ENG-001 - Capex Plan

ENGINEERING PROCESS
ENG-001
CAPEX PLAN
Engineering ENG-001 - Capex Plan 1

Revision B - 1/Dec/2016
REVISION CONTROL
ENGINEERING PROCESS
ENG-001
CAPEX PLAN
Rev. Date Revision Description Resp.
Hildo
0 1/jun/11 Original Edition
ADMGG
Hildo
A 14/jan/13 First Revision
ADMGG
Peter
B 1/dec/16 Second Revision
GPA

SUMMARY
REVISION CONTROL ................................................................................................. 2

SUMMARY .................................................................................................................. 3
GENERAL INFORMATION ......................................................................................... 4
MODULE DESCRIPTION............................................................................................ 5
LEARNING STAGES .................................................................................................. 6
GENERAL DEFINITIONS............................................................................................ 7
PART 1 - PRELIMINARY STUDY ............................................................................... 8
PROCEDURES .............................................................................................. 8
PREPARATION AND APPROVAL OF THE PS ........................................... 10
DEFINITIONS FOR PREPARATION OF THE PS ........................................ 12
DATA FOR PREPARATION OF THE PS ..................................................... 15
CRITICALITY (CR) ....................................................................................... 16
EXAMPLE ..................................................................................................... 20
PART 2 - CAPEX PLAN ............................................................................................ 21
PROCEDURES ............................................................................................ 21
STRATEGIC DIRECTIONS .......................................................................... 23
PREPARATION OF THE PLAN (CAPEX PLAN PHASE) ............................. 24
APPROVAL OF CAPEX PLAN (CAPEX PLAN PHASE) .............................. 30
EXECUTION AND CONTROL (EXECUTION AND CONTROL PHASE)...... 31
EXAMPLES ..................................................... Erro! Indicador no definido.
THEORETICAL SELF-EVALUATION ....................................................................... 33
ANSWERS ................................................................................................................ 37
REFERENCES .......................................................................................................... 38

GENERAL INFORMATION
Target Public
Engineering Managers
Engineering Teams: Project Coordinators, Discipline Coordinators, Industrial
Installation Coordinators, Civil Construction Coordinators, Capex Planning and
Control, and Draftsmen.
Prerequisites
Gerdau Capex Management (GIG)
Duration
It is estimated that this self-training can be adequately carried out in a total of three
hours of study. Two sessions of study are recommended, organized in different
shifts, as follows:
First session - two hours of careful reading;
Second session - half hour review of the main contents, half hour performing
the self-evaluation, followed by a review of theoretical issues where there was
doubt.

MODULE DESCRIPTION
OBJECTIVE
The objective of this module is to present the procedures for:
(i) preparation of the Preliminary Study (PS) as described in GG-PR-169-012;
(ii) preparation, approval, implementation and control of the Capex Plan as
described in GG-PR-169-001.
LEARNING STAGES
Basic knowledge about procedures for preparation of the

1- 8 to 20
Preliminary Study (PS), as described in GG-PR-169-012.
Basic knowledge about procedures for preparation,

2- approval, implementation and control of the Capex Plan, as 21 to 33
EVALUATION PROCESS
After studying the content covered in this module, you will make a Theoretical Self
Evaluation, included in this training material.
Next you will submit yourself to a Theoretical Evaluation, where you should answer
correctly at least 70% of the questions. If you do not answer correctly 70% of the
questions, you should review the learning stages where you had more difficulty.
If necessary, ask for help to the Facilitator.

LEARNING STAGES
LEARNING STAGES
Activities Resources
1. Studying the contents of the procedure for ENG-001 Module Pages 08 to 20

Preliminary Study (PS) preparation, as
2. Studying the contents relating to the ENG-001 Module Pages 21 to 33

procedures for preparation, approval,
execution and control of the Capex Plan, as
3. Theoretical Self-Evaluation. ENG-001 Module Pages 34 to 37

GENERAL DEFINITIONS
FIELD OF APPLICATION
This document applies to all Engineering areas of Gerdau Business Divisions.
REFERENCES
GG-PR-169-003 - Engineering Action Plan
GG-PR-169-012 - Preliminary Study (PS)
GG-PR-169-501 - Technical Study (TS)
GG-PR-169-501 - Technical Study Preparation
DC 08 - Approval of Fixed Asset Projects.
TERMS AND DEFINITIONS

According to the Glossary of GG-MG-169-001-Engineering Process Manual.
RESPONSIBILITY
The Investment Coordinator is responsible for the application of the GG-PR-169-012

- Preliminary Study procedure.
The Engineering Manager is responsible for the application of the GG-PR-169-001 -
Capex Plan procedure.

