Contractor shall issue to the EMPLOYER a Progress Report summarizing the performance and status of all major aspects of the Project, no less than monthly. Contractor’s Progress Report shall be issued as maximum the fifth (5th) of the month following the reporting period.
Contractor shall submit for the EMPLOYER review and approval its standard monthly progress reporting format which shall be modified as necessary to comply with EMPLOYER requirements. Distribution shall comply with requirements of Exhibit 1-3 (Project Instruction N°1 – Correspondence).
B. Principles
The EMPLOYER desires that Contractor Progress Reports be carefully structured so that important/relevant and comprehensive summary about the development of the project in an easily understandable and quantitative manner.
The Report shall be brief but clear in all aspects, utilizing management summary displays whenever possible.
As a general principle, the EMPLOYER requires that Contractor maintain the original baseline performance information and curves on all presentations, even if the EMPLOYER Company has approved revised projections. Such revised projections will be designated as Revisions.
The EMPLOYER desires to be alerted early to any significant project variances from plan/expectations. This being surfaced, while being assured that Contractor’s hierarchical project tracking and monitoring system is effectively picking up such variances early without the EMPLOYER having to
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14. MONTHLY PROGRESS REPORTING
International Bidding Process N° PCI-002-2008-OFP/P ETROPERU
exhaustively examine Contractor’s entire array of monitoring activities each month.
Contractor Monthly Progress Reports should contain a highlighted area where the most significant challenges are described along with either the recommended or the approved course of action. Contractor Monthly Progress Reports should also contain a log of open action items with appropriate notification and requirement dates and designation of the responsible party.
Items contained therein shall be maintained until fully completed.
Contractor shall not use the Monthly Progress Report as a primary source of first time communication to the EMPLOYER regarding important project developments, challenges and/or status information.
C. Content
The Progress Report shall contain two major portions: Narrative and Analytical.
1. Narrative – The Narrative section shall clearly and concisely assess the current status (cost, schedule, etc.) of the project, identify any pertinent opportunities, deviations or problems and define appropriate solutions and/or actions. It shall also describe the status of action items or problems identified in earlier reports.
Contractor’s narratives should be limited and also contain quantitative comparative information which allows the reader to determine quickly if the subject being referenced occurred as planned, and if not, what the deviation is from planned.
2. Analytical – The Analytical Progress Report shall be configured in accordance with Exhibits 14-1 through 14-14. It is intended that the Progress Report contain at its highest levels an overall assessment of Project status, with further details available at progressively lower hierarchical levels. Thus, the Project Summary and Cost Summary may be used to obtain a quick insight into status and progress, with identification of potential problems areas for further pursuit in more detailed areas of the Report. Management summary graphs should be included when appropriate to aid in the review and understanding of the report.
All advance status comparisons should contain the corresponding planned expectation and reflect present status relative to said expectation. The EMPLOYER prefers that as much summary status information as reasonably possible be presented in quantitative format.
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14. MONTHLY PROGRESS REPORTING
International Bidding Process N° PCI-002-2008-OFP/P ETROPERU
If Contractor has a standard Progress Report that covers and contains substantially all the elements contained in the exhibits, it may submit information regarding this standard to the EMPLOYER for consideration.
Only upon the EMPLOYER’s written approval may the standard be used as replacement for all or any portion of the exhibits. More likely, the EMPLOYER will request that Contractor amend its standard to incorporate the requested information not included in the Contractor’s standard.
Specific content shall include the following:
a. Overall statement of the advance of the project and perspectives (safety statistics, cost, schedule, progress, etc.) supported by summaries extracted from Contractors other published reports for the project.
b. Areas of concern and opportunities, significant risks or challenges and their proposed solutions; status of previously identified risks and challenges and proposed resolution.
c. Analysis of the project schedule as described in Project Instruction N° 2, Section III.E, Time Management.
d. Analysis of the project costs and cash flow curve as described in Project Instruction N° 3, Section III.A.2.e, Cost M anagement.
As noted in Project Instruction N° 3 – Cost Managem ent, following the conversion from Reimbursable Cost to Lump Sum cost basis, the requirement as noted herein under Section C.2.d shall be amended.
All other requirements as noted herein (Project Instruction N°14 – Monthly Progress Reporting) shall remain in force.
e. Summary of change orders for month reported plus cumulative totals, as described in Project Instruction N° 8, Section I I.E - Change Control.
f. Analysis of Project Progress (Earned Value), citing Plan, Real Forecast to include:
• Engineering Progress (Earned Value) - Progress Curve
- Staffing Histogram - Productivity
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14. MONTHLY PROGRESS REPORTING
International Bidding Process N° PCI-002-2008-OFP/P ETROPERU
• Procurement Process - Progress Curve
• Construction Progress (Earned Value) - Progress Curve
- Staffing Histogram - Productivity
g. Analysis of project quality issues such as summary of Non-Conformance Reports (NCR) and Corrective Action Reports (CAR), including number issued, number resolved, number outstanding and status of resolution for outstanding NCR’s and CAR’s, describing quality issues for month reported and highlighting most significant issues and resolution proposals.
h. Subcontract information and status as per Project Instruction N° 5, Section III.C.11, Procurement.
i. Procurement and expediting summary status report as described in Project Instruction N° 5, Section III.D.3.a and b, Procurement.
j. Brief summary of Supervised Contractor (SC) progress and performance as per Project Instruction N° 11, Secti on II.A.5, and Responsibility For Other Contracts.
k. Analysis of Site Safety, and Environmental incidents.
l. Site progress photographs.
