STANDARD OPERATING PROCEDURE (SOP) Category: Logistics & Operations

LO-010 INDUSTRIAL CENTRE INTERNAL PROJECTS OPERATING PROCEDURE (ICINPOP)

Created by: Mr Steven Lam, IPU Manager Effective date: 01 July 2022

Vetted by: Ir Dr Robert Tam, Director of IPU Next review date: 30 June 2024

PURPOSE
1. The purpose of the Industrial Centre Internal Projects Operating Procedure (ICINPOP) is to provide a
guideline for the administration of all Industrial Centre Internal Projects (ICINP) initiated by Industrial
Centre (IC).

SCOPE & DEFINITION

2. The Industrial Projects Unit (IPU) is responsible for the coordination of all ICINP initiated by stream
leaders, workshop in-charges, engineering staff or executive officers of IC so as to fulfill the operational
need within IC.

3. An ICINP covers product/facility design/make, research & development work or sponsorship for projects
of values as approved by IC Management.

4. The graphical presentation of the ICINPOP is shown on page 6 of this document.

PROCEDURE

For all ICINPs, the following procedures should be enacted.

5. Projects Inquiry
5.1. All inquiries must be directed to IPU. The inquiry must be in written form such as a letter, a
memo, a note, fax, an email, etc.

6. Acknowledging the Inquiry

6.1. Acknowledgment of the Inquiry is prepared by IPU within 3 working days after the project
inquiry is received.

7. Feasibility Study
7.1. The Inquiry will be evaluated in conjunction with other streams/workshops concerned with
the feasibility of its undertaking and the most desirable process. The evaluation process is also made
with respect to the value added and/or contribution to:
7.1.1. Trainees’ training value
7.1.2. R & D and project support for PolyU departments
7.1.3. Public relations/Sponsorship/Prospective or social commitment
7.1.4. Staff Development
7.2. After the study, if the inquiry is out of the capability of IC, the inquiry will be closed.

8. Rejecting Inquiries
8.1. Rejected cases would be replied to the initiator by IPU after the feasibility study.

9. Manufacturing Specification
9.1. IPU co-ordinator will work with the initiator to define specifications with reference to the initiator’s
requirements, such as:

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 9.1.1. Material selection
9.1.2. Appropriate manufacturing processes
9.1.3. Tooling and fixtures required

10. Manufacturing Hours and Lead-time

10.1. Stream Leaders or workshop in-charge will provide information to IPU for the estimation of working
hours and lead-time required for the project.

11. Cost and Delivery Date Estimation

11.1. IPU will estimate the project cost (direct material cost, indirect cost and IEP rate) and production
time with reference to the design, manufacturing specification and the work hours estimated by the
workshops concerned. In order to eliminate unnecessary internal fund transfer within IC accounts,
no professional charges will be taken into account for all ICINP. The attached ICINP Costing Policy
serves as a guideline for deriving a cost quotation.

12. Quotation
12.1. The IPU co-ordinator will prepare a quotation with cost estimation.
12.2. The quoted price will cover the basic expenditure including direct material, indirect and/or IPU
expenses.
12.3. For projects requiring machines with minimum set-up cost or charity projects, the Director of IPU
and the IPU Manager reserve the right to adjust the quoted price and accept jobs according to the
value and contribution of the job to the Centre or the community as stated in Paragraph 7 –
Feasibility Studies of the Internal Projects Operating Procedure (ICINPOP).
12.4. Quotation to be sent to the initiator would include the followings:
12.4.1. Quotation Form (IPU-003)
12.4.2. Artwork/product drawings and/or specifications where appropriate
Quotations can be signed by the authorized executive stipulated in the table below:

Quotation Amount Authorised 1st Alternate Delegate 2nd Alternate Delegate

(HK$) Signatory for Signatory for Signatory
Above HK$50,000 Director of IPU Not Applicable Not Applicable
Equal to or below Director of IPU IPU Manager Assistant IPU Manager
HK$50,000