PART 1 - PRELIMINARY STUDY
PROCEDURES
DEFINITIONS
The Part 1 presents the procedures for Preliminary Study (PS) preparation, as
As presented in Figure 1, the Preliminary Study (PS) for a Capex must be prepared
during Conception phase, with the purpose of identifying, recording and assessing
the opportunities for new Capex under analysis.
Figure 1 - Engineering Process
The Preliminary Study (PS) must be used to:
Present information to identify the Capex for the selection and prioritization stages
in the preparation of the Capex Plan, according to the GG-PR-169-001 procedure.
It is important that the information used in the preparation of the study be up-to-
date and reliable, especially regarding budget, deadline and quantification of
benefits. This information is essential for proper calculations of financial indicators
and their criticality.

PROCEDURES
The preparation of the Capex Plan, based on the Preliminary

Studies of Capex, contributes to increase the operational result
and to minimize the criticality of the BDs, improving the use of
resources and portfolio performance.
The Preliminary Study (PS) records the main information of the
studies carried out, which must be progressively detailed in
Conception phase, during the preparation of the Technical Study
(when required) and the Annual Capex Plan.
The Preliminary Study is the document used to approve a
Transitional Investment (TI) if it is necessary to allocate budget resources and
schedule to carry out a basic project to prepare the final Technical Study and the
Annual Capex Plan to be submitted for approval.
Figure 2 shows the relationship of the PS, developed in Conception phase, with the
other procedures and phaes previously referred.
Figure 2 - Relationship of the PS with other procedures and phases

PREPARATION AND APPROVAL OF THE PS
To undertake the preparation and approval of the PS, do the following:

Prepare the Preliminary Studies with the help of EPM;
Prepare new Preliminary Studies to continually record the new proposals for
Capex and carry out periodical revisions of the existing Preliminary Studies in
order to ensure that available information is up-to-date;
Observe that the PS should be prepared to

document a new opportunity of Capex, during
the early stage when the investment is still
considered an idea.
Review and refine the Preliminary Studies which are

already documented:
Use meetings with industrial areas and contacts with
suppliers to discuss options;
Use references of studies with similar scope, carried
out at other Industrial Units, to compare proposed
solutions.
Obtain PS formal approval by the Industrial Units

Engineering Manager, ensuring that PS contains the
minimum information and validating its use as a Capex
opportunity in the preparation of the Capex Plan.

PREPARATION AND APPROVAL OF THE PS
Use the Preliminary Study (PS) to submit to approval a

Transitional Investment (TI) necessary for the preparation
of the Technical Study (TS), considering that:
The executed budget of the Transitional Investment will be transferred to the

respective Capex when it is approved. In case it is not approved, the executed
budget will be absorbed by the cost center of the area where the investment
would be implemented;
The approval of the Preliminary Study must be formalized and documented
through signatures of the people in charge or record in the corresponding
meeting minutes, up to the highest level of approval according to Corporate
Guideline DC 08.

DEFINITIONS FOR PREPARATION OF THE PS
For preparation of the PS, you must Inform the following

items:
Title: Inform the title of the Capex. The title must be aligned with the main scope
of the Capex. Pay attention, the same title will identify the Capex along its
implementation.
Objective: Describe the main objective of the Capex, explaining why it is being
proposed. The objective must be aligned with the benefits of the Capex.
Classification of objectives: Classify the Capex according to form GG-FM-169-
501 - Technical Study Preparation.
Criticality: Classify the Capex according to the evaluation criteria presented in
pages 16 to 19.
Scope: Describe the summary of the work to be carried out, mentioning the main
equipment, facilities and changes proposed for the Capex.
Budget:
Prepare a detailed budget of the main budget items in the
Capex, according to the Project Structure Plan (PEP
Elements);
Inform the schedule of disbursements for the budget items;
Include in the budget the amount planned for the
Transitional Investment execution (if you need a budget for
preparing the Technical Study);
Inform the main suppliers used as benchmark;

