Definition Study – Defintion Of EPC Terms Oil & Gas Industy

ACCEPTABLE QUALITY LEVEL
[R]∙ The AQL is the maximum percent defective (or the maximum number of defects per hundred units) that, for purposes of sampling inspection, can be consid­ered satisfactory as a process average

ACCEPTANCE
[R] An act of acknowledging that an activity or item has been reviewed per established requirements without noting any non­-approved nonconformances. Acceptance does not imply assumption of responsibilities, endorsing or adding positive authorization.

ACCEPTANCE CRITERIA

[R] A limit is placed on the variation permit­ted in the characteristics of an item expressed in definitive engineering terms such as dimensional tolerances, chemical composition limits, density and size of defect, temperature ranges, time limits, operating parameters and other similar characteristics.

ACCOUNT CODE (See also CODE OF ACCOUNTS)
[B] The code of accounts enables estimating, charging, reporting and forecasting items of equipment, materials, subcontract and labor cost. The individual account codes should break costs down into many small pieces, but without creating excessive and confusing detail.
For each category of equipment, material and service, the approved bidders list is set up by code of accounts. Thus for each object (deliverable) of work, it is recorded which suppliers are on the list, regardless for which project.

[A] The code of account identifies the object of the work, i.e. the type of deliverable. The code of account is the link between WBS( Work Breakdown Structure), OBS (Organization Breakdown Structure), CBS (Cost Breakdown Structure), PDS (Plant Data Structure), and enables to control a project on costs.
The code of account, being the universal link, can be used in identifying WBS elements (for example to identify an activity), OBS elements (for example to determine who delivers what), CBS elements (for example to identify the level of cost consolidation) and PDS elements (for example to link materials with cost and budget).

[B] Code of accounts is applied for
- tagging and identification of equipment and material
- numbering of technical documents, specs, data sheets, drawings, requisitions and purchase orders
- procurement commodity codes
- scheduling activities in E, P, C
- estimating equipment, materials and services
- recording manhours on timesheets in the field and in the home office
- recording project scope changes
- project accounting and invoices
- project cost and progress reporting
- project document filing

ACCURACY
[R] Distinguisehd from precision, the degree of conformity of a measured or calculated value to some recognized stan­dard or specified value. This concept involves the systematic error of an opera­tion, which is seldom negligible

ACTIVITY
[W][A] Predefined series of actions, having a start, a duration, an end and predefined deliverables, using human, financial or other necessary means.
[A] Action through time, having a start and an end, normally resulting into a predefined deliverable.
[D] Predefined series of actions, using human, financial or other means.
[S] A certain level in a work breakdown structure.
[P] Task, function or decision that requires work and consumes time.
[A] To an activity is assigned resources. Resources cost money. An activity results into deliverables. Deliverables cost money. The total project budget minus the total money spent (cost) is profit (if greater than zero) or loss (if less than zero)
[A] The owner of an activity is responsible for that activity from beginning till end.
All resources working on a specific activity must book on that activity account, even though the resources may be from different organizational units or disciplines.
[O] An activity should basically be identified by the intersection of WBS, OBS and CBS.

ACTIVITY BREAKDOWN
[B] Structuring of an activity into smaller activities, and possibly again these smaller activities into smaller ones.

ACTIVITY CLASS
[M] Same as ‘task category’. It bundles certain activities with common characteristics (user defined) together in that the activity class or task category specifies the kind of work.

ACTIVITY LEVEL(S)
[A] For example : Project, job, activity class (=task category), activity.

ACTIVITY REMARK
[S] Commentary text related with the activity.

ACTUAL COST OF WORK PERFORMED (= ACWP)
[S] The cost of the completed portion of tasks based on ACTUAL USAGE.
[B] The costs actually incurred and applied or distributed in accomplishing the work performed within a given time period.
[A] The ACWP consists of the direct and indirect costs applicable to the contract.
[M] The cost actually incurred for the work accomplished during a specific timeperiod (current period) or accumulated up to a certain point in time (cumulative to date).

ACTUAL PERCENT SPENT
[M] Percent of total budget actually spent on the task or activity to date.

ACTUAL USAGE
[S] The resource usage expended in completing or partially completing a task (activity).

ADVERSE CONDITION
[R] A condition not conforming to procedures, codes, standards and/or other documents applicable for a project.

ALLOCATED
[M] See also ‘allotted’ and ‘assigned’. To use for a specific purpose, for example to allocate resources to an activity. In earlier PROMISYS documentation, ‘allotted’ and ‘allocated’ are used randomly.

ALLOTTED
[D] Not exactly the same as ‘allocated’ or ‘assigned’. It means to keep or have something for a specific purpose, for example to keep a budget for human resources so that the human resources have the budget.
[P] In earlier PROMISYS documentation, ‘allotted’ and ‘allocated’ are used randomly.

ALLOY
[R] Any material whose P number is three or higher as defined in ASME, Section IX.

ALLOY VERIFICATION
[R] Verification of the presence (qualitative) and if required quantities of specified elements in alloy materials or consumables used in construction of an item using an accepted analyzing method.

ANALYSIS
[B] A separating or breaking up of any whole into parts so as to find out their nature, proportion, function and relationship.
[O] For example : situational analysis – get the picture of the project and zoom into a problem to be solved – what went wrong and why; potential problem spotting – what might happen if.

APPROVAL
[R] Statement that the product, document or service is in accordance with specified requirements.

APPROVED VENDOR LIST
[R] A procurement document prepared by Procure­ment Department, reviewed by Engineering and approved by the Project Manager. This list is the sole basis on which bids are invited.

AREA / UNIT (see also WBS)
[O] Logical part of a plant. For Company, an area may have one or more units.
[A] Company Project Controls tends to consider an area to be the same as a unit because usually area versus unit is one-to-one, hence the use ‘AREA/UNIT’.
[B] There are different kinds of areas :
- Scheduling area, based on geography
- Cost area
A scheduling area can be considered as a project that can be engineered, procured and constructed independently from the next area.
A scheduling area cannot be in more than one cost area. Scheduling areas can be summed up into a cost area. Boundaries for a scheduling area are based on geography and never on systems or accounting codes.
[B] In a WBS the first subdivision of for example a hydrocarbon processing complex may consist of process facilities and offsite facilities.
The second subdivision would be the individual process units and the individual offsite units.
The third subdivision would be a geographical subdivision (area) within each of the units. Thus a unit may have one or more areas.

ASSIGNED
[D] Not exactly the same ‘allotted’ or ‘allocated’. It means either to delegate or to have or to use for a specific purpose.
[S] Project management software packages, such as PMW, use assign in the context of resources and tasks/activities.

AS-BUILT DATA
[R] Documented data that describes the condi­tion actually achieved in a product (ANSI N45.2).

AT COMPLETION VARIANCE (see VARIANCE AT COMPLETION)

AUDIT
[R] A documented activity performed in accor­dance with written procedures or check lists to verify, by examination and evalua­tion of objective evidence, that applicable elements of the quality assurance program have been developed, documented, and effectively implemented in accordance with specified requirements. An audit does not include surveillance or inspection for the purpose of process control or product acceptance (ISO 6215, BS 5882 and ANSI N45.2*) .
Note: The examination and evaluation can cover quality in general, product quality, process quality, as well as quality assur­ance system itself.

AUDITEE
[R] The individual, organization or part of an organization being audited.

AUDITOR
[R] An auditor is any individual who performs any portion of an audit (including lead auditors), who is qualified to perform the audit, who is not necessarily a member of the QA Department (such as technical specialists, and others such as management representatives and auditors in training) and who shall not be directly responsible for the activities being audited.

AUDIT TEAM
[R] One or more auditors, including a Lead Auditor, who are authorized to perform an audit (IAEA-50-SG-QA10).

AUTHORITY
[R] Any recognized body that has legal juris­diction over the design, fabrication, inspection, installation or operation of a facility. The legal jurisdiction may result from either governmental acts or control requirements.

AUTHORIZED
[R] Vested by a person or agency having the power or right to take a decision with said power or right on behalf of Governments, insurance companies with reference to written, legally accepted documents (such as codes, specifications etc.) or whose opinion is accepted or is recognized to be expert on this subject.

AUTHORIZED INSPECTION
[R] Inspection by an authorized inspector to confirm compliance with a legal code.

AUTHORIZED INSPECTION AGENCY
[R] An agency authorized to provide inspection services that confirm compliance with a code. The requirements for this inspection is part of the code as well as the require­ments for authorizing the agency.

AUTHORIZED INSPECTOR
[R] An inspector authorized to confirm compli­ance with a legal code. The authorized inspector must be employed by an authorized inspection agency and qualified as required by the legal code.

BARCHART, HORIZONTAL -
[S] See also ‘Gantt chart’.

BARCHART, VERTICAL -
[O] Same as histogram

BASELINE
[W][B] Snapshot of the original project plan or any subset of it, saved to serve as a reference. It allows comparisons between project progress and earlier estimates. As the project plan proceeds, actuals can be compared against the original plan to determine slippages and variances and to measure performance. The baseline reflects the scope definition, the estimate and the planned schedule.
[S] Project data preserved for later comparison with the current plan.
[O] Only when cost accounts for the entire project are approved, the baseline can be created.

BENCHMARK
[A] Qualitative measurement to see to which extent a goal has been reached.
[D] See also ‘milestone’. Reference point in surveying.

BILLING RATE
[S] The cost of resource usage per unit of measure (hours, days, quantity, etc).

BREAKDOWN
[P] Structure into levels of detail. Breakdowns can be applied to activity, deliverable, resource, cost and possibly budget. Project management software packages, such as PMW, structure a project into phases, activities and tasks.
[W][A] LCV planning & scheduling breakdown levels are :
- PMS project management schedule (level-I)
- POS project overall schedule (level-II)
- PDS project detail schedule (level-III)
- PWS project work schedule (level-IV)
- CWS construction work schedule (also level-IV)

BUDGET (see also PERFORMANCE & FORECASTING)
[A] Budget information for input consists of
- original budget
- approved changes external
- approved changes internal
- pending changes
- estimate to complete (including pending changes)
Budget information output consists of
- revised or current budget
- expected budget
- forecast at completion
- overrun/underrun
- deteriorization/improvement last period (forecast last period minus forecast actual period)
[P] Total number of hours allocated to a project phase called activity.
[P] Is assigned to an organizational unit to execute predefined activities.
[A] Available manhours to be consumed by resources who are working on activities in order to produce deliverables. Budget can also be money available to support deliverables (e.g. services, supplies, etc.), in that for a deliverable to be produced, materials must be purchased which generates cost that must be budgeted.
[P] [for performance = actual performance] MANHOURS FORECAST TO COMPLETE = (ALLOCATED MANHOURS * ACTUAL PERFORMANCE) – ACTUAL MANHOURS.
[P] [for performance = 1:] MANHOURS FORECAST TO COMPLETE = ALLOCATED MANHOURS * ((100 – ACTUAL PHYSICAL PROGRESS) / 100).
[P] [for performance = user defined:] MANHOURS FORECAST TO COMPLETE = (ALLOCATED MANHOURS * USER DEFINED PERFORMANCE) – ACTUAL HOURS.
[P] [for performance = actual performance:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * ACTUAL PERFORMANCE.
[P] [for performance = 1:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * ((100 – ACTUAL PHYSICAL PROGRESS) / 100) + ACTUAL MANHOURS.
[P] [for performance = 1:] MANHOURS FORECAST AT COMPLETION =
ACTUAL MANHOURS + ALLOCATED MANHOURS * (100 – ACTUAL PHYSICAL PROGRESS) / 100.
[P] [for performance = user defined:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * USER DEFINED PERFORMANCE.
[P] REVISED BUDGET = MANHOURS ORIGINAL + MANHOURS CHANGES INTERNAL + MANHOURS CHANGES EXTERNAL.
[A] EXPECTED BUDGET = REVISED BUDGET + MANHOURS CHANGES PENDING.
[A] BUDGET FORECAST AT COMPLETION = MANHOURS ACTUAL + MANHOURS ESTIMATED AT COMPLETION.
[A] BUDGET OVERRUN OR UNDERRUN = FORECAST AT COMPLETION – REVISED (OR CURRENT) BUDGET.
[A] DETERIORATION OR IMPROVEMENT LAST PERIOD = BUDGET FORECAST AT COMPLETION LAST PERIOD – BUDGET FORECAST AT COMPLETION THIS PERIOD.

BUDGET , APPROVED -
[O] Official okay for revised available manhours.
[A] Only based on approved or old budget, prediction should be done, not on unapproved new budget.

BUDGET AT COMPLETION
[S] The total baseline budget of a project.
[A] BUDGET ESTIMATED AT COMPLETION = MANHOURS ACTUAL + MANHOURS ESTIMATED AT COMPLETION.

BUDGET , EXPECTED
[A] EXPECTED BUDGET = REVISED BUDGET + CUMULATIVE PENDING CHANGE ORDER BUDGET.

BUDGET INDEX
[B] BUDGET INDEX = (ACTUAL + FORECAST) / ORIGINAL BUDGET;

BUDGET , ORIGINAL -
[S] Initial estimate (baseline) of available manhours.

BUDGET , REVISED -
[O] New estimate of available manhours. Must be approved prior to be used.
[A] REVISED BUDGET = MANHOURS ORIGINAL + CUMULATED MANHOURS CHANGES INTERNAL + CUMULATED MANHOURS CHANGES EXTERNAL.

BUDGETED COST OF WORK PERFORMED (= BCWP) (see also ACWP)
[S] The cost of the completed portion of tasks/activities based on the baseline usage data. Also called EARNED VALUE.
[B] The value of completed work. It reflects the progress made along the contract plan.
BCWP = BUDGET FOR ALL COMPLETED WORK + COMPLETED PORTIONS OF IN-PROGRESS WORK.
[B] BCWP, when compared with ACWP (actual cost of work performed), indicates whether the progress achieved is worth the money spent.
[A] The BCWP is the earned value, i.e. the planned value of the work accomplished.
[M] Earned value, or the value of work performed during a specific period of time (current period) or accumulated up to a certain time (cumulative to date). BCWP is reported in monetary units

BUDGETED COST OF WORK SCHEDULED (= BCWS)
[S] The baseline value of a defined portion of the project’s BUDGET AT COMPLETION (BAC). This portion is defined as a time period from the PROJECT START DATE up through the PROJECT AS-OF-DATE.
[A] The BCWS is the time-phased budget plan which represents the work plan.
[M]

BULK MATERIALS
[B] For example : civil/foundations, structures, pipes, electrical, instruments, insulation.

