abb project management framework

ABB Limited 9AKK105357 Issued by department Date Lang. Revision Page

GF-QO 2010-01-31 en A 1 (93) Doc. kind Process Description Status of document Released Project name ABB PM Framework Phase of project Implementation Creator name PM Council Distribution ABB Internal

Based on: 9AAD101005 /E

FILE: ABB PM Framework.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 Ltd; 2010

ABB Project Management Framework

Contents

Foreword 3 1 Vision and Roadmap 4 2 Project Success Criteria 5 3 Foundation 6

3.1 Project Complexity Calculator 6 3.2 ABB Project Management Competencies 8 3.3 ABB Strategic Imperatives 10 3.4 Attitudes and Attributes of Project Manager 11

4 Process 15 4.1 Overview 15 4.2 Key Deliverables 17 4.3 Project Initiation & Start-up 18 4.4 Project Planning 23 4.5 Project Execution 29 4.6 Project Monitoring and Controlling 32 4.7 Project Closure 34 4.8 Change handling during project execution 36 4.9 Risk handling during project execution 39 4.10 Project Reviews & Reporting 44 4.11 Independent Project Peer Reviews 46 4.12 Quality 49 4.13 Health and Safety 50 4.14 Scalability & Process Tailoring Guidelines 52

5 Organization 53 5.1 Project Organization 53 5.2 Execution of Cross – BU / Country Contracts 71 5.3 Career Path and Required Competency Levels 77 5.4 Training and Certification Program 78 5.5 Assessment and Certification of Execution Centers/LBUs 80

6 Project Management Tools 81 6.1 Overview 81 6.2 ABB Collaboration Program 81 6.3 Document Management System (Documentum) 81 6.4 ProSales 81 6.5 Risk Review 81 6.6 ProMIS 82 6.7 ServIS 82

7 Project Management Communities 83

Process Description Released 9AKK105357 A

ABB Project Management Framework 2010-01-31 2/93


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7.1 Overview 83 7.2 Project Management Council 83 7.3 PM Champions and Project Managers 83 7.4 PM Council & Network – Links to Division & Country 84

8 Glossary 85 9 References 92 10 Approvals 93 Revisions 93




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Foreword High performance project execution is the key to our business success. It allows us to consistently meet our customer’s expectations, while improving our profitability.

We have a long track record in executing a wide variety of projects in many different industries - ranging from small, fast track projects to large or complex projects. This gives us an enormous resource base of experience, knowledge and expertise – a significant competitive advantage.

Successful project execution depends on the application solid project management principles, bringing together the best of people, knowledge and collaboration. This ABB Project Management Framework provides the basis for our work in project management. We trust that everyone involved with project execution within our or-ganization will familiarize themselves with this framework. Utilizing the best prac-tices defined in this framework has the potential to yield significant returns, quickly, in terms of on-time, on-cost and on-quality project deliveries for higher profitability and even more satisfied customers.

These five building blocks integrate the work of the ABB PM Council with the aim to develop Project Management as an ABB core competency, to achieve even higher levels of project success.

Foundation

Process

Organization

Tools

Project Management Communi-ties




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1 Vision and Roadmap

To strengthen ABB's Project Management competencies, and make it as one of the core competencies, the ABB Project Management Council was officially launched on 5th November 2009. This Council will provide functional leadership to the global community of ABB project managers with the primary goal of improving ABB's project management performance for the benefit of both our customers and our shareholders.

The objectives of the ABB Project Management Council (ABB PMC) include:

Identifying, promoting and spreading existing ABB best practices

Driving implementation of Project Management training & certification processes

Identifying common gaps in Project Management processes & tools & setting priorities for action

Providing coaching and mentoring support to less experienced PM's

Promoting Project Management as a key career option in ABB

The following five work-streams were formed among the PM Council members as part of meeting the above objectives:

Project Planning and Execution Tracking: processes, tools and behaviors

Project Risk and Change Management during project execution phase

Clarity of, & support for the “Project Management Organisation”

Internal ABB delivery performance, on-time and on-quality

Skills & competences of Project Managers, and related key project roles

Following is the initial road-map integrating the different actions: 2010 2012 20132011

PM Skills and Competencies

Local Engagement

• Project Management to become a core competency in ABB with 100% on-time, on-profit , on-quality project execution

• PMgrCompetency assessments conducted in key countries

• >90% of Large/Complex & Group Accounts projects led by Senior PMgrs

• Senior Project Mgrs & Project Directors recognized as key leaders & role models

• Project execution (& review) tools roadmap developed

LBU PMgt Maturity Cert’n(eg PMI OPM3)

• ABB PMgrNetwork defined

• PMgr Network actively spreading best practices

• ABB PMgr Network - social networking processes developed eg peer to peer problem solving & On-line coaching support

• PMgt processes and guidelines formalised in PMgtFramework

LBU PMgtCertification piloted

PM Processes and Tools

• >80% PMgrsassessed and certified




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2 Project Success Criteria

S. No

KPI KPI Description

1 On- Time Delivery Meet the project milestones or contractual key dates

2 Degree of Customer Satisfaction

Deliver project/product on time according to scope of work

Create additional value to customer

Customer confidence and additional orders

3 Budget Com-pliance

Original sales price vs. final sales price

4 Project Safety Zero incidents (fatal, and serious)

5 Project Quality Traceability of project /product phases (engineering, procurement, construction)

Respect project/product specification, execute test verifying project/product performance, produce certifications demonstrating the total quality process

6 Scope and Change Management Effectiveness

Manage changes in project/product required during the project/product development while maintaining the project on time and increasing margins (if possible)

7 Risk Management Result %

(Risk provisions remaining + provisions turned to profit ) / Original risk provision

8 Risk Management Effectiveness

(Total number of risks - risks not identified at the risk review - risks not mitigated or not mitigated effective-ly ) / Total number of risks

where Total number of risks includes all risks from time to time including occurrence of new risks.

(Total number of risks shared with the customer up-front - risks not identified at the start-up - risks not mitigated or not mitigated effectively ) / Total number of risks

9 Competence growth

Permit to people working in the project to improve competency and experience obtaining an organic and objective growth of the organization.

10 Standardization Standardize as far as possible the process and proce-dures in to order to establish an efficient and reliable way to proceed




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3 Foundation

3.1 Project Complexity Calculator

Project Complexity Calculator is a simple model to determine the complexity of the Project Management challenge based on three dimensions.

3.1.1 Project Complexity Dimensions

3.1.1.1 Technical Complexity Technical complexity identifies:

degree to which the products, by design, use new technologies or materials that are novel or unproven in service;

degree to which the integration of the products into plants or systems, even previously proven products, brings complexity in combination;

degree to which the systems engineering required to ensure our products function in combination, and the robustness and maturity of the customers systems, into which our systems and products will be integrated;

need for project managers who deeply understand the customer’s technology; time constraints if any.

