Project Execution Plan

10.0 Business Management Plan

10.1 Overview
The Project business management team in Turkey and Iraq will be mobilized to implement and
administer selected proven and effective business management systems and procedures for the
Project. The execution plan will pertain to the development phase and each subsequent project
phase.

The systems and procedures will be implemented in an integrated manner and will include cost
control, schedule control, management reporting, financial, human resources, office services,
information technology, and document control. These systems and procedures will conform to
standards approved by the management will be tailored for the project’s needs.

The business manager and core scheduling and cost staff shall be located in Istanbul in the first
phase. When the site is fully mobilized the team shall move to Site. In first phase, the BM team
will have an petty cash in Erbil.

The business management systems and procedures will incorporate the following essential ele-
ments:

• A project plan, including schedule and cost budgets

• A continuous monitoring system that uses cost and schedule management tools to
measure schedule and cost performance against the project plans

• A reporting system that facilitates the analysis of commitments, currency fluctuation

and devaluation, actual costs, forecast support items, pricing, and performance to
identify emerging or potential deviations from the project plan and provides a change
management system that aids in the decision-making process

• A continuous system to monitor contract changes as they relate to cost, revenue, and
performance guarantees

• A financial system that provides monthly status reports and cash flow data

10.1.1 Responsibility and Accountability

Business management will be responsible to the project manager for all financial, project
controls, human resources, and other commercial activities for the project , including the
following:

• Strategic and operational planning

• Financial management, including tax management

• Planning and scheduling

• Budgeting and forecasting

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• Cost and schedule control

• Progress monitoring, reporting, and trending

• Levelized resourcing between projects

• Human resources

• Information technology

• Legal and insurance

While all operating decisions necessary to control job cost and progress will remain the
responsibility of each functional department within the project, project controls under business
management will coordinate each department’s efforts to monitor performance and cost against
schedule and budget, evaluate forecast support items and changes, and predict the effect of
schedule and cost on final job completion and costs. The Project Manager will be made aware
of potential impacts and possible remedial measures by the business management group.

Business manager will have a direct day-to-day reporting relationship with the Project
Manager.

10.1.2 Microcomputer Application and Integration

Microcomputers (PCs) will be used extensively to expedite the flow of project control informa-
tion, to allow easy access for retrieval and analysis, and to integrate schedule and cost data to
the maximum extent practical. The work breakdown structure will provide the basis for joining
the various components of the project, that is, material, labor, subcontracts, etc.

10.2 Organization
• Business Management—The business management team will consist of the following
key team members:

− Business Manager
− Lead Cost Supervisor
− Lead Planning and Scheduling Supervisor
− Finance and Accounting Supervisor in Istanbul
− Human Resources Supervisor
− Document Controls Supervisor
− Information Technology Supervisor

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10.3 Project Controls (Cost and Schedule)

Business management monitors and maintains the project schedule and budget. Every
functional department on the project owns the schedule and budget. The overall schedule,
budget, and status will be presented to the project functional team during routine meetings and
through issued documents. Each team member will be fully knowledgeable of the scope and
schedule for the assigned work area or discipline. Business management will control the project
code of accounts and coding functions and monitor action items. Action items will give project
team members accountability for the assigned work.

10.3.1 Cost Control

The cost control system allows the effective control of project elements. The budget system is
integrated with the financial and material data and focus is on commitments, budgets, forecasts
to complete, currency evaluations and responsibility. The elements of the system being used
include:

• Summary revenue and cost report and control

• Budget control

• Change management and budget adjustment logs

• Management and partner office control

• Material and subcontract control

• Manual labor control and performance

• Nonmanual control

• Field distributable control

• Quarterly Forecasting

• Cash Flows

• Quantity tracking

The cost control program is defined to a level that facilitates realistic control, while it addresses
the significant cost elements requiring control, that is, manual and non manual labor,
subcontracts, and materials. Key tools in the cost control program are as follows:

• IFS - IFS is an integrated costs and payable system that is being widely used in ENKA
project. All procurement activities shall be automatically transferred by MMS. Cost
engineers are responsible to update and maintain IFS.

• Change Management Program—The Forecast Support, Schedule Change and Scope

Change Programs are implemented during the Interim Notice to Proceed (INTP) period

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and continue through job completion. These programs facilitate early identification by
the Project Team of potential cost and schedule deviations from the project plan and
budget to enable mitigating actions to be taken where necessary. A project forecast
support and scope change report is issued and reviewed bi-weekly by the project team
members.

