ASSIGNMENT ON CASE STUDY OF:

SABAH OIL & GAS TERMINAL (SOGT) PROJECT TEAM

OVERCOME SEVERAL CHALLENGES TO ENABLE THEM
STARTS CONSTRUCTION EARLY

SEMESTER 1 SESSION 2015/2016

FULL NAME (IN-GROUP) : 1). R B KENNEDY ENIS (MK1422074T)

2). PEROWANSA BIN PARUKA (MK1512032T)

PROGRAMME : MASTER OF ENGINEERING (OIL & GAS)

FACULTY : FACULTY OF ENGINEERING

COURSE CODE : KOG11203

COURSE TITLE : OIL & GAS PROJECT MANAGEMENT AND ECONOMICS

LECTURER : MR. ZAKARIA BIN ARIS

Case Study 1

Team overcomes challenges to complete worlds largest Sabah Oil and Gas
Terminal on time and under budget.
Samsung Engineering Co. is one of the worlds leading and fastest-growing engineering, procurement,
construction and project management firms. PM Assoc. specifically commends Samsungs ability to
overcome a tight timeframe and substantial hurdles to complete the Sabah Oil and Gas Terminal project
(SOGT), which has created the worlds largest fuel separation plant. The plant powers Malaysias growing
petrochemical, commercial, domestic and transport markets. The Sabah terminal is expected to be
operational in 2014. It is designed to handle 300,000 barrels of oil per day and 1.25 billion cubic feet (bcf)
of gas per day. Sabah's capacity is equivalent to about 40% of Malaysia's crude oil production. The
SOGT will serve the offshore fields developed as part of the Sabah-Sarawak Integrated Oil and Gas
Project. The fields include Gumusut / Kakap, Kinabalu Deep and East, Kebabangan and Malikai.

Samsung Engineering was awarded the engineering, procurement, construction and commissioning
(EPCC) contract. The Samsung-Naim joint venture expects to achieve mechanical completion of the
terminal by December 2013. The MYR2.44bn ($770m) contract was signed in October 2010. PETRONAS
commissioned Samsung Engineering to build a Sabah Oil and Gas Terminal at its Map in Kimanis
complex. The Sabah terminal is being built in a 250 acre greenfield site at Kimanis, a township that lies
45km from the city of Kota Kinabalu. The location is proximate to a number of Sabah offshore fields. The
Sabah-Sarawak pipeline construction contract was awarded to a consortium of Punj Lloyd, Dialog E&C
and Petrosab Logistik in 2008. The consortium will be led by Punj Lloyd. The projects ambitious timeline,
along with challenges like resource shortages, working around existing plants and government delays,
forced us to look beyond traditional project management practices, said Samsung Engineerings
representative. With the help of PMBOK standards, which led to successful implementation practices
particularly regarding risk management, communication management and human resource management
the project team continually surpassed expectations. We are honored that PMBOK has recognized the
hard work and ingenuity of our team with a Distinguished Project Award.

The Samsung Engineering team faced substantial challenges. With approximately 300 tie-in points
among existing plants within the PETRONAS Carigali gas complex area, there had to be a large degree
of sensitivity in coordination from the planning stage through completion. The Supreme Court of Malaysia
issued an injunction to suspend the SOGT project, along with 65 other projects in the region, for an
environmental and health assessment, resulting in an 11-month hiatus. All the while, Samsung
Engineering was working on several other high-profile projects in Malaysia that required extensive
resources.

Question:

How does SOGT project team overcome these challenges to enable them to start construction early?
1. Description of SOGT Project Sites

The SOGT (short for Sabah Oil and Gas Terminal) project was the first mega project for
oil and gas industry in the East Malaysia. The project was located in the district of
Kimanis, Sabah, Malaysia in line with Kimanis Power Plant and still developing under
PETRONAS (short for Petroleum Nasional Berhad). It is lined onshore oil and gas
receiving, storage, processing and export terminal.

The SOGTs project team in collaboration with the EST Group Company had been
engaged to provide sheet piling solutions to a few key facilities including engineering
design, manufacturing and site assistance for:-
a) A proper berthing structure named Materials Off-Loading Facility (MOLF for
loading/unloading of construction materials, equipments and machineries mainly
from barge during the Terminal construction.
b) Shore line protection to a flare stack structure beside a reserved drain leading to the
sea.

2. Overview of SOGT Site and Sheet Pile Specifications

2.1 Material Off-Loading Facility (MOLF)

Figure 1: Typical section view for MOLF barge jetty.

 Figure 2: Sheet pile delivery in 24 m.

Figure 3: Initial MOLF site condition.

Figure 4: (Left) MOLF staggered sheet pile installation and (Right) construction of MOLF RC deck.
 Figure 5: (Left) Completed MOLF barge jetty and (Right) SOGT sheet piling quay wall at MOLF.