BUSINESS OBJECTIVE
[A] The objective that an enterprise wants to realize. Business objectives are supported by one or more business functions.

BUSINESS FUNCTION
[A] The definition of a cluster of work performed by an organization to obtain a certain result or situation, which is defined to entirely or partly accomplish a business objective. The work process in an enterprise can decomposed into independent subprocesses; these are called business functions. Business functions are necessary for realizing the business objectives.
[A] A business function is independent of how the work process in an enterprise is delegated to different organizational units. The decomposition into business functions may or may not be reflected in the organizational units of an enterprise.
[A] Business functions are generally considered more stable than organizational units because the organizational units can be changed at any time. Business functions support, however, business objectives. Therefore, business functions will only change if the business objectives change (e.g. because market demands change).

CALENDAR , GLOBAL -
[S] Record of default holidays and business days applicable to all projects. When creating a new project, the PROJECT CALENDAR starts with the same settings as the GLOBAL CALENDAR, but remains independent from it.

CALENDAR , PROJECT -
[S] Record of default holidays and business days applicable to a specific project. Normally takes the values from the global calendar. Changes can be made, however, independently from the global calendar.

CALENDAR , RESOURCE -
[S] Record of non-standard holidays, other periods of zero-availability, and business days applicable to an individual resource. Normally takes the values from the global calendar.

CALIBRATION
[R] The comparison of two measuring tools or instruments, of which one is a standard with known accuracy and traceable to a higher national or international standard, in order to discover, record and eliminate possible inaccuracy of the measuring tools or instruments which are compared with the standard (NS 5801).

CALIBRATION CERTIFICATE
[R] A document that verifies the accuracy of the instrument or equipment used in testing in accordance with a known standard.

CASH FLOW
[O] Usually cumulated and projected across years. Shows cost (money out) and benefit (money in) during execution of the project.

CBS
[W] Cost breakdown structure, representing the project’s costs of the deliverables, using codes of account

CERTIFICATE OF COMPLIANCE
[R] A written statement, signed by a qualified party, attesting that the items or services are in accordance with specified require­ments and accompanied by additional infor­mation to substantiate the statement (ANSI N45.2).

CERTFICATE OF CONFORMANCE
[R] A written statement, signed by a qualified party, certifying that items or services comply with specific requirements (ANSI N45.2).

CERTFICATION
[R] A written attestation that the applicable specified requirements were met, stating the means of verification (e.g. review, inspection, test, witness), which is signed or stamped and dated by the certifying party. Certifications must identify the purchase order and item(s) covered.

CERTFIFIED
[R] The status of a document for which for construction quali­fied engineers formally attest by signa­ture, that the document fulfills the requirements needed for detailed design, purchase or construction.

CERTIFIED MILL TEST REPORT(CMTR)
[R] A document generated by a vendor specifying the requirements as noted in the Purchase Order documentation or codes and it shall include chemical analysis or mechanical, electrical or dimensional properties. CMTR’s are not acceptable unless conveying the results of testing by an approved independent testing authority. (See also: Verified Certified Mill Test Report).

CERTFIED TEST REPORT
[R] A written and signed document, approved by a qualified party, that contains sufficient data and information to verify the actual properties of items and the actual results of all required tests (ANSI N45.2).

CHANGE NOTICE
[O] Report of deviation from the scope of contract.
[B] Change must be resisted by the project management and only be allowed if it can be proved that the project deliverable will not work without the change and if the change has been fully recorded and authorized by the owner who has accepted the impact upon cost and schedule. A clear distinction between ‘must’ and ‘want’ be made at all times.
Changes have detrimental effect on project performance, such as increasing cost, causing of delay, reducing productivity and worsening of relationships among those involved.

CHANGE ORDER
[O] Deviation, authorized by client and LCV, from the scope of contract.

CHARACTERISTIC
[R] A characteristic is an inherent and measur­able property of an item. Such a property may be electrical, mechanical, thermal, hydraulic, electromagnetic, or nuclear and can be expressed as a value for stated or recognized conditions. A characteristic may also be a set of related values of a property, usually shown in graphical form.

CHART OF ACCOUNTS
[W] representing the overall costs of the company at corporate level
Each country/office should establish a link (relation) between the DETAIL CODE OF ACCOUNT and the CHART OF ACCOUNTS. That is the only practical way to make the EPC contractor worldwide adhere to the headquarters CHART OF ACCOUNTS. This concept is already practiced by most offices. Only, a uniform coding structure cq format should be agreed upon.
Classification, such as for example ‘offshore’ versus ‘onshore’, can be expressed in the value of jobnumber, which eliminates the need for an additional coding element.
The company charts of accounts should reflect the type(s) of business we are in.

CHECK
[R] Verification of conformance to a specified requirement by review or inspection. The checks’ intensity, varying from complete to random sampling, depends on the specified requirements. These requirements will be specified in advance.

CHECKING DESIGN
[R] Is the detailed technical examination of a document to make certain that it is accu­rate and to ensure that all the technical design inputs, design bases and other design criteria have been correctly incor­porated (IAEA-50-SG-QA6).

CHEMICAL ANALYSIS (CA)
[R] A product, check or verification analysis of the semi-finished or finished product, usually for the purpose of determining conformance to the specification require­ments (ASTM-A751).

CLIENT
[O] A legal entity in the market place, to which Company offers full scope EPC Projects or EPC services.
[R] The organization to which the engineering organization has contracted its services to engineer (design and analyze) designated items or systems contract services may also include procurement and construction of the designated items or systems

CODE
[R] A standard which is recommended or imposed by a regulatory body (ISO 6215, BS 5882).
Note: This definition includes “rules” and regulations”.

CODE OF ACCOUNTS
[W] The codes of account structure is usually as follows :

PROJECT xxxxx (not really needed because jobnumbers are unique)
JOB xxxxx
UNIT xx (always 1:1 with area)
MAJOR CODE OF ACCOUNT x
SUB CODE OF ACCOUNT x
DETAIL CODE OF ACCOUNT xx
TYPE OF EXPENSE xxxxx
This is based on the functional layers :
- Project Management using code of accounts (outer layer)
Cost control (inner layer)
versus
Project Accounting (Inner layer)
General Accounting using company chart of accounts (outer layer)
where Cost Control is subpart of Project Management
and Project Accounting is subpart of General Accounting
and where Cost Control and Project Accounting are interrelated as to ‘interface’ Project Management with General Accounting.

The inner layers connect the outer layers, i.e. are interfaces between the outer layers.
Often there are overlaps between the WBS, CBS and OBS, largely caused by the inclusion of organizational elements in the WBS and the CBS; in other words, the structures are not normalized, i.e. not pure.
The things that need to be done first are :
- Normalize/purify the codes of account in a way that there are no dependencies on organization
- Normalize/purify the work breakdown structure in a way that there are no dependencies on organization
Prerequisites are :
- The WBS must reflect purely the work in order to map activities against. The WBS must not have any organizational elements.
- The CBS must reflect purely the cost of deliverables; the CBS should not have any organizational elements.
- The OBS must reflect purely the organization, i.e. organizational resources only.

Once the structures are normalized, i.e. purified, they can be maintained independently from one another and can be related to one another without any overlap.
The new codes of account structure is therefore as follows :
PROJECT xxxxx (not really needed because jobnumbers are unique)
JOB xxxxx
UNIT xx (always 1:1 with area)
MAJOR CODE OF ACCOUNT x
SUB CODE OF ACCOUNT x
DETAIL CODE OF ACCOUNT xx
Company CHART OF ACCOUNTS (format/structure to be determined)

So instead of TYPE OF EXPENSE there will be company CHART OF ACCOUNTS.

The advantages of this structure are :
- there is automatically a relationship between the CBS and the WBS
- because via the RAM the relationship between the OBS and the WBS is established, there is now automatically a relationship between the OBS and the CBS
- because the CBS is related with the company chart fo accounts, there is now automatically a relationship between the OBS and the company CHART OF ACCOUNTS
- and there is automatically a relationship between the WBS and the company CHART OF ACCOUNTS
Thus it has become possible to produce any composite overview, for example
- who (OBS) does what (WBS) against what deliverables costs (CBS)
- how much did the company spend (CHART OF ACCOUNTS) on engineering (OBS)
- how much did the company spend (CHART OF ACCOUNTS) on materials (CBS) for what type of units (WBS)
In order to ensure supporting multi-office projects and corporate finacial consolidation, each country/office should adhere to the same MAJOR CODE OF ACCOUNT and the same SUB CODE OF ACCOUNT, but be free in the way using the DETAIL CODE OF ACCOUNT.
This means that there should be a uniform coding for MAJOR CODE OF ACCOUNT and for SUB CODE OF ACCOUNT world wide.
Each country/office should be responsible for relating the DETAIL CODE OF ACCOUNT with the company CHART OF ACCOUNTS.
As far as it is not the case, the company CHART OF ACCOUNTS should be adapted to reflect EPC business.

COMMISSIONING
[R] The initial testing and start-up process by which a plant is put into operation (ISO 6215*, BS 5882).

COMMODITY
[A] All physical parts of a plant, that are necessary to accomplish and support the operational configuration of all equipment pieces.

COMPETENT PERSON
[R] A competent person is one who would be recognized as competent by those normally engaged in or responsible for similar activities. If the task is one usually entrusted to persons holding qualifications bestowed by, or recognized by, a profes­sional body, he is expected to possess such qualifications, and where experience is normally required in addition to qualifica­tions, he is expected to have had such experience. Similar principles are applica­ble where the individual can be expected to be skilled in a particular trade or other activity.

CONFORMITY
[R] The fulfillment of a specified (see also: Nonconformance) requirement by a quality characteristic of an item or service, the assessment of which does not depend essentially on the passage of time (BS 4778).

CONSTRUCTION PHASE
[R] A period which commences with receipt of items at the construction site and ends when the components and systems are ready for turnover to operations personnel (ANSI N45.2).

CONSTRAINED , TIME -
[S] If an activity or task is time-constrained, it must be finished within a specific amount of time.
3
CONSTRAINED , RESOURCE -
[S] If an activity or task is resource-constrained, it must be finished with the resources that are made available to the task or activity.

CONTINGENCY
[B] A provision for an occurrence dependent on chance, accident or uncertain event.
There are always possibilities of errors due to
- engineering omissions or errors
- cost and rate changes
- construction problems
- schedule slippages
- miscellaneous unforeseens
- estimating inaccuracies
Not all things will go wrong, however, an average contingency could be determined for each account. The total contingency (overall) could be available to the project as a whole.
Problem areas in each account code should be thought of. The average contingency percent decreases at each next stage of the project, for example
- stage 0 initial concept prior to finalization of process design
30 %
- stage 1 bulk materials factored but not priced
20 %
- stage 2 completion of basic engineering, p&ids, plot plans, etc.,and preliminary take-offs with quoted prices
13 %
- stage 3 engineering & design complete with final quantities taken-off and purchase orders placed
8 %
- stage 4 mechanical erection complete
4 %
- stage 5 final completion
0 %

CONTRACT
[R] A document which governs the relationship between client and contractor. Within Badger the following types of contracts are used:
Cost Plus Open Ended
Cost Plus Not to Exceed
Cost Plus Guaranteed Maximum
Cost Plus Fixed Fee
Cost Plus Incentive Fee
Firm Fixed Price
Fixed Price with Reimbursable Expenses
Time and Materials
Time and Materials Open Ended

CONTRACT BUDGET BASE (CBB)
[M] Sum of performance measurement baseline and budgeted management reserve. It is the total dollar amount budgeted for the contract.

CONTRACT DOCUMENTS
[R] All documents incorporated in the contract or subcontract package and/or referred to therein, which forms the whole of the contract or subcontract between Badger and its Contractor.

CONTRACT COST VARIANCE AT COMPLETION
[M] Substraction of the latest revised estimate at completion from the performance measurement baseline.

CONTRACT WORK BREAKDOWN STRUCTURE (CWBS)
[O] The CWBS is critical to effective performance measurement and considerable care needs to be exercised in its preparation.
Integration of the CWBS and OBS at the cost account level may be visualized as a matrix with the functional organizations on one axis and the applicable CWBS elements on the other axis; each organization may then be clearly identified with the work for which it is responsible. Treatment as individual CWBS elements and cost accounts facilitates performance measurement.

CONTRACTOR
[R] Any organization or individual under contract supplying items or services to the client. It may include the terms Supplier, Subcontractor, Fabricator and subtier levels of these where appropriate (ANSI N45.2).

CONTROLLING
[R] The continuous assessment of the most effective use of money, material and resources to maintain a smooth progression towards completion.

CORRECTIVE ACTION
[R] The analysis and implementation of the most effective action to recover or reverseany adverse trend of progress, productivity or cash flow.
[R] Those planned actions taken to ensure that conditions adverse to the achievement of quality requirements are identified and corrected, such as item and equipment malfunctions, deficiencies, deviations, and nonconformances. For significant conditions adverse to quality requirements, the program shall provide that the cause of such conditions be determined and corrective actions taken to prevent repetition (ISO 6215).

COST
[A] Cost can be subdivided into
- cost related to manhours
- cost for materials
- cost for subcontracts
- other cost
Cost predictions are normally channeled to Accounting.

COST ACCOUNT
[B] A project can be broken down into segments to support performance analysis. Such a segment may have one or more work packages. Each cost account is a natural subdivision of the work on a project and should have formally assigned to it the following
- description of the scope of work to be performed
- who is responsible for this work
- the resources required
- a plan, with scheduled starts & finishes
- the work packages that make up (i.e. are below) the cost account
[O] At cost account level, BCWS, BCWP and ACWP are determined.

COST BREAKDOWN STRUCTURE (CBS)
[O] The CBS also includes information about availability and rates of resources.
[O] The cost breakdown structure (cost control structure) is located at the lowest level of the WBS & OBS and its objective is to control the original budget.
The CBS coding structure should be introduced to compare the original budget and the actual costs per work package. The CBS structure depends on the way cost control takes place; for example it can be performed per cost group, cost center or cost element.