Schedule:
Inform the deadline for each of the activities in the standard-schedule of the
Preliminary Study. The schedule will be presented in months, 2-months,
quarters or semesters, depending on the total duration of the Capex;
Inform the milestones of Conclusion" and Start of Operation to define the
implementation deadlines of the Capex until its conclusion and start of
operation, respectively;
Assure to also include in the schedule the period of preparation of the
Technical Study and approval of the Capex;
Observe that the two first activities in the schedule (preparation of Technical
Study and approval of Capex) refer to the Transitional Investment;
Quantifiable benefits:
Describe only the benefits with financial gain with the implementation of the
Capex, classified as:
- cost reduction.
- increased capacity.
- quality improvement.
Inform the planned schedule for the estimated quantifiable benefits.

Return on investment calculation:

The return on Capex will be automatically calculated by EPM, as detailed in
procedure GG-PR-169-002.
Comments:
Describe the benefits, classified as safety, reliability, environment and
administration/support;
Include information regarding the technology employed, aspects of safety and
environment, general observations and attachments.
Key Performance Indicators:
Inform the defined Key Performance Indicators in order to measure the Capex
benefits. Attention: Key Performance Indicators must not refer to the Capex
management.

DATA FOR PREPARATION OF THE PS
When preparing the Preliminary Study (PS), verify that the information it contains is
supported by the minimum data presented in Table 1.
Preliminary Study (PS)

PHASES/PROCEDURE
The quality of the budget estimate and schedule must
ensure maximum deviation equal to or less than 30%.
General Capex Data

The benefits are classified and estimated in a
Benefits
preliminary way.
The location of the main facilities is studied in a
Location
preliminary way.
Project Scope The main scope is estimated based on similar Capex.
Work Breakdown Structure
The main supply packages are estimated.
(WBS)
The main milestones and total duration of the schedule
Schedule
are estimated, based on similar Capex.
The budget of the main packages is estimated based
Budget
on similar Capex.
Potential suppliers for the main supply packages are
Acquisitions Plan informed based on similar supply deals.
Engineering Deliveries
Initial/Preliminary
Process - Block Diagram
The layout is schematic and is based on information
Layouts
available from other Capex.
Table 1. Data for PS preparation
NOTE:
Table 1 should be used as a checklist to assure the responsible team
that all minimum data were used during PS preparation. This is
important to assure the necessary quality for budget and schedule,
providing estimations with deviations equal or less than 30%.

CRITICALITY (CR)
Sustainability Capex, that have no quantifiable benefits (Safety, Environment,

Reliability and Administration/Support), must be evaluated by the criticality of the
event that the Capex is supposed to eliminate or mitigate.
Important: Criticality must be referred to the event the Capex is

intended to eliminate or mitigate.
For example: a Capex is intended to eliminate an event that
would interrupt production for three months. The impact must be
accessed considering the probability of the occurrence of such
event and potential accumulated losses during the three month
period, if the Capex is not implemented.
Criticality (CR) is, therefore, the indicator used to compare and prioritize
sustainability Capex. Observe that mitigate means reduce to an
acceptable level the probability of occurrence and the impact that a
specific event would have over the business if the Capex is not
implemented.
CRITICALITY MATRIX
Criticality (CR) must be determined through the Criticality Matrix, considering the
impact and the probability of the occurrence of the event that the Capex is
supposed to eliminate or mitigate occurring.
To establish Criticality (CR) do the following:
Analyze the Capex classified as Safety, Environment and Reliability, together with
the people in charge of each process, using the qualification criteria defined by
the respective process;
The Capex classified as Administration/Support must use the probability (Table 3)
and impact criteria (Table 4);
Engineering must ensure comparability between the definitions of the different
processes and define the Criticality (CR) according to the Criticality Matrix, as
presented in Table 2.
Impact
Criticality Matrix
Low Medium High
High CR3 CR2 CR1
Probability Medium CR4 CR3 CR2
Low CR5 CR4 CR3
Table 2. Criticality Matrix

CRITICALITY (CR)
The values presented in Table 2 inform the different levels of Criticality, as follow:
CR1 are unacceptable;