2.2 Kimanis Power Plant Shore Line Protection

Figure 6: Typical section view at Kimanis Power Plant shore line.

Figure 7: SOGT sheet pile with gabion wall at Kimanis Power Plant shore line.
 Figure 8: Completed SOGT sheet pile wall at Kimanis Power Plant shore line.

2.3 Flare Stack Shore Line Protection

Figure 9: SOGT Kimanis flare stack shore line project delivered by ESC Group Company.

Figure 10: SOGT sheet pile panel driving method by ESC Group Company.
3. Challenges Faced by SOGT Project Runs

While Sabah is blessed with rich and significant natural resources, a number of key
challenges, if left unresolved, will continue to impact the overall competitiveness of
Sabahs oil and gas sector. Therefore, it was a great challenge to the roles of SOGT
project team, need to be resolved to its full potential in execution with of several aspects
as stated follows:-

3.1 Geographical Shapes

The geographical shape is one of the great challenges expediently for SOGT project
team to overcome. It was consists of the entering routes (i.e. air route, sea route, road
or similar) onto Sabah as that placed mainly at Kota Kinabalu city which the route
approximately distance of 45 km. Meanwhile, the traffic condition across the main road
was quite heavy consequently on the peak time.

3.2 Human Capital Resources

The vision for Sabahs oil and gas sector is to be the location of choice in Asia for
resource-based oil and gas by 2025. To achieve this vision, a number of programmes
should be considered to stimulate growth of existing industries and attract private sector
investments in targeted areas. Initiatives should also be focused on fixing the basic
infrastructural gaps, investing in human capital and putting in place a pro-business and
pragmatic incentives regime to make it compelling for companies to shift to higher order
value-added activities in Sabah. With these, any anchor companies for downstream
activities can be identified with committed investments.

3.3 Political Manners

In response to the SOGT mega projects embarked by PETRONAS in Sabah amounting
to staggering billions of ringgit, some quotations from YAB Datuk Seri Panglima Musa
Haji Aman as a Sabah Chief Minister had this to say at the 2nd SOGCE i.e:-
Let me assure you that the State Government is fully committed to the development of
the oil and gas industry in Sabah. We constantly engage with the Federal Government
to discuss provision of funds for physical development of infrastructure and industrial
facilities, and with PETRONAS on matters such as gas supply. Sabah will also continue
to work with PETRONAS and the Malaysian Investment Development Authority (MIDA)
to attract investors to establish oil and gas industrial activities in Sabah, apart from our
own efforts in nurturing local investments.

3.4 Mineral Policy

Allocation will be requested for the formulation of a sustainable mineral extraction policy
that could guide future development of potential downstream industries based on
Sabahs rich mineral deposits.
3.5 Value-Added Services
Value-added services is an area where Sabah companies and entrepreneurs could
enhance their participation and stand to gain in terms of value-added services such as
fabrication, piping, transportation, ship repair and overhaul. PETRONAS and its
production sharing partners have committed to build an oil and gas terminal on a 50
hectares site in Kimanis to receive and transfer crude oil and natural gas from oil fields
off Sabah. The SOGT is an integral part of a larger infrastructure project worth RM2.5
billion which comprises the construction of a subsea pipeline linking the offshore oil and
gas reserves to the onshore processing terminal in Kimanis. From Kimanis, a 480km
transfer pipeline connects SOGT with the Petronas LNG complex in Bintulu. The SOGT
is to have facilities for storing 300,000 barrels of oil and one billion cubic feet of gas per
day. The completion date for this project is slated for early 2010 to cater for Gumusut-
Kakap and Malikai oil drilling projects which are due to start production around that time.
With the construction of the Kimanis gas landing site, PETRONAS has committed to
support a facility in Sabah for gas pipes coating. This is expected to lead to further
opportunities for future contracts from other countries in the region. Aside from this
specific facility, local manufacturers such as Sabah Shipyard could participate actively
in offshore modules and sub-structures including ship repair works, oil and gas landing
base, onshore plant, fabrication of oil and gas offshore modules and skid packages.
Facilities at the existing yards need to be fully equipped for high-end engineering works.
This expertise could be built by forming strategic alliances with leading players in the
business.