D. Review
If requested by the EMPLOYER’s Project Manager, Contractor shall submit its Monthly Progress Report for review prior to formal release.
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15. MEASUREMENT OF PERCENTAGE COMPLETION I. OBJECTIVE
This Project Instruction addresses basic requisites and procedures for Contractor's measurement of percent of Work complete.
II. GENERAL REQUIREMENTS
Contractor shall submit at the Contract signature, for the EMPLOYER's review and comment, its standard procedures for physical progress measurement. Subsequent to any modification deemed necessary by the EMPLOYER’s Project Manager, said procedures shall be used to provide project control in time and cost management.
A. Project Control - In conjunction with Time Management (Project Instruction N° 2), Contractor shall apply measurement of percentage physical completion to all project activities to detect unfavorable schedule trends, deficiencies in productivity, potential schedule overruns, and other project execution problem areas.
B. Progress Payment - As set forth in the Agreement, Contractor shall submit at specified intervals invoices for portions of the amounts earned and Mark-Up according to categories specified in the Agreement. Invoiced amount for each category shall be directly proportional to measured actual completion of Work at end of invoice period. Cost Management shall detect unfavorable cost trends, potential cost overruns, and other project execution problems.
Contractor shall ensure that said measured percentages exclude all components attributable to Supervised Contractor progress.
III. SPECIFIC REQUIREMENTS
For the above purposes, Contractor's physical progress measurement procedures shall utilize principles of work breakdown structuring and earned value progress reporting presented below. Contractor shall also cause all Supervised Contractors (See Project Instruction N°11 – Responsibility for Other Contracts) to adhere to said principles for all overall consistency.
A. Work Breakdown Structure (WBS) - Contractor shall subdivide the entire project effort (including Work and responsibilities of the EMPLOYER, Supervised Contractors, and other project participants) into smaller activity packages for increased visibility and control. Said breakdown shall require:
1. A format to completely define relevant and descending control levels by which the project can be most effectively checked and controlled such as:
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15. MEASUREMENT OF PERCENTAGE COMPLETION
a. Participants - Company, Contractor, subcontractors, Supervised Contractors. etc.;
b. Project phase - process design, detailed engineering, procurement, field construction, etc.;
c. Function - engineering, planning, procurement, etc.;
d. Design specification - identified units;
e. Engineering discipline - civil/structural, process, electrical, mechanical, etc.;
f. Engineering discipline activity - general arrangement drawings, model, etc.;
g. Field craft - civil/structural, electrical , mechanical, etc.;
h. Field craft activity - piling/foundations, piping, etc.
2. Work element identification must be completely consistent with Contractor's standard account codes (See Project Instruction N° 10, Section II.A), the Control Estimate, and the project schedule (See Project Instruction N°2 – Time Management) so that each element in the WBS will be identified in the account code, estimate, and schedule. (Vendor activities and level-of-effort items such as supervision are exceptions to this rule.) Said identification shall require:
a. Listing of all elements, designating control levels to which they pertain, and specifying project participant(s) responsible for their execution.
b. Defining each element's content in terms of cost, material quantities, hours of effort, subcontract or consulting assistance, etc.
B. Earned Value (EV) Progress Reporting
Contractor shall report progress in such form and detail as approved by the EMPLOYER’s Project Manager.
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16. MECHANICAL COMPLETION AND FACILITIES TURNOVER I. OBJECTIVE
This instruction covers the requirements of Mechanical Completion and Facilities Turnover and defines attendant Contractor and the EMPLOYER’s responsibilities.
The CONTRACTOR shall include in its Project Preliminary Plan the initial procedures for the phases of Mechanical Completion and Pre-Commissioning1.
