Project Management of Change / Rev. No. 5

Project Management of Change / Rev. No. 5

Petroleum Development Oman L.L.C.

Project Management of ChangeProcedure

Document ID / PR-1247
Document Type / Procedure
Security / Unrestricted
Discipline / Project Engineering
Owner / UEP/3
Issue Date / 22-04-2015
Revision / Rev 5

Copyright: This document is the property of Petroleum Development Oman, LLC. Neither the whole nor any part of this document may be disclosed to others or reproduced, stored in a retrieval system, or transmitted in any form by any means (electronic, mechanical, reprographic recording or otherwise) without prior written consent of the owner.

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iDocument Authorisation

Authorised For Issue–22ndApril 2015

Document Authorisation
Document Authority
Julian Masters UEP
(CFDH-Project Engineering) / Document Authority
Leandro Cuberos MejiaUEP3
(CFDH-Project Services) / Document Custodian
Sreekumar Nair UEP33
(Functional Lead – Cost Engineering) / Document Controller
Said Harmali UEOI211
(IM Coordinator)
Date: / Date: / Date: / Date:

iiRevision History

The following is a brief summary of the most recent revisions to this document.Details of all revisions prior to these are held on file by the issuing department.

Version No. / Date / Author / Scope / Remarks
05 / April 2015 / Sreekumar Nair UEP/33 / Introduce;

• No-Change Mindset after DG3b.
• Set of Change Criteria
• Asset BVDs, CRP, and Approval levels for <USD 50 mln projects
• PMC tool
• Portfolio level reports and audit requirements

04.1 / May 2012 / Paul Frost UEP/3 / Minor inconsistencies corrected.
04 / Jan 2012 / Paul Frost UEP/3 / Approved. Includes Baseline Value Drivers
03 / Oct 2011 / Paul Frost UEP/3 / Issued for Review - Update in line with RHIP
02 / Mar 2011 / ANA Al Suleimany OTE/2 / Approved
01 / Jul 1999 / Issued for review

iiiReview Team

Name / Portfolio
Mata'Ni, Mohammed UEP/331 / Function
Mirza, Hamza UEP/311 / Function
Ting, Kong Yu CTP/1 / CPD
Akhavan, Majid CTP/11 / CPD
Sesha Guru, Sankareswaran GGE/4 / Gas
Narayanasamy, Rajesh GGE/41 / Gas
Stanley Fernando, Kingston FBI/3 / Infrastructure
Mithra, Vimal ONE/43 / North Oil
Cruickshank, David UIR/5 / RAH
Pentapalli, Srinivasa UIR/53 / RAH
Sidharthan, Rajesh OSE/4 / South Oil
Agrawal, Pankaj OSE/41B / South Oil
Oluwapojuwo, Olalekan OSE/41M / South Oil

ivRelated Business Processes

Code / Business Process
CP117 / Project Engineering Code of Practice

vRelated Corporate Management Frame Work (CMF) Documents

The related CMF Documents can be retrieved from the Corporate Business Control Documentation Register CMF.

EXECUTIVE SUMMARY

This document describes the process for controlling and managing changes during the DEFINE and EXECUTEphases of PDO projects. Change control is an important factor in ensuring that projects are completed on time and within budget. The document sets out a series of key Baseline Value Drivers for the projects which shall be developed during SELECT phase and then describes a structured method for assessing and approving (or rejecting)changes against these parameters.

The ‘Stage Gate’ methodology described provides a consistent approach to the assessment of ChangesbyChange Review Panel consisting of senior project personnel. The Change Review Panel meets regularly and acts as the reviewing and decision making body. Approval Levelsassociated with varying levels of change are also defined in the document.

Contents

iDocument Authorisation

iiRevision History

iiiReview Team

ivRelated Business Processes

vRelated Corporate Management Frame Work (CMF) Documents

1Introduction

1.1Background

1.2Distribution and intended audience

2Objective, Purpose and Scope

2.1Purpose

2.2Objective

2.3Scope

2.3.1Exclusions

3Basics of PMOC Process

3.1Project Basis

3.2Changes

3.3Change Criteria

3.4Baseline Value Drivers

3.5Classification of Changes based on impact levels

3.6Approval Authorities

3.7Change Review Panel (CRP)