13. Registration and Approval

13.1. The accepted quotations must be registered as Industrial Centre Internal Projects (ICINP) by
completing the Project Requisition Form (IPU-001). The Project Requisition Form must be approved
by the authorized executive stipulated in the table below:
Project Amount Authorised 1st Alternate Delegate 2nd Alternate Delegate
(HK$) Signatory for Signatory for Signatory
No Limit Director of IPU IPU Manager Assistant IPU Manager

14. Open Project File

14.1. The IPU co-ordinator will raise a project file for every approved ICINP with appropriate project
number and project name assigned. To ensure the real work concept is implemented in the IC

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 training and avoid surge loading, stock file will be issued by IPU for standard IC products or
corresponding components.

15. Receive Confirmation

15.1. Upon receiving confirmation on acceptance of quotation by the initiator, IPU co-ordinator(s) will get
approval from the Director of IPU or his/her delegates and inform involving workshops to
commence with the related project work.
15.2. For urgent cases, the project is allowed to proceed in parallel with the project file preparation and
approval provided that verbal agreement has been reached with the initiator and the IPU Manager
and/or Assistant IPU Manager is informed.

16. Materials Requisition

16.1. Project materials are either arranged by IC Procurement & Logistics Office (P&L) or supplied from
stock of the stream.
16.2. Materials or stock items arranged by IPU
16.2.1. IPU will issue Material Requisition Form (IPU-004) to P&L for each project. The P&L
Office has to deliver the material to the workshops according to instructions specified in
Materials Requisition Form (IPU-004). If the materials are not available from stock, P&L
Office will purchase those items and advise IPU the delivery lead time. For finished goods
or components from the stock, the items will be delivered to the IPU for delivery or further
process. Material Requisition Form (IPU-004) should be approved by the IPU Manager or
his delegates.
16.2.2. For project cost control, P&L Office will feed back to IPU the total material cost
spent on each project via Material Requisition Form (IPU-004).
16.3. Materials supplied by streams
16.3.1. If the material is available in the workshops of IC, the stream leaders, workshop in-
charges, engineering staff or executive officers of the workshops concerned can supply the
material and the material cost will be reimbursed accordingly.
16.3.2. For project cost control, the workshop in-charges will claim for the material
consumed by filling in the work order and return it to IPU upon its completion.

17. Work Order Issuance

17.1. A Work Order that specifies the job content of various tasks of the ICINP is prepared by the IPU
coordinator and approved by the IPU Manager or his/her delegates. The Work Order (IPU-005) is
then released to the workshops with relevant drawings, specifications, instructions, etc. attached.
However, any deviation in the manufacturing processes, such as machine break down or facilities
occupied for training must be reported to IPU for amendment.
17.2. The expected completion date of each task will be clearly marked in the Work Order (IPU-005) to
indicate its priority assigned by IPU in the Industrial Project list.
17.3. The IPU has full authority to control the priority of each project and its job tasks in accordance with
the urgency and importance of the projects and the availability of resources.

18. Manufacturing/Assembly
18.1. Having received the work orders and the materials, workshops shall immediately start to plan and
process the jobs according to the instructions and target date specified in the work orders.
18.2. Stream leaders or workshop in-charges of the workshops concerned should monitor the progress
and quality of the job to ensure the project is on the right track to meet the committed delivery
date. Upon the completion of the tasks, stream leaders or workshop in-charges shall report
variation, if any, to IPU by filling in the work order with:
18.2.1. Actual man-hours spent

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 18.2.2. Actual material consumed
18.3. For inventory control and cost control, all unused material and scrap material must be returned to
P&L with IPU informed for future applications or scrap.
18.4. For defective material, WIP and products, a Material Review Form (IPU-009) will be prepared by the
IPU for IPU Director’s review for the re-usability. The Director of IPU will then decide the disposal of
the defective items and the P&L Office will then dispose of the defective items according to relevant
SOPs.

