Introduction To Construction Management

Engineering Encyclopedia
Saudi Aramco DeskTop Standards
INTRODUCTION TO
CONSTRUCTION MANAGEMENT
Note: The source of the technical material in this volume is the Professional
Engineering Development Program (PEDP) of Engineering Services.
Warning: The material contained in this document was developed for Saudi
Aramco and is intended for the exclusive use of Saudi Aramcos employees.
Any material contained in this document which is not already in the public
domain may not be copied, reproduced, sold, given, or disclosed to third
parties, or otherwise used in whole, or in part, without the written permission
of the Vice President, Engineering Services, Saudi Aramco.
Chapter : Project Management

File Reference: PMT-105.01
For additional information on this subject, contact

PEDD Coordinator on 874-6556
Construction Management
Introduction to Construction Management
Content
Page
VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL

PROJECT ....................................................................................................................... 1
Introduction........................................................................................................... 1
Execution Phases of a Project.............................................................................. 1
Study and Development Phase ................................................................. 2
Preliminary Engineering Phase.................................................................. 3
Detailed Engineering Phase ...................................................................... 4
Construction Phase.................................................................................... 5
Project Completion and Close-Out Phase ................................................. 6
CONSTRUCTION MANAGEMENT ACTIVITIES FROM INITIAL PROJECT
PLANNING THROUGH START-UP ................................................................................ 8
Introduction........................................................................................................... 8
Construction Management During Project Development...................................... 8
Construction Management During Engineering .................................................... 9
Constructability Studies ............................................................................. 9
Coordination with Procurement................................................................ 10
Construction Contracting .................................................................................... 10
Construction Management During Construction ................................................. 11
Construction Execution and Controls....................................................... 11
Mechanical Completion and Start-Up ...................................................... 12
PRIMARY DUTIES AND RESPONSIBILITIES OF THE PROJECT ENGINEER .......... 13
Duties and Responsibilities................................................................................. 13
Surveillance of Construction Contractors................................................. 13
Engineering Support ................................................................................ 14
Procurement Support............................................................................... 14
Monitoring Project Performance .............................................................. 14
Project Status Reporting to Management ................................................ 14
Close-out of Project ................................................................................. 15
GLOSSARY .................................................................................................................. 16
VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL

PROJECT
Introduction
The success of a project is determined by its methodical
development and systematic execution process. A project must
progress step-by-step through several planning and execution
phases within Saudi Aramco and contractor organizations. This
systematic execution approach ensures that the project moves
from one phase to the other with proper development and
documentation. The time and effort in the execution phases
may vary, depending upon the project size, the proponent
organization, and the project execution philosophy.
Execution Phases of a Project
In this section, we will discuss typical execution phases for a
small Saudi Aramco capital project. Like any large Saudi
Aramco capital project, small projects (less than $50 million) go
through similar execution phases. The five execution phases
during the project life cycle of a Saudi Aramco project are:
Study and Development
Preliminary Engineering
Detailed Engineering
Construction
Project Completion and Close-Out
A specific project work scope must be performed in each of

these phases before a project can progress to the next
execution phase. The complete definition of the work to be
performed and the schedule milestones that are to be met
should be predetermined for the systematic development and
successful execution of a project.
Execution Phases of a Project, cont'd

It is important to recognize that there are different company
organizations and contractors involved in the execution of a
project. It is the responsibility of the Saudi Aramco Project
Management Team (SAPMT) to ensure that there is
consistency in the project execution approach. By implementing
an effective Project Execution Plan (PEP) and instituting good
contractor coordination procedures, the Project Engineer should
channel various contractors toward focused project goals.
Study and Development Phase
This phase is also known as the project inception phase, when

the project needs are first identified. During this phase, a
project goes through the progressive development of the project
definition.
Several execution and scope ideas may be
introduced; some of these become superseded and outdated.
The earliest projections of cost and schedule must be tied
specifically to the project as scoped. The project development
activities that normally take place during this phase of project
execution are:
Identify the project needs
Define the project work scope
Evaluate the project alternatives

-
Process
Economics
Establish a project schedule
Prepare the preliminary cost estimate
Develop the project justification
Prepare Design Basis Scoping Paper (DBSP)

The completion of DBSP constitutes a major milestone of the
study and development phase. With the above information
generated, the project progresses to a stage where it obtains
funding (TC-68) for the next phase, i.e., Preliminary Engineering
Phase.
Preliminary Engineering Phase
Preliminary engineering is defined within Saudi Aramco as the

engineering activity that leads up to Expenditure Request
Approval (ERA). It begins after the issuance of a DBSP which
supports the project proposal by defining the Budget Item (BI)
scope and its schedule. The preparation of the DBSP is the
responsibility of the Facilities Planning Department (FPD). The
project proposal is the major product of the Preliminary
Engineering effort.
Before Preliminary Engineering can begin, the capital program
development sequence is completed and a preliminary study is
entered in the capital programs.
The Facilities Planning
Department (FPD), in conjunction with the proponent, develops
a DBSP which keys the SAPMT to begin the Preliminary
Engineering effort. Funding is provided by TC-68 funds.
Activities - The Preliminary Engineering phase includes those
activities that lead up to Expenditure Request Approval (ERA).