4. Investment in Human Capital Training for SOGT Project Supports

The existing skills training centers, vocational colleges, polytechnics and universities will
be leveraged to tailor curriculum suited to targeted industries (for example,
manufacturing engineering courses, mechanical engineering courses, civil engineering
courses, electrical and electronic engineering courses, mechatronic engineering
courses and automotive engineering courses among others). As in University Malaysia
Sabah (UMS) has provided specific masters degree in oil and gas engineering field,
otherwise, there are four institution in Sabah focusing on technical and vocational
education with an approximately capacity for 10,450 trainees, on skills and training:
MARA Skills Institute (IKM), Sabah Skills & Technology Centre (SSTC), Industrial
Training Institute (ILP) and Kota Kinabalu Polytechnic (PKK). A consultative forum
comprising industry members, expert consultants and academia representatives should
be set up to ensure planning or review of curriculum and the training programmes can
be appraised according to targeted industries. To enhance the quality of the workforce
and improve work ethics, investments in training courses for oil and gas operators,
supervisors, managers and engineers should focus on:
a) Quality methods waste reduction, root-cause analysis, quality circles, process
control and Six Sigma.

b) Marketing branding, distribution channels, pricing and customer segmentation.

c) Design and inspection process and design for manufacturability, techniques for
anticipating customer demand, customer focus groups and h development
methodology.

d) Sector-specific courses (via industry inputs, matching their needs) such as process
safety management techniques, entrepreneurship and business management
methods, welding technologies and advancement as well as manufacturing-
processing methods and pipeline installation techniques.

To off-set the costs of sending employees to such programme, any approved oil and
gas companies should receive a proportionate rebate on the course fees. In addition, to
ensure sustainability of the programme, Oil and Gas Leaders Circle should be instituted.
This will put in place a systematic structure for sharing of best practices in performance
enhancement on the oil and gas fields in installation and processes.

5. Exceptional Preliminaries of SOGT Project Processes

5.1 Legislation and Regulatory Process
The SOGT project team shall extensively study the applicable legislation and regulatory
that applied not just in Federal legislation and regulatory level but also in State
legislation and regulatory level of Sabah. A necessary study or any assessment (i.e.
Environmental Impact Assessment, Social Impact Assessment, etc.) shall be carried
out, submitted and approved by the relevant government agencies.

5.2 Selection of EPCC Contractor

Due to billion ringgit of investment by PETRONAS for this project, selection of
contractor is the most crucial in term of budget and quality through Invitation To Bid
(ITB). The SOGT project team shall evaluate and assess all aspect of the potential
contractor (i.e. company background, previous record of project, financial status, etc.).
In the meantime, the SOGT project team also not to neglect that the political influence
of certain contractor in their evaluation and the economic impact to the local when
selecting the potential contractor. Since the project value is very high and need for high
capabilities contractor, the SOGT project team shall provide the best practice when
selecting the potential contractor to avoid political intervention that could lead to delay.
Selection of a consortium of contractors of international and local is the best way to
avoid political intervention. The local contractor has the abilities to deal with the local
legislation and regulation meanwhile the international contractor has the abilities to
manage the project. In the same time, a consortium of contractors will lead to
technological and knowledge transfer to local contractor and local people so thus it can
become the pioneer of the industry in future.

5.3 Human Resources

The SOGT project team shall assess the social impact of the local in term of
employment (human resources) in line with the project. Human resources in Sabah are
low for oil and gas industry since no major oil and gas activities in Sabah since it
exploration and production in 1980s. But, most of the local people are interested in the
field because of its high income. The SOGT project team shall collaborated and
communicate with the state government of Sabah since the State Government has the
capabilities to identify the potential local resources. Managing human resources by
involving the local talent lead to avoid or decrease the risk of intervention by local
entities that could delay the process of the project.

6. Winning Solution for SOGT Project Operations

PETRONAS plans to develop the gas fields offshore Sabah involves construction of the
proposed SOGT at Kimanis, which is scheduled for completion in 2013. Once
operational, the terminal will be able to receive, store, and export up to 300,000 bbl/d of
crude oil, as well as receive, process, compress, and transport up to 1.25 Bcf/d of gas
produced from the Gumusut/Kakap, Kinabalu Deep and East, Kebabangan, and Malikai
fields. The SOGT project team then looked at establishing the facilities offshore and
onshore by leveraging on an existing unused pipeline which was already connecting the
512 km, 36 inch diameter Sabah Sarawak Gas Pipeline (SSGP). Through the SSGP, it
will transports 750 MMcf/d of gas from the SOGT to the Petronas LNG Complex at
Bintulu, Sarawak. It is being constructed using API 5L X70 steel grade pipe, with a
thickness range of 14, 17, and 20 mm, and will have a design pressure of 96 bar. This
approach generates some savings in terms of facilities costs to the organisation and
simplifies the oil and gas handling logistics and overall operations of the facilities.

