9AAD102047-Project Management Process

ABB Group Processes Ltd 9AAD 102 047
Issued by department Date Lang. Revision Page
GP Project Execution 2003-01-30 en B 1 (54)

Doc. kind Status of document
Process Description Released
Project name Phase of project
Project Management Process Implementation
Creator name Distribution
Benny Nyberg ABB Internal
Based on: 9AAD100947
Project Management Process
Contents
Project Management - Process 81 .......................................................................3
Objective ....................................................................................................3
Benefits ......................................................................................................3
Scope..........................................................................................................3
Process Overview Diagram........................................................................3
Description.................................................................................................4
Key Changes ..............................................................................................5
Process Performance Metrics.....................................................................5
Dependencies and Prerequisites.................................................................5
RACI Chart ................................................................................................6
Order Preparation - Step 81.1 .........................................................................6
Contract Analysis - Activity 81.1.1 ...........................................................7
Order Entry and Acknowledgment - Activity 81.1.2.................................8
Basic Project Planning - Activity 81.1.3....................................................9
Expand Project Team - Step 81.2 .................................................................11
Internal Project Kickoff - Step 81.3..............................................................12
Customer Project Kickoff - Step 81.4 ..........................................................15
Project Startup Process Review - Step 81.5 .................................................17
Customer Satisfaction Management - Step 81.6 ..........................................18
Customer Project Review - Activity 81.6.1 .............................................19
Customer Satisfaction Surveys - Activity 81.6.2.....................................20
Customer Communication - Activity 81.6.3............................................20
Project Team Management - Step 81.7 ........................................................22
Project Team Progress Review - Activity 81.7.1.....................................22
Resource Conflict Resolution - Activity 81.7.2.......................................24
Performance Assessment - Activity 81.7.3..............................................24
Financial and Cost Management - Step 81.8................................................26
Monitor Project Costs - Activity 81.8.1...................................................26
Cashflow Management - Activity 81.8.2.................................................28
Invoicing to Customer - Activity 81.8.3 ..................................................28
Contract Management - Activity 81.8.4 ..................................................29
Reporting - Step 81.9....................................................................................30
Internal Project Report/Meeting - Activity 81.9.1...................................31
Customer Project Report - Activity 81.9.2 ..............................................32
FILE: 9AAD102047-Project Management Process.doc

We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden.
 ABB Group Processes Ltd; 2003
Process Description Released 9AAD 102 047 B
Project Management Process 2003-01-30 2/54
Change Management - Step 81.10................................................................33

Project Opportunity Management - Step 81.11 ............................................36
Project Procurement Management - Step 81.12 ...........................................37
Selection of Suppliers - Activity 81.12.1.................................................38
Purchase Orders and Expediting - Activity 81.12.2 ................................39
Inspection and Test Coordination - Activity 81.12.3...............................40
Packing, Shipping and Storage - Activity 81.12.4...................................41
Purchase Order Close-out - Activity 81.12.5...........................................42
Risk Management - Step 81.13.....................................................................43
Planning and Schedule Management - Step 81.14 .......................................47
Acceptance/Takeover - Step 81.15...............................................................49
Warranty/Aftercare - Step 81.16 ..................................................................51
Project Closeout Review - Step 81.17 ..........................................................52

Project Management - Process 81
Objective
The objective of this process is to focus Project Management on the Management and Cus-
tomer related aspects of projects, hence making Project Management the key driver for
value creation throughout the project life cycle and ensure that the expectations of the Cus-
tomer and other stakeholders are met. Key deliverables include:
• Customer Satisfaction
• Predictable Project Execution
• Increased Customer Value and Margin Improvement
Benefits
• Increased Customer Satisfaction
• Long term Customer Relationship
• Delivery of sold value to the customer
• Predictable delivery of revenue and profit to ABB
• Improved Change Management
Scope
This procedure covers the customer related and management aspects of projects that in-
clude hardware and/or software coupled with any form of engineering services. The details
of Supply & Demand Change Management, Engineering, Installation and Commissioning,
etc. are covered in separate processes. The process applies in full to delivery projects and
in principal, to all ABB projects. The process is not mandatory, and does not in all aspects
apply, to products such as catalog items (standard drives, stock parts, software licenses,
etc.), not requiring engineering.
Process Overview Diagram

Drawing Title Ordinate Process
Project Management Flowcharts Overview PM Process
Order Expand Project Internal Customer Project Startup

Sales Process Preparation Team Project Kickoff Project Kickoff Process Review
81.1 81.2 81.3 81.4 81.5
Customer Satisfaction Management 81.6
Project Team Management 81.7
Financial and Cost Management 81.8
Reporting 81.9
Change Management 81.10
Project Opportunity Management 81.11
Project Procurement Management 81.12
Risk Management 81.13
Planing and Schedule Management 81.14
Acceptance/ Warranty/ Project Closeout

Service
Take Over Aftercare Meeting
Process
81.15 Activity 81.16 Activity 81.17
Check-
Manual Automated Operation with Data Base / Document Lib
Start/Finish
operation Operation
Decision
separate File System
point Review Information flow
drawing
LEGEND
Document Id./Revision Status Date Process Created by Sheet No. Total Pages
ABB Group Processes 9AAD 102 052 Released 2001-06-21 Project Management PM Team 1 23
File: PM Flowcharts June 21, 2001
© ABB Group Processes Ltd, 2001
Description
Project Management is the task to manage the application of knowledge, skills, tools and
techniques to project activities. This includes delivery of the as sold scope to the Customer
and the budgeted revenue and margin to the company. Project management begins with the
involvement of a Project Manager as a member of the Cross Functional Team (in the Sales
process) and continues, through project execution, installation, commissioning, and war-
ranty period. Much like any other business management, this requires sound management
practices, overall control, and the ability to allocate and delegate the project effort to vari-
ous specialized functional areas.
Project activities are highly dependent on the scope and nature of a project. The applicabil-
ity and order of different tasks may differ. Several tasks are performed simultaneously (in
parallel) and repeatedly throughout the project execution.
Due to organizational differences, the Order Administration function as referred to in this
procedure may be performed by different functions. Also due to organizational differences,
the Supply & Demand Chain Management function as described in this procedure (Step
81.12) may be performed by different functions, e.g. Project Management, Purchasing, etc.
The Project Management function is performed by an appointed Project Manager (PM) or
other person responsible for managing the order.

Key Changes
KC# 81.1 Transformation of Project Managers to Business Managers
KC# 81.2 Greater Front end Involvement by Project Management
KC# 81.3 Customer Satisfaction Management
KC# 81.4 Cash Generation and Margin Improvement
KC# 81.5 Project Management Development
For more information, please refer to the Key Change document for Project Management.
Process Performance Metrics

Process Performance Metrics are used to measure how well a process performs. Key areas
for measuring the success of Project Management includes:
• Gross Margin Improvement
• Customer Satisfaction
• Change Management
• Risk and Opportunity Management
These Process Performance Indicators may be rolled up into Value Drivers and overall
Business Impact Metrics. For more information, please refer to the Process Performance
Metrics document for Project Management.
Dependencies and Prerequisites

External source Id Comment
Customer Purchase Order (aka A Purchase Order is the main prerequisite for a
Purchase Contract, Purchase Project. The scope of the contract is the base for
Agreement, etc.) planning how this process applies.
Cross Functional Team The knowledge and references from the CFT
participation is crucial for a successful project.
Handover Checklist 3BPA 000 126 Checklist completed during the CFT, listing all
documents from the sales activities required to
run the project.
Order Package All documents from the sales activities required
for running the project.
Project Management Key 9AAD 102 049 Document with Key Principles for successful
Changes project execution.
Process Performance Measure- 9AAD 102 060 Document with Process Performance Indicators
ment Metrics for Project Mngmt. for measuring the effectiveness of the process
RACI Chart for Project Man- 9AAD 102 046 Document with recommended Roles and Re-
agement sponsibilities for Project Management activities

RACI Chart
The RACI chart is a recommendation of the responsibilities for all activities within the
process Steps, applicable for all roles and activities within each Step. The formal responsi-
bilities are defined in the Local Work Instructions. (Local Quality Instructions)
R: Responsible, A: Accountable, C: Consulted, I: Informed
For more information, please refer to the RACI Chart document for Project Management
Order Preparation - Step 81.1
Objective
• Verify/establish the baseline for the project enabling a predictable Project Execution
• Complete administrative tasks necessary to start up the project and to plan the execu-
tion of the project.
Step Overview Diagram

Handover
Questions for Checklist
Internal & Customer Change Project
Kickoff Meeting Mngmt Library/File
Project
Financial Plan
Handover
Checklist
Risk Review
Contract Analysis Report
Business
System
81.1.1
Basic Project
Complete Project Schedule
Order Package Description
Customer
Order Entry and Order
Acknowledgment Acknowledgment Purchase
Package
81.1.2
Information
from other Process Plan
processes
Change Project
Mngmt Library/File Customer
Order
Acknowledgment
Basic Project Planning Communication

Plan
81.1.3
Customer
Documentation
Plan
Step Description
The Sales process has been completed and the order received from the Customer. The Pro-
ject Manager moves from the role as a member of the Cross Functional Team to the active
role of project management, taking accountability and ownership of the project.