3.1.1.2 Geographical Complexity Geographical complexity identifies:

complexity due to transport, logistics and communications difficulties intro-duced as a result of the geographical spread brings

complexity of different national regulations applicable, particularly on systems where physical elements of our system (eg cables) cross national borders.

complexity due to dealing across differing business cultures, e.g. a Japanese customer will expect a behavior from their suppliers that will not be the norm for a western company.

supply chain complexity that is greatly influenced by geography.

3.1.1.3 Contractual and Commercial Complexity Contractual and Commercial complexity identifies:

degree of complexity due to Commercial conditions degree of complexity due to project size and value. degree of risk our customers want to transfer as a mitigation action to de-risk

their projects. Due to this we will be increasingly forced to accept commercial conditions that we may have rejected in the past.

degree to which the contractual complexity can provoke blockages in decision making that can significantly delay the projects, as we try to pass these down back-to-back with our suppliers

degree of complexity due to Customer size, maturity and importance consortium related complexity




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3.1.2 Points criteria for key roles

3.1.2.1 Project Manager, Project Controller , Contract & Claims Manager Project complexity points determined by the Project Complexity Calculator can help the decision making to select Project Manager, Project Controller and other project related roles exclusive to the project.

Project Complexity

Points

Project Manager Project Controller Contracts & Claim Manager

<= 200 ABB Certified Asso-ciate Project Manager

- -

200 to 450 ABB Certified Project Manager

- -

450 to 750 ABB Certified Sr. Project Manager

Project Controller -

750 and above ABB Certified Project Director

Senior Project Controller

Contracts & Claim Manager

3.1.2.2 Participants for Project Reviews Project complexity points determined by the Project Complexity Calculator can help to determine the appropriate Project Review Committee as a means to provide neces-sary management oversight and coaching to Project Manager and rest of the project team.

PRC: Project Review Committee

Project Complexity Points

Monthly Quarterly

<= 200 Project Manager Head of LBU Operations

200 to 450 + Head of LBU Operations LBU Manager

450 to 650 + LBU Manager Local Division PRC

650 to 750 + Local Division PRC Respective Global Product Group PRC/System Group PRC / sBU PRC

750 to 950 + Respective Product Group PRC/System Group PRC / sBU PRC

Global BU PRC

950 and above + Global BU PRC Division PRC




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3.2 ABB Project Management Competencies

3.2.1 Project Oriented

3.2.1.1 Project Planning and Scheduling People demonstrating this competency effectively plan, schedule, monitor and control activities necessary for predictable fulfillment of planned activities with efficient utilization of available resources.

3.2.1.2 Customer Satisfaction Mgmt. in Projects People demonstrating this competency:

Establish, maintain and improve Customer Satisfaction by setting expectations and providing the expected value in accordance with the contract.

Have a drive to positively impact project performance and work with peers, partners and others who may not be in the line of command

3.2.1.3 Project Financial and Cost Management People demonstrating this competency monitor and control project financials to maintain or improve contract margins, cash flow and cash generation.

3.2.1.4 Legal & Contract Management for projects People demonstrating this competency understands legal and contractual require-ments to manage projects within given borders and to request legal sup-port/clarification as needed.

3.2.1.5 Project Execution Tracking and Reporting People demonstrating this competency communicates appropriate information to cus-tomer and other stakeholders timely and to achieve desired understanding.

3.2.1.6 Scope and Change Management for projects People demonstrating this competency manage scope including the collection and management of all project issues, whether just a question a change or a claim, with associated negotiations and approvals.

3.2.1.7 Project Risk and Opportunity Management People demonstrating this competency identify, contain and reduce risk, and ensure that all opportunities for Customer Satisfaction, Gross Margin Improvement and/or Project Growth are captured and acted upon.

3.2.1.8 Procurement Management for Projects People demonstrating this competency successfully obtain necessary services, mate-rials and equipment from external and internal suppliers.




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3.2.2 Leadership Oriented

3.2.2.1 Results Orientation People demonstrating this competency drive for improvement of business results.

3.2.2.2 Strategic Orientation People demonstrating this competency think beyond their own area. Strategic think-ing can be applied to a function or process, a product and market, a business or a corporate entity involving various businesses. This competency requires complex thinking abilities, incorporating both analytical and conceptual abilities.

3.2.2.3 Teamwork & Collaboration People demonstrating this competency have a drive to work with peers, partners, and others, who are not in the line of command to positively impact business performance

3.2.2.4 People Development People demonstrating this competency develop the capabilities of the organization by acquisition of top talent and development of people; they may find deep satisfaction in knowing they have made an impact on an individual’s life or career.

3.2.2.5 Personal Leadership People demonstrating this competency can focus, align, and build effective groups. This competency includes leadership roles in cross-functional, cross-organizational, or project teams as well as conventional management positions. NOTE: These beha-viors are not limited to formal or hierarchical leadership role.

3.2.2.6 Change Leadership People demonstrating this competency drive for improvement through people, trans-forming and aligning an organization in a new and challenging direction.

3.2.2.7 Intercultural Sensitivity and Effectiveness People demonstrating this competency are able to cross and bridge different regional, organizational, or business cultures. Normally this competency requires personal ex-perience of international business to achieve higher levels. Note that “culture” can re-fer not only to international issues but also issues between different functional areas or divisions within the same organization.

3.2.2.8 Customer & Market Orientation People demonstrating this competency add business value based on their understand-ing and service of the customers and the market in which they work. They know the customers they serve, the competitors, suppliers, and the regulatory environment and how to address them.




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3.3 ABB Strategic Imperatives

ABB‘s Strategic Imperatives

Cost and growth

• We cannot grow if we do not manage our costs

• We have to make sure we are positioned to win

• New business is becoming more and more competitive

• ABB needs to adapt to changes in the business cycle

One ABB • We must put ABB first, above individual divisions, countries or businesses

• We need to leverage our scale better through collaboration and sharing of our best practices and expertise

• We must approach customers as a complete and whole ABB

External focus

• We must look externally and compare ourselves to the best. A true reflection of how good we are is how we compare to the external world.

• External focus also relates to our processes and innovations – are we easy to do business with? Are we focused on what is important to customers?

• This also applies to our competitors, suppliers and global markets

Innovation • Innovation across every area of the business – not just product innovation

• An innovative culture is the one of the most important competen-cies of the future

Compliance • ABB must not, should not and will not break the law

• We compete and win only by playing by the rules

• There is no place in ABB for anyone who breaks the rules. We have a zero tolerance policy and will rigorously enforce it.

• We are proactive about compliance through on-going training, or-ganizational surveys and resources such as the ethics hotline and ombuds program




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3.4 Attitudes and Attributes of Project Manager

The Project Manager is expected to be both flexible an open minded, with a profes-sional and positive approach to all situations. Sound judgment, common sense and experience are needed to solve most of the project issues. It is important to face each situation with an open and inquisitive mind, and that the person involve personally as the PM.

