Execution Phase Reviews

PM Services / Group Audit Services

May 2009
Outline

 Purpose
 Background
 EPR Scope
 Responsibilities
 Way Forward

Name, Position, Department, Month Date, Year Slide 2

Purpose

 To articulate the objectives of an Execution Phase

Review (EPR)
 To define the scope of an EPR
 To delineate the roles & responsibilities of PM
Services (PMS) & Group Audit Services (GAS) in the
context of EPR’s
 To seek agreement between PMS & GAS on the way
forward.
Background

 EPR’s relate only to major projects (i.e. where BHPB’s share of the
investment exceeds the Group Approval Threshold which is currently
US$250 million)
 EPR’s are conducted for major projects in execution phase generally
where BHPB is the operator. However there could be exceptions
where non-BHPB operated projects are also subject to EPR’s e.g.
Alumar & Samarco
 EPR’s are conducted regularly at 3 to 4 month time intervals in
association with technical experts from RBO.
 PMS undertakes the following EPR’s:
• Baseline Review – to ensure that the project is set-up properly and
within 3 months of project approval
• Intermediate Reviews - to assess, among other things, the health
of the project (Healthy, Observation or Critical) and alignment with
the project KPI’s. Generally, these reviews are held once every 4
months
• Pre-operations Review – no later than 3 months prior to start-up.
 Background (cont.)
 GAS’s audit of the Execution Phase for projects examines:
Area Details GAS PMS
1 Vendors appropriately approved 
2 Procurement in a Competitive Environment 

3 Payments to suppliers 

4 Goods & Services Received 

5 Purchase Orders 

6 Masterfile information 

8 Continued Supply 

10 Supply Liabilities 

11 One Time Vendors and Non Order Invoices 

12 Taxes and Rebates 

13 Monthly Report 

14 Risk Management  

15 Fixed Assets Management 

17 Cost Report Reconciliation 

18 Change Management - Scope changes and Contingency Drawdown  

19 Progress calculation 

20 Vendor Data and Engineering Drawings 

21 Productivity (BHP Billiton and Subcontractors) 

22 Execution Approvals 

23 Project Execution set up and Organisation 

24 Cost Control Processes 

 EPR Scope & Responsibility

EPR Scope PMS GAS

Safety:
• Confirm project execution is as per the Project HSEC Plan Yes
• Review major safety issues & how they are addressed Yes
•Confirm site safety by undertaking site visits & walkthroughs
Project Scope:
• Confirm project scope being executed is as per the Project Scope of Yes
Work document approved at the end of the definition phase
• Review variations, if any, to both project scope and internal scope Yes
and confirm proper authorisation thereof.
• Verify all scope changes (project & internal) are authorised as per Yes
approved project authority limits.
Execution:
• Confirm the execution strategy & plan adopted to execute the project Yes
is as per the Project Execution Strategy & Project Execution Plan
documents approved at the end of the definition phase.
• Ensure that all the key procedures are in place as identified at the Yes
end of the definition phase.
 EPR Scope & Responsibility (cont.)

EPR Scope PMS GAS

Organisation & People:

• Confirm project execution is as per the Project Organisation Plan Yes
approved at the end of the definition phase regarding organisation
structure, roles, responsibilities and key individuals.
• Review the status of vacant positions and the measures proposed / Yes
taken to fill-in the vacant positions.
Approvals:
• Review the status of statutory approvals and issues, if any, and the Yes Yes
consequent corrective actions to address the issues.
Engineering:
• Confirm engineering is as per the Engineering Management Plan Yes
approved at the end of the definition phase.
• Review the status of vendor design and issues & associated Yes
corrective actions.
• Review other engineering issues / risks and the corrective actions to Yes
address them.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Engineering (cont.):
• Review actual engineering progress vs. plan vs. forecast. Yes

• Review engineering productivity & resources Yes

Procurement & Contracts:

• Confirm procurement & contracting activities undertaken are as per Yes

the Project Procurement Plan approved at the end of the definition
phase.
• Confirm project procedures for procurement & contracts are properly Yes
followed right from preparation of bid lists through tendering & bid
assessment to award of contracts & purchase orders.
• Review procurement / contracts issues / risks and the corrective Yes Yes
actions to address them.
• Review actual procurement / contracting progress vs. plan vs. Yes
forecast.
• Review procurement / contracting resources. Yes