Comments and Guidelines

1 The duration of this step is highly dependent on a successful Cross Functional Team
(CFT). When the Project Manager, and other team members, actively have participated
in the CFT the Project Startup Step can be very condensed. When resource, or other
reasons, dictate that personnel who did not participate in the CFT are allocated a pro-
ject, the Project Startup Step will need to be more extensive
Contract Analysis - Activity 81.1.1
Activity Description
The PM assumes the responsibility for the contract. If there is any doubt whether all con-
tractual aspects including; Terms and Conditions, Schedule and Cost, as well as technical
matters reviewed during the Cross Functional Team activities are acceptable, this must be
verified now. The result of this activity is PM’s final acceptance of the contract and sign-
off of the project financial plan. Project summary information is compiled in a Project De-
scription.
The intention with this analysis is to verify that all elements required for predictable and
successful project execution have been/are covered.
Actions
1 Review all relevant documents in the Order Package, received from the Sales process.
2 Review the Handover Checklist as filled out through and received from the Sales proc-
ess.
3 Review the received purchase order/contract and compare it with ABB’s proposal/as
sold specification.
4 Verify commercial and technical validity of quotes (external and internal purchases, ex-
ternal services, training, and freight). Ensure quotes for major purchases, as required
for the “as sold” scope, are revalidated prior to order entry.
5 Verify that labor estimates for engineering, installation, startup, project management
and other functions are valid, and are based on the “as sold” scope.
6 Verify that cost, such as: Letter of Credit fees, Commission, Agent fees, Duties, and
Performance Guarantees are covered.
7 Verify that applicable allocation fees, such as; Business Unit, Research & Develop-
ment, Product Responsible Unit, etc. are included.
8 Verify that allowance for applicable warranties have been made. Warranties extending
beyond ABB standard needs to be properly allowed for or back to back with vendors.
9 Verify that the project financial plan has a positive cashflow or that allowance for cost
of interest is budgeted for.
10 Verify that the contract is based on ABB’s General Terms and Conditions, or approved
by Legal.
11 Review Risk Review Report as received from the Sales process.
12 Verify that the project financial plan includes coverage for any foreseeable risk.
13 Verify that the delivery schedule can be met or negotiated with Customer.
14 Verify that payment milestones are reasonable.

15 Verify procedures for Contract Changes.
Inputs
Item Description in process context Proc. Ref. Spec. Comment
Handover Check- As received from Sales/CFT Sales
list Process
Complete Order Documents listed in the Handover Sales
Package Checklist Process
Information from Applicable Project Information from
other processes others e.g. Engineering, Supply &
Demand Chain Management, etc.
Outputs
Handover Check- Completed and signed
list
Project Financial Full Cost Calculation, Cashflow 81.8
Plan plan, and supporting document
Project Description Summary of project features 81.3
Risk Review Re- Updated as applicable 81.13
port

1 Any open items/question marks needs to be clarified with sales and/or the Customer at
the kick-off meeting. Deviations should be documented in meeting minutes and/or or-
der acknowledgment.
2 Document all deviations/problems/issues or specific requirements and notify manage-
ment.
3 Identify possibilities for margin improvement and project growth opportunities.
4 Based on the review, fill out a Project Description with summary project information
and distribute to the Project Team members.
5 Delegate activities for review to other functions/stages as required.
6 For easy finding and handling, project documentation should be held on electronic for-
mat whenever possible.
Order Entry and Acknowledgment - Activity 81.1.2
The order is entered into the business system (aka Enterprise Resource Planning (ERP) sys-
tem), by order administration as instructed by the Project Manager. Cost report line items
and milestones are set up.
The order acknowledgment is generated and sent to the Customer. An Order Acknowledg-
ment, based on PM’s input as part of the order entry documents, is generated by order ad-
ministration.

Inputs
list Process
Outputs
Customer Order Generated in company business
Acknowledgement system (aka Enterprise Resource
Planning (ERP) system) or manu-
ally as required by Customer

1 Enter the order into the company’s business system in accordance with local company
guidelines.
2 Ensure that order costs, cost types, revenue generation, payment milestone dates, etc.,
are correctly entered into the business system. This will form the baseline business data
that will be tracked throughout the project life cycle.
3 As a minimum the acknowledgment should include the following or spec./contract ref-
erence:
a) Scope of contract (project/product description)
b) Terms and Conditions
c) Payment Terms/Milestones
d) Delivery terms, point and time
Basic Project Planning - Activity 81.1.3
Develop a Basic Project Schedule, a Process Plan, a Communication Plan, a Customer
Documentation Plan, and define the Project Filing system.
Through this activity the project scope activities, including customer obligations, are
planned and/or refined from previous planning during CFT (First part of what some call
Scope Management). Details such as Work Breakdown Structure (WBS) are developed
and/or refined in the Planning and Schedule Management activity.
The Process Plan is the document used to define how the process applies to a specific pro-
ject, i.e. if a certain process activity is not applicable, or apply only to a limited degree, this
is to be documented.
Filled out Process Plan has to be signed off by Management, as locally defined. Each busi-
ness may have a business specific pre-defined Process Plan, as applicable. Project specific
procedures, guidelines, or forms may be referenced in the Process Plan.

Actions
1 Develop a Basic Project Schedule defining main activities, planned completion dates,
and milestones, as agreed with the Customer.
2 Identify payment milestones (from Customer/to vendors) to optimize cashflow.
3 Identify larger purchase packages that might need to be forecast and/or procured imme-
diately, and inform Supply & Demand Chain Management accordingly.
4 Establish Process Plan or use business specific pre-filled-out Process Plan as applica-
ble.
5 The completed Process Plan, or the document defining what pre-filled-out Process Plan
that is used, must be reviewed and approved by Management.
6 A project filing system for all project related documentation is set up. For easy location
of documents, the filing is organized in compliance with established company standard.
Inputs
list Process
Information from Applicable Project Information from
other processes others e.g. Engineering, Supply &
Demand Chain Management, etc.
Outputs
Process Plan Defining steps and activities re- 81.3
quired for project execution
Communication With communication channels 81.3
Plan amongst Customer, team members 81.4
and others as well as correspon-
dence numbering, etc.
Basic Project With main activities, milestones, 81.14
Schedule Customer obligations, etc
Purchase Pack- Large and/or long lead-time pur- 81.12
age/Forecast chase packages that might need to
be forecast and/or procured imme-
diately.
Customer Docu- With the content, layout and han- 81.3
mentation Plan dling of Customer documentation. 81.4

1 Any open items/question marks needs to be clarified with sales and/or the Customer at
the kick-off meeting. Deviations should be documented in meeting minutes and/or or-
der acknowledgment.

2 Document all deviations/problems/issues or specific requirements and notify manage-

ment.
3 Identify possibilities for margin improvement and project growth opportunities.
4 Based on the review, fill out a Project Description with summary project information
and distribute to the Project Team members.
5 Delegate activities for review to other functions/stages as required.
6 For easy finding and handling, project documentation should be held on electronic for-
mat whenever possible.
Expand Project Team - Step 81.2
Objective
• Expand the Project Team with resources required to successfully execute the project.