CR2 are undesirable;
CR3 may be accepted;
CR4 and CR5 are acceptable.
By those criteria, the Capex categorized in the CR1 and CR2 range should be
selected and prioritized with the purpose of reducing their Criticality to CR3 or below.
The levels of probability and impact of the events must be evaluated according with
the metrics presented in next sections.
PROBABILITY
In order to determine the probability, the criteria presented in Table 3 must be used,
considering the evidence that lead to the possibility of the event occurring.
Low Medium High

Probability
There is a remote
It is likely that the event It is very likely that the event
possibility of the event
occurs within the next 12 occurs within the next 12
occurring within the next
months. months.
12 months.
The event has rarely The event has occurred The event has occurred
occurred in similar occasionally in similar frequently in similar
Evidences that points situations. situations. situations.
to the probability of the The event is not The event is repetitive
event occurring The event is repetitive and
repetitive and it depends and it depends on more
there are aggravating causes
on several causes in order than one cause in order to
which may cause it to occur.
to occur. occur.
Table 3. Criteria for evaluation of the probability of occurrence of an event

CRITICALITY (CR)
LEVEL OF IMPACT:
To establish the level of impact, use the criteria presented in Table 4, considering the
classification of the sustainability Capex.
Capex Classification Impact

Low Medium High
Sustainability Projects in General
Doesnt attend the

Attend partially the
legislation. Are
present legislation.
Attend the minimum commitments formalized
There are not
Legal Aspects requisitions of the and/or interdiction risks
commitments
present legislation. that can receive
formalized and/or
administrative or legal
interdiction risks.
penalties.
Health and Safety
Can generate Can cause Can cause permanent

Accidents or diseases
temporary disability permanent loss disability or fatality
Environmental
Cause significant Cause severe

Cause minor
changes to the environmental changes
damage to the
environment, but difficult to reverse, due
environment,
Severity and extent reversible in the to long term or high cost
restricted to the site
medium term, for remediation,
of occurrence in the
restricted to the surpassing the
plant.
unit. boundaries of the plant.
Table 4: Criteria for evaluation of the impact level
Continue...

CRITICALITY (CR)
LEVEL OF IMPACT:
Reliability / Quality
Evaluate
accumulated
economic impact due
to production delays1,
repair costs and Total accumulated Total accumulated Total accumulated
remaining costs impact less than impact between impact more than 25%
caused by the event, 2.5% of the Mill 2.5% and 25% of of the Mill monthly net
or for Quality monthly net sales the Mill monthly net sales revenue or US$ 10
projects, due to revenue. sales revenue. million.
Market Share
reduction caused by
non-compliance to
quality requirements.
1- The economic impact linked to production loss or Market Share reduction is only valid if it cannot be compensated by
another unit.
Table 4: Criteria for evaluation of the impact level (continuing)
Important: The economic impact linked to loss of production or

reduction of Market Share is only valid if it cannot be compensated
by another unit.
For example, a production interruption of an "A" unit being
compensated by additional production of a "B" unit with excess
capacity, must not be considered as an economic impact, since the
customer was not impacted.

EXAMPLE
EXAMPLE OF A PRELIMINARY STUDY DOCUMENT

PART 2 - CAPEX PLAN
PROCEDURES
DEFINITIONS
The Part 2 presents the procedures for preparation, approval, implementation and
control of the Capex Plan, as described in GG-PR-169-001.
The Capex Plan (CP) represents all capital investments necessary to achieve the
strategic goals defined in the BD Roadmap, with a more detailed view of the
Business Division Execution Plan (PEX).
This procedure is part of Capex Plan and Execution and Control phases.
Figure 3 - Engineering Process
The preparation of the Capex Plan is shared: it begins at the level of all the areas
and processes of the Industrial Unit (with focus on results, risks and sustainability of
the operation) and it is complemented and consolidated on the Business Division and
Gerdau levels.