The Project Manager:

is accountable for everything pertaining to the project, and makes sure that all ne-cessary decisions and actions are taken at the proper time;

is responsible for the project’s technical, economical and timely end result; strives to increase sales and is responsible for the relationship with the customer; secures favorable, cost-effective procurements; proactively looks and respond both risks and opportunities, and tries to reduce

the total cost of the project; ensures positive cash flow in the project; fulfils all contractual obligations and ensures ABB rights according to the con-

tract; ensures that all interpretation of all agreements is adequately documented; takes ownership for quality, health and safety issues.

The following model shall be considered while making decisions:

Leadership and

teamwork

Solution

Finance

Procurement

Sales

Quality, Health,

Safety, and Environment

Legal and

Contractual




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S. No Aspect What makes this aspect so important?

How does this aspect manifest

itself in practice?

What is our policy and attitude in this

area?

1 Sales No sales – no business. Sales give us some-thing to do.

In those needs indi-cated by the Customer. A sale is confirmed when the customer submits a valid order.

We think “sales” every time we make contact with customer. It is PM’s duty to sell in a sales situation.

All contracts involve responsibility and risks. A sale will be interest-ing to us when its earn-ing potential is high when compared to the estimated risk and we can meet our contrac-tual obligations related to the sale in question.

2 Solution

(includes engi-neering, con-struction and/or commissioning)

We must define what will satisfy the needs of the customer.

Our specifications can wrong, if we do not manage to define the requirements in a language acceptable to the customer.

Ensure the require-ments are clearly de-tailing the needs of the customer.

Choose best possible alternative while pro-posing the solution to meet the needs of the customer.

3 Quality, Health, Safety and Envi-ronment

Satisfied custom-ers, suppliers and employees (project team members) want to deal with ABB as an on-going basis.

By satisfying the stakeholders needs and expectations.

Our performance should produce satis-fied customers, suppli-ers and employees. All the stakeholder needs and expectations shall be clearly documented during the project start-up and planning stage.

Efforts shall be made to satisfy these stake-holders’ needs and expectations during the execution and closure of the project.

4 Procurement Procurement constitutes a large portion of

Our suppliers can have an advanta-geous position, when

Ensure that the suppli-er is reliable and under-stands exactly what we




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itself in practice?


area?

our business ac-tivities.

suppliers receive these “signals”.

want.

Follow up of the supply during manufacturing phase (scope of work, deli-very on time, certifica-tion)

5 Legal and Con-tractual

Good under-standing of con-tract and appli-cable laws can place us in a bet-ter position and improve our margins.

When we are uncer-tain how to deal with the other party’s attitude regarding the contractual agreement and obli-gations.

When you need to use more time and energy than normal during discussions and negotiations and when the situation taken to its extreme, could lead to legal proceedings.

Be thorough with the contract.

We consult subject experts for contractual issues.

6 Finance Good profitabili-ty is necessary to ensure our fu-ture.

In every decision we make.

Evaluate the impact of termination of the con-tract and financial exit while making contrac-tual related decisions.

Take ownership to collect receivables in time for maintaining positive cash-flow.

Spend enough time with project controller to understand the project status in finan-cial terms and take proactive actions.

Keep an eagle’s eye on the costs.




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itself in practice?


area?

7 Leadership and team work

Clear objectives and contribution by everyone in-volved in the project can en-sure project suc-cess.

In every communica-tion and decision we make.

Ensuring involvement of all project stake-holders for the project success.

Spend enough time with Customer to un-derstand their concerns or satisfaction on regu-lar basis and take proactive actions.

Spend enough time with project team to understand the status on individual work packages and take proactive actions.

Have a silent time to reflect and contemplate on project status, is-sues and result on a regular basis.




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4 Process

4.1 Overview

The overview of the ABB Project Management Process is shown in below picture.

There are five main phases in the project life cycle. These include, in order: project initiation, project planning, project implementation and project close-out. The salient tasks in each phase of the project life cycle include:

Project Initiation & Start-up:

Gathering data relevant to the project; identifying the need for the project; developing statement of work/scope; establishing project goals and objectives; determining project feasibility, risk level, strategy; identifying project stakeholders and possible project team members; developing a project resource list and listing various implementation/

resourcing alternatives; obtaining approval for the project; and developing a project charter, endorsement of project budget.

Risk & Opportunity Management

Reviews & Reporting

Independent Project Peer Reviews

Quality, Health & Safety

Project Initiation &

Start-up

Project Planning

Project Execution

Project Closure

Project Monitoring & Control

Change Management

Scalability & Process Tailoring




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Project Planning:

Appointing various project team members and defining their project assign-ments;

developing the project WBS; establishing the scope baseline; assessing the risks in the project and defining alternative mitigation strategies; establishing a project baseline including schedule, budget, list of deliverables,

quality standards and monitoring/reporting indices; and conducting a project kickoff/celebration/ceremony.

Project execution:

Assigning work to each project team member with clear communications of their deliverables, roles and responsibilities;

selecting suppliers/subcontractors and establishing appropriate/necessary work contracts with each supplier/subcontractor with clear definition of the scope of their deliverables, prices, delivery schedule and performance mea-surement indices, along with all legal/contractual terms and conditions go-verning their relationship to the project and the PMs’ company;

establishing systems/indices for evaluating the implementation of the project, and regularly monitoring/controlling the implementation of the project by each team member with reference to the established indices; and

establishing procedures for issues reporting and resolution, and change man-agement.

Project Monitoring and Control

Happens throughout during the above phases:

Establish a method of earned value measurement (progress) based on objec-tive deliverables, monitoring periodically the project status.

Measure and check schedule (in particular critical path) and cost. Identify corrective actions for leading the project according to the base line

Project Close-out

Obtaining all necessary review/signoffs/acceptance certifications; ensuring that all costs have been recognized and invoices have been paid, and

financial closure has been applied; ensuring that all contracts have been closed-off; documenting the results of the project and lessons learned; conducting project handover to the downstream recipient organization; releasing the project resources; having a project closeout celebration; and releasing the project team members.




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4.2 Key Deliverables

S. No Deliverable Name

Objective Related Project Man-agement Phases

1 Project Charter Describes the high level strategy for executing the project

Project Initiation & Start-up

2 Project Document Distribution Ma-trix

Identify which stakeholders needs to be involved in docu-ments distribution


3 Project Coordina-tion Procedure/ Communication Plan

Defines Client/Project Team in-terfaces and way for communica-tion


4 Project Management Plan

(Also called as Project Execution Plan or Project Plan)

Details the high level strategy outlined in the Project Charter for executing the project - how the project is executed, monitored, controlled and closed. It may be a summary or detailed, and may be composed of subsidi-ary planning documents.

Project Planning

5 Change & Variation Log

Project Execution phase

6 Risk Register (Risk Manage-ment Plan)

Project Execution Phase

7 Project Review Report

States the current key data of the project. Also includes risks and opportunities.

Project Monitoring & Control

8 Project Closure Report

Final version of the Review Re-port, plus Lessons Learnt, Cus-tomer feedback and similar re-sults

Project Close-out phase

9 Provisional Acceptance Certification Cel-ebration

PM Leadership and team building

Project Close-out phase

10




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4.3 Project Initiation & Start-up

Project Initiation & Start-up is a phase that triggers the project activities upon ‘project commencement’.

