Subcontract Management Procedure 1 5k1327

PROCEDURE TITLE:

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SUBCONTRACTING

PROCEDURE #:

REVISION #: 0

ISSUE#: 01

PREPARED BY: HE

CHECKED BY: MR

APPROVED BY: MD/CEO

DATE: 1st July 2013

DATE: 1st July 2013

DATE: 1st July 2013

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PURPOSE The purpose of this procedure is to ensure that all subcontracts are properly managed starting from design, component identification, bid preparation, contract award, contract istration and contract closure.

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SCOPE -

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DEFINITION OF -

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All project subcontracts as decided by ARMECO

ARMECO GM F&A DCE HE MR SMP HQA/QC PM PQE

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AREWA METAL CONTAINERS LIMITED General Manager Finance & . Design & Cost Engineer Head Engineering Management Representative Subcontract Management Procedure Head Quality Assurance / Quality Control PROJECT MANAGER Production Quality Engineer

RESPONSIBILITIES The HE has overall responsibility for ensuring that this procedure is carried out correctly. The direct responsibility for ensuring that this procedure is carried out lies with the PM, DCE, HQA/QC, GM F&A, Construction manager and the site engineer

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Overview

The Subcontract Management Procedure (SMP) describes the process used by the ARMECO to select qualified subcontractors and manage them efficiently. The SMP combines the concerns of requirements management, project planning, project tracking, and project oversight for basic management control, along with necessary coordination of quality assurance (QA) and configuration management (CM), and applies this control to the subcontractor as appropriate.

5.1 Technical Scope

The SMP sets forth the processes for managing and integrating project activities, and provides methods and guidance for the selection and management of subcontractors using proven processes and methods that assure successful program execution. The SMP shall be updated annually or as required to reflect changes in subcontractor management functions and/or processes. The scope of the SMP begins at the pre-proposal stage and continues through subcontract execution, performance management, and closeout. It provides guidance for subcontract management activities, including:  Organization, roles, and responsibilities  Methods and processes for subcontractor management  Management oversight for all subcontractors to minimize program impacts due to cost, schedule, or technical performance  Distribution of work  Subcontract task work order (TWO) allocation  Quality assurance of deliverables/products  Status reporting and invoice procedure  Ongoing communications

6. Organization and Responsibilities This section describes the organization and responsibilities associated with the subcontract management process, including:  Project management  Business management  Contracts and subcontract istration  Engineering  Environmental; health and safety; and security  Quality assurance

6.1 Project Management

The responsibility for project management lies with the Head of Engineering. He ensures that planning is coordinated. Work is appropriately subdivided and subcontractors appointed for each component after carefully analyzing technical competence and commercial proposals. He ensures that the subcontractor submits a work breakdown structure (WBS), verifies and incorporate subcontractors WBS into the overall WBS. He ensures that subcontractors schedules are galvanized and incorporated into the entire project schedule. He appoints the construction manager and the site engineer and coordinates their efforts during planning, execution and closing. He provides regular reports to

management on project performance. He serves as the interface between the various stakeholders in the project and particularly the client.

6.2 Business Management

The GM F&A is responsible for the overall business management on the project. Based on input from the project manager, he determines the funding source and funding method. He ensures alignment of the profitability goals of ARMECO to those of the project as expressed by the scope, time, cost and quality baselines in the project plan. Constantly liaising with the project manager for actions that could improve the project’s overall business performance.

6.3 Contract and Subcontract istration

The Head of Engineering is responsible for contract istration in close collaboration with the company’s ant and the Design & Cost Engineer. Contracts and subcontracts are managed in such a way that after deciding the components of a project, an invitation for bid is sent to already pre-qualified subcontractors. The subcontractor submits method statement, work plan and quotes for the component being considered. Subcontractors are selected after careful analysis of bid using pre-approved criteria. The construction manager and site engineer ensures that subcontractors perform as required in all areas of the contract i.e. scope, time, cost, quality and documentation. All information relating to the contract/subcontract are kept in the project file.

6.4. Engineering

The DCE is responsible for the engineering of the project. He carries out detailed study and designs the project’s product. He ensures that detailed and work drawings are produced, approved and adequately dispatched. He handles all cases for design reviews and approval. He liaises with the construction manager and project quality assurance team to ensure that product elaboration is done in accordance with design.

7. Subcontracting Plan / Subcontractor Work Distribution This section describes the allocation/distribution of work among the project’s subcontractor team.

8. Task Work Order Management Process This section provides the management process for TWO responsibilities, including:  Subcontractor TWO management  Task work order staffing process

9. Quality Assurance This section describes the key areas that may be utilized for measuring teammate performance, including the staffing, financial, technical, and management areas.

10. Staffing This section describes staffing performance and how it is measured. The performance may be measured by performing an analysis of the open/filled ratio, and the timeframe required to fill open or vacant positions.

11. Financial This section describes the key financial elements that are monitored for ongoing analysis.

12. Technical This section describes the key factors monitored for subcontractor technical performance, including:  Delivery of excellent performance  Customer

13. Management 13.1 Risk Management

This section describes the process where performance problems are reported to the project management. It further establishes the process in which the project manager responds to problems and develops an action plan to ensure problem resolution.

13.2 Change Management

This section describes the control and exercise of all subcontract change or modification actions.

13.3 Subcontract Closeout Management

This section describes the procedure for how closeout of the subcontract will be managed.

14. Invoice and Financial Status Reporting 14.1 Receipt

This section describes the process for receipt of services and how invoices are processed for payment.

15. Communications and Problem Resolution This section establishes the key methods for subcontractor communications and how all issues/concerns are resolved when they arise.