PART 2 - CAPEX PLAN
PROCEDURES
Figure 4 shows how Capex Plan interacts with other Engineering Process phases.
The Capex is developed and approved in Capex Plan phase. All available input data
that contributes for the procedures, from identification of opportunities to Plan
approval, must be used.
In the Planning phase, the Capex Plan approved is used to develop the Technical
Studies Preparation Plan (TSs) which is part of the Engineering Action Plan.
In the Execution and Control phase, during the Engineering Meeting, the
implementation and control of the Capex Plan is carried out.
Figure 4 - Capex Plan and phases of the Engineering Process
The investments included in the Capex Plan must be in line with the
Execution Plan of the Business Division and with the Action Plan
for the Industrial Unit.

PART 2 - CAPEX PLAN
STRATEGIC DIRECTIONS
Considering Portfolio Management, every Capex Plan

begins with strategic planning. This action supplies the
process with the objectives, organizational goals, key
performance criteria and resources planned to be used
within the Capex Implementation period.
Preparation of the Capex Plan must follow the scheduled

dates and activities of the planning cycle and monitor the
preparation and approval of the Business Division Execution
Plan;
Priorities for the planned investments must be in accordance
with the Roadm Strategies for the Business Division or
Country;
Remember that a Portfolio comprises a set of investments, programs or

other tasks grouped to facilitate an efficient management of such group, in
order to meet business strategic goals.

PART 2 - CAPEX PLAN
PREPARATION OF THE PLAN (CAPEX PLAN PHASE)
In this procedure, the Capex Plan defines the portfolio of capital investments planned
for the next planning cycle. To prepare the Capex Plan, observe the following steps:
Identify: List all opportunities that may be part of the portfolio:

The Capex in the previous Capex Plan cycle;
The Capex necessary to realize the Execution Plan for the Business Divisions
and the Action Plan for the Industrial Unit and main Capex necessary to
support the strategies of the BD Roadmap;
The Capex that can be included in the plan from the prepared Preliminary
Studies. It is important that these studies are up-to-date, mainly regarding the
quantification of benefits in order to define financial indicators and their Level
of Criticality;
NOTE:
According to literature, the step of identification consists of developing
an updated list with sufficient information about new opportunities for
investments and those already in progress.
Categorize, in turn, is to combine the opportunities of the portfolio into
groups pre-established and strategically important, allowing a view of
the investments in each category.

PART 2 - CAPEX PLAN
Categorize: Group and prioritize Capex projects within the portfolio in accordance
with the three classifications following:
Type of Direction:
- Competitiveness: defined by the level of the Industrial Unit, or Business
Division which add value and improve results through quantifiable benefits
of cost reduction, increased quality (price) and increased capacity (sales).
These types of preliminary studies must present indicators for the
evaluation of financial return, according to the GG-PR-169-002 Return on
Investment (ROI).
- Sustainability: contributes to maintain Business Divisions through
improvements in Capex with benefits in safety, environment, reliability,
quality assurance and administration/support. This type of direction must
present the results for the Criticality evaluation, as established by procedure
GG-PR-169-012 Preliminary Study;

PART 2 - CAPEX PLAN
Description of main Objective and Capex Classification in

accordance to its main benefit, as established by procedure
GG-PR-169-501 Technical Study;
Financial Indicators (NPV, IRR and Payback), as

established by procedure GG-PR-169-002 Calculation of
Return On Investment (ROI);
Criticality, considering the impact and probability of the

event that the investment should eliminate or mitigate, as
established by procedure GG-PR-169-012 Preliminary
Study;
Special groupings: categorize the Capex by other dimensions and attributes

as defined by the Business Division, or by the Industrial Unit. This option is
applicable according to specific guidelines. Possible attributes include, for
example:
- Capex Programs: Capex projects which make up the programs and those
which should be analyzed jointly because the achievement of the objectives
is shared among them.
- Master Plans: usually, plans have their own prioritization, which is oriented
to a logical sequence of implementations in order to achieve the objectives
in the final stages;
- Steelmaking process where the Capex will be implemented;
- Main scope of Capex: may be used to guide purchasing policies and
specifications;

PART 2 - CAPEX PLAN
Evaluate and Select: Recommend a previously evaluated and selected set of

Capex projects that ensures the achievement of the strategic objectives.
Inform individually each Capex, always supported by Preliminary Studies
registered in EPM.
If approval in stages is planned, each investment must be presented as a
single Capex;
The Capex planned as an acquisition of a Direct Fixed Asset can be presented
in groups in a PS denominated Direct Fixed Assets planned approval year;
Present the Capex with their total budget, according to the quarter or year they
are planned to be approved, not spent. Do not confuse budget for
expenditure.
NOTE: The step of evaluation comprises the analysis of all relevant

information on the opportunities identified and classified to enable the
analysis and selection of Capex.
The step of selection must produce a short list of Capex based on
recommendations of the evaluation process and selection criteria of the
company.