Project Charter is developed and approved as a deliverable during this phase. This document issued by PM Responsible and approved by the Project Sponsor (*) or the Chairperson of the Project Review Committee. The Project Charter describes the high level strategy for executing the project and has following elements at a minimum:

Executive Summary

High Level Goals and Objectives for the Project

Project Manager

Roles, Responsibility of Project Team

Project Ground Rules

Project Key Milestones

*) The Sponsor is foreseen for projects with a degree of complexity determined by the Project Complexity Calculator above 650 points. For all projects with a de-gree of complexity determined by the Project Complexity Calculator below 650 points the "Project Charter" is prepared and issued by the Project Manager

4.3.1 Project Ground Rules 1 Authority The Project Manager (PM) is fully empowered to take

decisions and actions e.g. Ramping-up and Ramping-down the project team based on project life-cycle.

2 Communication and Documentation

The project team will have dedicated folder in Document Management Systems to store all project related corres-pondence and key project documents.

All the correspondences will be marked to PM.

All the Correspondence with Customer, Consultant, Interface Contractors, Suppliers etc., shall be routed through Project Manager and Contracts & Claims Manag-er. Only Project Manager or PM’s designated repre-sentatives shall be authorized to issue the communication to Customer, consultants, suppliers/contractors etc.,

3 Project Review Committee

(PRC)

The Project will have a Project Review Committee (PRC). PRC Members needs to be identified based on Project Complexity Points as described in 3.1.2.2 The Chairper-son of the PRC is the Sponsor for the Project for all projects with a degree of complexity determined by the Project Complexity Calculator above 650 points.




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4 Compliance The Project Team is responsible for ensuring adherence to ABB Directives, Statutory Compliance needs as specified by Law, Government, and any special requirements speci-fied in the contract.

5 Risks and Opportunities

Risks and Opportunities Reviews to be overseen and coordinated by Project Manager.

The Project Manager will open and maintain as Risk Reg-ister throughout the Project.

All team members are made aware of top 5 risks and op-portunities and response plan when they occur.

The project will have independent risk management re-view once in a quarter by Project Review Committee.

6 Change & Claim Management

The Project will have following project roles as Change Control Board (CCB) for this project. Project Manager can induct additional members as needed based on the change or situation during the CCB reviews. If necessary and based on the amount of the change also LBU or his representative could be permanently involved

Project Manager Project Engineering Manager Procurement Manager Site/Construction Manager Contracts & Claim Manager Commercial Manager/Proposal Manager

No Changes to be made without CCB approval.

The Project will have a Change & Variation Log to log changes, claims.

The CCB shall meet at regular intervals to review the Changes and Claims. Any issue which is identified during Project meetings, CCB Reviews, Project Risk Reviews shall be resolved as soon as possible by the project team. If the issue is not resolved within the specified time then it needs to be escalated to next level based on Issue Escala-tion Matrix.

7 Reviews & Reporting

The Project Manager is responsible for organizing differ-ent project meetings as required for the project. PM re-ports to different Stakeholders as well updates in ProMIS or its equivalent on a regular basis.

8 Safety The PM is accountable for ensuring Safety Plan is in place for this project. The Project Safety Manager is responsible for ensuring the safety culture is inculcated in the project team, sub-contractors etc.,




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4.3.1.1 Issue Escalation Matrix

Issue Type First Level Second Level Third Level Fourth Level

Safety Project Safety Manager

CCB Location OHS Advisor

Country OHS Advisor

Technical Engineering & Design Manager

CCB LBU Manager Local Division Manager

Commercial / Contractual

CCB LBU Manager Local Division Manager

Country PRC

Issue identified by a team member

Enter in Database and inform re-spective sub-team leader and Change

Control Board (CCB)

Issue reviewed by PM, discussed within the CCB team, appropriate

action defined and concerned action owner informed.

Issue resolved in specified

time

Yes

End

Update Database No

Escalate to next level




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4.3.2 Commercial and Technical Handover

A good handover protocol from Marketing & Sales to Project Management improves the success of the project. The appointed PM should be involved at least during the commercial negotiations before the contract signature for all projects during the sales stage with a degree of complexity determined by the Project Complexity Calculator above 450 points having a good chance to be become a contract.

Following are the recommended aspects while taking over the project from Sales and Marketing.

Contractual

Commercial

ABB Proposal

Critical aspects to be considered during project execution that has impact on scope, time and cost.

Execution plan foreseen during the bid phase.

Stakeholder (Customer, End-user, consultant etc., ) expectation, needs and rela-tionship issues understood during bid phase.

Detailed description of project site / end user location and special requirements like safety, visa and permits understood during bid phase.

Critical aspects related to local law, regulation and standards (during engineering and during construction/commissioning)

Technical Hand over check list

4.3.2.1 Follow up during project start up In case of the Project Manager and the project team have not been involved during the proposal phase it has to be evaluated if the contribution of the Proposal Manager during the project start up (1/6 months depending on the project size and complexity) can be considered useful.

Project Manager / Client interface smoothing eventual frictions and discussion during startup

Cost Control on the project checking and identifying eventual over budget during execution and possible solution to be discussed with the project team

Clear addressing of contractual document priority and memory of received documents. depending on the contract complexity, during start up it is not always simple to identify the document where single statement/ Client request has been included. In this case the Proposal Manager can help the project team to address the matter

Memory of what has been discussed during the proposal and eventual formal/informal agreement.




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4.3.3 Project Initiation & Start-up Activities

The following activities are performed as part of the Project Initiation & Start-up phase upon the receipt of Purchase Order/Contract from Customer:

1. Nominate the Project Manager (PM)

2. Define/organize the project team and relevant kick off meeting schedule.

3. Organize project handover from sales

4. Review the contract and summarize deliverables

5. Review and endorse the budget from sales

6. Organize a pre-schedule meeting with all Stakeholders in order to summarize main dates/milestone to be matched during project execution. As consequence start up detailed schedule definition (appropriate level)

7. Purchase Order/ Contract is acknowledged to Customer

8. Issuing of PM deliverables as for example

Project Execution plan

Organization Chart if not included in Project Execution Plan

Coordination Procedure

Document distribution matrix

Additional Plans/Procedures as required by contract

9. Open project in the business system (ERP)

10. Open folder / repository in the Document Management System (Documentum)

11. Open ProMIS document (if applicable) ) and in general all software used in the LBU

12. Arrange parent company guarantees/bonds, issue invoice and collect advanced payments

13. Update currency risk, hedging

14. Perform the stakeholder analysis for the project and consolidates all the stakeholder expectations

15. Re-evaluate the complexity calculator results and takes this into consideration the impact of each of the complexity items as part of Project Charter and Project Plan for the project

16. Approve Project Charter




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4.4 Project Planning

Project Planning is a phase that details the high level strategy outlined in the Project Charter for executing the project. Project Management Plan is developed and approved as a deliverable during this phase.

The Project Manager shall encourage the participation of whole project team while developing the Project Management Plan. Lot of iterations or progressive detailing of the execution strategy may be needed while developing this project deliverable as the project team understands the interdependencies and implications of different components of the Project Management Plan.