7. Closing Thoughts
Nowadays, with new and complex challenges of discovering and developing new oil and
gas resources, it still continue with lead the charge to provide professional knowledge
sharing and business networking platforms for the oil and gas industry to remain at the
cutting edge. While technical skill sets are core to success, engineers including the
operators, supervisors and managers have to apply the latest in technology while
working in multidisciplinary teams. They also need to supplement their IQ with a big
dose of EQ, as soft skills become increasingly important for success. Making jobs
tougher is the recent plunge in oil prices, and the resulting staff consolidation across the
oil and gas sector has made the profession less attractive than before to the best
graduate talents. Until at the current trend, unfortunately, it seems the recent downturn
especially in a low oil and gas prices environment has led to staffing consolidations
across the oil and gas sector. This has before, and will again, lead to the SOGT team
being seen as non-attractive for high quality graduates. The SOGT team should
continue to face and address this challenge. In addition, they need to continue with
SOGT project both of onshore and offshore as essential to economic growth,
environmentally responsible and high technology-driven. All these factors can be
classified the truth, but they do not always do the best job of communicating them,
faced by often-hostile media among other institutions. Here again, the Society of
Petroleum Engineers (SPE) events should be considered to provide a platform for the
projection of these positive messages.
 ASSIGNMENT ON:
THE TYPICAL CHALLENGES IN OIL AND GAS PROJECTS

SEMESTER 1 SESSION 2015/2016

FULL NAME (IN-GROUP) : 1) R B KENNEDY ENIS (MK1422074T)

2) PEROWANSA BIN PARUKA (MK1512032T)

PROGRAMME : MASTER OF ENGINEERING (OIL & GAS)

FACULTY : FACULTY OF ENGINEERING

COURSE CODE : KOG11203

COURSE TITLE : OIL & GAS PROJECT MANAGEMENT AND ECONOMICS

LECTURER : MR. ZAKARIA BIN ARIS

SOLUTION
Background on the Malaysian Oil and Gas Industry

Generally the Malaysian oil and gas industry uses traditional methods of
procurement. Client organisations are separate from contractors. Clients normally
employ consultants to design and supervise oil and gas sector projects (Chan, 2001).
Procurement of oil and gas projects is governed by the public procurement laws and
guidelines, but even these can be a source of contention. The oil and gas industry in
Malaysia contributes approximately 15% of the gross domestic product and makes a
significant contribution to the economy. The oil and gas sector also employs more than
50% of the construction/technical workers in Malaysia. It was envisaged that more than
45% of the 2010-2014 budget would be spent on oil and gas-related activities
(Malaysian Petronas of Statistics, 2010). These figures convey how important oil and
gas is to public expenditure in Malaysia.

What are Typical Challenges in the Malaysian Oil and Gas Sector Projects?

One research article by Rohani et al. (2009) has reported that since seventies the
economics of Malaysia has in process of rapidly developing and growth up especially in
oil and gas industry. Oil and gas project in oil and gas field constitutes an important
element of Malaysian economy. It is showing how important to control the projects in
smoothly process, good quality and efficiently. There are some element constraints
needed to be considered when managing the oil and gas projects likewise scope, cost,
time, and quality. In order to manage the projects running successfully, it is necessary
to consider whether the project is within those element constraints. Some common
typical challenges/problems had faced to oil and gas projects. Among the typical
challenges/problems includes tracking budget, lack of integration, contractor job
management and alerts/over-run management. The details of the typical challenges are
as follow:

(a) Item 5: Tracking Budget

[Real time budgets versus actuals tracking]

Continually forecast the budget A projects budget shall be continually forecasted

and compared with the masters budget allocated (proposed budget). Deviation in
budget might be occurring due to market environmental. Risk assessment shall be
carried out to points out the mitigations under worst condition of budget deviation.

Regularly forecast resources usage - To prevent an over-budget of a project, project

manager shall review and record the existing resources, then utilize all the resources.
 Keep the team informed Always keep-informed the project team with the project
budget forecast. The information of the project budget forecast will allow the project
team to utilize all resources as per allocated budget.

Manage scope meticulously Project manager shall manage project scope of works
of contract accordingly. Any additional works or scope that not stated in the contract
will be considered as Variation Order or Change Order.

Budget over-run The situation of oil and gas project in which budgetary estimate
exceeds estimation, budget exceeds budgetary estimate, and settlement exceeds
budget is a universal phenomenon. Projects budget which is out of control adds to
investment pressure, increases projects budget, affects investment decision-making
and wastes the national finance might result in corruption or offence (Ali and
Kamaruzzaman, 2010).

Lacks of experience Most of the contractors are lack of experience especially in

financial management. The distribution of the costs does not plan well in the projects.
It might be caused over of costs budgeted (Chan and Park, 2005).

(b) Item 6: Integration

[Lack of integration with MS projects and primavera]

Coordination all of the other knowledge areas throughout projects life cycle Project
Manager must coordinate all functional team of a project into an integrated project
team i.e. project administration, project engineering, project control, project
procurement, etc.

Poor coordinate contracts Ogunlana and Olomolaiye (1989) has stated that many
contractors in developing countries have organizes their own commercial
undertaking. They are good in managing expense because they are familiar with the
business of making money. They pay low wages, submit low bids and low ability to
plan and coordinate contracts. They do not follow the agreement that detailed in
contract.