Those activities include (but are not limited to):
Performance of initial studies
Preparation of the Project Execution Plan (PEP)
Preparation of the project proposal
Production of a detailed Expenditure Request (ER) estimate
Preparation and award of the contract for design

engineering, procurement assistance and Construction (in
the case of an Lump Sum Turn Key [LSTK] contract).
Moneys are committed only after approval of ER

The work performed during the Study and Development Phase
and the Preliminary Engineering Phase has a significant impact
on the work activities during the later phases of the project
execution, i.e., Detailed Engineering, Construction, Mechanical
Completion, and Project Close-Out. The documents developed
during this phase result in establishing the project baselines,
and the actual performance which will be compared to these
baselines. These include budget, schedule and project work
scope, etc.
defines the objectives, plans,
requirements, and related information necessary for optimum
project execution.
The PEP communicates the Project
Manager's front-end project planning to the Saudi Aramco
Executive Management for their review and approval, and
provides information to the proponent. It relates the project
scope to the contracting and material plans, cost information
and schedule in a comprehensive review document.
Project
Execution
Plan
Project Proposal establishes the design basis and scope of the

proposed facilities, including size, general layout, types of
material, estimated funds required and the completion schedule.
The approved project proposal document is the final design
basis from which the ER is developed and from which all
approved scope changes are measured.
Project proposals range from those requiring minimal detail to

those involving extensively detailed documentation. The extent
of project proposal needed is agreed upon in the PEP by both
the project department and the project proponent.
ER Estimate is a definitive estimate prepared in support of a
request for Budget Item (BI) funding and is used as the basis for
project cost control.
Detailed Engineering Phase
Formal award of an engineering contract for the detailed design

usually occurs directly after the ER Approval (ERA). If the
contract needs to be awarded before ERA, funding may be
obtained by the use of additional TC-68 funds.

Detailed engineering includes engineering and drafting activities
associated with design functions and other engineering required
to accomplish the project work scope. Progress of 95% should
be achieved by no later than Mechanical Completion, including
completion of drawings, material take-offs, requisitions,
purchase orders, Saudi Aramco Material Stock (SAMS)
allocations, start-up and operating manuals. The final 5% of
engineering activities generally consist of as-built drawings (if
done in the design office), technical support to Construction by
home-office engineering and final close-out activities, including
demobilization. At 100% progress, technical and Construction
support activities are complete; the engineering staff, including
contractor project management and support personnel, are
completely demobilized.
The SAPMT has the responsibility for the engineering and
design of the project facilities.
Construction Phase
The Construction Phase begins when the contract development

sequence for the Construction contract is initiated, and is not
complete until financial close-out. The period between the two
events will vary with the type, size, and complexity of a project.
The major activities occurring during the Construction Phase are
the same for any project. Major variations among projects arise
from the timing and responsibility associated with those
activities that depend on the selected contracting alternative.
The Project Manager should make sure that the construction
should start at an appropriate time. Early field mobilization
without adequate engineering and materials can be costly and in
fact detrimental to the project schedule. The construction start
date should be developed after detailed analysis of engineering
and material schedules.
In addition, it is essential to
Construction success that the construction contracting plans are
in place. The Project Engineers should ensure that the work of
contractors and/or subcontractors does not interfere, resulting in
conflicts and claims.

Project Completion and Close-Out Phase
New plants and/or units acceptance involves distinctive

procedures and responsibilities for each of the following
activities, which occur during the completion phase of a project:
Mechanical completion
Performance acceptance (start-up and commissioning)
Final acceptance
Financial close-out
The engineering and project management business line is

responsible for delivering a completed facility, which includes
the completion of all exception items listed on the "Mechanical
Completion Certificate." Once start-up activities commence,
construction work schedules from that point to final completion
are subject to the approval of operations. Any design or
construction
deficiencies
found
during
start-up
and
commissioning are corrected by the agency designated by
operations and charged to the start-up phase. After the plant or
unit is accepted as mechanically complete, start-up,
commissioning and performance acceptance become the
responsibility of operations, operations engineering and
mechanical services.
Mechanical Completion for a facility, or any separable portion
thereof, is achieved when:
The facility, or portion thereof, has been completed

mechanically and structurally put in a tight and clean
condition, and otherwise constructed as provided in the
project specification.
All deficiencies, including those that could prevent or delay

safe and orderly prestart-up/start-up procedures by Saudi
Aramco or timely achievement of facility operation at the
conditions specified in the project specification have been
corrected.