4.4.1 Key Project Planning Behaviors

Following are red flag behaviors:

Lack of clear understanding of the work to be accomplished to complete the project.

Complex plans that cannot be understood by the entire project team.

Simple plans that do not give adequate guidance to meet the project objectives and delivering benefits of the project.

Does not plan or follow established plan.

Project team members are uncertain as to their work to be performed in the future.

Following are some of the good behaviors while preparing the Project Management Plan:

Planning is done to secure project deliverables with efficient utilization of resources

The schedule meets what we have committed to customer

Customer obligations are identified as part of the project schedule.

Can contribute to margin improvement, if we focus on Critical Path.

Should build in float to allow for unanticipated 'surprises‘.

Schedule should define key milestones to which payments are tied to ensure positive cash flow throughout the execution phase.




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4.4.2 Implementation of Earned Value Management (EVM)

EVM is a management methodology that integrates scope, schedule and resources, and objectively measures project performance and progress. Performance is measured by determining the Earned Value and comparing it to the Actual Cost. EVM can pro-vide an early warning of project performance problems or issues.

Following are the requirements to implement EVM:

A Project Management Plan that identifies work to be accomplished.

A valuation of planned work called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS)

Earning rules to quantify the accomplishment of project work during project ex-ecution phase called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP)

Actual Costs (AC) for the work performed.

Term Description Formula Interpretation

Planned Value (PV)

Estimated value of the work planned.

Earned Value (EV)

Estimated value of the work actually accomplished or performed.

Actual Cost (AC)

Actual cost incurred.

Budgeted at Completion (BAC)

Budgeted value for the work.

Schedule Variance (SV)

SV = EV - PV Positive means ahead of schedule. Negative means behind schedule.

Cost Variance (CV)

CV = EV - AC Positive means under the budget. Negative means there is a cost overrun.

Schedule Performance Index (SPI)

Progressing at ___ % than originally planned.

SPI = EV/PV 1 means ahead of schedule. < 1 means behind schedule

Cost Perfor-mance Index (CPI)

Getting $ _____ out of every $ spent.

CPI = EV / AC 1 means under the budget. < 1 means there is cost overrun.




ABB Ltd; 2010

Term Description Formula Interpretation

Estimate at Completion (EAC)

What is the expected total project cost as of now?

EAC = BAC/CPI Used when no va-riances from BAC have occurred or we continue at the same rate of spending.

EAC = AC + ETC Used when original estimate is fundamen-tally flawed.

EAC = AC + (BAC – EV)

Used when current variances are thought to be atypical of fu-ture

EAC = AC + (BAC-EV)/ CPI

Used when current variances are thought to be typical of future

Estimate to Complete (ETC)

How much do we need to spend for completing the re-maining work?

ETC = EAC - AC

Variance at Completion (VAC)

VAC = BAC - EAC

4.4.3 Schedule meeting In order to simplify the issue of adequate project level schedule it is recommended to organize a schedule meeting discussing the key data of each function/discipline involved in the project.

Following advantages can result from schedule meeting:

Clear understanding of the scope of work since the beginning of the project

Focus on the main key dates (not more than 6/10 for each function/discipline)

Interfacing of Team Members who can submit relevant needs and necessities to the rest of the team

Discussion and agreement on the main dates obtained at the meeting.

Starting from the agreed main dates the detailed schedule can be developed, linked and implemented up to the level required from the project.




ABB Ltd; 2010

4.4.4 Project Planning Areas

ABB Project Manage-ment Competency

Relevant areas for Planning

Project Planning and Scheduling

Project Organization, Roles & Responsibilities Resource Utilization (Resource Histogram) Project Schedule Site Start-up and Closure including logistics like

visa etc., Customer Satisfaction Mgmt. in Projects

Stakeholder Management o Identifying the stakeholders o Determining their needs o Managing stakeholder expectations Communications Plan Customer Complaint Resolution Process (CCRP) Safety, Health and Environment

Project Financial and Cost Management

Revenue recognition Full Cost Model (FCM) Invoicing and billing schedule Project cash-flow, and cash-flow exposure Bonds and guarantees Parent company guarantee FOREX exposure and mitigation like hedging Taxes and duties Margin improvement Insurance Permanent Establishment (PE) Export Credit Agency (ECA)

Legal & Contract Management for projects

Consortium Issue Escalation Matrix – Customer Contract analysis and Contract Management Strat-

egy Project Execution Tracking & Reporting

Meetings o Internal Kick-off Meeting o Customer Kick-off Meeting o Project Team Meetings o Customer Meetings Reviews o Project Review Committee (PRC) o Change Control Board (CCB) o Independent Peer Reviews o Audits and Assessments Reporting o Internal Progress Reports o Customer Progress Reports o ProMIS




ABB Ltd; 2010

ABB Project Manage-ment Competency

Relevant areas for Planning

Scope and Change Management for projects

Work Breakdown Structure (WBS) including De-liverables / Work Packages

Engineering Design and Documentation Quality Statutory Approvals including Permits and Licenses

applicable for the project. Change Management Procedure (to be agreed with

Customer) Type Testing Acceptance and Validation Criteria o Milestone Billing o Factory Acceptance Test (FAT) o Site Acceptance Test (SAT) o Provisional Acceptance Certificate (PAC) o Final Acceptance Certificate (FAC) Change Control Board (CCB) Approach to Change and Claim Management with

Customer and Suppliers Warranty and Maintenance (if any)

Project Risk and Opportunity Management

Risk and Opportunity Management Risk and Opportunity Response

Procurement Management for Projects

Supplier Quality Assurance (SQA) Procurement(s) Transportation, Logistics and Security Stores Planning and release of material etc.,




ABB Ltd; 2010

4.4.5 Sequence of Typical Project Planning Activities

1. Review the contract.

2. Define/organize the project team and Roles & Responsibilities

3. Analyze/review resource planning

4. Define/refine Work Breakdown Structure (WBS)

5. Review the costing of the project incl. insurance & taxation.

6. Create/refine Project Schedule Network Diagram

7. Create/refine Project Risk Management Plan

8. Create/refine Project Communication Plan

9. Create/refine Quality Plan

10. Create/refine Health & Safety Plan

11. Conduct risk analysis and open Risk Register.

12. Create/refine Project Procurements Plan

13. Create/refine Project Schedule

14. Create/refine time-phased cash-flow/budget

15. Compile the Project Management Plan and get team commitment

16. Get approval for the Project Management Plan

17. Conduct kick-off meetings with Internal project organization, Consortium (if applicable) and, Client

18. Review the Project Planning & Start-up

Activities 1 to 14

Activities 17 to 18

Activities 15, 16 No

Yes




ABB Ltd; 2010

4.5 Project Execution

This phase involves coordinating with people and resources, as well as integrating and performing activities, work packages defined in the Project Management Plan.

4.5.1 Good Behaviors during Project Execution

Following are some of the good behaviors while executing the Project Management Plan:

Being proactive, and assertive.