PART 2 - CAPEX PLAN
Prioritize and Balance: Capex projects must be prioritized

using criteria described as follows:
Financial Contribution or Criticality
The score evaluates IRR for Capex with quantifiable benefits or
Criticality for Sustainability Capex, according to the table below:
NOTE:
Prioritizing is to sort the selected components within each category,
according to expected benefits and established criteria. Meanwhile,
balancing aims to check whether the set of opportunities is balanced to
meet all guidelines, given the constraints of existing resources.

PART 2 - CAPEX PLAN
Define the dates (month, quarter or year) planned for Capex

approval. The planned approval dates and start of operation
for Capex must be conform and comply with the objectives of
the Action Plan. Predict any restrictions caused by production
stoppages which may force to define dates of start of
operation and consequently the deadlines for the preparation
of documentation and their approvals.
Important: observe that data presented in the Capex plan must be

the same as that contained in the Preliminary Study prepared for the
Capex. If necessary, the Preliminary Study should be updated.

PART 2 - CAPEX PLAN
APPROVAL OF CAPEX PLAN (CAPEX PLAN PHASE)
Concerning the approval of Capex Plan, observe the following aspects:

The dates of approval meetings for the 3-Year Capex Plan will be defined by the
Business Division (BD), according to the dates in the Plan for the planning cycle,
for the preparation and approval of the Execution Plan;
The Capex Plan for Industrial Units must be consolidated and approved at the
Business Division level (BD).
Gerdau Engineering is in charge of consolidating the
Capex Plan, according to the General and Specific
Strategic Directions and the established top-down goals
for submittal to the Gerdau Executive Committee (GEC)
for analysis;
The 3-year Capex Plan will be approved by the Gerdau
Executive Committee (GEC) and by the Board of
Directors, for each Business Division/Country of business
and Industrial Unit, as established by Guideline DC-08
Approval of Fixed Asset Projects;
Plans must be updated when there are changes in directions or in priorities

identified by the consolidations performed at upper levels;
The Capex projects that make up the 3-year Capex Plan portfolio must undergo
approval individually, according to the approved plan and in compliance with
Guideline DC-08.
Important: Approval of the Capex Plan does not eliminate the need for
individual approval of each Capex.

PART 2 - CAPEX PLAN
EXECUTION AND CONTROL (EXECUTION AND CONTROL PHASE)
For execution and control of the Annual Capex Plan, do the following:
Prepare the Annual Capex Plan according to the standardized form (see attached
example). The data included in the Plan must be the same as those approved in
the 3-year Capex Plan.
The following information must be presented:
Original Planned: the originally approved
Capex Budget (in the 3-year Capex Plan).
It is important to remember that the
original Capex budget in the approved
Capex Plan must be kept fixed
throughout the year.
Present Estimate: the best estimate for the updated value of the budget based
on more accurate information in regard to the Capex on the date of revision.
Approved: the approved budget; considering that the Capex has been
approved at the appropriate level.
The number of the final document (PAI, PAI-C or RAI) used in the approval
and the date of approval by the last approval level planned in Guideline DC 08
Approval of Fixed Asset Projects;
The categorization of capex regarding the type of direction (Expansion/New
Business, Operational Efficiency or Sustainability);
Use the Annual Capex Plan as the reference for the control of what is planned
and executed. Conduct the follow-up in The Execution and Control phase, during
the Engineering Meeting. Items that must specifically be monitored are as follows:
The status of cancelled capex. In this case, the information under the current
budget estimate column must be zeroed out;
New capex projects under consideration, scheduled to undergo approval, but
which are not in the approved plan. In this case, the information under the
original planned budget column must be kept at zero.
The best estimate for the total budget amount of the Capex which is still under
consideration. This is important to keep the column current budget estimate
updated with the total amount planned for the year;