COST IN A PROJECT , ELEMENTS OF CAPITAL COST
[B] The following table illustrates typical elements of capital cost proportions in a project :

% of total

LOW
TYPICAL
HIGH
Home office
8
10
12
Equipment
20
30
40
Commodities
25
31
40
Direct labor
15
20
25
Construction indirects
8
9
12

Total

100

COST CENTER
[B] Area of responsibility as it appears in the responsibility matrix.

COST CONTROL
[B] The objective of cost control is to keep the project within budget, which is achieved by early warning on deviations, and the information to take corrective action before costs are out of control.
Cost control refers to costs before, during and after the fact.
The elements of cost control are :
- preliminary estimate must be available at the beginning of design and converted into a preliminary budget
- code of accounts should be prepared so that the cost of each item of equipment, material and labor cost can be estimated, charged and forecasted for the project
- cost trend estimates should include the amount that purchase commitments are over/under budget, and the cost effects of changes in scope, quantities, design criteria and schedule
- definitive estimate should contain the best assessment possible of the effects of inflation; principal uncertainties are construction direct & indirect labor costs and the cost of completing design
- contingency should not be applied as insurance against overrun but rather to cover cost of changes
- management review concerning total definite estimate, contingency and change allowance
- cost forecasting for every account, including those that are under budget
- change orders to be reviewed and approved before implementation; cost effects on each affected code of account should be added to the budget
- schedule monitoring on a monthly basis; activities significant behind schedule will cause increase cost during time.
[B] Cost control is the maintenance of costs within budget by taking corrective actions where necessary, as indicated by the analysis of predicted cost relative to budget.
Cost control is only effective if all personnel involved is cost conscious; for example if a drawing is reviewed, often areas of savings can be found which repeated many times can lead to major savings.
Cost control for Construction seems more evident, because of the physical objects (materials), however, optimization of the design has generally greater impact on the overall project.

COST CONTROL FOR COMMODITIES
[B] Commodity price control can be achieved by :
- Obtain at least 3 competitive quotes; review the market ahead of time to determine which suppliers need work
- Do not issue inquiries until specifications and quantities are firm as to avoid price change after the PO has been placed
- Obtain fixed price quotes or fixed unit prices; do not accept escalation clauses or other price adjustment clauses which cannot be easily monitored
- Do not place orders which are open ended or where the fabricator can invoice to his measurement, in particular for pipe fabrication

COST CONTROL FOR EQUIPMENT
[B] Equipment cost control can be achieved by :
- Do not issue inquiries prematurely; wait until equipment definition is firm so that sellers can bid on definite information
- Obtain competitive bids from at least 3 sellers; search the market ahead of time to determine which vendor shops need work
- Obtain firm price quotations; if escalation clauses are unavoidable, specify an escalation formula which can be monitored and relates to the required delivery
- If attachments may be added or changed, obtain fixed unit prices for these additions prior to placing the PO
- If spares are required, obtain firm price quotations with the bid or before placement of the PO

COST FORECASTING
[B] Final cost can be forecasted for already started individual cost accounts, work breakdown structure items, and organizational cost accounts.
The following elements are used in cost forecasting :
- Performance (index) to date (CPI) = BCWP/ACWP
- Budgeted cost for the remaining work = BAC – BCWP
- Estimate to complete (ETC) = (BAC – BCWP) / CPI
- Forecast cost at completion (EAC) = ACWP + ETC
For the not yet started segments, no forecast can be made, except to take the average overall performance, taking extrapolative forecast as a starting point; for example the CPI for a department involved with a specific cost account can be taken as the initial CPI for that cost account, thus dividing the CPI into the budgeted cost for the remaining work gives the cost forecast for that account.

COST OF WORK PERFORMED (SPI, CPI)
[S] Cumulative actual usage of manhours from the start of the task or activity up to the current project date times billing rate.
[A] MANHOURS COST ESTIMATED AT COMPLETION = {BUDGET} BUDGET FORECAST AT COMPLETION * {RESOURCE} BILLING RATE OF MEMBER ROLE.
[B] COST PERFORMANCE INDEX = BUDGETED COST OF WORK PERFORMED / ACTUAL COST OF WORK PERFORMED;
If CPI (cost performance index) is less than 1, then it can be safely assumed that there is a problem concerning cost.
[M] CPI % = (BCWP / ACWP) * 100; if CPI falls below 100 % then it indicates that less than a dollar’s worth of work was accomplished for every dollar spent.
The CPI is an indicator of spending performance to date and indicates the cost efficiency of a contract or an item as a percentage of the earned value.
[B] SCHEDULED PERFORMANCE INDEX = BUDGETED COST OF WORK PERFORMED / BUDGETED COST OF WORK SCHEDULED;
If SPI (scheduled performance index) is less than 1, then it can be safely assumed that there is a problem concerning budget.
[M] SPI % = (BCWP / BCWS) * 100; if SPI falls below 100 % then it indicates that less work has been accomplished than planned.
[B] If ACWP (actual cost of work performed) is greater than BCWP (budgeted cost of work performed), then CV (cost variance) is less than 0 (zero), thus over cost.
[B] If ACWP (actual cost of work performed) is less than BCWP (budgeted cost of work performed), then CV (cost variance) is greater than 0 (zero), thus under cost.

COST PLUS OPEN ENDED (CPOE)
[R] Cost-plus-open-ended contracts provide for payment of allowable costs plus negotiated burden rates on labour and/or costs, without any funding limitation on expenditures.

COST PLUS NOT TO EXCEED (CPNTE)
[R] Cost-plus-not-to-exceed contracts provide for payment of allowable costs plus negotiated burden rates on labour and/or costs, subject to a limitation on the cumulative expenditures. Contractually, the company is not obliged to incur costs and the customer is not obligated to reimburse the company beyond the estimated funding limit.

COST PLUS GUARANTEED MAXIMUM CPGM)
[R] Cost Plus Guaranteed Maximum price contracts provide for payment of allowable costs plus negotiated burden rates on labour and/or costs up to a ceiling price. The Guaranteed Maximum price differs from a not-to-exceed contract in that completion of the contract is required regardless of cost. Sharing agreements may or may not be part of the contract.

COST PLUS FIXED FEE (CPFF)
[R] Cost-plus-fixed-fee contracts provide for payment of allowable costs plus negotiated burden rates on labour plus a negotiated lump sum fee.

COST PLUS INCENTIVE FEE (CPIF)
[R] Cost-plus-incentive-fee contracts provide for payment of allowable costs plus negotiated burden rates on labour and/or costs plus incentive fee amount based upon specific evaluation criteria.

COST VARIANCE (see also SCHEDULE VARIANCE)
[M] A negative cost variance indicates overspending, i.e. the monetary value of the work accomplished is less than the amount spent.
A positive cost variance indicates cost savings, i.e. less than a dollar was spent to accomplish a dollar’s worth of work.
[A] Cost variance is the difference between the budgeted cost of work performed and the actual cost of work performed. A negative value indicates that costs have exceeded the baseline plan; a positive value indicates cost savings.
[B] A negative cost variance indicates a poor performance.
[B] The cost variance can be graphically shown by S-curves; the cost variance is measured on the Y-axis (cost), the schedule variance on the X-axis (time).
[S] COST VARIANCE = EARNED VALUE – ACTUAL COST;
[B] COST VARIANCE = BUDGETED COST OF WORK PERFORMED – ACTUAL COST OF WORK PERFORMED; i.e. CV = BCWP – ACWP;

COSTS
[B] Costs can be subdivided into :
- Home office costs, such as
. salaries & benefits of personnel (engineering, procurement and supporting services)
. overheads for accommodation, facilities and non-chargeable support staff
. miscellaneous, i.e. reproduction, communications, travel, business expenses, computer time
- Construction costs, such as
. wages & benefits of direct hire construction labor
. salaries & benefits & expenses of construction supervisors
. rental, purchase and maintenance of construction tools & equipment
. provision of temporary construction facilities, buildings, utilities, construction supplies and protection materials
In all major subdivisions, the salaries/wages is the major cost that can be controlled

C/SCSC
[B] Integrated approach to project controls that interrelates the work scope definition, the schedule, the estimate or budget, the physical performance, and the actual expenditure.
Basically it comprises the following steps :
- Define the work, using a WBS
- Define coding and numbering, e.g. WBS levels, organizational units, types of activities, etc.
- Define the organization, using an OBS
- Assign responsibility for execution of the work (WBS)
- Schedule the work
- Prepare estimates/budgets per resource
- Establish performance baselines, i.e. integrate the schedule and the cost elements to create performance baselines for each accountcode in the WBS
- Record actual costs (e.g. by WBS account code, by organizational unit, etc.)
- Measure performance (e.g. manhours, costs, quantities, etc. relative to the estimate or budget)
- Compare planned progress (i.e. budgeted cost of work scheduled [BCWS]), earned value (i.e. physical progress, budgeted cost of work performed [BCWP]), and actual cost (actual cost of work performed [ACWP], obtained from Accounting)
- Monitoring and corrective actions.
[O] Contractors also benefit from management control systems employing the C/SCSC approach for performance measurement. Benefits experienced by contractors are
- improved operational discipline
- integration of budget and schedule plans for performance
- added dimension of earned value
- improved planning
- better communication internally and with the customer
- more detailed and earlier project visibility
- increased cost and schedule awareness at all levels, particularly at the lower management levels
[P] Contractor’s management control should include policies, procedures and methods that are designed to ensure accomplishing the following :
- Organization
. Define all authorized work and related resources to meet the requirements of the contract, using the CWBS framework
. Identify the internal organizational elements and the major subcontractors responsible for accomplishing the authorized work
. provide the CWBS and the OBS to integrate contractor’s planning, scheduling, budgeting, estimating, work authorization and cost accumulation
. Identify managerial positions responsible for controlling overhead (indirect costs)
. Integrate the CWBS with the contractor’s functional OBS in a way that permits cost & schedule performance measurment for contractor WBS & OBS
- Planning & budgeting
. Schedule the work in a way as to describe the sequence of work and to identify the significant task interdependencies required to meet the delivery requirements of the contract
. Identify physical products, milestones, or other indicators that will be used to measure performance
. Establish & maintain a time-phased budget baseline at the cost account level against which performance can be measured; initial budgets established for this purpose will be based on the negotiated target cost; any other amount used for performance measurement purposes must be formally recognized by both the EPC contractor and the client
. Establish budgets for all work with separate identification of cost elements (code of accounts) such as labor, material, etc.
. In case work-packages are applied, establish budgets for this work in terms of dollars, hours or other measurable units
. Provide that the sum of all work-package budgets + planning package budgets within a cost account equals the cost account budget
. Identify relationships of budgets or standards to budgets for work-packages
. Establish overhead budgets for the total costs of each significant organizational component whose expenses will become indirect costs
. Identify management reserves and undistributed budget
. Provide that the contract target cost plus estimated cost of authorized but unpriced work is reconciled with the sum of all internal contract budgets and management reserves
- Accounting
. Record direct costs to be controlled by the general books of account
. Summarize direct costs from cost accounts into the WBS, allocating a single cost account to only one WBS element
. Summarize direct costs from the accounts into the contractor’s functional OBS, allocating a single cost account only to one OBS element
. Record all indirect costs allocated to the contract
. Identify the bases for allocating the cost of apportioned effort
. Identify unit costs, etc, as applicable
. The contractor’s material accounting must provide for
- cost accumulation and assignment of costs to cost accounts in a manner consistent with the budgets
- determination of price variances by comparing planned versus actual commitments
- cost performance measurement at the time most suitable for the category of material involved, but no earlier than the time of actual receipt of material
- determination of cost variances attributable to the over (including excessive usage), short or damage of material
- full accountability for all material purchased for the contract, including the residual inventory
- Analysis
. Identify at cost account level, using data from
- BCWS and BCWP
- BCWP and applied (actual where appropriate) direct costs for the same work
- BAC and EAC
- variances resulting from the above, together with the reasons for significant variances, including technical problems
. Identify budgeted indirect costs, actual indirect costs and variances along with the reasons
. Summarize the above information and associated variances through the OBS and the WBS to the reporting level specified in the contract
. Identify significant differences between planned and actual accomplishments together with the reasons
. Identify managerial actions taken as a result on the above
. Based on performance to date and on estimates of future conditions, develop revised estimates of cost at completion for WBS elements identified in the contract and compare these with the contract budget base and the latest statement of funds requirements reported to the client
- Revisions
. Incorporate contractual changes in a timely manner recording the effects of such changes in budgets and schedules; before negotiations of a change, base such revisions on the amount estimated and budgeted to the functional organizations
. reconcile original budgets for those elements of the WBS identified as priced line items in the contract, and for those elements at the lowest level of the project summary WBS, with current performance measurement budgets in terms of
- changes to the authorized work
- internal replanning in the detail needed by management for effective control

COUNTS (STATISTICS)
[S] TOTAL ACTIVITIES IN PROGRESS SCHEDULED = COUNT ((DATE START SCHEDULED EQUAL OR LESS THAN PERIOD END DATE) AND ((DATE FINISHED SCHEDULED GREATER THAN PERIOD END DATE) OR (DATE FINISHED SCHEDULED EQUAL EMPTY)))

[S] TOTAL ACTIVITIES IN PROGRESS ACTUAL = COUNT ((DATE START ACTUAL EQUAL OR LESS THAN PERIOD END DATE) AND ((DATE FINISHED ACTUAL GREATER THAN PERIOD END DATE) OR (DATE FINISHED ACTUAL EQUAL EMPTY)))

[S] TOTAL ACTIVITIES IN PROGRESS FORECASTED = COUNT ((DATE START FORECASTED EQUAL OR LESS THAN PERIOD END DATE) AND ((DATE FINISHED FORECASTED GREATER THAN PERIOD END DATE) OR (DATE FINISHED FORECASTED EQUAL EMPTY)))

[S] TOTAL ACTIVITIES IN PROGRESS FORECASTED OR SCHEDULED = COUNT (((DATE START FORECASTED OR DATE START SCHEDULED) EQUAL OR LESS THAN PERIOD END DATE) AND ((DATE FINISHED FORECASTED OR DATE FINISHED SCHEDULED) GREATER THAN PERIOD END DATE) OR ((DATE FINISHED FORECASTED OR DATE FINISHED SCHEDULED EQUAL EMPTY)))

[S] TOTAL ACTIVITIES FINISHED SCHEDULED = COUNT (DATE FINISHED SCHEDULED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES FINISHED ACTUAL = COUNT (DATE FINISHED ACTUAL EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES FINISHED FORECASTED = COUNT (DATE FINISHED FORECASTED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES FINISHED FORECASTED OR SCHEDULED = COUNT ((DATE FINISHED FORECASTED OR DATE FINISHED SCHEDULED) EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES ISSUED FOR APPROVAL SCHEDULED = COUNT (DATE FOR APPROVAL SCHEDULED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES ISSUED FOR APPROVAL ACTUAL = COUNT (DATE FOR APPROVAL ACTUAL EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES ISSUED FOR APPROVAL FORECASTED = COUNT (DATE FOR APPROVAL FORECASTED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES ISSUED FOR APPROVAL FORECASTED OR SCHEDULED = COUNT ((DATE FOR APPROVAL FORECASTED OR DATE FOR APPROVAL SCHEDULED) EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES SCHEDULED STARTED BEFORE PERIOD END = COUNT (DATE SCHEDULED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES ACTUAL STARTED BEFORE PERIOD END = COUNT (DATE ACTUAL EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES FORECASTED STARTED BEFORE PERIOD END = COUNT (DATE FORECASTED EQUAL OR LESS THAN PERIOD END DATE)

[S] TOTAL ACTIVITIES FORECASTED OR SCHEDULED STARTED BEFORE PERIOD END = COUNT ((DATE FORECASTED OR DATE SCHEDULED) EQUAL OR LESS THAN PERIOD END DATE))

CPM (CRITICAL PATH METHOD)
[B] CPM PLANNING consists of
- list work activities
- establish sequence and dependence
- create network and test logic
CPM SCHEDULING consists of
- add activity durations and manhours
- check for criticality and float
- allocate manpower
- level uneconomic manpower peaks
- recheck for criticality and float

CTR (COST TIME RESOURCE)
[M] A bundle of tasks or activities with defined deliverables, that has its own budget, schedule and materials.