Project Management Flowcharts Expand Project Team 81.2
Project
Description
Project
Financial Plan Project
Expand Project Organization
Process Plan Team Chart/List
Basic
81.2
Project
Schedule
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
This is done by the PM in conjunction with functional managers.
Based on the Basic Project Schedule, the skill mix and skill levels necessary to execute all
project activities are determined, and the project team members are selected.

Team members project specific roles and responsibilities are defined.
Actions
1 Determine the skill mix and skill levels necessary to execute activities required for the
as sold scope.
2 Nominate new project team members together with the functional managers.
3 Define project specific Roles and Responsibility of the Team members (including sub-
stitutes, as applicable). Ensure the responsibility for all activities is delegated to and
understood by all team members.

1 Use the resource database containing individual resources by name and skill level with
current assignment and project availability (common tool not yet available). Consider
other Business Area Units (BAUs), consultants or partners as needed.
Internal Project Kickoff - Step 81.3
Objective
• Kickoff the project and achieve internal commitment for resources and project sched-
ule.

Project Management Flowcharts Internal Project Kickoff 81.3
Project
Description
Meeting Preparation
Project Meeting Agenda
Financial Plan
Process Plan
Internal MOM
Risk Review Kickoff Internal
Report Meeting Kickoff
Opportunities Communication
81.3
Plan
Project
Basic Organization
Project Customer
Chart/List
Schedule Documentation
Plan
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
An Internal Kickoff Meeting is prepared, organized, called and conducted by the PM. The
project team members are informed of project scope and; financial plan, project organiza-
tion, communication plan, process plan, project schedule, and customer documentation
plan. The meeting involves, as a minimum, sales and the project team. If applicable, the
management of Engineering, Manufacturing, Supply & Demand Chain Management, and
Project Management should be involved. Meetings could be conducted in person, as vid-
eoconference, or by telephone.
Actions
1 As a minimum, the meeting should cover the following items:
a) Orientation of new team members to the project.
b) Review project scope, define delivery limits with list of exclusion and interface re-
quirements between Customer and ABB equipment.
c) Establish and agree to Communication Plan, Roles and Responsibilities (whom to
contact).
d) Review Contract aspects, as applicable.
e) Review Process Plan.
f) Review and commit to the Project Schedule (considering resource planning).
g) Define progress report principals and frequency.

h) Identify additional information required and establish Action Item List/Query, as

applicable.
i) Identify deviations from normal design standard and procedures.
j) Identify project Growth Opportunities/Margin Improvements.
k) Evaluate project Risk and Opportunities.
l) Agree on reporting format and meeting frequency.
2 Achieve commitment for work allocation (assigned work package(s)) and cost from
Team Leads.

1 Prepare meeting agenda and distribute to participants ahead of the meeting.

Customer Project Kickoff - Step 81.4
Objective
• Ensure that all parties have a common understanding of the scope of supply and the de-
tailed requirements of the project, including project organization, project basic schedule
and how the project will be executed.

Project Management Flowcharts Customer Project Kickoff 81.4
Project
Description Meeting Agenda
Project
Organization
Communication
Customer MOM
Plan
Kickoff Customer
Meeting Kickoff
Project
Schedule 81.4
Customer
Documentation
Plan
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
A Customer kickoff meeting is prepared, organized, called and conducted by the PM. The
meeting involves, the Customer’s project team and ABB participants selected by the PM.
For some projects additional kickoff meetings with third parties may be required. Meetings
could be conducted in person, as videoconference, or by telephone.
Actions
1 As a minimum the meeting should cover the following:
a) Introduce ABB Project Organization and team members to Customer.
b) Obtain Customer Project Organization.

c) Review project scope (System Solution, Equipment, Services, and Documentation).

d) Establish and agree to a communication plan. Roles and Responsibilities (who to
contact).
e) Establish and agree to the method used for project changes/claims.
f) Review and agree to Project Schedule.
g) Identify additional information required and establish Action Item List as applica-
ble.
h) Agree on reporting format and meeting frequency.
i) Introduce ABB’s approach to Customer Satisfaction including Customer Survey,
and Customer Complaint Resolution Processes (CCRP), as appropriate.
j) Agree on method of commercial acceptance of the as sold scope (suggest ABB’s
acceptance document/procedure).
k) Review contract Terms and Conditions.
l) Review contract Warranty terms.
m) The PM should ensure that accurate meeting minutes are taken.
n) Meeting minutes should preferably be taken by ABB, if possible printed during the
meeting, agreed upon, and signed by all parties.

1 The meeting agenda is to be submitted to the Customer and project team before the
meeting to enable adequate preparation. This way any requests for further detail could
be addressed and resolved during the meeting.

Project Startup Process Review - Step 81.5
Objective
• Access the effectiveness of the process and report the findings to the process owner to
facilitate further improvements.

Project Management Flowcharts Proj. Startup Proc. Rev. 81.5
81.1
All
Documents MOM
81.2 Project Startup
from Review
Project Process Review Project Startup
Startup 81.3
81.4 81.5
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
Feedback as to how further process improvement can be achieved are collected, and report
to the project management process owner. This could be a separate meeting, an agenda
item in the next Project Team Progress Review/Meeting, or included in a periodic depart-
ment type meeting and could be conducted in person, as videoconference, or by telephone.

1 Preferably the review is conducted with a locally developed standard checklist.
2 Prepare a short meeting with the project team for review of the Project startup.

3 Collect feedback from the project team as to how further improvement (of process
manual and work instructions) can be achieved.
Customer Satisfaction Management - Step 81.6
Objective
• Establish, maintain and improve Customer Satisfaction by providing the expected value
in accordance with the contract.

Project Management Flowcharts Cust. Satisfact. Mngmt. 81.6
Customer
Satisfaction
Meeting Agenda
Customer Project Survey
Review/Meeting Record/
Minutes
of Meeting
81.6.1
Customer Change Customer

Communication Mngmt Satisfaction Surveys
Record
81.6.2
Customer
Customer - Customer Complaint
Correspondence
Complaint Resolution Process
Customer Project
Communication File
81.6.3
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND

1 Customer Satisfaction can be defined as, received value in relation to established ex-
pectation, as perceived by the Customer. Ultimately Customer Satisfaction translates to
Customer Loyalty; a Customer that honors us with repeat business clearly expresses
Customer Satisfaction.
2 In many cases Customer Satisfaction Management is made more complex due to more
parties, e.g. 3rd party suppliers, being involved. Customer Satisfaction is an important
subject for all employees of ABB. A Customer may be external to the company or any
other function within the company. The first and most important step enabling Cus-
tomer Satisfaction is to know what the Customer expectation is. Since a Customer or-

ganization consist of a number of individuals, Customer Satisfaction is a highly people

oriented activity.
3 Customer Satisfaction Management is an always-ongoing activity. Customer Satisfac-
tion is an inherently unstable and temporary state, which can quickly change from great
satisfaction to dissatisfaction unless proper actions are taken as situations arise. Cus-
tomer dissatisfaction issues are addressed through the Customer Complaint Resolution
Process (CCRP).
Customer Project Review - Activity 81.6.1
Regular Customer Project Reviews should be held with the Customer. Sometimes review
meetings with other parties, e.g. 3rd party suppliers, are equally important. Meetings could
be conducted in person, as videoconference, or by telephone.
Actions
1 As a minimum, the following items should be reviewed:
a) Review project status.
b) Review Project Schedule.
c) Summary of external Queries and Changes
d) Identify open items and establish/update Action Item List/Query with target dates
and Customer/ABB responsibilities, as applicable.
e) Review level of Customer Satisfaction.
Inputs
Customer Corre- Including any expression of satis-
spondence faction or dissatisfaction (com-
plaint), as received from a Cus-
tomer.
Customer Com- A record of any verbal or written
munication Record communication with the Customer.
Meeting Agenda Distributed before the meeting. (To
Customer and other participants).
Outputs
Minutes of Meeting Minutes from Customer Project
Customer Project Review/Meeting.
Review

Customer Satisfaction Surveys - Activity 81.6.2
Customer Satisfaction Surveys are conducted to monitor Customer Satisfaction. Project re-
lated surveys are initiated by the PM and conducted by the Quality Assurance (QA) de-
partment or others. The Project Manager informs the QA department or others when and to
whom project related surveys should be sent. A survey could be conducted several times
throughout the lifetime of a project, only at the conclusion of a project, or on an account
and calendar base. Surveying a Customer that just awarded us an order typically gives a
high Customer Satisfaction score since the purchasing decision is being defended.
Inputs
Outputs
Customer Satisfac- Record from Customer Satisfaction
tion Survey Record Surveys as conducted for the pro-
ject.