PART 2 - CAPEX PLAN
EXECUTION AND CONTROL (EXECUTION AND CONTROL PHASE)
Observe that changes in the total budget of the Capex Plan can be requested by
the Industrial Unit (operational level) or by the Business Division and Gerdau
(Strategic level). These changes must be approved by the Gerdau Executive
Committee (GEC) and by the Board of Directors (BD) before they can be
considered as effective;
Conduct the follow-up of the execution and control of

the Annual Capex Plan using as indicator the Control
Item Compliance with the Capex Plan. This indicator
measures compliance with the approved Capex Plan,
comparing the Capex which have been approved with
those planned;
Update the Plan regularly with information from the

approved Capex and updated budget estimates (not yet
approved at the appropriate approval level).

THEORETICAL SELF-EVALUATION
1. Indicate who is responsible for implementing the procedure of the Preliminary

Study:
A. ( ) Project Coordinator.
B. ( ) Project Engineer.
C. ( ) Industrial Installation Coordinator.
D. ( ) Area Manager.
2. The Preliminary Study (PS) must be used to present information necessary to

identify Capex that will participate in the steps of selection and prioritization for the
preparation of __________.
A. ( ) Plan Risks in Implementation phase.

B. ( ) Planning in Planning phase.
C. ( ) Capex Plan in Capex Plan phase.
D. ( ) Training Plan in Planning phase.
3. Consider the following statement and answer accordingly: "The PS is used to

submit for approval a Transitional Investment (TI),whenever a TI is required to
prepare the Technical Study (TS)".
A. ( ) The statement is false, since the PS is used to submit a TI, but the TI has
nothing to do with the development of a TS.
B. ( ) The statement is false because the PS is not used to submit the TI.
C. ( ) The statement is false because the PS has no relationship with TI and TS.
D. ( ) The statement is true.

4. Indicate which of the alternatives presented below contains an item

that is NOT a part of the PS:
A. ( ) Comments and Control Items.

B. ( ) Objectives and Methods of Analysis.
C. ( ) Criticality and Scope.
D. ( ) Quantifiable Benefits and Calculation of Return on Investment.
5. Choose the alternative that indicates how should be evaluated the Capex that
have no quantifiable benefits (Safety, Environment, Reliability and Administration /
Support):
A. ( ) should be evaluated by the similarity they have with other previous Capex.
B. ( ) should be evaluated by an economic forecasting conducted by the team.
C. ( ) should be evaluated by the criticality of the event that the Capex is intended to
eliminate or mitigate.
D. ( ) cannot be evaluated, since only Capex with quantifiable benefits can be
evaluated.
6. Indicate who has responsibility for implementing the procedure of the Capex Plan:
A. ( ) Project Coordinator.
B. ( ) Engineering Manager.
C. ( ) Area Manager.
D. ( ) Draftsman.

7. Check the item that best describes how the preparation of

the 3-Year Capex Plan is shared:
A. ( ) The preparation starts at the level of all areas and
processes of the Industrial Unit and is complemented
and consolidated at the level of Business Division and
Gerdau.
B. ( ) The preparation, completion and consolidation is carried out simultaneously in

all areas and processes of the Industrial Unit and in the level of Business Division
and Gerdau.
C. ( ) The preparation starts at the level of Business Division and Gerdau Group and
is complemented and reinforced across all areas and processes of the Industrial
Unit.
D. ( ) None of the above is correct, because the preparation is not shared.
8. Indicate the directions used to group Capex:

A. ( ) Competitiveness and Performance.
B. ( ) Competitiveness and Sustainability.
C. ( ) Operational and Sustainability.
D. ( ) Competitiveness and Sustainability.
9. Complete the gaps: in the Capex Plan, __________ refers to the originally
approved Capex Budget (in the 3-year Capex Plan). This budget __________ be
kept fixed throughout the year.
A. ( ) Value Analysis; does not have to.
B. ( ) Original Planned; must.
C. ( ) Value Analysis; must.
D. ( ) Original Planned; does not have to.

10. Mark the indicator to be used for measuring the execution and control of the 3-
Year Capex Plan:
A. ( ) The productive growth of the Industrial Unit.
B. ( ) The management goal - Improvements achieved.
C. ( ) The Control Item - Compliance with the Capex Plan.
D. ( ) The Control Item - Quality of the Capex Plan.