Partial Mechanical Completion may be achieved with an
"exception items" listing of all unfinished items of work giving
dates for their completion. This Mechanical Completion status
is only established if the work can be finished thereafter without
impeding prestart-up activities.
Performance Acceptance - After Mechanical Completion, but prior
to final acceptance, a Performance Acceptance Certificate

(Form 7214) is usually required. The performance acceptance
should entail the start-up, commissioning and demonstration of
acceptance performance of the facility based on strict
compliance with the project plans and specifications.
Partial performance certificates may be used on larger projects
where phased-in completion is required.
Final Acceptance - Upon completion of all work and only after all
exception items are accepted, a final acceptance is approved by

the operating organization and the construction agency. Saudi
Aramco accepts the completed facilities from a contractor (final
acceptance) when all work, including remedial work, is complete
and the facilities have been successfully operated at the
conditions specified in the contract job specification.
Financial Close-Out formalities normally begin after Mechanical
Completion and during the start-up and commissioning of a
facility.
Financial close-out of projects that are essentially complete, in

service, and against which the major elements of cost have
been recorded, should not be unreasonably delayed. If the cost
of minor exception amounts, additional materials, or outstanding
change orders and contract payments can reasonably be
estimated, the Fixed Assets and Work-in-Progress Accounting
Department may approve the handling of such costs using a
special account called SP account.
CONSTRUCTION MANAGEMENT ACTIVITIES FROM INITIAL PROJECT PLANNING

THROUGH START-UP
Introduction
The Construction Phase is typically perceived to start after the
completion of the Detailed Engineering Phase. In many cases
the field work starts earlier with the initial construction activities
as site preparation, and civil work overlapping with the Detailed
Engineering Phase. Some people relate the construction
management function with the field work. But in reality, the
construction management function begins during the earliest
phases of the project development and lasts through the Project
Close-out.
The projects which fail to recognize the role of the construction
management function during the initial phases of the project
study and development phase, invariably feel the adverse
impact during the later phases of execution. The construction
input in the earlier phase can be incorporated in important
documents, e.g., the DBSP, the ER Estimates, PEP, etc. In this
section, we will discuss the role of the construction management
from the initial planning through the project completion.
Construction Management During Project Development
The construction management involvement during the project
study and development will result in getting valuable
construction input prior to finalizing important documents during
the execution phase. For example, the construction input is
useful in establishing project schedule during the study and
development phase. Construction input is also beneficial in
developing the following decision-making activities and
documents:
Preliminary Cost Estimates
Design Basis Scoping Paper
Project Schedule
Long-lead and Engineered Equipment
Construction Management During Engineering

Modular Design Options
Since the drawings and other engineering decisions have a
great influence on the Construction Phase, the construction
management's participation should be a project requirement
during both the Preliminary Engineering and Detailed
Engineering Phases. The key construction management staff
(e.g., the construction manager and the construction engineer)
should work closely with the engineering group. Some of the
activities of the construction team during the engineering
execution include:
Coordinate job-site information with engineering
Constructability analysis
Rigging studies for major lifts
Construction schedule development
Coordination with procurement group
Input in the ER estimate development
Assist in construction contracting
Constructability Studies
Constructability is the necessary examination throughout the

project that asks, "Are we planning to do the most efficient, least
expensive, and highest quality work in the field while aiming to
achieve the expected results?" It is during the engineering
phases of the execution that maximum benefits can be gained
from this technique.
Constructability concepts that influence the engineering work
include:
Designs are configured to enable efficient construction
Design elements are standardized
Construction Management During Engineering, cont'd
Construction efficiency
development
is
considered
in
specification
Module/pre-fabrication options are considered to improve

construction schedules
Design promotes construction accessibility of personnel,

material, and equipment
Design facilitates the construction under prevalent weather

conditions
Coordination with Procurement
Construction management provides valuable information to the