1 To gather accurate and fair feedback, filtered from a temporary state of satisfaction or
dissatisfaction, surveys should preferable be scheduled well ahead of time.
2 Collect specific Customer expectations and communicate to the team.
3 For Customer complaints use the company Customer Complaint Resolution Process.
Customer Communication - Activity 81.6.3
Active Customer Communication with regular Customer contact is an important part of
Customer Satisfaction. Knowing the Customer and the Customer expectations well are pre-
requisites for project success.
Inputs
tomer.
Customer Com- A record of any verbal or written
munication Record communication with the Customer.

Outputs
tomer.

1 Ensure that all Customer communication is performed in a correct, dedicated and posi-
tive manner.
2 Collect specific Customer expectations and communicate to the team.
3 Listen to your Customer! Find out what’s important, capture the Opportunities, be ac-
tive and make additional selling.
4 For Customer complaints use the company Customer Complaint Resolution Process.

Project Team Management - Step 81.7
Objective
• Manage and coach a Project Team assembled from cross-functional representatives
throughout all project phases.

Project Management Flowcharts Project Team Management 81.7
Change
Mngmt
Project Status
Progress Schedule
Company
Resource
Organization
Conflict
Functional
Resolution
Project Description Managers
Project Organization Clarification of Scope 81.7.2
Communication Plan
Project Team
Process Plan
Progress Review
Project Schedule Meetings
Information
Customer
Documentation Requirements
Plan MOM
Project
Review
Monitor
Opportunities
81.7.1
Assessment
Performance Record
Assessment
81.7.3
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
Success of a project team requires clearly defined Roles and Responsibilities for all team
members. Each team member must take accountability for the assigned activities.
As the “Managing Director of the Project” the PM has the authority and is responsible to
manage the personnel on the project team.
Project Team Progress Review - Activity 81.7.1
The PM should hold regular internal reviews with the project team. This is an important
part of the PM’s managing of the project team, keeping informed of project issues and to

ensure that all team members have the information necessary to perform the assigned pro-
ject tasks.
Inputs
Query Any project questions with financial, 81.10
technical or schedule impact.
(Raised by Engineering, Supply &
Demand Chain Management, In-
stallation, Commissioning, Service,
PM, etc.)
Project Organiza- Chart or List of all project team 81.2
tion members and their role.
Plan amongst Customer, team members
Process Plan Defining steps and activities re- 81.3
quired for project execution
Project Schedule With main activities, milestones, 81.14
Customer obligations, etc.
Customer Docu- With the content, layout and han- 81.1
mentation Plan dling of Customer documentation
Outputs
Minutes of Meeting Minutes from Project Team Pro-
Project Review gress Review Meeting

1 As a minimum, the following items should be covered:
a) Orientation of new team members to the project.
b) Project Scope as relevant for the phase of the project.
c) Review project status.
d) Review Project Schedule.
e) Identify resource conflicts.
f) Identify additional information required and update Action Item List as applicable.
g) Project changes.
h) Project Risk/Opportunities.
i) Review any open Query

Resource Conflict Resolution - Activity 81.7.2
A Project team is composed of individuals with skill mix and skill level necessary to exe-
cute all different project activities. These individuals are part of a line organization and
might be required to participate in other projects. Hence, resource conflict occurs and
needs to be resolved in cooperation between PM and functional managers. Resource man-
agement is the responsibility of line management but must not be done without agreement
with the PM. Important for the final decision is a complete understanding of the conse-
quences.
Actions
1 Resolve resource conflicts with line management.
2 Escalate unresolved critical resource conflicts to senior management.
Inputs
Plan amongst Customer, team members
Outputs
Performance Assessment - Activity 81.7.3
A performance assessment, for each Project Team member, is done regularly and/or at the
completion of the Team member’s involvement in the project. Team members are assessed
by the PM as input for Line management’s formal assessment. The PM is assessed by the
line manager and/or by team members as locally defined. Constructive feedback is critical
to the development of individuals.
Actions
1 Conduct Performance Assessment of team members in accordance with procedures as
established by local human resource organization.

Inputs
Outputs
Assessment Re- Record of performance, identifying Line & HR
cord potential and necessary training

1 The Performance Assessment is provided to line management as input for the team
member’s annual performance review.
2 The Performance Assessment is used as input for determination of training and further
development needs.

Financial and Cost Management - Step 81.8
Objective
• Monitor and control project financials.

Project Management Flowcharts Financial and Cost Mngmt 81.8
Business Cost Report /

System Summary
Change
Monitor
Mngmt Updated
Project
Cost Project
Financial Plan
Supplier
Information 81.8.1
Project Coordination
Financial Plan with Company
Contract Management
Financial
Organization
81.8.4
Business System Customer
Invoice
Documents for
Invoicing Invoicing to Follow up
Customer Payment
to Customer
Expediting of Suppliers Cashflow

Release payment Cashflow
(Supply Chain Report
to Suppliers Management
Management)
81.8.3 81.8.2
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
The company expects the PM to maintain or improve the contract margin. Cost control
within the project scope, and management of the financial aspects of the project, including
cashflow management are high priority activities throughout the project cycle.
Monitor Project Costs - Activity 81.8.1
Monitor project costs and cost to complete against anticipated expenditures. Review actual
cost as charged, and/or committed to, in the company’s business system. Update “esti-
mated” and “planned” cost, as applicable.

Actions
1 Project costing should include all items as identified under Contract Analysis.
2 All hours and costs incurred should be booked against the applicable cost code.
3 Review project financials on a periodic basis in conjunction with review of schedule,
cost to complete, cashflow, etc.
Inputs
Supplier Informa- Cost update from internal and ex- Engineering Engineering
tion ternal suppliers. 60.23 S&DCM
106.3.2 Civil Works
107.3.2 Installation
108.3.2 Commissioning
Outputs
Project Financial Full Cost Calculation, Cashflow
Cost Report/ Business system printout for follow-
Summary up of project costs related to finan-
cial plan: planned cost, actual cost
and estimated costs to complete.
Cashflow Report Cashflow Diagram filled out with
project actuals.

1 A project’s budget includes the cost and revenue budgeted at the time of order booking,
forms the baseline for the project, and can be revised only at a scope change.
2 The planned cost is the cost forecast at project completion (estimate at completion).
3 The planned cost is updated as required to reflect the best estimate at any given time.
4 The difference between planned cost and actual cost charged is the cost to complete.
5 The cost associated with a purchase order is considered a “committed costs” until the
invoice from the supplier is received in the business system.
6 Some commonly used cost categories (with further breakdown as applicable):
a) Buyouts/Orders to suppliers
b) External Field Work (Installation/Commissioning, etc.)
c) Packing, Freight and Duty
d) Finance and Interest cost/income
e) Provisions and licenses
f) Contingency/Reserves
g) Engineering/Documentation
h) Project Management
i) Training

j) Warranty
7 Escalate any significant deviation to management.
Cashflow Management - Activity 81.8.2
Cashflow management involves timely Customer invoicing and follow up in order to
achieve prompt payment. Favorable payment terms should be negotiated with vendors as
applicable.
Inputs
Outputs
Cashflow Report Cashflow Diagram filled out with
project actuals.