CRITICAL DEFECT
[R] Defect that judgement and experience indicate is likely to result in hazardous or unsafe conditions for individuals using, maintaining or depending upon the product; or an defect that judgement and experience indicate is likely to prevent performance of the essential functions of a major end item, such as a ship, aircraft, computer, medical equipment or telecommunications satellite (NS 5800, ISO 2859).

CRITICAL PATH
[S] The longest path through the network that defines minimum project time.
[B] The path with the least float, i.e. any delay or expansion of a task or activity on that path lengthens the project duration, regardless the resource constraints.

CRITICAL PATH METHOD (CPM) NETWORK
[B] The methodology or management technique that determines a project’s critical path.

CRITICALLY LATE
[S] When a task/activity has a SCHEDULED END DATE later than the LATE END DATE, the PROJECT END DATE is delayed.

DAC REPORT (from PACS)
[M] Drawing & activity report.

DATA FLOW
[O] A channel through which information goes, for example between processes.

DECOMMISSIONING
[R] The permanent retirement from service of a plant and the work which follows in bring­ing it to a definitive condition (BS 5882*).

DEFECT
[R] The non-fulfillment of intended usage requirements (ISO 8402).

DEFECTIVE MATERIAL
[R] A material or component which has one or more characteristics that do not comply with specified requirements (ANSI N45.2).
Note: “Defective Material” to be read preferably as “Nonconforming Material”.

DELIVERABLE
[A] A measurable result or product of an activity or task. Examples are : drawings, requisitions, subcontract, a trained employee, a schedule, a management summary report, etc.
[B] Predefined, planned output of a project.

DESIGN
[R] The technical and management processes which lead to and include the issuance of design documents such as drawings, specifi­cations and other documents defining technical requirements of structures, systems and equipment.

DESIGN ANALYSIS
[R] Process which uses design inputs and which results in the generation of informa­tion necessary for preparation of design output documents such as drawings, specifi­cations and procedures. Design analyses include calculations (IAEA-50-SG-QA6).

DESIGN BOOK
[R] Provides the design basis of a plant or unit without mechanical details but inclu­sive of operating aspects.

DESIGN CHANGES
[R] Any revision or alteration of the technical requirements defined in, approved and issued, design documents.

DESIGN CRITERIA
[R] The basic data contained in the design documents to which an item shall be de­signed. These data can be requirements of the Client, Badger, authorities, vendors, etc.

DESIGN DOCUMENTS
[R] Drawings, specifications, data sheets, calculations, records, reports, codes, standards and other documents that will be used in design and/or procurement, manufac­ture, fabrication, erection/installation, testing, and examination.

DESIGN INPUT
[R] Those criteria, bases or other design requirements upon which the detailed final design is based.

DESIGN INTERFACE
[R] The boundary between the design related responsibilities and activities of one organization, group, or individual and another organization, group or individual. It includes both the external design interface which is the boundary between different organizations, and the internal design interface, which is the boundary between design units of the same organiza­tion, (IAEA-50-SG-QA6).

DESIGN OUTPUT
[R] Documents such as drawings, specifications and other documents defining technical requirements of materials, parts, compo­nents, equipment, structures and systems.

DESIGN REVIEW
[R] A formal, documented, comprehensive and systematic examination of a design to evaluate the design requirements and the capability of the design to meet these requirements and to identify problems and propose solutions (ISO 8402).

DESIGN SPECIFICATION
[R] A document provided by the Client or Badger, detailing requirements as to the intended operating conditions in such detail as to constitute an adequate basis for selecting materials and designing, fabricating and inspecting the product(s) as required to comply with the applicable Code requirements.

DESIGN VERIFICATION
[R] The process of checking, confirming or substantiating the design to provide assurance that specified requirements have been met. Acceptable methods include design reviews, alternate calculations and test­ing.

DESTRUCTIVE TESTING
[R] Verification of material or component properties by a test which destroys the test piece. Common destructive tests are tensile testing, impact testing, bend testing, compression testing, and proof testing.

DIRECT COST ACCOUNTS
[O] LCV codes of account ‘A’ through ‘P’.
[A] The costs of the deliverables
[M] Direct costs contribute directly to the completion of a specific contract, and are usually identified and charged to one project or contract. Examples are materials, billed labor hours, equipment.
Direct costs can be subdivided into
- direct labor costs
- direct material costs
- direct overhead costs

DEVIATION
[R] A nonconformance or departure of a charac­teristic from specified requirements (ANSI N45.2).

DEVIATION PERMIT
[R] See: Production Permit.

DISCREPANCY
[R] Any condition that does not conform to specified requirements including procedur­al, material, documentation, and construc­tion requirements.
Note: A discrepancy is a difference, an inconsis­tency (Concise Oxford).

DISPOSITION
[R] An action to determine how a departure from specified requirements is to be handled or settled (IAEA-50-SG-QA1).

DOCUMENT
[A] Uniquely identifiable composite information on a data storage medium for the purpose of communica­tion. A menu on a screen, for example, is not a document.
[R] A drawing, specification, sketch, proce­dure, item list, or report form containing pertinent data or information.

DOCUMENT MANAGEMENT
[A] Document management is a subfunction of the business function deliverable control. Deliverable control is itself a subfunction of project management.

DOCUMENTATION
[R] Any recorded or pictorial information describing, defining, specifying, reporting or certifying activities, requirements, procedures or results (ISO 6215, BS 5882 and ANSI N45.2*).

DRAWINGS (DESIGN-)
[R] Plans which show a design complete with sizes, sections, and relative location of all items but generally not showing details of joints and attachments.

DRAWINGS (SHOP-)
[R] Shop drawings give complete information necessary for fabrication of the item including details of joints and attach­ments.

DURATION
[S] The length of business time (hours, days, etc.) that a task or activity requires from start to finish.

DURATION VARIANCE
[B] Difference between baseline and current plan duration for a task or activity. A negative value indicates longer duration than was planned for in the baseline. Formula : Baseline duration minus current duration.

EARLY WORK SCHEDULE (EWS)
[P] Project overall schedule (POS), level II, for the first 6 weeks up to 3 months of a project, issued in anticipation of a project detail schedule (PDS).

EARLY START
[S] The earliest date a task can be started.
[A] The early start of an activity makes only sense if it is certain that there is full productivity throughout that activity and no budget is wasted due to resource idle time.

EARNED VALUE
[M] For certain tasks the percentage of work completed may not equal the percentage earned; for example, when 30 % of the work is complete, the task earns 50 % credit; when it is 75 % complete, it earns 90; etc.
[B] Earned value indicates the accomplishment in terms of budget hours.
[B] Each quantity measurement unit (e.g. tons, cubic yards, number of drawings, etc.) has its particular unit hourly rate. For example, the labor hours for a large concrete pour could be 8 hours per cubic yard. Another example, the hourly rate for a piping isometric might be 5 hours, whereas the rate for a P&ID could be 350 hours. Thus the
EARNED VALUE IN BUDGET HOURS = QUANTITY * BUDGETED HOURLY RATE;
[B] For effective performance measurement, the work must be subdivided into packages in which the measurement units and the hourly rates are the same for all quantities in the package. The measurement units and the unit hourly rates must be the same as those in the budget.
[B] The earned value is the multiple of the quantity completed times the milestone percent times the unit hourly rate.
[B] The earned value is the number of units or quantity that has reached a milestone, times the milestone percent, times the unit hourly rate.
[B] The cost of the completed portion of a task or activity based on the baseline total usage. The usual elements are :
- budgeted cost of work scheduled, i.e. the cost of baseline total usage up to the project as-of date
- actual cost for work performed, i.e. cost of cumulative actual usage
- estimate at completion, i.e. estimated cost of resource usage at the completion of a task or activity (= actual plus estimate to complete).
[P] For LGV, according to the PROMISYS documentation, the earned value curves should contain
- actual man-hours for work performed
- budgeted manhours for work scheduled
- budgeted manhours for work performed
[B] In fact, earned value is another expression for reliable measurement of progress of work done that is percentage complete.
[A] EARNED VALUE = ALLOCATED MANHOURS * PHYSICAL PROGRESS;
[P] EARNED WEIGHT VALUE = ALLOCATED MANHOURS * PHYSICAL PROGRESS;
[P] ACTUAL PHYSICAL PROGRESS OF PDS = (SUM EARNED WEIGHT VALUES PWS) / BUDGET MANHOURS;

EARNED VALUE ANALYSIS (= EVA)
[S] Also called PERFORMANCE MEASUREMENT, which is a calculation of actual work accomplished in relation to what was planned when the BASELINE BUDGET was established.

EIS (= EXECUTIVE INFORMATION SYSTEM) INFOCENTER
[A] For an EPC contractor an executive information system would allow to keep track of the project progress at all levels in a work breakdown structure. Any change at a certain level immediately shows the affected higher levels. From any level, any lower level can be zoomed into for more details.
Technically, an EIS is supported by (fourth generation) software that can transparently (for the user) access and relate any database and aggregate at any predefined level in the work breakdown structure. EIS is the ultimate infocenter front-end to support decision making.
EIS should provide the possibility to relate the WBS and the OBS to zoom into the responsibility assignment matrix, for which it would be advisable to include the accountnumber in activity identification because any OBS element working on a WBS element should book on that WBS element.
[A] An EIS works only as good as the underlying method of project progress control. A good method is :
- Establish a deliverable oriented WBS (Work Breakdown Structure) and an overall schedule derived by adding logic between the elements at a given level. The calculated dates impose constraints on lower levels of the structure.
- Establish an OBS (Organization Breakdown Structure)
- Establish a RAM (responsibility Assignment Matrix) with cost centers on the grid. The RAM shows on one axis which OBS element is responsible for what cost centers, and on the other axis which WBS element (deliverable) is associated with what cost centers.
The cost center is a control point where
. responsibility is assigned
. budgets are assigned
. costs are approved
. schedules are approved
. baselines are maintained
- Establish procedures for management of cost centers
- Break down each cost center into work packages to form the detail schedule
- Setup dependencies between work packages for critical path analysis of the plan
- Spread the resource requirement over the duration of the work package, calculating the quantity and associated cost of each resource, per accounting period, using the project calendar
- Establish a CBS (Cost Breakdown Structure) and detail the resources in the structure. Link the CBS with rate tables. Include resource availability.
- Manage each cost center by
. developing detail breakdown of tasks, including start & end dates and float
. assigning resourtces to the plan to obtain detailed cost estimates and resource plans
. reschedule the plan to obtain optimum usage of resources
. revise the latest estimate where needed
. produce forecasts from actuals and latest estimates
. enter actual manhours and costs expended against the plan
. summarize to cost center level for performance reporting
- Record actuals (cost and quantities) against cost center
- Summarize (roll-up) costs and quantities through each level of the structure
- Using baseline, progress and actuals, calculate the Earned Value (BCWP) to measure the true amount work performed, and how this varies from what was budgeted and what was actually spent.
- Report via the structures that is most appropriate to the various project responsibles, for example
. in numeric form within the WBS, OBS, CBS and RAM
. predefined graphs concerning a cost center or any element of the structures or of the RAM
. highlight any relevant aspect of the project per individual requirements
The important point is that the method must be refelected in a data structure that is congruent with the breakdown structures (WBS, OBS, CBS, RAM)

END , EARLY -
[S] The earliest date that a task or activity can end, based on the critical path.

END, LATE -
[S] The latest date on which a task or activity can be completed without adversely affecting the critical path of a project.

ENDURANCE (LIFE TEST)
[R] A test in which an item is subjected to specified stress(es) over a specified long period of time or large number of opera­tions, or both, in order to determine its durability.

ENGINEERING CONTRACTOR
[R] Any organization or individual under contract supply engineering services to the client.

ENGINEERING DOCUMENTS
[R] Engineering documents are all engineering drawings and specifications which reflect Code or Users Design Specification require­ments such as Material-, Welding-, NDE Specification, etc.

ENGINEERING FLOW DIAGRAM (EFD
[R] This document shows all equipment connect­ing piping, utility piping, complete with control loops and all other instrumenta­tion, all valves and safety measures. It is the main tool for the project engineer to convey information to the piping design office and control systems engineering group to the piping design office and control systems engineering group for the detailed piping and control systems design.