Access to management tools All functional project team shall have the access to
management tools of the project (Microsoft Project or Primavera); to review, update
and communicate the current situation of their respective roles and responsibilities of
the project.

Obsolete/unsuitable equipments and methods Long et al. (2004) has reported that
the obsolete/unsuitable equipments and methods may cause the progress of project
runs become slower. Some countries try to import or transfer the modern technology
 into their countries. However, the method is unsuccessful because lack of skilful
human to operate the technology.

Inflation of project integration Inflation of project integration may cause increasing

of costs (Harrison, 1981). Such inflation of materials, equipments, and labours costs
may vary geographically within a country, from country to country, and contracts of
subcontractors with suppliers may involve different inflation protection terms that
agreed with a client. As inflation goes up, interest rates will go up and the costs will
increase too.

Poor or mistakes in design According to Long et al. (2008), poor in design or

mistakes design are caused by the low-competence a designer. The approval design
or drawing process becomes low quality and ineffective especially for those with
government-funded projects. The unrealistic design which found after the start the oil
and gas projects has to change and it could lead to cost overrun and lack of
integration.

(c) Item 7: Contractor Management

[Contractor job management]

Planning and management Improper in some planning and management

experience limitation may be caused failures of using technical (Frimpong et al.,
2003). It would led the processes to produce some product become slower and take
longer period to complete the project. That is one of the main reasons that employers
should scope the contractors work and should include more than just documenting
the task to be performed by the contractor. Health and safety issues associated with
the task and the level of supervision required must also be considered. Effective
planning may be achieved through consultation with suitably qualified person(s) who
is/are knowledgeable in the task to be undertaken. Health and safety hazards must
be identified during planning to eliminate or reduce the risk of injuries to workers.

Efficient management According to Gould (2002) that the efficient management is

important to produce a productive and cost efficient site. Scope may changes due to
inadequate planning and feasibility studies. In order to control the project effectively,
the project manager must follow up the schedule to avoid additional costs and ensure
the building can be occupied on time as planned.

Competent personnel According to Kaliba et al. (2009) that the contractors, the
consultants, and the clients should ensure that they must have the right personnel
with appropriate qualifications to manage their projects efficiently. It is better if project
manager have experience and qualifications in oil and gas project management.
 Task creep This is dealing with set-up the task, but to achieve the agreed outcome,
more work is required than what the employer and contractor had originally agreed
on. Be clear about what is required of the contractor, include in tender process and
create a system.

Tendering process The tendering process has commonly two stages; one is
developing a tender specification and evaluating submitted tenders. This process
allows employer/administrator to assess whether the contractor is able to perform the
task safely within the budget and timeline requirements. A preferred contractors list
can help employers manage contractors. Employers must assign a person or team
(each with clearly defined tasks and responsibilities) to manage and monitor the
contracted works from tender to contract and evaluation. They should address issues
that arise during the contract process, either personally or by engaging a suitably
qualified person. The tendering process for the contractor is normally complex due to
the extensive assessments that have to be made.

Contract and supervision The contract and supervision between the employer and
contractor should be included the health and safety requirements (e.g. company
policies, procedures, equipment maintenance and bringing hazardous substances
onsite); health and safety roles and responsibilities of the employer and contractor
(including their management teams) and procedures for handling non-compliance
with company policies, procedures and agreed work methods. It is Include a
provision to terminate the contract and remove the contractor from your preferred
contractor list and the worksite as well as processes for eliminating or reducing risks
to health and safety so far as is reasonably practicable. Before a contactor starts
work, the employer should induct the contractor or their workers/sub-contractors to
the worksite. The level of supervision of contractors depends on a number of factors.
Higher levels of supervision are expected for at least likewise the start of the
contracted works, new contractors to the workplace, high risk work, people working
alone or at night, complex work, a specialist skill or knowledge, the introduction of
new machinery, equipment or systems of work and tasks where work methods are
relied on to control the risks. Contractor supervision should also include regular
reviews of the contractors health and safety reports.

(d) Item 8: Alerts

[Escalations, alerts and delay/over-run management]

Proving cause and effect Set out the need for developing and establishing a proper
logical standard of proof for cause and effect and provides examples of some of the
more effective standards implemented which are essential to not only ensuring the
appropriate determination of disputes but also effectively encourages amicable
resolutions.
 Late completion of projects Abbas (2006) has simply defined the late completion of
projects as delay and compared it to the planned schedule or contract schedule.
Delay occurs when the progress of a contract falls behind schedule. Delay may be
caused by any party to the contract and may be a direct result of one or more
circumstances. A contract delay has adverse effects on both the owner and the
contractor (either in the form of lost revenues or extra expenses) and it often raises
the contentious issue of responsibility for the delay, which may result in conflicts that
reach the courts.