4PMOC Process

4.1Identifying and Recording Change

4.2Screening

4.3Impact Assessment

4.4Change Review

4.5Implementation of Change

4.6Reporting Change

4.7Emergency Change Process

5PMOC Process for Projects <50M$

5.1South Oil Asset

5.1.1BVDs and Approval Authorities

5.1.2CRP – Change Review Panel

5.1.3Change Coordinators

5.2North Oil Asset

5.2.1BVDs and Approval Authorities

5.2.2CRP – Change Review Panel

5.2.3Change Coordinators

5.3Gas Asset

5.3.1BVDs and Approval Authorities

5.3.2CRP – Change Review Panel

5.3.3Change Coordinators

5.4Infrastructure Asset

5.4.1BVDs and Approval Authorities for Projects greater than 20M$

5.4.2BVDs and Approval Authorities for Projects less than 20M$

5.4.3CRP – Change Review Panel

5.4.4Change Coordinators

5.5Change Register

5.6Reporting

6Funding the Change

7Roles and Responsibilities

7.1Project Manager / Project Engineer

7.2Project Services Lead

7.3PMOC Coordinator

7.4Change Initiator

7.5Screening Team

7.6Impact Assessor

7.7Change Review Panel (CRP)

7.8Change Owner

8PMOC Tool

9Portfolio Level Reporting & PMOC Audits

10Abbreviations

11Appendix-1 – Attachments

1Introduction

1.1Background

The purpose of the Project Management of Change process is to improve, maximise and protect the ultimate integrity and value of PDO projects by ensuring that all changes to the agreed Project Basis are robustly managed.

PDO projects will implement the Project Management of Change (PMOC) process through the DEFINE and EXECUTE phases, effective from the commencement of DEFINE phase (post Decision Gate 3b (DG3b)).

This Project Management of Change procedure sets out the PDO process for controlling changes to the agreed Project Basis and assure that further development and definition from starting point (DG3b) is properly managed, communicated and documented.

1.2Distribution and intended audience

This document will be archived electronically within the PDO Livelink database, which will hold the definitive current version.

The intended audience is all personnel involved in PDO projects, including Subsurface, Facilities Delivery, Wells Delivery, OR&A, HSSE & SD, QA/QC, Project Services, C&P, Finance, as well as the BOM, DRB and DE.

2Objective, Purpose and Scope

Control of project change is an essential element in the management of design integrity and project performance. The primary aim of this procedure is to establish a systematic approach to the identification, quantification, evaluation, approval, implementation and reporting of changes to the approved Project Basis, during the DEFINE and EXECUTE phases of the project.

This Procedure describes how to manage the early identification, recording, documentation, screening, impact assessment, review, approval, implementation and reporting of a Change.

Early identification of potential Changes, rapid information flow and timely decision making will lead to success in this process.

2.1Purpose

The purpose of this procedure is to set standard process of managing deviations to approved Project Basis, in PDO projects.

2.2Objective

There are four basic objectives for Project Management of Change:

1. To record changes to the project’s approved basis for historical, accountability and auditing purposes;
2. To control changes – identify changes, screening, impact assessment and decision making;
3. To provide early warning of changes and facilitate timely decisions regarding potential changes;
4. To support Cost and Schedule Forecasting.

2.3Scope

This procedure applies to all activities performed and deliverables produced by the project team (including Subsurface, Facilities Delivery, Wells Delivery, OR&A, HSSE & SD, QA/QC, Project Services, C&P and Finance) from completion of the SELECT Phase, through DEFINE and EXECUTE Phases.

Any proposed deviation from this process shall be reviewedby UEP33 and get endorsed by CFDH – Project Services (UEP3).

2.3.1Exclusions

This procedure does notcover:

•Deviation from PDO Standards – please refer to PR-2066 – Managing Deviations from Standards & Procedures

•Requests to deviate from approved Contractors or Vendors.

•Revision of Budget and re-phasing processes.

•Facilities change proposals (FCPs) which deal with changes to installed facilities and are governed by the Field Change Proposal procedure PR-1001a.

3Basics of PMOC Process

Figure: - 2. PMOC with ‘No Change Mindset’

Good scope definition is fundamental to minimizing changes in a project. Good scope definition, coupled with a clear set of project objectives which are agreed with all stakeholders ensures a sound basis for the project. This is the biggest and most important way to avoid future preventable changes.

After DG3b, a “No-Change Mindset” should govern the project and changes in accordance to Change Criteria (section 3.3) will only be considered.

3.1Project Basis

Project Basis is a set of technical, cost, time and strategy/plan documents approved at decision gates, which defines the project scope.Examples of Project Basis documentation;

During the DEFINE Phase (endorsed at DG3b):

• Field Development Plan
• Concept Selection Report
• Basis for Design documentation
• DEFINE Phase Budget
• Type-2 Cost Estimate and Estimate Basis
• DEFINE Phase Timeline
• Integrated Schedule, major milestone, and Schedule Basis
• Project Execution Strategy/Plan
• Contracting Strategy/Plan

During the EXECUTE Phase (endorsed at DG4):

• FEED documentation
• Project Specifications
• EXECUTE Phase Budget (without P50 Contingency) and basis of Cost Estimate
• Integrated Schedule, major milestone, and Schedule Basis
• Project Execution Strategy/Plan
• Contracting Strategy/Plan

3.2Changes

Changes are deviations from the Project Basis and cover areas such as omissions or gaps in scope of work, incomplete definition of intermediate deliverables or methods, changed project premises or external influences.