EQUIPMENT
[A] All physical parts of a plant, that deliver a meaningful direct or indirect service to the chemical process of that plant, or that can not be purchased as a standard item.
[B] For example : furnace, exchanger, tower, vessel, rotating, special.

EQUIPMENT DOSSIER
[R] Describes the equipment used in a plant or unit without consideration of its position or function in the plant.

EQUIPMENT CONTROL INDEX
[A] List of pieces of equipment with description, requisition number, tag number, progress data.
There should be a common standard equipment control index, rather than multiple locally developed ones.

ERECTION CONTRACTOR
[R] organization or individual under contract, supplying services for installa­tion of items on the site to the client.

ESTIMATE
[O] A statement that tells what it takes to deliver something. Sometimes called ‘guesstimate’.
[B] Most EPC contractors use standard unit hourly rates (i.e. standard hours, basic hours) for their activities. The standard hours reflect the time it would take to perform an activity under normal conditions. For plants built under different conditions, the standard hourly rates are adjusted by a project productivity factor.
BUDGET HOURS = STANDARD HOURS * PROJECT PRODUCTIVITY FACTOR;
The productivity factor may be different for each work package within a project, or may be a constant for a discipline or for a department/section.
[B] OVERALL PROJECT ESTIMATE MATRIX is composed of PROJECT CODE OF ACCOUNTS (for example : equipment [heaters, vessels, rotating], bulk materials [buildings, piping, instrumentation, etc], services [home office, construction, misc, etc], etc.) and PROJECT SUBDIVISIONS (for example : process plants [crude unit, reforming unit, etc], utilities & services [water facilities, fuel facilities, waste disposal, etc], civil works [fences, roads, dikes, etc]). The matrix is used to support estimating.
[B] At various project stages, particular estimating can be done, for example :
- Conceptual stage : Order of magnitude estimate, derived from curves or return costs from previous similar projects.
- Process design complete : Preliminary control estimate
- Basic engineering complete : Definitive estimate
- Quantities and prices known : Detailed or check estimate
[A] Estimates must be done only by the owner of the area of estimation, noone else.

ESTIMATE AT COMPLETION (= EAC)
[S] The sum of the actual cost and the remaining costs.
[B] ESTIMATE AT COMPLETION = ACTUAL COST OF WORK PERFORMED + ESTIMATED TO COMPLETE;

ESTIMATE TO COMPLETE (ETC)
[M] The money or resource units expected to be spent to accomplish a task.
[S] Estimated resource usage required for a resource to complete a task assignment or activity assignment.
[B] ESTIMATE TO COMPLETE = (BUDGET AT COMPLETION – BUDGETED COST OF WORK PERFORMED) / COST PERFORMANCE INDEX;

EXAMINATION
[R] An element of inspection consisting of investigation of materials, components, supplies, or services to determine confor­mance to those specified requirements which can be determined by such investigation. Examination is usually non-destructive and includes simple physical manipulation, gauging, and measurements (ANSI N45.2).

EXTERNAL AUDIT
[R] An audit of those portions of an organiza­tions quality assurance program which are performed by another organization (IAEA 50-SG-QA10).

FAILURE
[R] The occurrence of a defective item while the item is under test or in service.

FINAL DOCUMENTATION
[R] All documents required to confirm final condition of an item and includes as-built­-data, test reports, and certifications.

FINAL INSPECTION
[R] The final inspection carried out by the contractor to verify that all specified inspection has been carried out and that the delivery satisfies all the specified requirements, including requirements as to documentation (NS 5801).

FINDING
[R] Survey originated objective evidence that a control feature of the approved quality program was not implemented with an accept­able level of reliability (API-Q1).

FIRM FIXED PRICE (FFP)
[R] A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places full responsibility upon the contractor for all costs and resulting profit or loss.

FIXED PRICE WITH REIMBURSABLE (FPw/RE)
[R] A firm fixed price contract which additionally reimburses the contractor for non-labour costs (i.e., travel and repro).

FLOAT
[S] The amount of time a task or activity can slip from the early start date without affecting the project end date. If float is zero, then task or activity is on critical path. Float = late start minus early start.
[S] The difference between EARLY START DATE and LATE START DATE of a task (activity).

FORECAST
[D] A calculation that tells what is going to happen in the future, especially in relation to a particular event.

FORECAST MANHOURS AT COMPLETION
[A] Forecasted manhours to complete added to actual manhours spent.

FORECAST MANHOURS TO COMPLETE
[A] Manhours for a resource to complete a task or activity.

GANTT CHART
[M] Graphical representation of the entire project or a subset of it, usually horizontal barchart, to show baseline data, actuals, and estimates to complete.

GEMS (GENERALIZED ENGINEERING MANAGEMENT SYSTEM)
[B] An approach to project control, based on dividing the project into manageable tasks. It combines
- schedule control
- (project-) document control
- budget control
- labor forecasting
- progress measurement

GRADE
[R] An indicator of category or rank related to features or characteristics that cover different sets of needs for products or services intended for the same functional use (ISO 8402).

GUIDELINES
[R] Particular provisions which are considered good practice but which are not mandatory. The term “should” denotes a guideline; the term “shall” denotes a mandatory require­ment (ANSI N45.2*).

HOLD-POINT
[R] Mandatory point in the manufacturing sequence of which the client’s quality control organization shall be notified and work shall not proceed until required inspections and tests have been witnessed or waived in writing.

INDEX , PERFORMANCE -
[M] Calculation : budgeted cost of work performed divided by actual cost of work performed. An index of 1 represents normal performance; an index of less than 1 represents performance poorer than planned; an index greater than 1 represents a better performance than planned.
Some indices are : schedule performance index, cost performance index, schedule variance index.

INDEX , PERCENT COMPLETE -
[M] Calculation is based on earned value against budget at completion. The elements are shown as % of the baseline budget.
Some indices are : performance % complete, scheduled % complete, actual % spent.

INDIRECT COST (BURDEN RATES)
[M] Costs incurred through operating organizations such as training and business development that supports tyhe direct costs for all projects. Indirect costs are calculated as a percentage of the direct costs; these percentages are called BURDEN RATES.

INQUIRY
[R] A procurement document prepared by the Procurement Department which is sent to vendors shown on the Approved Vendors List requesting a proposal for the item of service described in the Material Requisi­tion.

INSPECTION
[R] Activities such as measuring, examining, testing, gauging one or more characteris­tics of a product or service and comparing these with specified requirements to determine conformity (ISO 8402).

INSPECTION CHECKLIST
[R] An itemized instruction document that defines and prescribes the manner and sequence of performing manufacturing or construction site surveillance.

INSPECTION POINT
[R] Any point during manufacture and installa­tion which comprises inspection activities as stated in the routing plan of quality control program.

INSPECTOR
[R] A qualified inspector employed by the owner, or installer whose duties include the verification of quality related activi­ties or installations or both (ANSI N45.2 *).

INTERCONNECTING FLOW DIAGRAM (IFD)
[R] This document shows the interconnecting lines between various plant units, e.g. tank farms, etc.

INTERFACE
[R] Organizational Interface – A written description of the organizational relation­ship between the design groups of various project contractors, sub contractors and consultants.
[R] Physical Interface – The physical location identified by coordinates and elevation where divisions in engineer­ing responsibil­ity exists.

INTERNAL AUDIT
[R] An audit of those portions of an organiza­tion’s quality assurance program which are performed within its organizational struc­ture (IAEA-50-SG-QA10).

ITEM
[R] A part, equipment, sub-system or system that can be individually considered and separately examined or tested
[R] An actual or conventional object on which a set of observations may be made;
[R] Defined quantity of material on which a set of observations may be made;
[R]. An observed value, either qualitative (attributes), or quantitative (measured) (BS 4778).

JOB INSTRUCTION
[R] Description of a certain work procedure and determined pattern of action in given situations (NS 5801).

LEAD AUDITOR
[R] An individual qualified to organize and direct an audit, report audit findings, and evaluate corrective action (ANSI N 45.2).

LINE DESIGNATON TABLE
[R] Listing of engineering flow diagram pipe­lines. It contains additional information including maximum temperature for thermal stress calculations, operating pressure and temperature, design pressure and tempera­ture, testing pressure and medium, insula­tion code and thickness, paint code and type of heat-tracing.

LOADING PATTERN
[M] The pattern of usage for a resource assigned to a task or activity. The most widely used loading patterns are : Uniform, front, back, contour.

LOSS (I.E. UNNECESSARY COST TO THE PROJECT)
[B] To illustrate the influence of the cost of borrowing, consider the following example :
Suppose for a large project $3 billion would be set aside at the start of the job, and the job will take 5 years, then (taking a uniform spread) half of the money would not be put to productive use. If the borrowing cost were 13 percent and the short-term return is 5 percent, then roughly the net loss to the project owner is approximated to be
0.5 * $3 billion * 0.5 * 5 years * (13%-5%) = 300 million
This is of course a very crude calculation, but it does make clear some potential overall costs.

MAINTENANCE
[R] The combinations of all technical and corresponding administrative actions intended to retain an item in, or restore it to, a state in which it can perform its required function.
Note: The required function may be defined as a stated condi­tion (BS 4778).

MAJOR DEFECT
[R] A major defect is one which reduces the usability of an item for its intended purpose.

MANAGEMENT RESERVE
[M] A monetary amount separate from the project’s performance measurement baseline that is not assigned to any work item in the contract. This amount is set aside for tasks that are within the scope of the project, but not included in the budget.

MANHOUR BUDGET
[A] Manhours available to an activity level.

MANHOURS DISTRIBUTION METHODS
[P] The following matrix shows the manhours distribution methods

MANHOURS DISTRIBUTION

0
%
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90
%
100 %
linear
0
10
20
30
40
50
60
70
80
90
100
triangular
0
2
8
18
32
50
68
82
92
98
100
triangular increase
0
2
5
11
18
27
38
51
65
82
100
triangular decrease
0
18
35
49
62
73
82
89
95
98
100
back loaded
0
7
14
21
28
35
48
61
74
87
100
front loaded
0
13
26
39
52
65
72
79
86
93
100
trapezoidal
0
2
9
20
35
50
65
80
91
98
100
bell shape
0
1
4
12
27
50
73
88
96
99
100
three step
0
8
16
24
37
50
63
76
84
92
100
user defined

MANHOURS , EFFECTIVE -
[P] Total manhours minus vacation, holidays, sickleave, absence.

MANPOWER (ESTIMATING)
[B] MANPOWER PERFORMANCE INDEX = EARNED VALUE / ACTUAL VALUE;
ESTIMATE TOTAL MANHOURS = PLANNED MANHOURS / MANPOWER PERFORMANCE INDEX;
[A] The required manpower for the remaining period will be based on the manhour estimates to complete given by the Lead Engineers, or calculated based on performance.

MANUFACTURER
[R] One who constructs any class of components, part, or appurtenance to meet prescribed design requirements (ANSI N45.2).

MANUFACTURING
[R] Collective term for purchasing, production, inspection and storing.

MATERIAL
[A] Equipment or Commodities.

MILESTONE
[M] Establishes one or more identifiable elements that contribute to the overall work package. Accomplishing any milestone earns a certain predefined value. Accomplishing all the milestones in the work package means that the work package has been completed satisfactorily.
[A] A predefined end-result on the time axis. Trends in slippage of completion dates for parts of the project can be shown.
[P] A turning point in the execution of an activity. Once a milestone is reached, a certain percentage of completion is assumed.
[D] In general, showing the distance to particular points.
[S] A significant date or event in a project.
[B] Many activities may go through a series of steps before they are completed. For example, in the field a foundation must first be excavated, then formed, concrete added and finally grouted out. Another example, a drawing is first drafted, then reviewed for design, then material taken off and finally issued for construction. These steps are completion points in time. The earned value is the number of units or quantity that has reached a milestone, times the milestone percent, times the unit hourly rate.

MILESTONE DATES , SCHEDULED -
[P] Result of distribution (according to manhours distribution method) of allotted manhours from start date to finish date (including no-work days).

MONITORING
[B] To determine specific problem account areas in a project. The next step is to determine the reasons for the deviations from the plan and to assess what corrective actions on significant variances are needed to get back on course.
[R] The continuous assessment of the work completed in every discipline and every stage until completion.

ORGANIZATIONAL BREAKDOWN STRUCTURE (= OBS)
[O] The OBS is used to generate planning reports required by the departments involved in the project. This is made possible by specifying which parties are supposed to supply information and which parties are supposed to receive information during the execution of the project.
To identify all organizational elements in a project organization, the organizational structure should be presented as a coding structure. When each party involved has a place in this organization structure, it will also be allocated a place in the coding structure. By using this code, all involved parties can be identified throughout the project.
An example of OBS coding :
- Location
- Division
- Department
- Section
[B] Is similar in concept as the WBS, being a hierarchical family tree defining the organizational elements in successively greater levels of detail. A specific OBS for the project depicts those organizational elements responsible for performing the work. For example :
Level-0 The company
Level-1 Division, such as Engineering, Procurement, Construction
Level-3 Department, such as (within Engineering) Process, Civil, Piping, Electrical
Level-4 Section, such as (within Civil) Structural
The integration of the WBS and the OBS forms the responsibility matrix.

[M] According to the PACS procedures, the OBS is as follows
Level-1 Company
Level-2 Divisions
Level-3 Departments
Level-4 Sections
Level-5 Task Categories
Level-6 Activities
[A] Please note that Level-1 to -4 are organizational and level-5 to -6 are work related, i.e. should be part of WBS, not OBS.
[W] OBS, organization breakdown structure, representing the project’s organizational resources

ORGANIZATIONAL UNIT
[A] Departments or sections. Organizational units (OU for short) execute one or more business functions; business functions are delegated to one or more organizational units.

PENDING VARIANCE
[M] Difference between total usage and new total usage.