• Quarterly Project Forecasts—An evaluation of commitments plus a forecast of cost

to complete on a quarterly basis culminating in a revised current forecast and baseline
for project monitoring and control. The basis for the forecast of cost to complete is an
evaluation of pricing, performance, and forecast support items that have been approved
by Project Management.

• Cost and Commitment Reporting—Cost and commitment reporting provides a

comparison of current budget costs, to-date commitments, to date realized (invoice
received but not paid), to-date actual costs paid, and current forecast costs at levels,
ranging from manual and non manual labor, individual subcontract or purchase order
to a project summary by responsibility or department. This report is produced monthly.

• Project Cost/Revenue Report—The overall project cost and revenue report tracks the
project’s revenue and costs and is a summarized form of other reports. This report is
issued monthly.

10.3.2 Schedule Control

The planning and scheduling control system involves a hierarchical system of schedules to
satisfy the specific scheduling details required by each level of the organization. These
schedules are interrelated; hence, each successive detail level is tied to the milestone end dates
in the preceding summary level, up to the milestone summary schedule. The milestone
summary schedule is the highest level (level I) and forms the contractual completion
commitment with the Owner to achieve the guaranteed completion date. The schedule system
includes the following:

• Project milestone summary schedule

• Project integrated intermediate schedule

• Critical items action report

• System turnover schedules

• Startup schedule

• Detailed management and partner office schedules

• Detailed construction and startup (field) schedules

• Release and installation curves

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A hierarchical system of schedules using Primavera will be implemented to integrate, monitor,

and control engineering, procurement, construction, and startup activities for each project. The
tools in this system range from a project summary schedule to task lists for each discipline. The
level of detail in each tool will be established to fully and efficiently control each aspect of the
work and to allow effective communication and coordination between the project team
members and the management group.

The key tools in the schedule control system are as follows:

• Milestone Summary Schedule—This schedule will identify project milestones,

summary engineering, construction and startup activities, and critical path work. It will
provide an overview of activity status and will communicate project status to
management. The milestone summary schedule will be updated monthly and will be
issued with the monthly progress report.

• Integrated Intermediate Schedule—This schedule consists of detailed engineering,

procurement, construction, and startup activities. It will be the basis of critical path
analysis and schedule assessment and will include resource loading for jobhours and
bulk materials. The intermediate schedule will be statused weekly with periodic
revisions if the plan changes materially. This schedule will be logic-driven with
interrelationships integrating engineering, procurement, construction, and startup
activities.

• Short-Term Work Plan (Rolling Schedule)—The short-term work plan is a rolling

schedule of to-go work and is developed from the engineering intermediate schedule
and the construction intermediate schedule. This week-to-week and day-to-day working
tool is used to plan and control engineering, procurement, construction, and startup
activities.

10.3.3 Management Reporting for Schedule

Progress information will be produced based on specific project and contractual commitments
and needs. This information will encompass the following:

• Physical percentage complete calculations

• Commodity release and installation curves

• Areas of concern

• Critical action items

• Manpower charts and job hour installation curves

• Short Term Milestones

• Safety statistics

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The monthly progress report is a contractual document that discusses status, lists project
accomplishments, describes planned near-term activities, and highlights trends and critical
items. This report will be available monthly to project team members, and issued to
management, and the Owner on the prescribed date.

10.4.1 Management Reporting (Cost)

At every month meeting, the following financial reports will be presented:

• Monthly trial balance (consolidated)

• Monthly cost and commitment report

• Monthly Running Costs (Services) Report

• Monthly reconciliation of realized and paid between accounting and cost

• Source and use of cash

• Cash position and cash forecast

• Status of receivables from the owner

• Analysis of other significant balance sheet accounts

• Analysis of the capital accounts

• Status report on tax issues

• Quarterly Project Revenue and Cost Forecast including update of cash-flow, tax
management plan

• Pending Change Orders where execution started but a final amount has not been agreed
yet with Owner.