The project needs to manage such Changes to ensure there is an auditable mechanism for decisions related to the content and consequences of these Changes.

3.3Change Criteria

Changes may be considered only if they meet one or more of the following Change Criteria:

Criterion 1.The Change is essential to maintain health, safety, environment and security standards;

Criterion 2.The Change is essential to comply with legislation or results from a change in legislation;

Criterion 3.The Change is essential for system or component functionality or operability;

Criterion 4.The Change is essential for the implementation of the project, due to variation in original premises (estimate basis, schedule basis, strategies and plans, etc.)

In exceptional cases, BOM/DE may propose specific changes and in such cases, the project team shall use the PMOC process. Examples for such cases;

• The Change will result in a significant reduction in the life cycle cost without impact on schedule.
• Availability improvement as a result of improved reservoir data.

3.4Baseline Value Drivers

For the purpose of the PMOC process, the Baseline Value Drivers (BVDs) are the set of targets approved at decision gate. BVDs are approved at the Decision Gate (DG3b / DG4) by the DE.

The BVDs for a project are determined at the end of SELECT Phase and the approved BVDs at DG3b will form the basis for the PMOC process during the DEFINE phase.

At the end of DEFINE phase, the BVDs are revised, updated or added with new documentation and the approved BVDs at DG4 will form the basis for PMOC process during the EXECUTE phase.

A change to the Baseline Value Drivers will either increase or erode the value of the project and is therefore subject to the PMOC.

Examples of Baseline Value Drivers are:

1. Time – Project Schedule (Major Milestones)
2. Cost – (Opex / Capex budgets)
3. Target Asset Production
4. Asset Integrity
5. Asset Availability
6. Reserves

All projects >$US50M will have their individual BVD set developed at DG3b. If Change occurs during the DEFINE Phase (e.g. reserves, project budget or schedule milestones changed) an updated BVD set must be developed at DG4.

3.5Classification of Changes based on impact levels

The potential impact of a Changemust be considered when applying the PMOC process. Changes can be classified in four Levels according to their cumulative impact (total impact of all approved Changes + impact of the current Change) on each BVD. Below table provides guidance to set impact levels.

Impacts on
(BVDs) / Metric / Baseline / Level 4 Change / Level 3 Change / Level 2 Change / Level 1 Change
Major Milestone(s) / Months / .... / Changes with no impact on BVDs
or with impacts
<0.1%  / <1% 
or 1 month / <5% 
or 3 months / >5% 
> 3 months
DEFINE Budget (not applicable during EXECUTE phase) / $ / .... / <1%  / <5% 
or US$100k / >5% 
or US$1mln
Type-2 Estimate (not applicable during EXECUTE phase) / $ / .... / <1%  / <5% 
or US$100k / >5% 
or US$1mln
EXECUTE Budget(including P50 Contingency) / $ / .... / <1% 
or
US$5mln / <5% 
or
US$10mln / >5%
or US$50mln
Operating Expenditure / $M/Y Opex / .... / <1%  / <5%  / >5% 
Asset Production / k bopd / .... / <1%  / <5%  / >5% 
Asset Integrity / QRA
(max IRPA) / .... / <1%  / <5%  / >5% 
Asset Availability / % / .... / <1%  / <3%  / >3% 
Reserves / M Boe / .... / <1%  / <5%  / >5% 
(QRA - Quantitative Risk Assessment, IRPA - Individual Risk per Annum)
General Guideline on change level / <0.1%  / <1%  / <5%  / >5% 

As part of the project specific Management of Change elements in Project Controls Plan, the project team shall set up the BVDs. The baseline values (column-3 of above table) shall bedocumented and the deltas are calculated as per the percentages given. Wherever the percentage value is more than the given discrete values, the discrete values shall be applicable.

3.6Approval Authorities

The approval authority of a Change is on the basis of the impact level on the BVDs (refer to 3.4). The below table describes the Approval Authority for each impact level.