PERCENT COMPLETE
[B] The percentage completion for an accountcode is the sum of the earned values for the work packages divided by the total budget for the account.
[B] PERCENTAGE COMPLETION FOR AN ACCOUNT = SUM EARNED VALUES FOR THE WORK PACKAGES / TOTAL BUDGET FOR THE ACCOUNT; earned values may be in terms of manhours, quantities or costs, depending on the units used to establish the budget for the account
[S] User defined completion estimate used in EARNED VALUE analysis and used to display the status of activities (tasks) in the Gantt chart view.
[A] A completed portion of an activity.
[B] PERCENT WORK COMPLETED = (ACTUAL / (ACTUAL + FORECAST)) * 100;
[B] NET PERCENT COMPLETED = PERCENT PERFORMANCE * WEIGHTED PERCENT;
[P] PERCENTAGE COMPLETE FORECASTED = 100 * (PERIOD END DATE – DATE START FORECASTED + 1) / (DATE FINISHED FORECASTED – DATE START FORECASTED + 1);
[P] PERCENTAGE COMPLETE SCHEDULED = 100 * (PERIOD END DATE – DATE START SCHEDULED + 1) / (DATE FINISHED SCHEDULED – DATE START SCHEDULED + 1 );
[P] PERCENTAGE COMPLETE ACTUAL = 100 * (PERIOD END DATE – DATE START ACTUAL + 1) / (DATE FINISHED ACTUAL – DATE START ACTUAL + 1);
[P] WEIGHTED PERCENT COMPLETE = (PERCENT COMPLETE / 100) * WEIGHTED PERCENTAGE;
[P] WEIGHT PERCENTAGE COMPLETE SCHEDULED = 100 / (SUM REVISED WEIGHT /
SUM WEIGHT PERFORMED SCHEDULED);
[P] WEIGHT PERCENTAGE COMPLETE ACTUAL = 100 / (SUM REVISED WEIGHT /
SUM WEIGHT PERFORMED ACTUAL);
[P] WEIGHT PERCENTAGE COMPLETE FORECASTED = 100 / (SUM REVISED WEIGHT /
SUM WEIGHT PERFORMED FORECASTED);

PERCENT SCHEDULE USED
[B] PERCENT SCHEDULE USED = (DURATION USED / TOTAL DURATION) * 100;

PERFORMANCE ANALYSIS
[B] To determine, for the money spent, whether or not the progress is achieved as defined; the analysis also includes to determine how much should have been spent for the progress achieved, and how this actually compares with what is actually spent.
[B] To compare planned progress, earned value and actual cost.
[A] Performance analysis means finding out whether we are going to be on schedule and on budget, looking at the trend of progress and cost.
[B] Performance measurement for all E, P, C, SC activities must be by means of physically measurable yardsticks (quantities, milestones). Performance measurement must NOT be measured in terms of calendar time or manhours/costs expended.
[B] The purpose of performance analysis is to find out concerning :
- the schedule
. where there is a variance
. why there is a variance
. what effect does the variance have on the project
- the budget
. where there is a variance
. why there is a variance
. what caused the variance
. who is responsible for the variance
. what can be done about the variance
- the trend
. what is the progress
. what is the cost
- forecasting
. what will be the final cost
. what will be the completion date
- monitoring
. what is the rate of built-up cost
. what is the rate of progress
. how does cost relate with time.
[B] For effective performance measurement, the work must be subdivided into packages in which the measurement units and the hourly rates are the same for all quantities in the package. The measurement units and the unit hourly rates must be the same as those in the budget.
[B] On timecards, hours are recorded per work package code (account code). There should be no manipulation of timesheets to make budgets look good. Only accurate reports can aid good projections to complete.
[B] Performance measurement for combined accounts can only measured in terms of dollars. Therefore, each cost account must be estimated with the same units of measurement as its actuals, and all must be capable of being translated into dollars.
[B] The following table is an example that illustrates performance analysis
[B] Performance analysis objective is to answer questions like
- Are we on schedule, on the project as a whole and the individual parts of it ? In case of a variance, why did it occur and who is responsible for it ? What effect will it have on other parts of the project and what can we do about it ?
- Is the work being completed to the budget estimate. In case of a variance, where did & why & how did it occur, who is responsible for it and what can we do about it ?
- Are we going to be on schedule & budget, i.e. what is the trend of progress and cost?
[O] To help forecast future contract performance, it would be very useful to use current and past contractor cost & schedule data concerning similar work.

BCWS
BCWP
ACWP
Cost variance
Scheduled variance
Analysis
(conclusion)
4
4
4
0
0
on schedule
on cost
4
4
3
1
0
on schedule
under cost
4
4
5
-1
0
on schedule
over cost
3
4
4
0
1
ahead of schedule
on cost
3
4
3
1
1
ahead of schedule
under cost
3
4
5
-1
1
ahead of schedule
over cost
5
4
4
0
-1
behind schedule
on cost
5
4
3
1
-1
behind schedule
under cost
5
4
-5
-1
-1
behind schedule
over cost

PERFORMANCE & FORECASTING
[P] Performance is the ratio between time progress (actual manhours spent) versus physical progress.
[P] [for performance = actual performance:] MANHOURS FORECAST TO COMPLETE = (ALLOCATED MANHOURS * ACTUAL PERFORMANCE) – ACTUAL MANHOURS;
[P] [for performance = 1 (i.e. as planned):] MANHOURS FORECAST TO COMPLETE = ALLOCATED MANHOURS * ((100 – ACTUAL PHYSICAL PROGRESS) / 100);
[P] [for performance = user defined:] MANHOURS FORECAST TO COMPLETE = (ALLOCATED MANHOURS * USER DEFINED PERFORMANCE) – ACTUAL HOURS;
[P] [for performance = actual performance:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * ACTUAL PERFORMANCE;
[P] [for performance = 1:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * ((100 – ACTUAL PHYSICAL PROGRESS) / 100) + ACTUAL MANHOURS;
[P] [for performance = 1:] MANHOURS FORECAST AT COMPLETION = ACTUAL MANHOURS + (ALLOCATED MANHOURS * (100 – ACTUAL PHYSICAL PROGRESS) / 100;
[P] [for performance = user defined:] MANHOURS FORECAST AT COMPLETION = ALLOCATED MANHOURS * USER DEFINED PERFORMANCE;
[B] PERCENT PERFORMANCE = TOTAL ACTUAL / TOTAL ESTIMATED;
[A] Contract performance should normally be measured against a formal, contract related baseline rather than against a contractor’s internal operating plan, which may represent something other than the contractual commitment.

PERFORMANCE PERCENT COMPLETE
[M] Percent of work performed to date against the total budget.
[M] PERFORMANCE PERCENT COMPLETE = (100 * BUDGETED COST OF WORK PERFORMED) / BUDGET AT COMPLETION.

PERFORMANCE , WEIGHT
[P] WEIGHT PERFORMED SCHEDULED = REVISED WEIGHT / (100 / PERCENTAGE COMPLETE SCHEDULED );
[P] WEIGHT PERFORMED ACTUAL = REVISED WEIGHT / (100 / PERCENTAGE COMPLETE ACTUAL );
[P] WEIGHT PERFORMED FORECASTED = REVISED WEIGHT / (100 / PERCENTAGE COMPLETE FORECASTED );

PHYSICAL PERCENT COMPLETE
[B] Probably the most widely used tool for schedule monitoring. The standard way of doing is to compare the forecasted progress (curve) with the actual progress (curve).
[B] PHYSICAL PERCENT COMPLETE = TIME SPENT / (TIME SPENT + TIME TO BE SPENT);
PHYSICAL PERCENT COMPLETE is not : TIME SPENT / TIME ESTIMATED TO BE SPENT;

PHYSICAL PROGRESS
[P] Physical progress is the percentage completion of an activity at a given moment.
[P] The actual physical progress curve of a task category starts at the earliest found actual start date of the PWS activities related to the task category, and finishes at the latest found actual finish date.
[P] The actual physical progress curve of a department/section starts at the earliest found actual start date of the PWS activities related to the department/section, and finishes at the latest found actual finish date.
[P] [per progress date :] ACTUAL PHYSICAL PROGRESS OF A TASK CATEGORY = SUM OF EARNED WEIGHT VALUES / BUDGET MANHOURS;
[P] [per week :] SCHEDULED PHYSICAL PROGRESS OF A TASK CATEGORY = ((CUMULATED SCHEDULED MANHOURS PER WEEK) / (TOTAL ALLOCATED MANHOURS PER TASK CATEGORY)) * 100 % ;
[P] [per department/section :] SCHEDULED PHYSICAL PROGRESS OF A DEPT/SECT = ((CUMULATED SCHEDULED MANHOURS PER WEEK) / (TOTAL ALLOCATED MANHOURS PER DEPT/SECT)) * 100 % ;
[P] SCHEDULED PHYSICAL PROGRESS PER PERIOD FOR TASK CATEGORY = (CUMULATED SCHEDULED MANHOURS PER PERIOD / TOTAL ALLOCATED MANHOURS PER TASK CATEGORY) * 100 % ;
[P] SCHEDULED PHYSICAL PROGRESS PER ORGANIZATIONAL UNIT = (CUMULATED SCHEDULED MANHOURS PER PERIOD / TOTAL MANHOURS PER ORGANIZATIONAL UNIT) * 100 % ;
[P] [per week :] FORECASTED PHYSICAL PROGRESS OF A TASK CATEGORY = ((CUMULATED FORECASTED MANHOURS PER WEEK) / (TOTAL ALLOCATED MANHOURS PER TASK CATEGORY)) * 100 % ;
[P] [per department/section :] FORECASTED PHYSICAL PROGRESS OF A DEPT/SECT = ((CUMULATED FORECASTED MANHOURS PER WEEK) / (TOTAL ALLOCATED MANHOURS PER DEPT/SECT)) * 100 % ;
[P] FORECASTED PHYSICAL PROGRESS PER PERIOD FOR TASK CATEGORY = (CUMULATED FORECASTED MANHOURS PER PERIOD / TOTAL ALLOCATED MANHOURS PER TASK CATEGORY) * 100 % ;
[P] FORECASTED PHYSICAL PROGRESS PER ORGANIZATIONAL UNIT = (CUMULATED FORECASTED MANHOURS PER PERIOD / TOTAL MANHOURS PER ORGANIZATIONAL UNIT) * 100 % ;

PLAN
[S] A specification of the work to be performed for a project.

PLANNING
[D] Decided in detail to do something before actually starting to do.
[B] Planning, as essential part of managing a project, is a means of
- organizing the work of the project
- deciding who does what, when, where, why, how
- determining resources required
- allocating resources on a time phased basis
- allocating and defining responsibility
- integrating the work of all the organizations involved
- communication between all those involved in the project
- coordination of all activities and people involved
- estimating time to completion
- basis for controlling project progress
Planning is also
- a basis for PM authority
- basis for budgeting and financial control
- a means of orientation and looking time consciously ahead.
[R] The formulation of the logic and execution strategy of the work to be done.

PLANNING & SCHEDULING DEPARTMENT
[O] Primary task with the company is monitoring projects as regards scheduling, costs and resources.

PROCESS
[O] Transforms incoming data (flow) into outgoing data (flow)

PRODUCTIVITY
[R] The manhours earned for work done against mainhours expended, i.e. the value of the pay items.

PROGRESS
[R] The measurement value of work done in agreed units of execution against contractually laid down pay items.

PROGRESSIVE INSPECTION
[R] Inspection of an item or component at selected stages of manufacture. Progressive inspection is performed on a periodic basis and as necessary to support witness, hold point and observe point requirements.

PROJECT
[S] Set of interrelated activities undertaken by resources to achieve a specific goal or objective. [A] A unique and complex set of inter-related Work Processes, with the aim to obtain a clearly defined and specified set of Client required results with discrete time, financial and technical performance goals.
[R] A planned series of activities executed by the EPC contractor under the contract.

PROJECT CONTROLS (N23)
[A] Project Controls is primarily focusing on the profitability of a project. Important areas to be examined for determining profitability are
- cost
- time
- contracts
- risks
in an efficient & effective way.
The focusing on costs rather than manhours has become more important because cost is the major issue concerning profitability.
Company is moving towards 3 major areas of business
- EPC (Company), requiring integrated systems
- multi partner (Company + other companies), requiring Company ability to consolidate data from foreign (non-Company) systems
- project management consultant (Company as PMC), requiring the image to be able to act as overall project manager having all the tools available.

PROJECT REPORTS
[B] In general, several project reports support the managing the (progress of the) project. Examples are :
- Narrative report. Usually distributed to the highest levels of client and contractor management
- Construction scheduling area plan. This is a tangible frame of reference of the amount of work contained within each scheduling area.
- Milestone report. High level concise project planning overview for client, contractor and project management.
- Hotline report. Provides detailed explanation of each critical milestone in the milestone report.
- Criticality report. Working level report for first line supervisors to focus attention and resources on the most critical problems.
- Slippage report. To specifically and numerically indicate which parts of the project are under/out of control.
- Manpower distribution (early and late) curves. To show extremes in manpower distribution.
- Manpower S-curves. To establish a resource leveled schedule.
- Manhours totals.
- Workschedules by discipline.
- Workschedules by scheduling area.
- Major equipment overview. To show projected & actual delivery of equipment.
By item number and/or by scheduling area.
- Bulk material by requisition/purchase order. To show projected & actual delivery of bulk material.
-

PROJECT DETAIL SCHEDULE (PDS)
[P] Also referred to as level-3 planning & scheduling.

PROJECT MANAGEMENT
[S] A body of knowledge dealing with the planning and control of projects.
[O] A collection of techniques and principles used in order to make a project succeed by controlling it.
[B] Work, organization and systems must be integrated, which involves
- a WBS, i.e. breakdown of a project into its component parts and all the work involved on these parts defined
- organizations and people involved in working on the lowest level of the WBS must be identified, i.e. responsibility matrix
- cost accounts cq work packages, i.e. intersection of WBS with OBS; each intersection point has identifiable responsibility, scheduled start & finish, budget and methods to monitor progress, cost & changes
- one level of planning must be integrated with the work packages
- budgets be established for each cost account/work package
- information supply based on the cost accounts/work packages in order to channel information on progress, cost & changes
- analysis of progress, cost variances & trends be carried out for the cost account/work package, WBS element and functional subcontract, to monitor performance and relate it to individual responsibilities
- project reports must be based on this structure
- management action should also follow this structure.

PROJECT MANAGEMENT SCHEDULE (PMS)
[P] Also referred to as level-1 planning & scheduling.

PROJECT OVERALL SCHEDULE (POS)
[P] Also referred to as level-2 planning & scheduling.