1 Verify contract prerequisites for invoices to ensure that timely invoicing can be issued
and result in prompt payment.
Invoicing to Customer - Activity 81.8.3
An invoice is generated through PM’s release of the associated milestone in the company’s
business system or as a request to the finance function.
Inputs
Outputs
Invoice to Cus- Formal commercial invoice.
tomer

1 An invoice might need to be accompanied by different documents (Bill of Lading, Cer-
tificate of Origin, Packing List, etc.) as defined in the contract.

2 Invoicing to internal ABB customers is done through CIT (Cash in Time), as applica-
ble.
3 After invoicing, a follow up call to Customer to ensure receipt and acceptance of the
invoice is to be done. “Customer follow-up calls”, as any other Customer communica-
tion, should be documented.
Contract Management - Activity 81.8.4
Bank Guaranties, Performance Bonds, and Letter of Credits are often used to secure a
money transaction, contingent on a specified performance, between a Customer and a ven-
dor. These can be highly specialized for specific contract conditions. Thus support from
legal and/or finance department, as well as external banking institutions is often required.
It is the responsibility of the PM to be fully aware of the contract requirements and coordi-
nate the necessary support from any function required, in order to obtain, manage, and
close any and all of the documents required.
Inputs
Outputs
Bank Guaranty If required by
Contract
Performance Bond If required by
Contract
Letter of Credit If required by
Contract

Reporting - Step 81.9
Objective
• Convey appropriate project information to customer and other project stakeholders.

Project Management Flowcharts Reporting 81.9
Customer
Project
Customer
Reports,
Project Report
MOM
Project 81.9.2
Description
Financial Plan Project Status

-Queries/Changes/
Project Progress
Project Claims
Schedule -Risks & Opportunities
Project Cost
Cashflow Internal
Project
Internal
Reports,
Project Report/Meeting
MOM
Clarification of Scope
Monitor Opportunities
and Risks
Information
Requirements
81.9.1
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
Timely and accurate reports are required to keep Customers and management updated with
the status of the project. Project specific information is periodically communicated to Cus-
tomer, management, and others as required.
Actions
1 Reports are generated by adding only textual status to information generated in each
relevant activity such as, Planning and Schedule Management, Cost and Financial Man-
agement, etc.


1 Timely collection of inputs as provided by team members is critical to the relevance of
all reports.
2 Templates should be used to standardize report format.
Internal Project Report/Meeting - Activity 81.9.1
Regular project review meetings should be held by management and/or finance. The PM
should participate in these meetings and report the status of current projects, based on in-
formation from planning and schedule management, cost and financial management, etc.
and as required by Management. Meetings could be conducted in person, as videoconfer-
ence, or by telephone.
Inputs
Plan Plan, and supporting documents
Project Schedule With details for project execution. 81.14
Outputs
Internal Project Based on project status and sched-
Report/Minutes of ule.
Meeting

1 Project information from schedule management, business system and team members
regularly communicated/reported to internal management includes:
a) Project Scope.
b) Project Schedule.
c) Activity status and progress to date (versus planned).
d) Financial status (cost and cost to complete, cashflow).
e) Confirmation of team members work load and utilization.
f) Project Opportunities (including additional sales and gross margin improvement).
g) Project Risk/Issues/Concerns and actions to resolve them.
h) Process Implementation status, i.e. process use/issues
2 Reports may be distributed to Project Team members, as applicable.
3 Report process related issues to the process owner for project management.

Customer Project Report - Activity 81.9.2
Progress of the project according to contractual requirements, with information from plan-
ning and schedule management, is regularly communicated to the Customer in a Customer
Project Report, as required by Customer.
Inputs
Plan Plan, and supporting documents
Project Schedule With details for project execution. 81.14
Outputs
Customer Project Based on project status and sched-
Report/Minutes of ule.
Meeting

1 A typical customer report includes the following:
a) Project Schedule
b) Project Status

Change Management - Step 81.10
Objective
• Collect and manage all project issues, whether just a question or a change, with associ-
ated negotiations and approvals.

Project Management Flowcharts Change Management 81.10
Change Management
Query Management Query/Change Request Change/Claim Management
Close Query/
Change Note
External Immediate YES Initiate Negotiate

Change action required Claim Claim
NO
Reply to and/
or resolve Quote Customer
Engineering
Installation &
Query Change Approval
Commissioning
Query (Fault/ Project Management
Others YES
Action Item,
Change Request/ Produce Change Note
Review
Claim, Non Change Note and/or
& Evaluate Specify Internal ABB
Conformance) Log Query and/or Change
from:
Query/Change Change Change Approval Change Order
Request
- Customer Order
- Third Parties
- Vendors NO
- Other Processes
and Functions
Check-
Manual Automated Data Base / Document Lib
Start/Finish Decision Operation with point Review Information flow
operation Operation File System
separate drawing
LEGEND
Step Description
The Change Management process is the means by which technical issues, or issues with fi-
nancial or schedule impact, are raised, and managed. This includes Queries, Changes and
Claims. Project related Faults and Non Conformances are documented through the same
process.
It is the responsibility of everyone involved in a project to identify and log queries as they
arise. A query with no cost, scope, or schedule impact may be immediately answered/re-
solved and closed. Queries with cost and/or schedule impact, or that requires a more com-
prehensive review, are directed to the appropriate function for further action. A query may
initiate a project change and/or claim. Please note that a Query that also is a Customer dis-

satisfaction issue is addressed also through the Customer Complaint Resolution Process
(CCRP).
Requests for changes to the project scope of supply, schedule and financial issues, whether
generated externally or internally, must be managed so that any potential impact can be
properly assessed. To properly document a fault/action item, a possible change and/or
claim it is first always logged as a Query. The resulting changes can then be integrated into
the work-in-progress with minimum impact to cost and schedule. A Change Note is gener-
ated to order and document every change.
A Claim is the result of a change asked for or required but not yet confirmed in a change
order to the contract.
Changes which are expected to be paid for by others, i.e. Customer or other party, should
only exceptionally be proceeded with, without first reaching an agreement. When a change
that should be paid by someone else is necessary to proceed with, but an agreement con-
firming this is not yet obtained it becomes a claim. A claim can be made to the Customer,
to a vendor or to any contractor or third party involved.
The Project Manager acts to avoid/minimize claims towards ABB. For large and complex
projects, and especially when site installation is included, claims (back charges) are unfor-
tunately common. Claims that can not be avoided, needs to be managed professionally in
order to minimize impact to cost and schedule.
Actions
1 Queries, Faults, Non Conformances, Change Requests and Claims are all logged as a
query. Necessary information (source, reason, impact, etc.) should be included in the
query in order for the Project Manager to make a decision.
2 To ensure proper quality, Design Changes are dealt with using the Design Process.
3 Changes internally generated are considered a quality issue and should be analyzed for
root cause and elimination.
4 Decisions whether to implement a change will ultimately reside with the Project Man-
ager. However, a decision cannot be made until all the necessary information is avail-
able with respect to the impact of such a change.
5 Third Party and Supplier claims are handled similarly.
6 Follow Customer and vendor contracts/orders carefully to minimize the risk for claim.
7 All claims must be agreed upon, resolved, and eventually result in an order adjustment.
8 Close out the Change Note when the change is complete, and ensure the change will be
considered in the related review process.

1 Requests for changes may be generated externally or internally. Any consequential
changes to the scope shall be controlled by the same process used for both Customer
initiated changes and internally generated changes.
2 The Project Manager should consult Team members to assist in resolving changes and
work closely with functional managers and other Project Managers to resolve changes
that span multiple projects.

3 Decision to take corrective actions for simple faults is typically delegated to Lead En-
gineer or the individual doing the work.
4 Changes may represent a deviation to the contract, may result in a claim, and have to be
managed in accordance with specific contractual agreements for the project (e.g. ap-
proval procedure).
5 Whenever possible, use a change procedure where no customer changes (and as such no
resulting claims) are accepted unless first approved.
6 Early identification of claims simplifies the resolution.
7 Claims may be listed in a claims log or ”plus-minus list” and resolved on a regular basis
as frequently as practical (weekly, monthly, etc.), when the aggregate value of the
claims exceeds a defined monetary amount or, but only exceptionally, at the end of the
project.
8 Involved partners are informed of changes and consequences, whether approved or not.