Change Level / Approval Authority / Comment
Level 4 / Project Engineer / To be presented to next Change Review Panel, for info.
Level 3 / Project Manager / To be presented to next Change Review Panel, for info.
Level 2 / BOM / CPD Projects / BOM, CTSM and CPDM shall join the CRP meeting to review Level 2 Change.
After decision by BOM, inform DE
Asset Engineering Manager (AEM) / Asset Major Projects (>50M$) / BOM and AEM shall join the CRP meeting to review Level 2 Change.
After decision by AEM, inform DE
Level 1 / DE / CPD Projects / DE, BOM, CTSM and CPDM shall join the CRP meeting to review Level 1 Change
Asset Major Projects (>50M$) / DE, AEM and BOM shall join the CRP meeting to review Level 1 Change

3.7Change Review Panel (CRP)

The objectives of the Change Review Panel are;

• To review the decisions taken by PE and PM for Level 4 and Level 3 Changes
• To take decisions for Level 2 and Level 1 Changes
• Ensure that all implications of the Change are considered before being accepted or rejected, for all Changes.

The Change Review Panel will meet on a regular basis; monthly on a specific day and at a specific time. CRP can be called to meet by the PMOC Coordinator when the need arises on or at the discretion of the Project Manager. If required, the CRP should be able to convene within 24 hours.

The PMOC Coordinator will work with the Project Manager to ensure that the composition of the CRP is appropriate that every affected domain and/or function is adequately represented.Whenever Level 2 or Level1 Changes are been reviewed, ensure that the respective Approval Authorities are present in the CRP.

CRP Position / Project Position
Chairman / Approval Authority / Project Manager
Secretary / PMOC Coordinator
Member / Project Manager / Project Engineer
Member / Facility Delivery Manager
Member / Project Services Manager
Member / HSSE & SD Lead
Member / OR&A Lead
Member / QA/QC Lead
Member / Discipline Lead(s)
Member / C&P
Member / Finance
Member / Subsurface team Lead
Member / FEED (Office) Manager
Member / Wells lead
Member / Functional technical authority (as required)

The CRP quorum is minimum five members, including the Approval Authority. Depending on the nature of the Change, the Chairman may decide to relieve some CRP members and/or invite other function/discipline/partyas appropriate.

Within the mandate given by the Decision Executive, the Project Manager owns the budget. However, it is the responsibility of the Project Managerto ensure that the correct overall approval is obtained, in particular if authorisation is required from outside the project team (e.g. PDO Governance and Controls body, DRB, PDAB, Project Steering Committee, Tender Board, etc.)

4PMOC Process

The standard procedure PR-1247 is applicable for all projects.

To be able to follow this process, each project requires;

• Project Basis documentation (doc. Number and revision number)
• Documented Baseline Value Drivers and its threshold limits/ranges
• Approval matrix
• Composition of Change Review Panel and CRP meeting schedules
• PMOC Coordinator
• Discipline Leads (as per PCAP TAs)

These specific details shall be documented in the Project Controls Plan, in the section ‘Project Management of Change’.

Figure: - 1. PMOC Process in the ORP

Projects below USD 50 Million will follow the PMOC process; however the CRP, BVDs, etc. will be those at the Asset level, as described in Section 5.

4.1Identifying and Recording Change

A Change can originate essentially from anywhere; within the Project Team, Contractors, Operations, etc. and the source of the Change can be Contractor's change requests, Design/Constructability/Operability Reviews, HSSE Reviews, Info/updates from Vendors, Info/Updates from Govt/Legal sources, etc.

The Change Initiator, in consultation with Discipline Lead, shall fill in Section-1 of CPF with all available details, including supporting documents and references and issue immediately to PMOC Coordinator, before commencing any study work.

Depending on the nature of the potential change, the PMOC Coordinator shall consult the appropriate Discipline Leads, PE or PM to decide whether the proposed change is a deviation of Project Basis (Change) or not. If it is identified as a Change, it will follow the PMOC process or else the proposal be discarded or follow otherproject controls processes, such as forecasting.

PMOC Coordinator shall verify the contents and collaborate with the Change Initiator and subject matter experts such as Cost, Schedule, HSSE, Finance, Technical Discipline Leads, etc. to complete Section-1 of CPF, if any essential details are missing. Once the Section-1 of CPF has been satisfactorily completed, PMOC Coordinator shall register the potential change into Change Register.

4.2Screening

Screening Team shall consist of at least two members from the CRP and the PMOC Coordinator. Depending on the nature of the Change, PMOC Coordinator shall select the screening team. The team shall review the Change Proposals and based on the specifics of the Change, identify the disciplines or teams to be involved in the Impact Assessment of Change and the BVD(s) assigned to each Impact Assessor.

Screening Team shall identify and nominate a Change Owner for the proposed Change.

The Screening Team shall meet as frequently as required, however once in a week as a minimum, when any Change Proposal is available for Screening.

The PMOC Coordinator shall complete CPF Section-2.