II. DEFINITIONS
Following definitions apply to completion and turnover:
• Mechanical Completion means, in respect of the Works and any Section, when all of the following requirements have been satisfied
(a) the Contractor has constructed and installed all Materials, Plant and other equipment, components and systems constituting the Works or the relevant Section (except for completion of minor portions of the Works or Section such as painting, final grading, final insulation, and any other portion of the Works or Section not affecting the Pre-Commissioning, reliability, dependability, operability, safety, compliance with applicable Laws and mechanical and electrical integrity of the Works or Section) in accordance with the Contract;
(b) the Contractor has made available for inspection by the Employer all Permanent Works systems in accordance with the procedures set out in the Master Job Specifications or mutually agreed to at the time by the Contractor and the Employer;
(c) the Works or relevant Section are mechanically and electrically sound, all systems have been flushed, cleaned out and filled as necessary for Pre-Commissioning; and
(d) the Works or relevant Section are in all other respects ready for Pre-Commissioning
• Pre-Commissioning means, in respect of the Works and any Section:
(a) all pre-operations checking and testing required for the start up of the Works or Section; and
(b) all other work and testing forming part of Pre-Commissioning as set out in the Master Job Specification.
1 Question1 – Round 3.
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16. MECHANICAL COMPLETION AND FACILITIES TURNOVER
• Ready for Start-Up (RFSU) means, in respect of the Works and any Section, when all of the following requirements have been satisfied:
(a) the Works or Section have achieved Mechanical Completion;
(b) all Pre-Commissioning for the Works or Section has been completed satisfactorily and all systems have been started up in accordance with the procedures set out in the Master Job Specifications or mutually agreed to at the time by the Contractor and the Employer and can be operated without the use of temporary equipment that is not part of the Works or the relevant Section;
(c) all systems and subsystems relating to the Works or the relevant Section have been installed and the equipment and systems included therein (except for completion of minor portions of the Works or Section such as painting, final grading, final thermal insulation, and any other portion of the Works or Section not affecting the start up or Commissioning of the Works or Section) can be operated:
(i) operated in accordance with Good Engineering and Construction Practices and applicable Law; and
(ii) in a manner that does not void any Subcontractor or system warranty;
(d) the Contractor has provided to the Employer the documents in accordance with Sub-Clause 5.6 [As-Built Work Documents] and Sub-Clause 5.7 [Operation and Maintenance Manuals], of the EPC conditions in respect of the Works or the relevant Section;
(e) the Contractor has provided any training which is required by the Master Job Specification for the Employer's Personnel or the Employer's contractors' personnel who will participate in Commissioning and/or the Guarantee Tests of the Works or the relevant Section (save for any training which the Master Job Specification states may be provided after the commencement of the Guarantee Tests);
(f) the Contractor has supplied the spare parts, special tools, Consumables and other facilities, services and materials required to be delivered in accordance with the Master Job Specification for Commissioning and/or the Guarantee Tests for such part of the Works.
(g) the Works are all in all other respects ready for Commissioning in accordance with the Contract; and
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16. MECHANICAL COMPLETION AND FACILITIES TURNOVER
(h) the Contractor has performed all other obligations expressly stated in the Contract to be pre-conditions, or required, for Ready for Start Up.
• Guarantee Tests means the operative tests to be carried out to determine whether the Processes Guarantees and, where applicable, the Minimum Guarantee Levels have been attained, as more particularly described in Schedule 9 [Performance Guarantees and Guarantee Tests] of the EPC Conditions of Contract. No test which is carried out otherwise than in accordance with the procedure described in that Schedule shall be deemed to be a Guarantee Test.
• Good Performance Guarantee Period means, pursuant to Article 1523 of the Peruvian Civil Code, in respect of completed elements of the Works comprised in each Section, the period commencing on the relevant date of Taking Over and expiring 24 months after that date.
• Reception means, in respect of the Works or any Section, when all of the following requirements have been satisfied in accordance with Article 1780 of the Peruvian Civil Code. The Contractor must acquire regulations, standards and other bibliographic material necessary to comply with its obligations.
(a) Ready for Start Up Certificate has been issued for the Start-up;
(b) the Contractor has completed and Commissioned the Works, or the Works comprised in such Section, except for the items on the Punch List, in accordance with all Contract requirements and the Works or such Section comply with applicable Laws;
(c) either:
(i) the Guarantee Tests have been passed and the Performance Guarantees attained or satisfied; or
(ii) the Guarantee Tests have been passed and the Performance Guarantees attained or satisfied except only for the Performance Guarantees for which the Contractor has:
(A) attained the Minimum Performance Levels; and
(B) paid or allowed Penalties for non-execution to the Employer in accordance with the Contract in respect of its failure to attain the corresponding Guarantees;
(d) the Contractor has supplied the spare parts, special tools and Consumables required to be provided to the Reception under Sub-Clause 7.12 of the EPC Conditions and replaced any spare parts, special tools and Consumables
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used or consumed during the carrying out of Guarantee Tests which are required to be replaced pursuant to the Contract;
(e) the Contractor has completed its training obligations to be effected prior to Taking Over of the Works or Section for the Employer's Personnel and other nominees of the Employer;
(f) the Contractor has delivered to the Employer the documents and data required by Sub-Clauses 5.6 and 5.7 of the EPC Conditions; and
(g) all other requirements or pre-conditions for Taking Over stated in the Contract have been satisfied.