The price structure There should also be a decision on the price structure intended,
as part of the process of determining who and how far is a party to be responsible for
the design uncertainties or certainties. There are some possibilities but variances
within each structure are quite common i.e. the structure fixes the price regardless of
the contractors as-built cost and therefore places substantial risk on the contractor
build-ability and assessment of the works involved from the specifications and
drawings.

Proper project costing and financing Kaliba et al. (2009) has mentioned in their
reports that the delays of schedule may occur caused of delayed in payments due to
complex financial processes in client organisations. Delay in payment would cause
financial difficulties to contractors and subsequently delay the schedule to complete
the activities on site. Interest could be charged on delayed payments hence inducing
cost overruns in the project.

Inaccurate or poor estimation of original cost According to Peeters and Madauss

(2008) that the biggest factor that contributes to overruns of budget is inaccurate
estimation of original or initial cost of a project. It is because of technical problem on
how to estimate project costs and also not enough project information in the early
stage of project.

Insufficient fund Long et al. (2008) noted that delay of the projects followed by cost
increasing to cover all the expenses during project runs. Owners are not preparing
sufficient fund for project and pay on time as per in contract agreement to contractor.

Closing thought

In the Malaysian oil and gas industry, it is important to have control on execution
performance of oil and gas projects to ensure the project sequences in terms of cost
and time is within the budget. Similarly the oil and gas project management is needed to
keep the project within its planned budget. Therefore, stakeholders in the oil and gas
industry are advised to minimize changes in their work scopes, as this has the greatest
impact on the cost and the time overruns.
Even though some typical challenges in oil and gas projects are a critical issue, it can
be defined that most of the oil and gas projects are affected by improper management,
lack of experience, incompetent personnel, cost overrun etc. Finding of the related case
study to those issue shows the oil and gas projects is consequently suffered. With
those, the main variables that contributed to the typical challenges are poor estimation
of original project costing and underestimating the development load by the quantity of
surveyors. It is recommended that oil and gas project management be improved, with a
shift in emphasis towards more collaborative relationships, which would reduce
payment delays by improving cash flow on the part of the client and thereby save
overall project costs.

References

Ali, A.S. and Kamaruzzaman, S.N. (2010). Cost performance for building construction
projects in Klang Valley. Journal of Building Performance, 1(1): 110-118.

Abbas, M.I. (2006). Causes and effects of delays in Aceh construction industry. MSc
dissertation. Universiti Teknologi Malaysia.

Chan, S. and Park, M. (2005). Project cost estimation using principal component
regression. Construction Management and Economics, 23: 295-304.

Chan A.P.C. (2001). Time-cost relationship of public sector projects in Malaysia.

International Journal of Project Management, 19: 223-229.

Frimpong, Y., Oluwoye, J. and Crawford, L. (2003). Causes of delay and cost overruns
in construction of groundwater projects in developing countries; Ghana as a case
study. International Journal of Project Management, 21: 321-326.

Gould, F.E. (2002). Managing the construction process: Estimating, scheduling, and
project control. Upper Saddle River, NJ: Prentice Hall.

Harrison, F.L. (1981). Advanced Project Management. England: Gower Publishing

Company Limited.

Kaliba C., Muya M. and Mumba K. (2009). Cost escalation and schedule delays in road
construction projects in Zambia. International Journal of Project Management, 27:
522-531.
Long, N.D., Ogunlana, S.O. and Lan, D.T.X. (2004). A study on project success factors
in large construction projects in Vietnam. Journal of Engineering, Construction and
Architectural, 11: 404-413.

Long, L.H., Young, D.L. and Jun, Y.L. (2008). Delays and cost overrun in Vietnam large
construction projects: A comparison with other selected countries. KSCE Journal of
Civil Engineering, 12: 367-377.

Ogunlana, S.O. and Olomolaiye, P.O. (1989). A survey of site management practice on
some selected sites in Negaria. Building Environment, 2: 191-196.

Peeters, W. and Madauss, B. (2008). A proposed strategy against cost overruns in the
space sector: The 5C approach. Space Policy, 24: 80-89.

Rohani, E.I., Akintoye, A. and Kelly, J. (2009). Cost and time overruns of projects in
Malaysia. Retrieved August 21: 2009.
[http://www.irbnet.de/daten/iconda/CIB10633.pdf]
 ASSIGNMENT ON:

PROJECT REQUIREMENT DOCUMENT

SEMESTER 1 SESSION 2015/2016

FULL NAME (IN-GROUP) : 1). R B KENNEDY ENIS (MK1422074T)

2). PEROWANSA BIN PARUKA (MK1512032T)

PROGRAMME : MASTER OF ENGINEERING (OIL & GAS)

FACULTY : FACULTY OF ENGINEERING

COURSE CODE : KOG11203

COURSE TITLE : OIL & GAS PROJECT MANAGEMENT AND ECONOMICS

LECTURER : MR. ZAKARIA BIN ARIS

Project Requirement Document (PRD)

Project Name Project Code Project Manager

Brunei Darulsalam - Indonesia - UOil/BIMP/2015/001 Dr. Anisuzzaman
Malaysia - Philippines Gas Pipeline
(BIMP Gas Pipeline Project)

Customers Contact Revision

Project Manager - 014-8728882 A
OEM Companies

Date
21 November 2015

(1) Project Summary and Description (what is this project about?)