PROJECT WORK SCHEDULE (PWS)
[P] Also referred to as level-4 planning & scheduling.

PURCHASE ORDER
[R] A procurement document prepared by the procurement group authorizing the supply of items or services described in the material requisition.

PURCHASE ORDER REVIEW MEETING
[R] A meeting with a supplier shortly after purchase order commitment to confirm that supplier has received, reviewed and under­stood all purchase order requirements.

PURCHASER
[R] Any individual or organization who placed an order for items or services (ISO 6215, BS 5882).

QUALIFICATION (Personnel)
[R] The characteristics or abilities gained through training or experience or both that enable an individual to perform a required function (ANSI N45.2).

QUALIFIED PARTY
[R] A person or organization competent and recognized as knowledgeable to perform certain functions (ANSI N45.2)

QUALIFIED PROCEDURE
[R] A procedure which incorporates all applica­ble codes and standards, manufacturer’s parameters, and engineering specification and has been proven adequate for its intended purpose (ANSI N45.2).

QUALITY
[R] The totality of features and characteris­tics of a product or service that bear on its ability to satisfy stated or implied needs (ISO 8402)
Note :
1. (BS 4778) In order to be able to assure, control or improve quality, it is necessary to be able to evaluate it. This definition calls for the identifi­cation of those characteristics and features bearing upon the “fitness for purpose” of a product or service. The “ability to satisfy a defined require­ment” includes economics as well as availability, maintainability, reliabil­ity, design and all other characteris­tics that the need for a product or service involves.
2. The defined requirements for a particu­lar service, product, equipment or unit are as dominated by:
- - Client’s and Contractor’s requirements (Process performance, equipment life, equipment maintenance and safety).
- - Statutory requirements (such as pressure vessel codes, environmental codes, anti-pollution requirements etc.).
- - Any other non-statutory requirements (such as related to insurance, ship­ping, etc.).

QUALITY ASSURANCE (PROGRAM)
[R] A description of the overall management and procedures covering the quality assurance actions for the execution of a specific contract or project (ISO 6215, BS 5882).

[R] All those planned and systematic actions necessary to provide adequate confidence that a product or service will satisfy given requirements for quality (ISO 8402).
Note : The actions have to provide documented confidence that quality control is properly executed.

QUALITY ASSURANCE DEPARTMENT
[R] A specialized group that is independent of project execution responsi­bilities and charged with the responsibili­ty ensuring that adequate Quality Assurance Programs are implemented.

QUALITY ASSURANCE PROCEDURE
[R] A detailed procedure which forms an inte­gral part of the Quality Assurance Program, to give written policies and procedures governing quality related functions and activities for the execution of the proj­ect.

QUALITY AUDIT
[R] A systematic and independent examination to determine whether quality activities and related results comply with planned ar­rangements and whether these arrangements are implemented effectively and are suit­able to achieve objectives (ISO 8402).

QUALITY CONTROL
[R] The operational techniques and activities that are used to fulfil requirements for quality (ISO 8402).
Note : Quality Control is the total of all mea­sures taken within each department to achieve quality.
It comprises:
- Standardization and computerization of design and drafting as much as possible.
- Selection and use of qualified person­nel, vendors and subcontractors.
- Execution and logging of extensive and continuous supervisory checks and inspection of work done in the office, in vendor’s shops and at site, in accordance with an established quality control plan and accepted quality control procedures.

QUALITY CONTROL PROCEDURE
[R] A detailed procedure which provides a means to control and/or measure the characteris­tics of a material, facility or work, to established requirements.

QUALITY CONTROL SURVEILLANCE
[R] The overseeing of a supplier’s quality control organization and methods by the customer, his representative or an indepen­dent organization (BS 4778).

QUALITY LOOP (Spiral)
[R] Conceptual model of interacting activities that influence the quality of a product or service in the various stages ranging from the identification of needs to the assess­ment of whether these needs have been satisfied (ISO 8402).

QUALITY MANAGEMENT
[R] That aspect of the overall management function that determines and implements the quality policy (ISO 8402).

QUALITY MANUAL
[R] A document setting out the general quality policies, procedures, and practices of an organization (BS 4778).

QUALITY PLAN
[R] A document setting out the specific quality practices, resources and sequences of activities relevant to a particular prod­uct, service, contract or project (ISO 8402).

QUALITY POLICY
[R] The overall quality intentions and direc­tion of an organization as regards quality, as formally expressed by top management (ISO 8402).

QUALITY SYSTEM
[R] The organizational structure, responsibili­ties, procedures, processes and resources for implementing quality management (ISO 8402).

QUALITY SYSTEM REVIEW
[R] A formal evaluation by top management of the status and adequacy of the quality system in relation to quality policy and new objectives resulting from changing circumstances (ISO 8402).

QUALITY VERIFICATION
[R] The provision of evidence or proof that requirements for quality have been met (BS 4778).

REQUIISTION
[R] This document contains the full technical description of the material or work, and the quantities required.RESOLUTION
[R] Determining the disposition of a non­-conformance as either use-as-is, repair, rework or replace and the associated instructions.

RAM
[W] responsibility matrix, representing the intersection between OBS and WBS, i.e. who does what; each cell in the RAM may represent a responsibility ‘center’ or a workpackage or an activity

RESOURCE
[B] Whole or part of organization required to complete a project or part of it. Sometimes costs are treated as a resource, as to simplify determination of budget and cash flow requirement analyses.
[S] A human, financial or other means, having the capability to execute or support an activity, partially or wholly.
[O] Any object necessary to perform a task.

RESOURCE LEVEL
[B] To be applied in short term forecasting.
RESOURCE LEVEL = (FORECAST / REMAINING DURATION) * DAYS IN THE PERIOD;

RESPONSIBILITY MATRIX (RAM)
[O] The combination of the WBS (project structure, the work that needs to be done, and when it is scheduled), the OBS (who is going to do the work), and the CBS (to summarize costs and analyze the results), that makes up the relationship of scope of work, organization, cost accounts, budgets, estimates and schedules.
[O] The RAM allocates organizational responsibility for each work element and relates it with the cost account (budget).

[B] The responsibility matrix is the intersection of the WBS and the OBS. Each cell which is formed by the intersection is considered as a unique area in which an element of work scope is assigned to a single organization, thus forming a cost center or a (code of) account.
WBS Level-n : Each descending level provides increasing detailed definitions of the individual tasks, until organizational elements (taken from the organizational breakdown structure OBS) can intersect with the WBS elements. The intersection is the responsibility assignment matrix. Each cell in the matrix is in effect a management control point and can have a cost center number (account code) assigned to. At OBS discipline level, budgets are approved, costs are collected and performance is measured.
[B] For each intersection point of the matrix must be assigned
- description of the work performed
- who is responsible for the work
- time phased budget for the work
- resources required
- schedule start & finish
[A] According to the PACS procedures (re: Integration of OBS and WBS), task categories are in the OBS, but in fact task categories represent work, not organization, thus logically should not be part of the OBS, rather part of the WBS. The responsibility matrix cells, according to the current Company way, are formed by intersecting task categories with work packages; this is not consistent with the definitions of WBS and OBS.
[A] The OBS consists of resources that are doing the work defined in the WBS. The intersection of OBS and WBS forms the responsibility matrix.

REVAMP FLOW DIAGRAM (RFD)
[R] This document shows which equipment, lines, control loops etc. must be demolished, modified, removed or relocated etc. in a revamping project. The existing engineering flow diagrams of a plant or unit to be revamped shall be used. In general, two sets of diagrams are to be prepared:
1. an updated existing EFD’s version for demolishing purposes, RFD’s;
2. new “as-built” EFD’s.

REVIEW
[R] Examination of documentation, i.e. draw­ings, specifications, procedures, and/or records, to obtain confidence of conformance to specified requirements

REVISION OF A DOCUMENT
[A] The result of changes of the contents of a document. The revision number makes a unique identification possible.

REWORK
[R] The process by which a nonconforming item is made to conform to a prior specified requirement by completion, remachining, reassembling, or other corrective means (ANSI N45.2).

RISK
[B] Exposure to mischance, danger, hazard, injury, damage, bad consequence or loss.

ROLL-UP
[A] Consolidation of progress from the lowest level into higher levels of either the WBS, the OBS or the CBS.
See picture below.

ROLL-UP RULES
[S] [output :] ROLL-UP FORECAST START DATES OF PWS ACTIVITIES TO ONE FORECAST DATE OF THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE EARLIEST FOUND FORECAST START DATE WILL BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP FORECAST FINISH DATES OF PWS ACTIVITIES TO ONE FORECAST FINISH DATE OF THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE LATEST FOUND FORECAST FINISH DATE WILL BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP ORIGINAL (ALLOCATED) MANHOURS OF PWS ACTIVITIES TO ORIGINAL MANHOURS OF THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE ORIGINAL MANHOURS ARE TOTALLED TO BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP REVISED (ALLOCATED) MANHOURS OF PWS ACTIVITIES TO REVISED MANHOURS OF THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE REVISED MANHOURS ARE TOTALLED TO BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP ACTUAL MANHOURS ON PWS ACTIVITIES TO ACTUAL MANHOURS ON THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE ACTUAL MANHOURS ARE TOTALLED TO BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP FORECASTED MANHOURS TO COMPLETE ON PWS ACTIVITIES TO FORECASTED MANHOURS TO COMPLETE ON THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE FORECASTED MANHOURS TO COMPLETE ARE TOTALLED TO BE ROLLED-UP TO THE PDS

[S] [output :] ROLL-UP FORECASTED MANHOURS AT COMPLETION ON PWS ACTIVITIES TO FORECASTED MANHOURS AT COMPLETION ON THE RELATED PDS ACTIVITY (TASK CATEGORY)
[algorithm :] FROM ALL PWS ACTIVITIES RELATED TO THE PDS ACTIVITY, THE FORECASTED MANHOURS AT COMPLETION ARE TOTALLED TO BE ROLLED-UP TO THE PDS

RULES
[R] The Rules are to be understood as being all regulations and requirements decided by the Certification Authorities.

S-CURVE (see also MANPOWER and EARNED VALUE)
[B] S-curves show quantitative progress rather than qualitative because the important thing to know is whether the job is handled volumetrically at a rate appropriate for the given time span, rather than knowing for example which pieces of pipe are erected by a specific date.
S-curves can be applied to show for example
- Material take-off quantities
- Cubic yards of earth excavated
- Feet of cable installed
- Number of requisitions
- Dollar value of purchase orders
- etc.
[B] An S-curve is a graph of the cumulative value of manhours, percentage complete or cost against time. The S-shape is because most projects have a slow start, followed by a longer period of relatively constant activity at a high rate, and finally falling off of this rate to give a slow finish.
In manpower analysis the slope of the curve represents the rate of expenditure of manhours (= velocity) and the rate of build-up or run down of the momentum of work (= acceleration or deceleration of the pace of work).

S-curves should not be smoothened to look good. The purpose is to show deviations from the schedule and act upon, not to simulate a statement of security.SAFETY
[R] Those activities related to securing human life and health, protecting the environment and securing material values.

SAFETY RELATED
[R] Pertaining to those structures, systems and components of installations the satisfacto­ry performance of which is important to the prevention of accidents that could cause undue risk to the health and safety of the public, or to mitigation of the consequenc­es of such accidents (BS 5882*).

SAMPLE
[R] A group of items or individuals, taken from a larger collection or population, that provides information needed for assessing a characteristic (or characteristics) of the population, or which serves as a basis for action on the population or the process that produced it (BS 4778)
Note : The term may also be used to describe a portion of material taken for the same purpose from a larger bulk of material or a sample of observations. Many statistical techniques require that the sample shall be drawn at random.

SCHEDULE
[D] A plan that gives a list of activities, events, etc., together with the timing each activity, event, etc. should happen.

SCHEDULE INDEX
[B] SCHEDULE INDEX = PERCENT SCHEDULE USED / PERCENT WORK COMPLETED;

SCHEDULE PERCENT COMPLETE
[S] Percentage of budget at completion represented by budgeted cost of work scheduled.
[S] SCHEDULE PERCENT COMPLETE = 100 * BUDGETED COST OF WORK SCHEDULED / BUDGET AT COMPLETION.

SCHEDULE PERFORMANCE INDEX (SPI)
[M] An approximate indicator of schedule performnace to date, indicating the schedule status of a contract or an item as a percentage of the earned value.
SPI % = (BCWP / BCWS) * 100;
An SPI of 100 % indicates that all work is completed, but it does not indicate whether the work was compleetd on time.
[S] Index of budgeted cost of work performed and the budgeted cost of work scheduled.
[S] SCHEDULE PERFORMANCE INDEX = COST OF WORK PERFORMED DIVIDED BY BUDGETED COST OF WORK SCHEDULED.

SCHEDULE VARIANCE
[M] Indicates how far behind or ahead of schedule the project is for the current period or for all periods to date.
[S] Difference between the earned value and the planned value. A negative schedule variance means the earned value is less than the plan and the project is behind schedule.
[S] SCHEDULE VARIANCE = EARNED VALUE – PLANNED VALUE; i.e. SV = BCWP – BCWS;
[B] If BCWP (budgeted cost of work performed) is greater than BCWS (budgeted cost of work scheduled), then SV (schedule variance) is greater than 0 (zero), thus ahead of schedule.
[B] If BCWP (budgeted cost of work performed) is less than BCWS (budgeted cost of work scheduled), then SV (schedule variance) is less than 0 (zero), thus behind schedule.
[B] A negative schedule variance indicates that the earned value is less than the plan, and the project is behind schedule.

SCHEDULE VARIANCE INDEX
[S] Index of the variance between budgeted cost of work performed and the budgeted cost of work scheduled.
[S] SCHEDULE VARIANCE INDEX = (BUDGETED COST OF WORK PERFORMED – BUDGETED COST OF WORK SCHEDULED) / BUDGETED COST OF WORK SCHEDULED;
[B] If the schedule performance index is greater than 1 (one), then the earned value is ahead of plan, thus good performance.
If the schedule performance index is less than 1 (one), then the earned value is behind plan, thus poor performance.
[B] SCHEDULE VARIANCE = EARNED VALUE – PLANNED VALUE;
[B] SCHEDULE VARIANCE = BUDGETED COST OF WORK PERFORMED – BUDGETED COST OF WORK SCHEDULED;
[B] Also referred to as the ratio of the earned value to the plan. A value in excess of 1 means that the earned value is ahead of plan, thus good performance.

