrity of Computerised Data 1826.19.4 Reducing Contractor's Software Costs 1836.20 The Interface Manager 1846.20.1 Primary Function and Responsibilities 1846.20.2 Interface Management Plan 1846.20.3 External and Internal Interfaces Explained 1856.20.4 Identifying/Locating Interfaces 1866.20.5 Interface Slip-Ups 1876.20.6 Closing Interface Activities is Hard Work 1886.21 The Contract Administration Team 1896.21.1 Determining the Compilation of the Team 1896.21.2 The Project Contract Manager 1906.21.3 The Contract Administration Manager 1906.21.4 The Subcontracts Manager 1916.21.5 Compiling the Contract Summary 1926.21.6 Identifying Risk Exposure 1926.21.7 Importance of Keeping Records 1936.21.8 Risk of Collusion in Measurement/Costing Team 1956.21.9 Facilitation Role of the Contract Administration Team 1956.21.10 Illusory Claims 1966.22 The Human Resources Manager 1966.22.1 Primary Responsibilities 1966.22.2 Becoming the Employer of Choice 1976.22.3 Recruitment Issues 1986.22.4 Emergency Replacement for Key Personnel 1996.23 The Administration Department 2006.23.1 Primary Responsibilities 2006.23.2 Providing Back-Up Support to Site Quickly 2006.24 The Financial Management Team 2016.24.1 Primary Responsibilities of Finance Manager 2016.24.2 The Budget Controller 2026.24.3 Controlling Purchases 2036.24.4 Keeping Track of Expenditure 2046.25 The Compliance Team 2046.26 The Legal Department 2066.26.1 Utilising External Legal Team 2066.26.2 Utilising Dispute Adjudication Boards 2077 Reducing Joint-Venture/Consortium Risks 2097.1 Joint Venture Versus Consortium 2097.2 JV Considerations 2097.3 Setting Up a JV Steering Committee 2107.4 Objectives of JV Steering Committee 2117.5 JV Members are Partners 2128 Claims Management Risks and Problems 2158.1 Relying on Claims to Achieve Profitability 2158.2 Factors Legislating Against a Claim's Success 2168.3 Key Ingredients for Worthwhile Claims 2178.4 Proving Excusable Delay 2178.5 Key Components of Successful Claims 2189 Identifying Hazards and Managing the Risks 2199.1 Introduction 2199.2 Potential Hazards for Construction Projects 2209.3 Responsibility for Project Risk Assessment 2229.4 Identifying and Managing Project Risks 2249.5 Project Main Risks Register 2279.6 Risk Assessment Team Inputs 2289.7 Relative Risk Factor Assessment 2299.8 Risks Arising from Safety Studies 2309.9 Dealing with Safety Risks to On-Site Personnel 2329.10 Dealing with Health Matters for On-Site Personnel 2369.11 Dealing with Risks to the Environment 237List of Figures:Figure 6.1 Interfaces for EPC Project's Departments and Teams 114Attachments:Attachment A Matrix of Project Risk Areas and Corresponding Risk Management Solutions 239Attachment B Matrix of Prime Risk Considerations, Impacts & Consequences 243Attachment C Example Project Main Risks Register 245Attachment E Task Hazard Assessment Worksheet 251Appendices:Appendix A Abbreviations and Acronyms 253Appendix B Glossary 255Appendix C EPC Project Management Team Organisation Structure 269Appendix D EPC Project Departmental Organisation Structure 271About the Author 275Index 277
Responsibility: Walter A. Salmon.


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