Engineering, Procurement, Construction & Commissioning of The Trans Brunei Darulsalam - Indonesia - Malaysia -
Philippines (BIMP) Gas Pipeline. Running from the joint Brunei Darulsalam - Indonesia - Malaysia - Philippines East
ASEAN Growth Area BIMP - EAGA development area approximately 320 kilometres offshore towards the Eastern
Malaysia coast near Bandar Sri Begawan, Brunei.

(2) Project Goals and Objectives (including delivery schedule, cost, scope & quality goals)
The entire project should be completed within 24 months where all works have to be executed in compliance with
requirements of OHSAS 18001 and ISO 14001.

(3) Project Major Steps and Deliverables (list key milestone only)
1. Design Proposal and Planning 11. Trenching, Lowering and Backfilling
(example)
2. Land Acquisition and Requisition 12. Tie-in
1.0 Project
3. Tender initiating
Document Preparation 13. Hydrostatic Testing
2.0 Project Planning
4. Tender / Bid 14. Cleaning
5. Bid
3.0 EvaluationSelection and Award
Contractor 15. Commissioning
6. Contract Award 16. Operation
4.0 Material Procurement 17. Closeout
7. Procurement / Contract Administration
5.0 Construct and Test Phase 1
8. Mobilisation
Etc.
9. Clearing, Grading and Stringing
10. Welding and Non-Destructive Test (NDT)

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(4) Assumptions (assume the conditions of the project and or environment factor)
The Project's schedule of 24 months is crucial due to offshore condition of construction work. Proper planning
management and advance construction technology method have to be implemented throughout the construction
phase. Sea condition of the Project site have to be assessed and no construction activities shall be carried out
during rough sea condition especially during the Monsoon Season.

(5) Key Risks (what are the potential risks on this project)
1. Environmental Risk - Monsoon Season
2. Resources Risk - Selected construction technology method do not suit to project's site condition.
3. Budget Risk - Over-budget might be occurred due to project scope creep (additional works).

(6) Procurement Requirements (human resource and any major capital expenses)
1. Project Manager
2. Procurement Manager
3. Quantity Surveyor Manager
4. Operation & Construction Manager
5. Quality Control Manager
6. Contract Manager
7. Coastlines Offshore & UMS Consortium (Contractor for Excavation & Backfilling Works)

(7) Procurement Requirements (specific requirements for purchase materials and contracts to be
used)
The Bill of Materials (BOM) for the whole Project would cost USD 238 million and the cost estimation team calculating
the operation cost (machine, operators, testing, quality assurance and inspection works & etc., except shipping) to be
USD 70 million (based on 24 months projection and the scope of works involved).

Firm Fixed Price (FPP) contract would be used to purchase the above materials from respective suppliers. A Cost Plus
Incentive Fee Contract (CPIF) would be used for Coastlines Offshore & UMS Consortium construction works.

(8) Acceptance Criteria (including authorized persons for approvals)

The works to be executed at the highest levels of Quality Assurance, Quality Control and commitment to Health, Safety
& Environmental and ensure customer satisfaction.

The Project Manager will be the Approval Authorised Persons that assisted by respective Functional Department i.e.
Quality Control Manager, Procurement Manager, Contract Manager, etc.)

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(9) Reviews (types of review with core team and with management)
1. Formal Review - i) Report Writing - Each functional department shall provide their writing report in weekly &
monthly basis to the Project Manager. The report writing shall include but not limited the progress of their respective
tasks and its comparison to planned schedule. Project Manager shall evaluate the reports and the status of the project.
Project Manager is responsible to report the status of the project and its mitigation to the Top Management.
ii) Meeting - Project Manager shall convene a meeting with all team members to update and to discuss the current
condition of the project condition. Each decision made in the meeting shall be documented and responsible person
shall be assigned.

2. Inspection Review - The Construction Inspection & Testing Plan (ITP) will be developed for the whole
construction duration. ITP will ensure that the quality of each task or work follow the project requirements. Each
inspection & testing shall be documented and signed by the Assigned Person.

(10) Communication Plan (include internal and external and external meetings and updates)
1. Report Writing - Report Writing is the most useable method to communicate internally and externally on how the
overall status of the project. The report shall be included but not limited to the current project status projected with
the planned progress of the current duration, QAQC report, HSE report and etc.