Project Opportunity Management - Step 81.11
Objective
• Ensure that all opportunities for Customer Satisfaction, Gross Margin Improvement
and/or Project Growth are captured.

Project Management Flowcharts Proj. Opportunity Mngmt. 81.11
Change
Mngmt
Customer
Communication
Update List of List of

Opportunities Review Evaluate
Opportunities Opportunities
Opportunities Opportunities
Customer
Survey
Create/Develop Change Request

Opportunities /Quote
81.11
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
A project typically involves numerous contacts with the customer. With the length of time
project managers and the project team deal with our customers there are great opportunities
to learn more about what the customer needs are, and what’s really important for the par-
ticular customer. Throughout the project, the Project Manager acts to create and/or capture
opportunities for additional sales. A successfully executed project often includes additional
sales by the PM and it also sets the ground for repeat business.
Actions
1 Monitor project opportunities throughout the project.


1 A project is an opportunity for additional sales but it is equally important that the pro-
ject team stay focused on the delivering the current scope.
Project Procurement Management - Step 81.12
Objective
• Obtain necessary services, materials and equipment from external and internal suppli-
ers.

Project Management Flowcharts Proj. Procurement Mngmt. 81.12
Bids and
Agreement Documents from
Documents from Packing and
Suppliers: Suppliers:
Project Shipping -Certificate of
-Certificate of Instruction
Description Origin
Compliance
-Test Certificates -Packing List
Purchase -Shipping List
-Type Certificates
Package -Proof of Delivery
-etc.
-Financial and Cost -Invoice
Purchase Management Change -etc.
Specification -Planning and Schedule Mngmt
Management
Test Plan
Project Schedule
81.12.1 81.12.2 81.12.3 81.12.4 81.12.5
Documents form Selection of Purchase Orders Inspection and Packing, Shipping Purchase Order
Suppliers Suppliers and Expediting Test Coordination and Storage Closeout
Project Management Process Business

Supply & Demand Chain System
Management Process
62.29 60.13
60.23 60.23
Project Supplier 60.20 Supplier 60.26 60.27 60.22
Manage Purchase Manage Purchase
Selection & Shipping Performance Receive Material Paying Warranty
Orders Orders
Planning Assessment
Packing and Payment to

Purchase Order Shipping Suppliers
Instruction
Documents to
Suppliers
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
This includes all activities from the first project related contact with the suppliers until
completed delivery, acceptance, warranty and payment.
NOTE: This process is heavily integrated with the Supply & Demand Chain Management
processes, documented separately.


The Supply and Demand Chain Processes are to be followed for all Project Procurement.
Normally this is ensued by allocating these tasks to a Supply Manager. If the Project Man-
ager assumes the role of a Supply Manager the PM must ensure process compliance.
Selection of Suppliers - Activity 81.12.1
Selection of suppliers is done in cooperation between Project Management and Supply &
Demand Chain Management, based on, customer requirements, list of qualified suppliers,
previous deliveries, technical specifications, quality level and commercial aspects.
Actions
1 Before selection of a supplier, all aspects (technical, timeliness, completeness, value of
bid, supplier capability, risk, etc.) should be validated.
2 An early Supply & Demand Chain Management involvement is important for sourcing
and negotiation of the best possible purchase agreement.
Inputs
Quotes and As received from suppliers or es- 62.29.1
Agreements tablished agreement
Purchase Specifi- Specification for purchase detailing Engineering
cation functional and quality requirements
of the material/service
Purchase Package Large and/or long lead time pur- 81.1
chase packages that might need to
diately
Customer obligations, etc
Documents from Commercial and technical docu-
suppliers mentation
Outputs

1 All technical information, commercial aspects, quality and delivery requirements
should be communicated to each foreseeable supplier as part of the bid request.

2 For large projects with extensive buyouts a Supply Manager might be allocated to the
PM and included in the project organization, in accordance with local working proce-
dures.
Purchase Orders and Expediting - Activity 81.12.2
The PM authorizes purchase orders for all “buyout” project purchases. Supply & Demand
Chain Management issues Purchase Orders based on PM’s purchase requisition and/or En-
gineering’s purchase specification.
Purchase Orders are followed-up to ensure that delivery commitments will be met and in
accordance with project requirements. If there is any indication that these commitments are
not going to be met, then expediting, and if necessary escalation must take place. This in-
cludes the supply of technical and commercial documents, software and hardware items,
and services, included in the purchase order, in the specified time frame.
Actions
1 Include back to back terms (terms that mirror the agreement with the customer) and
conditions to suppliers when applicable and favorable.
2 In case of changes (design, delivery time, etc.) secure commitment form the suppliers
as early as possible.
3 The Supply Manager is to check the Purchase Order acknowledgement to ensure that
everything is included matches the agreed upon delivery, warranty, terms and condi-
tions etc.
4 When order cancellation occurs, the Supply Manager is to immediately inform the sup-
pliers, in writing.
Inputs
Quotes and As received from suppliers or es- 62.29.1
Agreements tablished agreement
Purchase Package Large and/or long lead time pur- 81.1
chase packages that might need to
diately
suppliers mentation
Packing Instruction Customer packing and marking
requirements.

Shipping Instruc- Customer shipping requirements.

tion
Outputs
Purchase Order For procurement by S&DCM, detail- 60.23.1
Request ing material/service requirement,
(delivery, commercial, technical)
and recommended suppliers.
Documents to Commercial and technical docu-
suppliers mentation
Packing Instruction Defining packing and marking re- 60.20.1
quirements.
Shipping Instruc- Defining shipping requirements. 60.20.1
tion

1 Order products, with the same delivery time, from the same supplier, at the same time
whenever possible.
2 Remember that including all required data, and agreed format, speed up handling on all
levels. Enclosed data could be design specification, design milestone schedule (design
freezing day), etc.
3 A separate purchase order item for documentation, tied to payment, helps facilitate
timely receipt of documentation.
4 Request regular status reports from the suppliers for monitoring, as required.
5 Ensure where the supplier intends to manufacture procured products. The supplier may
like to split the order with another feeder factory (different country) which could im-
pose a problem with the Customer.
Inspection and Test Coordination - Activity 81.12.3
This activity deals with the necessary coordination and clarification of inspection and test
execution. This is based on established Test Plan and Customer requirements. When fac-
tory acceptance test (FAT) is included, follow ABB’s standard procedures, as applicable.
Inspection and Test normally require coordination between Customer, project management,
and supplier.
Actions
1 Specify Inspection and Test requirements in purchase orders/contracts.

Inputs
suppliers mentation
Outputs
suppliers mentation

1 PM makes practical arrangements for Customer’s participation in FAT.
2 FAT specifications are defined by engineering. Routine test of products is executed per
factory standards.
Packing, Shipping and Storage - Activity 81.12.4
Specific Customer shipping instructions, including selection of transportation mode, as de-
fined in the contract, is provided to suppliers and the transportation organization, as re-
quired. Storage and handling instructions should be submitted to Customer and others as
required.
Actions
1 Inform supplier of project specific packing, marking and shipping instructions.
2 Request project specific packing lists and/or documentation as required.
Inputs
suppliers mentation
Packing Instruction Customer packing and marking
requirements.

Shipping Instruc- Customer shipping requirements.

tion
Outputs
suppliers mentation
Packing Instruction Defining packing and marking re- 60.20.1
quirements.
Shipping Instruc- Defining shipping requirements. 60.20.1
tion

1 Shipping instructions should preferable be included in the order.
2 Customer and authorities may need different type of documents.
3 Preferable use ABB standard packing instructions/method.
4 Request proof of delivery to verify that all goods have arrived to destination.
5 Upon receipt of shipment, or at open package inspection, it is important that shipping
damages or missing parts are reported (to insurance company and others as applicable).
Purchase Order Close-out - Activity 81.12.5
Upon receipt of the purchased service, material or equipment, and before approval of pay-
ment, the PM verifies that all committed to items are included, and on time. To ensure ac-
curate tracking of delivery performance and smooth payment of suppliers, receipt of goods
is promptly recorded in the business system.
Internal ABB invoices are automatically paid through the Cash In Time (CIT) procedure, as
applicable.
At the time of purchase order closeout, Supply & Demand Chain Management will from
time to time and for selected suppliers, provide a Supplier Performance Record to be filled
out by the PM.
The Supply & Demand Chain Management function includes supplier warranty manage-
ment.
Inputs
suppliers mentation

Outputs
suppliers mentation

1 In case of supplier warranty claims, accurate failure information needs to be communi-
cated to the supplier.
Risk Management - Step 81.13
Objective
• Contain and reduce the risk exposure identified within the Sales process, during Con-
tract Analysis or later.