19. Delivery
19.1. When delivery is ready, IPU would inform the initiating stream leader or workshop in-charge to pick
up. Three documents are prepared for delivery:
19.1.1. Delivery Note (two copies)
19.1.1.1. Upon receiving the goods, the initiating stream leaders or workshop in-
charges are requested to sign on the Delivery Note Form (IPU-006). One copy will
be kept in the project file by IPU while the other copy will be retained by the
stream for record.
19.1.1.2. The Delivery Note must be signed by the authorized executive stipulated in
the table below:

Project Authorised 1st Alternate 2nd Alternate 3rd Alternate

Amount Signatory Delegate for Delegate for Delegate for
(HK$) Signatory Signatory Signatory
No Limit Director of IPU IPU Manager Assistant IPU IPU Co-ordinator
Manager

19.1.2 Invoice (one copy)

19.1.2.1 Invoice Form (IPU-007a) will be sent to the initiating stream leader or workshop
in-charge together with the products to be delivered or sent separately. The
initiating stream leader or workshop in-charge is requested to sign on the lower
portion of the Invoice Form (IPU-007a) and send back the original copy to IPU for
financial settlement. (If the project amount is settled by Earning Account of IC,
Invoice Form (IPU-007) should be used instead.)
19.1.2.2 Invoices should be signed by the authorized executive stipulated in the table
below:
Invoice Amount Authorised 1st Alternate Delegate 2nd Alternate Delegate
(HK$) Signatory for Signatory for Signatory
Above HK$50,000 Director of IPU Not Applicable Not Applicable
Equal to or below Director of IPU IPU Manager Assistant IPU Manager
HK$50,000

20. Settlement of Payment

20.1. For all ICINPs, IPU co-ordinator will prepare a Work and Cost Break Down using ICINP Form (IPU-
002a). It must be signed by the IPU Manager or his delegates. IPU will request P&L Office to

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 perform IC internal account transfer based on the ICINP Form (IPU-002a) and Invoice Form (IPU-
007a). Head of P&L will sign/stamp on the invoice copies and return a copy to IPU for
record/documentation. (If the project amount is settled by Earning Account of IC, the Work and
Cost Break Down for INP Form (IPU-002) and Settlement of Payment Form (IPU-008) will be used
instead and the settlement of payment processes as stated in the “Internal Project Operating
Procedures (INPOP)” will apply as well.)

21. Closing Project File

21.1. Any direct materials prepaid when Material Requisition Form (IPU-004) is received and any indirect
expenses incurred by workshops will be reimbursed to IC One-line GE A/C. The man-hours spent in
IPU jobs will be reflected in the Shop Load Report in IP Report Summary. After these transactions
are completed, the project file can be closed.
21.2. The IPU Manager will summarize the cost and workshop loading of the ICINP with reference to the
following information:
21.2.1. Quotation/invoice
21.2.2. The material cost from P&L Office
21.2.3. Total material consumption from the Workshops’ feedback
21.2.4. Total man-hour spent from the Workshops’ feedback
21.2.5. Cost reimbursement, if any
21.3. In case of significant variation in material/man-hour consumption against the estimation, review will
be conducted with the workshops concerned and reported to the Director of IPU.
21.4. Finally, the IPU co-ordinator closes the project file and keeps the documents in folder for records.
21.5. For all IC internal projects, only direct material costs, indirect workshop charges and IEP rate will be
accounted for project cost. There will be no professional charges for IC internal projects in order to
reduce unnecessary IC internal fund transfers.
21.6. If the project amount is settled by IC Earning Account, the corresponding processes for closing
internal project file will follow the Closing Project File processes as stated in the “Internal Project
Operating Procedures (INPOP)”

22. Scrap material swarf

22.1. For cost saving, some scrap material or swarf with good resale value will be resold in lieu of normal
disposal. With the approval of the Director of IPU, the scrap material or swarf will be resold using
normal purchasing procedures. The project fund will be transferred to the IC One-line GE to cover
the expenses for scrap, stock material and consumables supplied by P&L Office or workshops.