Not hurting the ego of key Stakeholders.

Demonstrating perseverance and patience while facing the issues.

Giving examples (to lead by examples and apply to himself/herself what is required to the team).

Being systematic. Complying with procedures and systems.

Meeting and honoring the commitments made.

Being thorough with the contract

Leading the customer (rather than customer leading the project).

Getting Customer trust demonstrating competency and loyalty

Taking the ownership of health and safety issues.

Taking the ownership on costs and project cash-flow.




ABB Ltd; 2010

4.5.2 Project Execution Activities

The following activities are performed as part of the Project Execution phase:

1. Direct and Manage the Project Execution by executing the Project Management Plan

2. Complete the work packages

3. Perform the quality assurance activities

4. Conduct Safety Observation Tours (SOT)

5. Perform Supplier Qualification Assurance (SQA)

6. Conduct procurements

7. Update ERP System and ProMIS

8. Organize project team meetings, CCB reviews, PRC reviews, relevant project review meetings with Customer, Consultants etc.,

9. Organize independent peer reviews (if applicable) for the project based on Project Complexity Points.

10. Manage Stakeholder expectations

11. Ramp-up and ramp-down project team based on the project needs and requirements,

12. Develop project team

13. Organize project team building activities.

14. Resolve open issues that have been escalated through Issue Escalation Matrix

15. Resolve issues that have come through CCRP.

16. Raise issues that needs to be addressed using CCRP system e.g. product failures

17. Take preventive actions to avoid/mitigate risks

18. Take proactive actions to purse/enhance opportunities

19. Look for and respond to new risks and opportunities

20. Look for changes and claims.

21. Manage audits (project, external, IS, safety, SOX, etc.)

22. Perform contractual and commercial related activities required for the contract

1. Monitor and control bonds

2. Review letter of credit and manage accordingly

3. Execute procedure in accordance with ECA requirements

4. Manage custom duties administration

5. Manage tax administration including permanent establishment




ABB Ltd; 2010

6. Assess/manage risks contingencies & provisions

7. Monitor country risks

8. Manage insurance incl. claims to the insurance company

9. Manage change- and claim management policy incl. wallchart

10. Document and pursue project variation/claims related activities

11. Report on status of claims

12. Invoice and collect according to invoice schedule and ensure all sup-porting documents are available

13. Maintain cash-flow according to plan & update exposure curve

14. Manage project bank accounts and petty cash

15. Book revenues and update revenue recognition plan

16. Ensure compliance with ABB accounting policy

17. Promote commercial & contractual awareness in project team

18. Monitor material deliveries time/ performance

19. Supervise/support site administration activities

20. Manage business licenses & permits as applicable in the project

21. Monitor hedging and initiate appropriate actions

22. Assess consistency and risk related to project schedule, SCM delivery schedule, subcontractor/vendors with S-curve, cost/revenue/cash flow forecast

23. Organize Warranty risk assessment and update provision requirements/booking

23. Perform Permanent Establishment (PE) related activities if applicable for the project

24. Perform consortium related activities if applicable for the project.

1. Manage commercial consortium aspects

2. Manage contractual consortium aspects

25. Manage exceptions to the Project Management Plan.

26. Organize lessons learned work-shop and provide feedback.




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4.6 Project Monitoring and Controlling

Project Monitoring and Controlling involves the processes or activities required to track, review and regulate the project progress and performance. It also includes updating the Project Management Plan and initiate necessary change as and when the need arises.

4.6.1 Good Behaviors during Project Monitoring and Control

Following are some of the good behaviors while monitoring and controlling the Project Management Plan:

Establish a method of project monitoring and implement a periodical review all all project parameters

Continuously observe the early warning signals.

Communicate the early warning signals to the project team and relevant project Stakeholders.

Take corrective action since the beginning of early warnings




ABB Ltd; 2010

4.6.2 Project Monitoring and Control Activities

The following activities are performed as part of the Project Monitoring and Control:

1. Ensuring compliance to the Project Management Plan.

2. Monitoring the project activities against the Project Management Plan and the performance baseline for the project.

3. Influencing the factors that could circumvent the integrated change control so that only approved changes are implemented.

4. Monitor and control scope

5. Monitor and control schedule

6. Monitor and control quality

7. Monitor and control risks and opportunities

8. Monitor and control resource utilization

9. Monitor and control safety

10. Monitor and control contract and commercial activities

1. cost (incurred, committed, COPQ), revenue plans and forecast at completion

2. cash flow forecasts and project exposure and monitor project BS

3. project revenue

11. Monitor and control Permanent Establishment activities (if applicable)

12. Monitor and control Consortium related activities (if applicable)

13. Monitor punch list resolution

14. Monitor compliance and initiate appropriate actions

15. Monitoring the issues associated with Cost of Poor Quality (COPQ) due to internal changes, rework, under utilization of resources etc., and taking appropriate actions to reduce COPQ.

16. Taking proactive actions and controlling changes in anticipation of possible problems.

17. Administering the project procurements

18. Verifying scope

19. Report OHS and environmental progress report

20. Report project claim status

21. Report project performance to relevant stakeholders.

22. Updating the Project Management Plan




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4.7 Project Closure

This phase involves formalizing the acceptance of the project and bringing all the contractual obligations to an end.

4.7.1 Good Behaviors during Project Closure

Following are some of the good behaviors during the project closure phase:

Remind that project closure phase is part of the project. Close the project and finish the work

Remind that all data collected during project closure phase can be used and useful for next project

Closing the project can avoid waste ot time and difficult data research to colleague who will be involved in the project if not done by the Project Manager.




ABB Ltd; 2010

4.7.2 Project Closure Activities

The following activities are performed as part of the Project Closure phase at Provisional Acceptance Certification (PAC):

1. Organize Final Acceptance (FAC) and take over by customer

2. Organize training period to Customer (if required)

3. Organize warranty period and maintenance period (if any)

4. Organize to collect the feedback/ "Customer Satisfaction Survey" from key stakeholders as a good practice before closing the Project.

5. Issue final invoice and collect money

6. Close Bonds and Bank Guarantees unless what foreseen from PAC to FAC period

7. Close parent company guarantee

8. Close insurances

9. Close Permanent Establishment activities (if applicable) including tax matters.

10. Close project related consortium agreements (if applicable)

11. Close procurements pending with Vendors and Subcontractors

12. Issue as-built documents

13. Archive key contractual documents

14. Archive project related technical documentation

15. Publish final project performance report and update ProMIS

16. Organize handover to Service

17. Organize lessons learned workshop and provide feedback.

18. Close the project in Business System (SAP)

19. Issue the project close out report in structured way in order to freeze all information, project parameters, way to proceed, permitting to be easily found and utilized for next projects

20. Formally close the project.




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4.8 Change handling during project execution

A clear scope definition and understanding of who is undertaking what responsibility is crucial for a reliable determination of cost, time and resource requirement, as well as the risks associated with ABB scope of delivery. This must be established during the tender preparation process, and during contract negotiations with the customer.