2. Meeting - Project Manager shall convene a meeting with all team members to update and to discuss the current
condition of the project condition. Each decision made in the meeting shall be documented and responsible person
shall be assigned.

(11) Change Management Plan (how to handle change request, e.g. from customers, core team
and senior management)
A Project Scope is a dynamic which mean the probability of additional works within the Project Scope is high.
Additional works or project creep is avoidable if the work is really needed for completion of the particular
task before concurrent task can be carried out. Additional work mean additional cost.

Needed for Change Order or Variation Order shall begin with several proposal of variation prepared by the
respective department i.e. Construction Department - technical issue. The proposals shall be submitted to Quantity
Surveyor Department for cost estimation of the changing. Lastly, the proposals with cost estimation to be submitted
to Project Manager and be discussed with top management for approval.

(12) Other Comments (include any positive actions that can help the project delivery)
The progress of the project need to be closed monitor by regularly tracking the status of the project versus planned
progress. Risk assessment for major activities shall be carried out so that mitigation for each issues arise during the
construction or operation phase is prepared.

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 ASSIGNMENT ON:

WORK BREAKDOWN STRUCTURE (WBS)

SEMESTER 1 SESSION 2015/2016

FULL NAME (IN-GROUP) : 1). R B KENNEDY ENIS (MK1422074T)

2). PEROWANSA BIN PARUKA (MK1512032T)

PROGRAMME : MASTER OF ENGINEERING (OIL & GAS)

FACULTY : FACULTY OF ENGINEERING

COURSE CODE : KOG11203

COURSE TITLE : OIL & GAS PROJECT MANAGEMENT AND ECONOMICS

LECTURER : MR. ZAKARIA BIN ARIS

 Description Owner Duration Coast
1.0 Project Initiating
1.1 Project Charter Perowansa 1 days 0
1.2 Team Formation Anisuzzaman 2 days 0
1.3 Hold A Kick-Off-Meeting (KOM) Anisuzzaman 1 day 0
1.4 Project Needs and Requirements
1.4.1 Emergence Kennedy 1 day 0
1.4.2 Recognition Kennedy 1 day 0
1.4.3 Articulation Kennedy 1 day 0
1.4.4 Functional Requirements Kennedy 1 day 0
1.4.5 Technical Requirements Kennedy 1 day 0
2.0 Project Planning
2.1 Develop PRD with Core Team Anisuzzaman 2 hours 0
2.2 Present and Get PRD Approved By Management Anisuzzaman 2 days 0
2.3 Develop Construction Master Schedule Mohd Fadlie 30 days 0
2.4 Develop Project Planning Management
2.4.1 Project Budgeting / Costing Norasiah 3 days 0
2.4.2 Resources Planning Joseph 3 days 0
2.4.3 Risk Planning Mohd Fadlie 3 days 0
2.4.4 Procurement Planning Joseph 3 days 0
2.4.5 Communication Planning Kennedy 2 days 0
2.4.6 Quality Planning Kennedy 2 days 0
3.0 Contractor Selection & Contract Award
3.1 Contractors Interview Joseph 10 days 0
3.2 Contractors Evaluation Joseph 2 days 0
3.3 Finalized Selection Joseph 1 day 0
3.4 Award Contract Joseph 1 day 0
3.5 Contractors Kick-Off-Meeting Anisuzzaman 1 day 0
4.0 Material Procurement
4.1 Finalize The Bill of Materials Anisuzzaman 2 days 0
4.2 Get Quotation From BOM Materials
4.2.1 Get Quote for Key Items Joseph 3 days 0
4.2.2 Get Quote for Non-key Items Norasiah 3 days 0
4.3 Purchase Materials
4.3.1 Issuing Purchase Order for Key Items Joseph 1 days 0
4.3.2 Issuing Purchase Order for Non-key Items Norasiah 1 days 0
4.4 Receiving Materials
4.4.1 Receiving Materials for Key Items Kennedy 2 days 0
4.4.2 Receiving Materials for Non-key Items Norasiah 1 day 0
4.5 Materials Storage Mohd Fadlie 3 days 0
4.6 Payment for Approved Materials Norasiah 2 days 0
5.0 Construct and Test Phase 1
5.1 Mobilisation Mohd Fadlie 3 days 0
5.2 Temporary Stockpile Mohd Fadlie 60 days 0
5.3 Excavation of Trench Mohd Fadlie 60 days 0
5.4 Pipe Installation and Welding Mohd Fadlie 90 days 0
5.5 Non-Destruction Testing (NDT) Mohd Fadlie 90 days 0
5.6 Backfilling Mohd Fadlie 90 days 0
5.7 Demobilisation Mohd Fadlie 3 days 0