• Review the status of formal execution of documents for contracts & Yes
entered into CCR.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Procurement & Contracts (cont.):

• Verify time sheets and rates for all reimbursable contracts eg. EPCM Yes
Off-site Fabrication & Manufacturing:
• Review actual off-site fabrication / manufacturing progress vs. plan Yes
vs. forecast.
• Review issues / risks and measures to address them. Yes
• Review the delivery dates to site – Required-on-Site (RoS) dates vs. Yes
ETA dates & actions for expediting.
Construction:
• Confirm construction activities are in line with Construction Yes
Management Plan approved at the end of definition phase.
• Review issues / risks and measures to address them Yes
• Review actual construction progress vs. plan vs. forecast Yes
• Review construction resources deployed including direct labour, Yes
supervision & construction equipment.
• Review construction productivity & resource histograms Yes
 EPR Scope & Responsibility (cont.)

EPR Scope PMS GAS

Construction (cont.):

• Review the status of construction camp including issues / risks, if Yes

any, and the associated corrective actions
• Review the status of industrial relations including issues / risks, if Yes
any, and the associated corrective actions.
Construction Verification & Pre-commissioning:
• Review actual construction verification / pre-commissioning progress Yes
vs. plan vs. forecast.
• Review issues / risks and the associated corrective actions. Yes
Commissioning & Operational Readiness
• Review the development of a detailed Commissioning Management Yes
Plan (CMP) and Operational Readiness Management Plan (ORMP).
• Confirm commissioning & operational readiness activities Yes
undertaken are as CMP and ORMP respectively
• Review actual commissioning / operational readiness progress vs. Yes
plan vs. forecast & issues / risks and associated corrective actions.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Project Controls – Scheduling:

• Confirm that the Project Master Schedule and other associated Yes
schedules including contractors’ schedules are an accurate reflection
of the project status (current) from a schedule perspective.
• Confirm that the project completion milestone and other key Yes
intermediate milestone dates are a true & fair representation of
reality.
• Review Schedule Contingency to ensure that it accurately Yes
represents the outstanding risks & uncertainties.
• Review the status of critical & near critical activities & actions Yes
Project Controls – Cost Control

• Confirm that the forecast final cost (FFC) at the overall project level Yes
and at the individual WBS & Package levels are a true & fair
representation of reality.
• Confirm that Project Contingency accurately reflects the outstanding Yes
risks & uncertainties
• Confirm cost control including budgetary control & commitments are Yes Yes
as per the Project Cost Control Plan approved at the end of
definition phase.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Project Controls – Progress Measurement

• Confirm that progress is measured as per the Project Progress Yes

Measurement Plan approved at the end of definition phase.
• Confirm that physical progress of key project deliverables is Yes
measured and is weighted by current budget $ or work-hours to
derive Earned Value.
• Verify the process including the arithmetic for calculation of progress Yes
& Earned Value as a minimum all major packages
Project Controls – Change Management
• Confirm that change management is undertaken as per the Project Yes
Change Management Plan approved at the end of definition phase.
• Confirm that an accurate & up-to date change log register is Yes
maintained.
• Verify that all changes are authorised as per the approved project Yes
authority limits.
Project Controls - Reporting

• Confirm Project Progress Report is as per the approved template as Yes

a minimum & timing.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Quality:
• Confirm that quality management as per the Project Quality Yes
Management Plan approved at the end of definition phase.
• Verify major defects & non-conformances & actions for rectification
including inspection, supervision & training etc.
Project Accounting
• Verify and confirm payments to suppliers and contractors have been Yes
authorised as per the approved project authority limits.
• Confirm that a commitment (P.O. or Contract) exists prior to making Yes
a payment.
• Verify and confirm that back-charges from suppliers & contractors Yes
are correctly recovered in a timely fashion.
• Confirm development of the Fixed Assets Register as per the Yes
required standard / procedure.
Project Controls - Reporting

• Confirm Project Progress Report is as per the approved template as Yes

a minimum.
 EPR Scope & Responsibility (cont.)
EPR Scope PMS GAS

Project Health (Watchlist Status)

• Assess the health of the project from a cost & schedule perspective Yes
& assign watchlist status as Healthy, Observation or Critical