The Change Management process is the means by which technical issues, or issues with financial 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 re-quires a more comprehensive review, are directed to the appropriate function for fur-ther action. A query may initiate a project change and/or claim. A Query that also is a Customer dissatisfaction 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 im-pact 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 generated to order and document every change.

Log Query

Query (Fault/Action Item,Change Request/Claim, NonConformance)from:- Customer- Third Parties- Vendors- Other Stages and Functions

Review& Evaluate

Query/ChangeRequest

SpecifyChange

ABBApproval

Change Noteand/or

ChangeOrder

ProduceChange Note

and/orChangeOrder

Close Query/Change Note

Reply to and/orresolve Query

Query Management Query/Change Request Change/Claim Management

Change Management

InternalChange

ExternalChange

Immediateaction required

QuoteChange

CustomerApproval

InitiateClaim

YES

NegotiateClaim

EngineeringInstallation &CommissioningProject ManagementOthers

NO

YES

NO




ABB Ltd; 2010

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 unfortunately common. Claims that cannot be avoided are to be ma-naged professionally in order to minimize impact to cost and schedule.

Roles and responsibilities while handling changes during project execution

The PM is accountable for Change Management and may delegate responsibility to others, e.g. Lead Engineer, Site Manager.

Everyone involved with projects are responsible to log Queries, as they arise Changes are efficiently managed in accordance with established procedure.

No changes are made without appropriate approval.

Change Control Board (CCB) is formally constituted team responsible for reviewing, evaluating, and appropriately dealing with changes to project. The CCB members are documented in project charter and approved by project sponsor. Following options are usually available for Project Manager and CCB to deal with changes:

Reject the change

Implement the change

Delay the change

Send for evaluation by CCB (Change Control Board)

Send for approval to Senior Management.

A formally defined change control plan is the means by which effective change man-agement can be achieved. It involves:

Receive change request

Review change for impact

Decide if change is worth it?

Document change request and response.




ABB Ltd; 2010

Is change worth?

Change accepted after

implementation?

Receive Change Request

PM Reviews initial Impact

Seek Sponsor’s approval

Close change request

Reject

Is change worth?

CCB Review

Is cost within limits ?

Document and Implement change

Yes

No

No

No

No

Yes

Yes

CCB Review needed ?

No

*) : Seek appropriate management approval based on Table of Authority (ToA), if the sponsor is not appointed for the project.

*




ABB Ltd; 2010

4.9 Risk handling during project execution

The purpose of risk management is to identify potential obstacles and hazards to the successful execution for the project. These risks may be technical, commercial, legal understanding and relationship with different project stakeholders. It is of utmost im-portance that these risks are handled in an open and transparent manner to ensure that appropriate resources are allocated from all stakeholders as early as possible to mitigate obstacles for the successful execution of the project. This process should in-volve ABB, the customer, the suppliers and any other partner such as consultants or consortium partner.

4.9.1 Framework

4.9.1.1 Mandate and commitment ABB Group CFO has made the following mandate on 5th January 2006 for establish-ing a comprehensive approach to better understand and manage the different types of risks that the Company is exposed to. For the specific case of ABB, at Organization level these risks are segregated in three separate buckets:

1. Control Risks - linked with internal control processes, reliability of our finan-cial reporting IS access controls, etc... This category of risks is obviously tho-roughly addressed today through the Sarbanes-Oxley project and the build-up of the Assurance function.

2. Market risks: ABB is exposed, in its daily business, to fluctuations in curren-cy rates, interest rates, commodity prices, credit default spreads, growth rates, inflation rates, political risks, mortality statistics (for pension liabilities), equity and bond prices, etc. (Corporate finance)

3. Project management risks: a specific exposure to our business is clearly the way we run and manage our large projects, from the pre-bid phase to an in-cluding the execution phase. Risk Review Steering Committee (RR SteCo) has been formed to lead a multi-business, multi-functional task force in order to consolidate the best practices and establish a consistent framework and cul-ture in project risk management.

4.9.1.2 Design of framework for managing risk Along the business process, project risk management is continuously applied:

During the Sales & Marketing process, to ensure that tenders will: - have defined deliverables based on proven technology, fulfilling customer’s demand - have adequate commercial and contractual conditions - be compliant with international business ethics, social, environment and tax requirements - be aligned with the company’s portfolio strategy and financial targets




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During the Project Execution process, to ensure that: - the project is managed by the required qualified resources - the project activities are systematically planned, monitored and adapted to ensure timely delivery - all measures are taken to ensure that the project economics are safeguarded to guarantee, at the minimum, the achievement of financial targets

4.9.1.3 Implementing risk management The respective Divisions have further detailed the implementation of the Group Di-rective GD/LC-24 in their Divisions/Business Units. In addition, the RR SteCo has published risk review guidelines (a collection of best practices) to support this Direc-tive.

We utilize risk review database for evaluating risks in tender stage. A representative of project management is usually involved while this document is created or reviewed in RR Database. The document is made available to Project Manager for referring during the execution stage.

Parts of this risk review document are document is utilized in ProMIS Database.

4.9.1.4 Monitoring, review and continual improvement of the framework The SteCo meets atleast once a quarter to review the implementation of project risk management.

U sers

S teC o

Fe ed bac ks

P ro pos a lsIm prove m e nts o f

gu ide lin es , p roc essan d to o ls

C o n tin u o u sIm p ro v em e nt

p ro c es s

R R S te C o m e m be rsor reg io na l tra in ers

U sers

S teC o

Fe ed bac ks

P ro pos a lsIm prove m e nts o f

gu ide lin es , p roc essan d to o ls

C o n tin u o u sIm p ro v em e nt

p ro c es s

R R S te C o m e m be rsor reg io na l tra in ers

Top-down communication Bottom-up communication

RR SteCo communicate on: Organization Training Guidelines Tools (RR dB, MT dB)

RR SteCo communicate: through GF-CC to project risk management au-

dience across all divisions

RR SteCo receives inputs on: Organization Training Guidelines Tools (RR dB, MT dB)

RR SteCo receives inputs from: Division and Regional CFOs Division risk managers Regional risk management train-




ABB Ltd; 2010

ers

4.9.2 Risk handling process during project execution

4.9.2.1 Risk management context We have utilized the following tabs as part of risk review database to identify and evaluate the risks.

Scope of Work Customer and Country Consortium Basis for Execution Contractual Issues Price, full cost calculation, cash flow and exposure Taxes and Customs duties




ABB Ltd; 2010

4.9.2.2 Risk assessment

4.9.2.2.1Risk Identification The risk management database has identified possible risks as a checklist for each of the tabs.

4.9.2.2.2Risk analysis and evaluation Classify risks in categories in addition to checking complexity factors:

unimportant risks : They do not jeopardize the project objective nor the execu-tion process substantially

medium risks : negative impact on the project can be felt by all involved

important risks : They lead to a substantial cost increase and delay time sche-dule, but do not jeopardize the project objective in general

heavy risks : they lead to strong cost overrun and schedule delay and thus have heavy impact on project objective

project endangering risks : They jeopardize with high likelihood the project ob-jective and may lead to complete failure

Following template is utilized for reporting the top 5 risks.