project procurement staff to ensure efficient construction. The
construction team can help in reviewing the vendor drawings
from the construction point of view. The construction team can
also act as a liaison between the engineering and maintenance
groups. Construction management activities in support of
procurement groups include:
Provide field requirement dates
Identify the specific quantity requirements and field priorities
Decisions related to modular/pre-fabrication procurement
Transportation and material handling requirements
Construction Contracting
Involvement of construction management during the

engineering phase helps in the timely procurement of
construction contractors.
Major decisions related to the
construction are made during the engineering phase. Some of
the activities where the construction group provide valuable
information are:
Breakdown of the number of construction contracts
10
Construction Management During Engineering, cont'd
Ensuring completeness of the bid package
Screening and selection of the contractors
Review and approval of construction plans
Ensuring efficient field move-in and contractor mobilization
Construction Management During Construction

Obviously the construction management plays its most
important role during the Construction Phase of the project. The
construction management team is responsible for the safest and
most efficient execution of field work in order to achieve the
project goals and company objectives. Depending upon the
size of a project, day-to-day management of field activities is the
responsibility of the construction contractor.
The Saudi
Aramco's construction management team ensures the
construction work is getting done safely and in accordance with
the contractual requirements. The SAPMT ensures that the
Saudi Aramco supplied materials are issued to contractors as
per the construction plans, and there are no schedule conflicts
among the construction contractors.
Construction Execution and Controls
To achieve successful execution of the Construction Phase of a

project, effective management controls should be implemented.
The SAPMT should require the contractor to produce periodic
reports showing the actual status and its comparison with the
construction performance baselines such as:
Construction Schedule Milestones
Construction Critical Path
Cost
Manpower Plans
11
Construction Management During Construction, cont'd
Safety Performance
In addition to the contractor's construction reports, the Saudi

Aramco construction management team also produces its own
project status report to keep Saudi Aramco Executive
Management informed about the project performance.
Mechanical Completion and Start-Up
The construction management team plays a pivotal role in the

transition phase from the construction Mechanical Completion to
the transfer of the facilities to the operations for start-up. The
construction team is responsible for the completeness of the
work performed prior to the transfer of facilities. Some of the
construction management activities during the Mechanical
Completion and start-up phase are:
Identify the sequence of facilities transfer
Ensure completeness of the constructed facilities by:

-
Testing alignment of equipment
Checking calibration
Run-in of motors
Adjustments and fine tuning
Energizing the equipment
Develop punch-list of incomplete work and institute plans to

complete this work list
Complete all the formalities related to the transfer of facilities

to proponents and the Project Close-out
12
PRIMARY DUTIES AND RESPONSIBILITIES OF THE PROJECT ENGINEER

Duties and Responsibilities
The Project Engineer plays an important role in the planning
and execution of a small Saudi Aramco project. During the
Construction Phase, the Project Engineer's performance as the
role of a monitor in ensuring that the project is progressing per
the plans. The Project Engineer does not get involved in the
day-to-day construction planning and execution. That role is
typically performed by the construction contractor. Some of the
responsibilities of the Project Engineer during the Construction
Phase include:
Surveillance of Construction Contractors
Engineering Support
Procurement Support
Monitoring Project Performance
Project Status Reporting to Management
Close-out of Project
Surveillance of Construction Contractors
The Saudi Aramco Project Engineer on a small capital project is

responsible for monitoring construction contractor's field
activities and performance. In this role, the Project Engineer
ensures that the contractor is performing the work as per the
contractual requirements and in accordance with the project
procedures and guidelines. The Project Engineer provides
necessary guidance and clarification, resolves any conflicts, and
ensures that the construction contractor is performing to the
best of his capabilities.
13
Duties and Responsibilities, cont'd

Engineering Support
During the Construction Phase, the Project Engineer acts as a

liaison between the engineering contractor and the construction
contractors. He ensures timely availability of design drawings
and provides the necessary design clarification to the
construction contractor. He is also responsible for getting the
engineering drawings updated with any field changes and in
finalizing the as-built drawings for project documentations.
Procurement Support
The Project Engineer ensures that all the project materials

reach the site according to the field required days. He
coordinates any expediting efforts, if necessary, to get the
materials on time. The Project Engineer also monitors the
contractor's procurement during the Construction Phase.
Monitoring Project Performance
The Project Engineer is responsible for monitoring the project

performance, and initiating necessary actions, if necessary, to
ensure that the project is completed in accordance with the
project goals. The Project Engineer, with the support of the
project controls staff, analyzes the project information to
evaluate the current progress status as compared to the project
performance baselines. He constantly seeks opportunities and
implements actions to enhance project performance.
Project Status Reporting to Management
The Project Engineer is responsible for communicating the

project status information to the company management. The
company project management procedures dictate that the
Project Engineer must develop and update project status
reports and submit them to the company management. The
Project Engineer is responsible for collecting the necessary
construction status information from the company sources and
contractors, and presenting it to the Saudi Aramco Executive
Management in a timely fashion.
14