Project Management Flowcharts Risk Management 81.13
Change Risk coverage by

Mngmt Company Insurance
Risk Review Evaluate Update Risk Review

Review
Report Risk Risk Review Report
Risk
(Cost, Time) Report
Financial and Cost

Elimination
Rest Risk Management
or Reduction
of Risk
if possible
Change Request
81.13
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND

Step Description
The PM monitors the process to ensure that opportunities are captured and that unforeseen
risks are avoided.
Actions
1 Monitor project risks as identified in the Contract Analysis.
2 Document any change in risk evaluation as well as any new risk identified.

Consider that a project may include any and all of the following risks:
1 Back to Back agreement that may include any of the below listed risks
2 Contract and Agreements
a) Penalty / Liquidated Damages
b) The customer deliberately exploits weakness in the agreement
c) The agreement contains specifications open to misinterpretation
d) General / vague contract wordings
e) Open Issues, deviations –Technical and/or Commercial
f) Change Management procedures not agreed with customer
g) Excessive reporting needs by the customer
h) Permits / Licenses
i) Agents and commissions
3 Responsibility and Liability
a) Unclear scope or unclear limit of responsibility
b) Limits of Liability
c) Cancellation caused by force majeure: Seller, Customers responsibility milestones
for scope of supply, Non Compliance with contract, Employer
4 Financial
a) Payment, Positive cashflow, Letter of Credit, Procedures
b) Currency exchange rate fluctuation
c) Inflation
d) Bonds
e) Financial status – Customer credit history
f) Sub-contracting exposure
5 Political
a) Stability of political environment
b) Political disturbances delay startup
c) Political disturbances that could inhibit our delivery performance
d) Changes in legislation
e) Export / Import restrictions
f) Legal clauses of arbitration
6 Warranty
a) Non standard / Extended Warranty
b) Cost of transportation to/from ABB facility (In/Out Warranty)
c) Repair of equipment at site

d) Ready Access to equipment to allow repairs at site

7 Schedule
a) Unrealistic delivery time
b) Delivery impact due to Non Standard Solutions
c) Delivery commitments
d) Document exchange from all parties
e) Approval Procedures
f) Site Access and site readiness: power, water, including medium for testing, i.e. cor-
rect process conditions
g) Work by others not finished on time
h) Compulsory interface with other suppliers/deliveries
i) Delivery impact due to peak loading of resources
8 Technical and Technological
a) Non Standard Application Solutions
b) Process / Performance guarantees
c) Environmental test simulations, i.e. heat chambers
d) Quality Assurance regulations must be observed
e) Site location an/or customer Standards applies
f) Extensive documentation requirements
g) Technical Interfaces: Retrofit/Extension of existing plant, Third party contrac-
tors/Consortia partners, Responsibility for performance
h) Technical Specifications: Vague Technical Specification/Function Description,
Customer selected technical solution or components
i) Customer Acceptance criteria
9 Resources
a) Man Power: Skill sets needed, Capacity, Availability
b) The contract involves a major engineering input
c) The contract involves a large portion of external resources
d) The contract involves major demands on production equipment
e) Technical workmanship of local supply
10 Supply & Demand Chain Management
a) Delivery commitments: ABB, Third Party
11 Customer
a) Level of experience of Key Personnel
b) The project will be given a low priority
c) Business counterparts / consultants / joint venture
d) Bureaucracy
e) Communications
f) Language
12 Consortia
a) Sharing of penalty for consortium members
b) Third party contractors difficult to deal with
c) Loss of payment in case of insolvency of consortium leader
d) Sharing costs in case of additional suppliers and services
13 Environmental

a) Emissions (noise, dust etc.)

b) Lack of secure storage leading to loss or damage of equipment
c) Infrastructure: Harbor links (port connections), Roads, Telecommunication, Electric
power/disturbances
d) Social cultural: Thefts, Business ethic
14 The PM must take immediate action to manage and/or avoid any and all potential risk
15 PM exerts all possible influence in order to improve the economical results of the pro-
ject
16 PM makes certain who the client is. If others are acting on the client’s behalf, PM
checks the authority of the persons concerned.
17 The Risk Review Report is updated during the Contract Analysis in the Project Startup
phase, and again when any risk has changed.
18 PM carries on or extends the clients contract conditions to the suppliers, as applicable
19 All possible backcharge claims are identified and the worst case cost estimated
20 PM verifies to what extent certain risk can be covered by general company insurance
21 When a risk can not be avoided, the related cost and influence to the schedule have to
be evaluated; planned cost and schedule should be updated accordingly.

Planning and Schedule Management - Step 81.14
Objective
• Plan, schedule, and monitor project activities.

Project Management Flowcharts Planning & Sched. Mngmt. 81.14
Project Work Package

Schedule Detailed Project Definition /
Scheduling Commitment
Process Plan Work Break Down
Internal and External

schedule Information
Monitor
Reporting
Schedule (Earned
Progress Information (Internal/External)
Value)
from Other Functions, Update
e.g. Engineering Schedule
Production Log
Actions to keep
Schedule
- Query Response
Change Management
- Change Request
81.14
Check-
Manual Automated Data Base / Document Lib
Start/Finish Decision Operation with point Review Information flow
operation Operation File System
separate drawing
LEGEND
Step Description
This activity entails project planning (Scope Management) and scheduling of activities nec-
essary for the project and with the efficient utilization of available resources. Develop a
Project Schedule identifying specific activities to be performed during the course of the
project. Identify task dependencies and the critical path for the project. The detailed Pro-
ject Schedule forms the basis by which the Project Manager and Lead Engineer will meas-
ure the progress (Earned Value). The PM addresses any need for changes in project re-
sources from the line organization, with functional management.

Actions
1 Expand the basic schedule, as required, to include sufficient detail to measure and
monitor performance throughout the project.
2 Develop a Work Breakdown Structure (WBS) which, when applicable, is further bro-
ken down into work packages.
3 Verify a responsible Team Lead for each work package.
4 Project Team Leads (i.e. the lead for Project Procurement, Manufacturing, Engineering
Installation, Commissioning, etc.) are responsible to provide information for the de-
tailed Project Schedule, e.g. Engineering’s update/maintaining of Engineering Sched-
ule/Production Log, S&DCM’s expediting/update of vendor progress.

1 Produce the Project Schedule based on schedule templates as available in the reuse li-
brary.
2 A Work Breakdown Structure is a deliverable oriented grouping of project elements
that organizes the total scope of a project. Work not in the WBS is outside of the scope
of the project.
3 The granularity used for a WBS depends on the size and type of business. A typical
ABB project is split in at least:
a) Project Management (Hrs and expenses).
b) Engineering deliverables as defined by Lead Engineer in Engineering Sched-
ule/Production Log.
c) Buyouts (hardware, services, training, etc.)
d) Installation and Commissioning (Hrs and expenses).
4 Each descending level in the WBS represents an increasingly detailed definition of a
project element.
5 Work packages are used to identify and control work flows in the organization and have
the following characteristics:
a) A work package represents a distinct unit of work at the appropriate level of the
WBS where work is assigned.
b) Each work package is clearly distinguished from all other work packages, and is as-
signed a cost code facilitating cost to be monitored in the Business System.
c) The responsibility to complete each work package on schedule and within budget is
always assigned to one project team member.
d) The work packages are to be set-up and agreed to in an early project phase, prefer-
able prior to start of work.
6 A clear work package responsibility ensures that each Project Team Lead has a clear
understanding of the project deliverables, as well as the roles and responsibilities.
7 Pending on the size of the tasks, the Project Team Leads may divide the project into
smaller work packages in Engineering Schedule/Production Log.
8 Project progress (Earned Value) is monitored based on WBS and in particular by the
Lead Engineer based on Engineering Schedule/Production Log.
9 Define the detailed required skill mix and skill levels with input from the Project Team
Leads. Define when specific resources will be required in the project cycle.