SCHEDULED AUDIT
[R] An audit applied on a scheduled basis after contract award. This audit evaluates, but is not limited to, the effectiveness of the QA program, pertaining methods, manuals, procedures and instructions.

SCHEDULING
[A] Relating activities with deliverables, deliverables with costs, costs with budget, budget with manhours, manhours with activities.
[R] The proper assignment of resources to complete the work within the contract time scale and in the most efficient manner.

SCRAPPING
[R] Decision to reject a product or a service (NS 5801).

SENSIVITY
[B] The quality of being keenly susceptible and responsible of external forces.
One cost account may have greater impact on the overall project cost than another cost account. The analysis of contingency per cost account indicates the potential areas with high sensivity (for example concerning labor cost versus labor productivity). Additional surveillance for these cost accounts should therefore take place.

SERVICE LIABILITY (See:Product liability

SERVICES
[R] The performance by a supplier of activities such as design, fabrication, inspection, non-destructive, examination, repair or installation (IAEA-50-SG-QA1).

SHOP SURVEY
[R] Same as supplier evaluation. This term is being phased out of Badger procedures.

SITE
[R] The location of both on-plot and off-plot units and facilities which are intended to be constructed

SOFTWARE QUALITY ASSURANCE
[R] Program Requirements: New QA Professional Field covered by requirements in MIL-S­-52779 and ISO 9005 for the development, implementation and maintenance of a Quality Assurance Program for Computer Software.

SPECIFICATION
[R] The document that prescribes the require­ments with which the product or service has to conform (ISO 8402)
Note : The limits of acceptability must be includ­ed in the document referred above.

SPECIMEN
[R] Binding example of a product manufactured by the contractor’s manufacturing equipment (NS 5801).

STANDARD
[R] A document approved by a generally recog­nized body which results from the process of formulating and applying rules for an orderly approach to a specific activity or a physical specimen giving examples of professional performance of work.
Note : This definition includes Badger’s and/or Client’s standards.

START , EARLY -
[S] The earliest date a task or activity can start, based on the critical path.

START , LATE -
[B] The latest date on which a task or activity can start without adversely affecting the critical part of the project.

START VARIANCE
[S] Difference between baseline start and current start. Start variance = baseline start minus current start. A value less than zero indicates slippage from the baseline plan.

STATUS , ACTIVITY -
[M] Indicates whether the activity is hold, started & cancelled, not started & cancelled, etc.

STATUS , DOCUMENT -
[A] Describes the purpose of use of a document (including the authorization of use). Within a certain status, several substatuses can be defined.

90 % SYNDROME
[B] Progress and expenditure reports look favorable until 90 % completion is reached; then the last 10 % shows a considerable overrun in manhours and schedule time. This is mainly caused by :
- unrealistic manhour budgets and unrealistic schedule periods
- no fixed yardsticks to measure progress against
- assuming that meeting a schedule date means no further charge of manhours (for example follow-up, removal of holds, replies to queries, etc. even after AFC)

STORAGE
[R] The act of holding items at the construc­tion site or in an area other than its permanent location in the plant (ANSI 45.2).

SUBCONTRACTOR
[R] Any organization or individual under contract supplying items or services to the contractor.

SUPPLIER (See:Contractor)

SUPPLIER EVALUATION
[R] An appraisal to determine whether or not a supplier is capable of producing a compo­nent, product or service in accordance with a specified requirement, and providing objective evidence thereof (ISO 6215, BS 5882).
Note : Supplier’s QA/QC system to be evaluated as well.

SUPPLIER PERFORMANCE EVALUATION
[R] Assessment of a supplier’s control of quality carried out during and after completion of manufacture.

SURVEILLANCE (Quality)
[R] The continuing monitoring and verification of the status of procedures, methods, conditions, processes, products and servic­es, and analysis of records in relation to stated references to ensure that specified requirements for quality are being met (ISO 8402).

SURVEILLANCE CHECK PLAN
[R] An instruction document that defines and prescribes the manner and sequence of performing manufacturing or construction site surveillance.

SYSTEM
[R] Formalized collection of mutually coordi­nated procedures (NS 5801).

SYSTEM AUDIT
[R] An audit of effectiveness of the quality assurance program and pertaining methods, procedures and instructions.

TASK CATEGORY
[M] See also ‘activity class’. It bundles certain tasks or activities with common characteristics together in that the activity class or task category specifies the kind of work. Task category “A” is administrative and normally limited to 10 % of the budgeted manhours per department or section.
[S] A discrete unit of work that occurs over time. In general, any level a project’s WBS.
[A] Contrary to a code of account, a task category identifies the type of work, indicating what sort of work (activities) is happening, rather than the object (deliverable) of the work.
[A] Synonymous with work-package.

TESTING
[R] The determination or verification of the capability of an item to meet specified requirements by subjecting the item to a set of physical, chemical, environmental or operating conditions (ISO 6215, BS 5882 and ANSI N 45.2).

TIME AND MATERIALS (TM)
[R] A time-and-materials contract that provides for reimbursing the contractor for actual direct labour hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses and profit plus materials at specified rates on cost.

TIME AND MATERIALS OPEN ENDED (T&MOE)
[R] A time-and-materials contract with no funding limitation on expenditures.

TIME CARD
[A] At some contractors, hours are booked on charge number (project- or jobnumber) and task category. In fact, to accurately record how many hours are related with what object of work (i.e. deliverable or type of material), the hours should be booked on corresponding codes of account as well, otherwise it is impossible to know for example how much money is spent on earthwork, cooling towers, crystallizers, etc.

In this sample, the time card conatins WBS work breakdown structure), OBS (organization breakdown structure) and CBS (cost breakdown structure) information.

TRACEABILITY
[R] The ability to trace the history, applica­tion or location of an item or activity, or similar items or activities, by means of recorded identification (ISO 8402).

TRAINING
[R] A continuous program of learning to gain knowledge and improve one’s ability in any subject, art or profession. Developing skills and attitudes through self-teaching, working on-the-job, workshop seminars, or formal classroom instructions.

TRENDING
[B] In addition to the overall project, project trending methods can be applied to specific work areas or activities as well. The most common use is for schedule and cost trending. Typical applications are for example :
- Engineering
. manhour expenditure v. budget
. productivity/performance v. target
. drawing production rate v. plan
. final MTO v. estimate
- Procurement
. Inquiry/po cycle time v. plan
. Purchase commitment rate v. target
. Actual vendor delivery time v. promise
- Construction
. Labor manhour expenditure v. budget
. Labor productivity/performance v. target
. Equipment/material erection rate v. plan
. Material quantities used v. estimated
Results of trends should normally not be used as forecasts, but persistent trend indications should be taken into account when making forecasts.

TYPICAL
[R] When associated with a dimension, means that the dimension applies to all features that appear to be identical in size and configuration. The tolerance stated for a dimension labelled typical also applies to each identical feature.

UNIT
[A] Functional part of a plant.
[O] In practice, the same as AREA, as far as project controls is concerned.

UNIT OF MEASURE
[S] Used to represent usage, such as days, hours, cost or quantity.

USE AS-IS
[R] A disposition which may be imposed for a nonconformance when it can be established that the discrepancy will result in no adverse conditions and that the item under consideration will continue to meet all engineering functional requirements, including performance, maintainability, fit, and safety (ANSI N45.2).

UTILITIES FLOW DIAGRAM (UFD)
[R] This document shows how utilities are generated and distributed from the source or supply point to the various parts of an installation. The diagram shows common control loops, additional equipment that is deemed necessary to supply the utility as required and the safety measures necessary. The diagrams shall be drawn in accordance with the geographical layout of the plant.

VARIANCE
[S] Deviation between actual and planned performance. Some elements are :
- schedule variance, i.e. difference between budgeted cost of work performed and the budgeted cost of work scheduled
- cost variance, i.e. difference between budgeted cost of work performed and the actual cost of work performed
- variance at completion, i.e. difference between latest revised estimate at completion and the baseline budget at completion; if value is less than zero, then costs are projected to be over budget when the work is completed
[B] Cost variance shows whether the work done costs more or less than estimated.
Schedule variance gives a cost measure of how far behind or ahead of schedule the cost account, WBS item or the project is.

VARIANCE AT COMPLETION (= VAC) ; AT COMPLETION VARIANCE (= ACV)
[S] The difference between the latest ESTIMATE AT COMPLETION (EAC) and the baseline BUDGET AT COMPLETION (BAC). A positive value indicates that the task is proceeding as planned; a negative value indicates a cost overrun.
[A] At contract level, total budget is usually equal to the contract value; therefore, the difference between BAC and EAC forecasts a contract overrun/underrun.

Interpretation of AT COMPLETION VARIANCES

B A C
E A C
A C V
DESCRIPTION
1
1
0
forecast on cost
2
1
1
forecast under cost
1
2
(1)
forecast over cost

VARIANCE , END -
[S] The difference in end between the baseline plan and the current plan. A negative value indicates schedule overrun.
[S] END VARIANCE = BASELINE END – CURRENT END.

VARIANCE TRESHOLDS
[M] Variance tresholds are specified as FAVORABLE PERCENT, UNFAVORABLE PERCENT, FAVORABLE COST, UNFAVORABLE COST, FAVORABLE EQUIVALENT WORK MONTHS and UNFAVORABLE EQUIVALENT WORK MONTHS. They are boundaries specified for each level of a structure in a project.

VARIANCE , USAGE -
[M] Difference between baseline total usage and the current plan total usage (actual plus estimate to complete) for a task or activity.

VENDOR
[R] Any organization or individual which offers items or services to a potential client.

VENDOR PRINTS
[R] All of the documents submitted by a vendor to purchaser for either review, approval or record purposes.

VERIFICATION
[R] The act of reviewing, inspecting, testing, checking, auditing, or otherwise verifying and documenting whether items, processes, services, or documents conform to specified requirements (ISO 6215, BS 5882 and ANSI N45.2*).

VERIFIED CERTIFIED MILL TEST REPORT
[R] A CMTR whose authenticity is confirmed by positive proof. Photocopies of CMTR’s are not generally acceptable without further laboratory check testing (to the require­ments of the appropriate product specifica­tion) unless the vendor or supplier veri­fies the photocopy by company stamping and signing in ink on the photocopy that the copy is either an original or stating the actual location where the original is held.

VERSION
[D] Occurrence of something (project, document, etc.) in which details have changed from previous occurrence

WAIVER
[R] Written authorization to use or release a quantity of material, components or stores already produced but which do not conform to the specified requirements (ISO 8402).

WEIGHT
[M] The original amount of hours reserved to do the work for the activity.

WEIGHT PERFORMED
[M] The scheduled, forecasted and actual amount of hours needed to do the work to be performed for the activity.

WELDING PROCEDURE SPECIFICATION (WPS)
[R] The Welding Procedure Specification shall list in detail the various base metal P Numbers to be joined by welding, the filler materials to be used, the range of preheat and post-weld treatment, thickness, and other variables described for each welding process as either essential or non-essential (ASME Section IX).

WITNESS
[R] The operation, test, or examination in which the purchaser’s inspector must be present during the specified activity.

WITNESS POINT
[R] Point of which the QA department shall be notified and work shall not proceed until required inspections and tests have been witnessed.

WORK BREAKDOWN STRUCTURE (= WBS) (see also : EIS)
[O] The WBS is the preferred management tool for identifying and defining the work. The WBS provides a structured framework for planning and controlling the cost, schedule and performance.
Example of a WBS
- Project phase
- Main group
- Function group
- Group activity
- Task

[O] Hierarchical structure that is used to break down a project into identifiable components.
[S] Usually a deliverable oriented hierarchical tree that organizes and defines the project tasks that are necessary to accomplish project objectives.
[B] For each intersection point of the matrix must be assigned
- description of the work performed
- who is responsible for the work
- time phased budget for the work
- resources required
- schedule start & finish
These cost accounts represent sizable amounts of work (-packages); each of them could be broken down into lower level tasks and job assignments.
According to the WBS, roll-up of physical progress and cost progress is applied.
[M] According to the PACS procedures, a WBS has two sections
- higher level
1 . project
2 . job
3 . area (unit)
- lower level
4 . major code of account
5 . subaccount
6 . work package element (which is an aggregate of various forms of documents), mainly used for inquiry and subcontracting; similar to Company task category.
[O] For each WBS element, cumulative values can be monitored, i.e. budget, earned value, actual costs, re-estimate and cost variance.
[B] A large project can be subdivided into its various units, areas and plant elements to facilitate control and reporting. The number of sub-project numbers should be kept to a minimum to give reasonable control. On a major multi-unit project the following breakdown is recommended
- overall project number for summary cost reports and common/bulk requirements
- individual sub-project numbers for each major identifiable process unit within complex
- one or more sub-project numbers for offsite systems, depending on size and scale
- separate sub-project numbers for geographically distinct locations such as marine terminals, rail loading, dispatching stations, etc.
[B] A WBS has various levels :
- Level-1 of a project WBS represents the quantified project objective, i.e. the total facility.
- Level-2 contains the major work segments grouped as subprojects. These work segments may be several process units comprising a process area or aggregation of services.
- Level-3 is subordinate to level-2 and further defines the project in terms of individual plant units as in a process area.
- Level-n : Each descending level provides increasing detailed definitions of the individual tasks, until organizational elements (taken from the organizational breakdown structure OBS) can intersect with the WBS elements. The intersection is the responsibility assignment matrix. Each cell in the matrix is in effect a management control point and can have a cost center number (account code) assigned to. At OBS discipline level, budgets are approved, costs are collected and performance is measured.
[W] WBS, work breakdown structure, representing the project’s deliverables

WORK PACKAGE
[A] A collection of activities, materials, manhours, equipment, etc. that is needed to reach a specific deliverable.
The NAM for example calls work packages ‘cost, time, resource’, which is the same as CTR-code used by Company.
A work-package may have 1 or more codes of accounts.

WORK PROCESS
[A] A specific cluster of work performed by a human resource or machine, in order to obtain a certain result or situation, which is defined to execute one or more business functions.

WORK STANDARD
[R] Document or physical specimen giving example of professional performance of work.