Close-out of Project
The Project Close-out is the final milestone in the life of a typical

Saudi Aramco small project. It consists of several activities, as
follows:
Transfer of facilities to operations
Commissioning
Performance acceptance
Final acceptance
Financial close-out
Different Saudi Aramco departments get involved in testing the

facilities and completing procedural documentation. The Project
Engineer acts as a liaison from the project management team in
transferring the facilities to the proponent, and in completing the
various close-out documents.
15
GLOSSARY
BI
Budget Item
DBSP
Design Basis Scoping Paper
DC
Direct Charge materials
ER
Expenditure Request
ERA
Expenditure Request Approval
ER Estimate
An ER estimate is a definitive estimate prepared in support

of a request for Budget Item (BI) funding and is used as the
basis of the project cost control.
Final Acceptance
Saudi Aramco accepts the completed facilities from a

contractor (final acceptance) when all work, including
remedial work, is complete and the facilities have been
successfully operated at the conditions specified in the
contract job specification.
Financial Close-Out
Financial close-out formalities normally begin after

Mechanical Completion and during the start-up and
commissioning of a facility. Financial close-out of projects
that are essentially complete, in service, and against which
the major elements of cost have been recorded.
FPD
Facilities Planning Department
LSTK
Lump Sum Turn Key contract
Mechanical Completion
Mechanical completion for a facility, or any separable portion

thereof, is achieved when the facility, or portion thereof, has
been completed mechanically and structurally put in a tight
and clean condition, and otherwise constructed as provided
in the project specification.
Project Execution Plan
The Project Execution Plan (PEP) defines the objectives,

plans, requirements, and related information necessary for
optimum project execution.
16
Project Proposal
The project proposal establishes the design basis and scope

of the proposed facilities, including size, general layout,
types of material, estimated funds required and the
completion schedule.
Performance Acceptance
The performance acceptance should entail the start-up,

commissioning
and
demonstration
of
acceptance
performance of the facility based on strict compliance with
the project plans and specifications.
RPD
Resource Planning Department
SAMS
Saudi Aramco Materials Stock
SAPMT
Saudi Aramco Project Management Team
TC-68
Preliminary engineering funds
17

Introduction To Construction Management

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Engineering Encyclopedia

Saudi Aramco DeskTop Standards

Chapter : Project Management

For additional information on this subject, contact

VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL

Saudi Aramco DeskTop Standards

VARIOUS EXECUTION PHASES OF A TYPICAL SAUDI ARAMCO SMALL

Study and Development

Project Completion and Close-Out

A specific project work scope must be performed in each of

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

This phase is also known as the project inception phase, when

Identify the project needs

Define the project work scope

Evaluate the project alternatives

Establish a project schedule

Prepare the preliminary cost estimate

Develop the project justification

Prepare Design Basis Scoping Paper (DBSP)

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

Preliminary engineering is defined within Saudi Aramco as the

activities that lead up to Expenditure Request Approval (ERA).

Performance of initial studies

Preparation of the Project Execution Plan (PEP)

Preparation of the project proposal

Production of a detailed Expenditure Request (ER) estimate

Preparation and award of the contract for design

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

Project Proposal establishes the design basis and scope of the

Project proposals range from those requiring minimal detail to

Formal award of an engineering contract for the detailed design

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

The Construction Phase begins when the contract development

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

New plants and/or units acceptance involves distinctive

Performance acceptance (start-up and commissioning)

The engineering and project management business line is

thereof, is achieved when:

The facility, or portion thereof, has been completed

All deficiencies, including those that could prevent or delay

Saudi Aramco DeskTop Standards

Execution Phases of a Project, cont'd

to final acceptance, a Performance Acceptance Certificate

exception items are accepted, a final acceptance is approved by

Financial close-out of projects that are essentially complete, in

Saudi Aramco DeskTop Standards

CONSTRUCTION MANAGEMENT ACTIVITIES FROM INITIAL PROJECT PLANNING

Preliminary Cost Estimates

Design Basis Scoping Paper

Long-lead and Engineered Equipment

Saudi Aramco DeskTop Standards

Construction Management During Engineering

Coordinate job-site information with engineering

Rigging studies for major lifts

Construction schedule development

Coordination with procurement group

Input in the ER estimate development

Assist in construction contracting