10 Preferably the detailed Project Schedule is produced on an electronic interactive system

that can be updated by all Project Team members, (i.e. a live system). However, the
PM controls the Schedule throughout the execution process. The schedule can be
printed in different reports, such as external, internal, milestone, progress, testing, and
startup.
11 Project schedules should be approved/committed to, and regarded as contracts.
Acceptance/Takeover - Step 81.15
Objective
• Timely contract acceptance and final payment
• Takeover by the customer.

Project Management Flowcharts Acceptance / Takeover 81.15
Change
Mngmt
Inspection
Punch List
Record
Resolution
Acceptance/
Organize
Takeover
Acceptance/
Takeover Document
81.15
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
Acceptance of a contract constitutes that a supplier has fulfilled its contractual obligations
and commitments, including applicable performance bonds and guaranties, to its Customer.
Acceptance is initiated by ABB. An early acceptance is important to us but not necessary
to the Customer. It is essential that all acceptance criteria be clearly defined, the accep-

tance is typically tied to significant payment and defines the conclusion of the warranty pe-
riod.
Actions
1 Unless otherwise defined in Customer purchase order, acceptance is initiated/obtained
by a Customer signed acceptance document or an ABB issued letter of notification.

1 Acceptance must be clearly documented. Typically, the Acceptance Document covers,
as a minimum:
a) Time and place
b) Recipient/Participants
c) Inspections, as applicable
d) Measures carried out
e) Agreed upon additional actions
f) Warranty period
g) Applicable signatures
2 Acceptance may be obtained in a Customer meeting or through correspondence.
3 All inspection reports have to be completed before acceptance meeting with Customer
4 Obtaining a Customer acceptance even if minor troubles or open items still exists may
be possible according to the contract.
5 Any open action item including agreed upon time for completion should be listed.

Warranty/Aftercare - Step 81.16
Objective
• Ensure appropriate Warranty and Aftercare is provided to ABB’s customers
• Handover to Service

Project Management Flowcharts Warranty / Aftercare 81.16
Warranty
Project
Expiration
Description Monitor Warranty
Letter
Acceptance/
Takeover Handover
Document Document
Define Aftercare
to Service
81.16
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND
Step Description
Warranty scope and duration is based on contractual agreement. Warranty expiration date
is typically defined by the ship and/or installation date. Warranty start and end date has to
be clearly defined and agreed with the Customer. Aftercare is the responsibility of others
(local organization, ABB Service, etc.) who need appropriate information in order to per-
form their work.
Actions
1 Inform the Customer how to make a warranty claim, i.e. request for service of parts.
2 Send a Warranty expiration letter to indicate when the agreed warranty period is over.


1 Standard warranty claim form simplifies the warranty management.
2 Local service organization’s possibility to handle and support Customer’s needs during
and after warranty period is very important. Define aftercare activities and express ad-
ditional sales opportunities (service/parts) to ABB’s service company.
3 If warranty period issues are properly attended to, Customer will probably use ABB’s
deliveries and services in future.
4 Service Handover Documents typically includes:
a) Project Description (or an excerpt, as applicable).
b) Project specific Customer documents, as applicable.
Project Closeout Review - Step 81.17
Objective
• Access the effectiveness of the process and report the findings to the process owner to
facilitate further improvements.

Project Management Flowcharts Project Closeout Review 81.17
Change
Mngmt
All Applicable
Project Documents
e.g. Project Closeout Project Closeout
Risk Review Report, Review Report
Minutes, etc.
81.17
Acceptance
Document
Check-
Start/Finish
operation Operation
Decision
drawing
LEGEND

Step Description
A project closeout meeting is prepared, organized, called and conducted by the PM, upon
completion of a project. The meeting involves, as a minimum, sales and the project team,
plus management of PM, Engineering, Manufacturing, and Supply & Demand Chain man-
agement, as applicable. The meeting minutes should document project successes and
things to improve. Meetings could be conducted in person, as videoconference, or by tele-
phone.

1 A project closeout report should include/refer to:
a) Project reference/number
b) Customer/end user
c) Short project description
d) Project organization (ABB)
2 The project close out review should, as a minimum cover:
a) Experience from participants (sales and the project team, plus management of PM,
engineering, production, and supply & demand chain management) and others as
received throughout the project.
b) Comments regarding: Project management, engineering, commissioning, spare part
used, time schedule, SW revisions, equipment changes, production, Local ABB, test
and test result, Customer Satisfaction.
c) How internal/external suppliers have performed, delivery time, quality, co-
operation, price. Review/fill-out Supplier Performance Records.
d) Project’s financial review: Contract value, gross result, gross margin %, and GM
improvement.
e) Engineering reuse.
f) Engineering hours used/planned
g) What have we done well
h) What can be done better (Items to improve)
3 Report process related issues to the process owner for project management.

Revisions
Rev. Page (P) Description Date Dept./Init.
ind. Chapt. (C)
- First issue (Based on 3BPA 000 008-004) Oct. 3, 2001
GP/CC PM/BN
A Minor clean-up/word changes before official release Nov. 14 2001
GPPE /BN
B Pg 5 “KC#” added to Key Changes Aug. 30, 2002
GPPM/BN


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ABB Group Processes Ltd 9AAD 102 047

Issued by department Date Lang. Revision Page

GP Project Execution 2003-01-30 en B 1 (54)

Project Management Process

FILE: 9AAD102047-Project Management Process.doc

Change Management - Step 81.10................................................................33

FILE: 9AAD102047-Project Management Process.doc

Project Management - Process 81

Process Overview Diagram

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Drawing Title Ordinate Process

Project Management Flowcharts Overview PM Process

Order Expand Project Internal Customer Project Startup

Customer Satisfaction Management 81.6

Project Team Management 81.7

Financial and Cost Management 81.8

Change Management 81.10

Project Opportunity Management 81.11

Project Procurement Management 81.12

Risk Management 81.13

Planing and Schedule Management 81.14

Acceptance/ Warranty/ Project Closeout

FILE: 9AAD102047-Project Management Process.doc

Process Performance Metrics

Dependencies and Prerequisites

FILE: 9AAD102047-Project Management Process.doc

Order Preparation - Step 81.1

Step Overview Diagram

Basic Project Planning Communication

FILE: 9AAD102047-Project Management Process.doc

Comments and Guidelines

Contract Analysis - Activity 81.1.1

FILE: 9AAD102047-Project Management Process.doc

15 Verify procedures for Contract Changes.

Comments and Guidelines

Order Entry and Acknowledgment - Activity 81.1.2

FILE: 9AAD102047-Project Management Process.doc

Comments and Guidelines

Basic Project Planning - Activity 81.1.3

FILE: 9AAD102047-Project Management Process.doc

Comments and Guidelines

FILE: 9AAD102047-Project Management Process.doc

2 Document all deviations/problems/issues or specific requirements and notify manage-

Expand Project Team - Step 81.2

Step Overview Diagram

Project Management Flowcharts Expand Project Team 81.2

FILE: 9AAD102047-Project Management Process.doc

Team members project specific roles and responsibilities are defined.

Comments and Guidelines

Internal Project Kickoff - Step 81.3

Step Overview Diagram

FILE: 9AAD102047-Project Management Process.doc

Drawing Title Ordinate Process

Project Management Flowcharts Internal Project Kickoff 81.3

FILE: 9AAD102047-Project Management Process.doc

h) Identify additional information required and establish Action Item List/Query, as

Comments and Guidelines

FILE: 9AAD102047-Project Management Process.doc

Customer Project Kickoff - Step 81.4

Step Overview Diagram

Project Management Flowcharts Customer Project Kickoff 81.4

FILE: 9AAD102047-Project Management Process.doc

c) Review project scope (System Solution, Equipment, Services, and Documentation).

Comments and Guidelines