• Potential Risk Items

• Potential Savings Items

• Potential Backcharges

10.4.2 Procedures

The business manager will develop all policies and procedures and make them available to
each project. The business manager must approve changes to any policy or procedure at the
jobsite to ensure uniformity in accounting and reporting. The following core procedures will
be developed

• Cost Control Procedure

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• Schedule Procedure

• Chart of accounts

• Cash management

• Receivable management

• Construction equipment accounting

• Accounts payable

• Subcontractor payments-retention

• Payroll

• Income tax reporting

• Value-added tax reporting

• Payroll tax reporting

10.5 Human Resources and Administration

10.5.1 Human Resources

Business management human resources will be responsible for the human resources function.
The main human resources activities for both manual and nonmanual employees will include
the following:

• Development of employment conditions

• Recruitment and processing

• Terminations

• Salary administration

• Performance evaluations

• Employee records

• Training

• Work permits and visas

• Government and police interface

• Administration of camps, kitchens, and restaurants

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10.5.2 Administration

Project site office and the management office in Istanbul will be supported by a business
management administration group. The administration group will provide the following
services:

• Stationary stock control and issuance

• Office security

• Reception duties

• Copying and reprographic services

• Hotel and travel reservations

• Transportation services

• Office cleaning and maintenance

• Maintenance of key controls

• Mail receipt, distribution, and dispatch

10.6 Insurance
The following insurances will be obtained:

• Construction / Erection All Risk Insurance

• Third Party Liability

• Cargo Insurance

• Workers compensation and employers liability insurance

• Insurance for Contractor’s equipment

• Compulsory Vehicle Liability Insurance

Subcontractors will arrange insurance for their personnel and property used for their scope of
work.

Daily maintenance of the project insurance will be the responsibility of the business manager.

Owner shall provide third party liability insurance, cargo insurance, construction/erection all
risk insurance, operational property all risk insurance and machinery breakdown insurance.

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10.7 Automation
Information Technology, as a part of Business Management, will prepare an automation plan
and will issue it as an attachment to the execution plan. The automation plan will address the
following:

• Owner, Contractor, and supplier and subcontractor requirements

• Data transfer links

• Automation of work processes

• Integration and networking

− Management office
− Jobsites

• Network infrastructure requirements including equipment specifications

• Security

• Training and support

• Software maintenance

• Implementation schedule

• Communications

− Telephone
− Fax
− VHF radios

• Inventory control

− Software
− Hardware

The detailed cost analysis of the selected automation approaches and tools is also included.
This analysis will help to control costs by ensuring that expenditures are appropriate and
necessary.

The business management information technology group will support the project functional
team members and interface between the Owner, the project site organizations, Project
management, partner offices, and suppliers and subcontractors.

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10.8 Document Control

Project Administration, reporting to Business Management, will implement a project records
management system. The records management system includes the control, maintenance, and
retention of all project records (electronic or hardcopy), including correspondence. This system
will include coordination with the Owner, management, project site, partner offices, and
suppliers and subcontractors.

The project site, ENKA partner engineering, and the management office in Istanbul will be
supported by the business management document control group.

Document control will be responsible for the development and implementation of the record
retention and turnover plan.

The software application Docplant will be used for communications and document control in
the Enka offices and at the project site. Bechtel Frederick will use its InfoWorks document
control software for internal management of drawings, documents and correspondence,
however the Docplant database maintained by the Document Control Manager is the official
repository of project information. Communication and transmission of drawings, documents
and communication will be by email and dedicated transfer drive. Additional software
packages may be identified on an as-needed basis.

A series of project communication procedures will be prepared to identify communication

facilities available to the project functional team and will provide guidelines for the use of
electronic mail and urgent communications. These procedures will also provide direction on
letterhead usage, correspondence numbering, and the handling of meeting minutes and
telephone calls and will include a project master distribution schedule.

The official distribution of all correspondence to and from the Owner will be through the docu-
ment control group in accordance with established interfaces as defined in a project
communication procedure.

10.9 Mobilization
The business management team consists of the managers of finance, project controls, human
resources, document control, Upon the finalization of initial planning and organizational
activities, the Business Management team will relocate to Site.

10.10 Historical Cost Report Base and Database

An HCR will be generated toward the end of each project. The HCR will include the following:

• Scope definition

• Budget and change order details

• Final installed quantities

• Final cost data

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• Lessons learned

• Performance ratios

• Startup and commissioning experience

• Justification of major subcontractors and suppliers

• Performance against milestone schedule

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