ANSWERS
ANSWERS
1. A
2. C
3. D
4. B
5. C
6. B
7. A
8. D
9. B
10. C

REFERENCES
REFERENCES
DINSMORE, P.C. Transformando estratgias empresariais em resultados atravs da

gerncia de por projetos. Rio de Janeiro: Qualitymark, 1999.
FRAME, D.J. Managing Project in Organizations:how to make the best use of time,
techniques, and people. Planning and Control Tolls, 3 ed. ISBN 0-7879-6831-5. San
Francisco:Jossey-Bass, 2003.
HEERKENS, G.R. PREPARING. Project Management. Detailed Project Plan: step

by step. Dealing with risk and uncertainty. New York:McGrawHill, 2002.
HELDMAN, K. Gerncia de Projetos. Guia para o exame oficial PMI. Rio de

Janeiro:Editora Campos, 2003.
MOTTA, R. R.; CALBA, G. M. - Anlise de investimentos: tomada de deciso em

projetos industriais. Editora Atlas, So Paulo, 2002.
PROJECT MANAGEMENT INSTITUTE. PMI. The Standard for Portfolio

Management, 2 ed. 2008.
PROJECT MANAGEMENT INSTITUTE. A guide to the Project Management Body of

Knowledge: PMBOK, 4 ed. 2008.
XAVIER, C.M.S.; VIVACQUA, F.R.; MACEDO, O.S.; XAVIER, L.F.S. Metodologia de

Gerenciamento de projetos METHODWARE. Rio de Janeiro: Brasport, 2005.


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ENGINEERING PROCESS

Engineering ENG-001 - Capex Plan 1

Rev. Date Revision Description Resp.

Engineering ENG-001 - Capex Plan 2

REVISION CONTROL ................................................................................................. 2

Engineering ENG-001 - Capex Plan 3

Engineering ENG-001 - Capex Plan 4

Basic knowledge about procedures for preparation of the

Basic knowledge about procedures for preparation,

Engineering ENG-001 - Capex Plan 5

1. Studying the contents of the procedure for ENG-001 Module Pages 08 to 20

2. Studying the contents relating to the ENG-001 Module Pages 21 to 33

3. Theoretical Self-Evaluation. ENG-001 Module Pages 34 to 37

Engineering ENG-001 - Capex Plan 6

TERMS AND DEFINITIONS

The Investment Coordinator is responsible for the application of the GG-PR-169-012

Engineering ENG-001 - Capex Plan 7

Figure 1 - Engineering Process

The Preliminary Study (PS) must be used to:

Engineering ENG-001 - Capex Plan 8

The preparation of the Capex Plan, based on the Preliminary

Figure 2 - Relationship of the PS with other procedures and phases

Engineering ENG-001 - Capex Plan 9

To undertake the preparation and approval of the PS, do the following:

Observe that the PS should be prepared to

Review and refine the Preliminary Studies which are

Obtain PS formal approval by the Industrial Units

Engineering ENG-001 - Capex Plan 10

Use the Preliminary Study (PS) to submit to approval a

The executed budget of the Transitional Investment will be transferred to the

Engineering ENG-001 - Capex Plan 11

For preparation of the PS, you must Inform the following

Engineering ENG-001 - Capex Plan 12

Engineering ENG-001 - Capex Plan 13

Return on investment calculation:

Key Performance Indicators:

Engineering ENG-001 - Capex Plan 14

Preliminary Study (PS)

General Capex Data

Engineering ENG-001 - Capex Plan 15

Sustainability Capex, that have no quantifiable benefits (Safety, Environment,

Important: Criticality must be referred to the event the Capex is

Engineering ENG-001 - Capex Plan 16

CR1 are unacceptable;

Low Medium High

Table 3. Criteria for evaluation of the probability of occurrence of an event

Engineering ENG-001 - Capex Plan 17

Capex Classification Impact

Sustainability Projects in General

Doesnt attend the

Health and Safety

Can generate Can cause Can cause permanent

Cause significant Cause severe

Table 4: Criteria for evaluation of the impact level

Engineering ENG-001 - Capex Plan 18

Table 4: Criteria for evaluation of the impact level (continuing)

Important: The economic impact linked to loss of production or

Engineering ENG-001 - Capex Plan 19