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 ATTACHMENT 1

ATTACHMENT 2

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 ICINP COSTING POLICY

1. The generic IC Internal Project costing formula is:

Quoted Price = (Direct Material + Indirect Expense) * (1 + IEP Rate)

Where:
 Materials
Materials consist of all the direct materials required in the project including materials supplied by P&L
Office or workshops, purchased parts, sub-contracting parts and sub-contractor’s fee, if any.
 Indirect expenses
To simplify the calculation, a shop rate in terms of working hours is used to calculate the indirect
expenses in a workshop. It covers the indirect material; tooling and consumables used by the
concerned workshops. Machine maintenance of expensive equipment; such as the laser tube in RP
and IPU, laser plotter in PCM, etc, are also charged under this category.
 IEP rate
IEP rate is a factor used to cover the expenses for scrap, inventory holding cost and consumables
supplied by P&L Office to workshops. It is 5% as effective since July 2000. To prevent surge loading
and ensure the real work concept is implemented in the IC training, the IEP rate is also used to pre-
pay for all stock orders issued by the IPU for some standard parts or products. Re-imbursement will
be made to the IC One-line GE A/C when the WIP and/or finished goods were ordered by the initiating
stream.

Costing:
Project cost = (Direct Material Cost + Indirect Expense) * (1 + IEP Rate)
Quoted Price = Project cost

Action journal:
Dr. Project expenses A/C or cheque
Cr. IC One-line GE = (Direct Material + Indirect Expenses) x (1 + IEP Rate)

Reimbursement:
Concerned workshops (One-line GE) = (Material + Indirect Expense)
IEP Charges (One-line GE) = (Material + Indirect Expense) * IEP Rate

The quoted price should normally cover the basic expenditure including material, indirect expenses and IPU
expenses.

Example:
Working Material (1) Indirect IEP rate (3) = [(1) + (2)] x 5% Project Cost Quoted Price
Hours Expenses (2) (1) + (2) + (3)
CNC ($50/hr) (5%)
Machining
5 hrs $500 $250 $38 $788 $788

Concerned workshops (One-line GE) = (Material + Indirect Expense) = $750

IEP Charges (One-line GE) = (Material + Indirect Expense) x IEP Rate = $38

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2. Shop Rate for processes/workshops in IC

Shop rate is accounted for the rate of indirect expenses of the workshop/process for INP jobs and is
related to the time spent on the job.

Item Workshops / Processes Shop Rates / hour

(HK$)
1. Rapid Prototyping (RPM)* $60†
2. Technical Application in Biomedical $60†
3. Non-conventional Machining (Wire-cutting, EDM etching and metallic $60†
laser cutting)*
4. CNC Press (Turret & Forming)* $50†
5. CNC Machining * $50†
6. Rapid tooling (RT&M)* $60†
7. Non-metallic laser cutting and engraving* $40†
8. UV printing* $20†
9. Precision Machining* $60†
10. Reverse Engineering* $50†
11. Fibres Composite Workshop $80†
12. Photo-Chemical Machining (PCM)* $60†
13. Machining* $30†
14. Electrical Engineering Workshop* $30†
15. Automation* $30†
16. Electronic Engineering Workshop* $50†
17. Plastic Workshop* $30†
18. Surface Finish Workshop* $60†
19. Drawing Office* $20†
20. Design Realisation Studio* $20†
21. Welding* $20†
22. Hot Metal* $20†
23. Maintenance* $20†
24. Woodwork* $20†
25. Civil Works* $20†
26. Sheet Metal* $20†
27. Procurement & Logistics* $20†
28. Documentation (IPU)* $20†
29. Inspection (IPU)* $20†
30. Assembly $20†
31. Metallic laser engraving* $40†
* Material will be charged separately as direct material.
† If special tools and/or processes are required by a particular project, part of the tooling/indirect cost
will be charged as direct material cost or by changing the shop rates of concerned
processes/workshops.

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