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4.9.2.3 Risk treatment

Risk treatment strategy

Description

Avoidance Changing the project plan to eliminate the risk or protect the project objectives from its impact.

Mitigation Seeking to reduce probability and /or impact of risk below ac-ceptable threshold.

Transference Seeking to shift the impact of the risk to a third party together with a ownership of response. e.g Taking insurance, Outsourcing or making provisions for warranty.

Acceptance Accepting the risk. The project team has decided not to deal with the risk. (Or) the team is unable to identify any other suitable risk response strategy.

Opportunity treatment strategy

Description

Ignore The project team has decided to ignore this opportunity.

Pursue Try this.

Enhance Seeking to improve the probability and/or impact of opportunity.

4.9.2.4 Risk monitoring and review The residual risks are monitored during project reviews, and actions are taken.

4.9.2.5 Communication and Consultation Risks and Opportunities reviews are overseen and coordinated by Project Manager and Project Controller.

Project Controller determines the risk provisions and contingencies for the risks iden-tifies with Likelihood as “Almost certain” and “Likely” as per the latest Accountancy Rules and Guidelines.

The Project Manager will open and maintain as Risk Register throughout the Project.

All team members and Project Review Committee (PRC) are made aware of top 5 risks and opportunities and risk treatment strategy and implementation plan.

4.9.2.6 Effectiveness of the risk management process The Project Manager shall document the lessons learned in the Lessons Learned Da-tabase during execution at regular intervals and during project closure.




ABB Ltd; 2010

4.10 Project Reviews & Reporting

Periodic reviews and reporting of projects under execution is the key for the success-ful project execution, for ensuring timely delivery, customer satisfaction and achievement of approved project performance targets. Timely and accurate reports are required to keep the stakeholders updated with the status of the project.

Main objectives of project reviews are to:

support the project manager in executing the project to enhance ABB profit opportunities and risk mitigation, in compliance with USGAAP and SOX (Sarbanes-Oxley Act) requirements

ensure customer’s satisfaction in line with ABB contractual obligations

evaluate the latest project’s estimates at completion presented by the project manager

approve the project estimates to completion, and the changes proposed by the project manager, prior to their release as report in ERP systems and ProMIS.

Following are the guidelines for the project manager while creating agenda for project reviews or preparing project reports:

Provide an objective rather than subjective status evaluation of the project status

Match level of the detail to the needs of the stakeholders who are participat-ing in reviews or reading the project report

Report information consistently across time.

Provide the relevant information to stakeholders on timely basis

Use appropriate graphics and figures to condense and streamline the project information

Be proactive and positive. (Present solutions, not just problems)

Critically evaluate actual or potential deviations to scope, plan and budget

A ‘tough and challenging’ inquiry focused on risks and potential risks to project’s success

Actions to resolve current issues & risks and potential issues & risks

Questions should not be viewed as challenging a person’s capability or per-formance rather, questions are focused on business processes




ABB Ltd; 2010

Typical Project Review and /or Report content includes:

Project Scope.

Project status and progress

Financial status and project calculation (cost and cost to complete, cashflow).

Monthly Earned Value freezing

Risks and Opportunities

Claims

Project Planning, scheduling and resources

Engineering and Quality

Procurement & Deliveries

Customer and internal changes (Change Management)

Project health and safety

Site and logistics management

Project warranty and close-out

Action Plan

Roles and responsibilities

Project Review Committee (PRC) is formally constituted team responsible for re-viewing, evaluating, and appropriately dealing with project issues. The PRC members are documented in project charter or Project Management Plan (also called as Project Execution Plan or Project Plan).

The Project Manager is responsible for organizing different project review meetings as required for the project. PM is responsible for preparing the project review and for presenting project status to date to the PRC.

The PM is responsible for documenting project review meeting minutes and reporting to different stakeholders. PM can delegate the updating in ProMIS or its equivalent on a regular basis to the Project Controller.

The LBU manager defines the attendance of the project review committee.

Joint project reviews shall be conducted for projects involving more than one LBU (SteCo)

BU Management shall be involved in reviews for large and / or critical projects.




ABB Ltd; 2010

4.11 Independent Project Peer Reviews

4.11.1 Overview of Independent Project Peer Reviews

Independent Project Peer Reviews encompass all activities through the project life-cycle. These reviews aim to;

provide Division, BU and Local Division management with structured and in-dependent assessment of project status for continuation to next phase/milestone

improve project management behaviors and performance within ABB

achieve improved business results and Net Promoter Score (NPS)

provide an opportunity to transfer knowledge and experience from more se-nior Project Managers across the group

determine the current real status of the project and the changes (if any) that need to be made in People, Solutions or Processes

4.11.2 Principles of Independence

The project complexity score is computed using Project Complexity Calcula-tor and is entered in Risk Review Database during the Risk Review Process.

The Risk Review Committee (RRC), based on the project complexity, deter-mines the level of project manager needed for execution.

All projects having complexity score of >650 points must have independent participation in project phase reviews during execution.

The independent peer assessors will be typically PM Council Members, ABB Certified Project Director or Senior Project Managers.

The independent assessor will provide an external view on the project, con-structively challenging the project progress & content from an objective point of view.

The independent assessor will provide a 2-3 page written report regarding their view on project progress including key risks & opportunities and will recommend any actions they feel necessary to secure the best outcome for the project.




ABB Ltd; 2010

4.11.3 Typical mandatory independence during Peer Reviews

No. Typical Milestone Name

Peer Review Objectives Independent Assessment

1 Project Start-up and Requirements Review

• Confirm resource availability and project planning

• Evaluate the project risks and oppor-tunities.

• Accept the detailed requirements, spe-cifications and the preliminary design.

• Secure route to achieve top level project objectives and requirements.

Mandatory

2 System Design Review

• Determine prior to full-scale develop-ment and integration, whether the de-sign is acceptable in terms of Customer requirements and specifications, quali-ty, manufacturability, regulations and standards

• Start of manufacturing and integration.

Recommended

3 Procurement / Manufacturing / Integration Release Review

• Determine design works to specifica-tion and can proceed to manufacture.

Optional

4 Factory Acceptance Test Readiness Re-view

• Determine if the system is ready for Customer inspection and delivery as per specification.

Optional

5 Site Start-up Review

• Confirm site readiness, resource availa-bility, and project planning

• Evaluate the risks and opportunities during site works, installation and commissioning.

Mandatory

6 Partial Acceptance Certificate (PAC) Readiness Review

• Evaluate the readiness to handover the project to Customer and secure accep-tance from customer.

Recommended

7 Formal Acceptance Certificate (FAC) Readiness Review

• Secure acceptance from Customer • Evaluate the lessons learned

Optional




ABB Ltd; 2010

4.11.4 Independent Project Peer Reviews Process

4.11.5 Independent Peer Review – Report Overview traffic lights

On Track Project on the right track with only minor or “normal” issues to be resolved • All expected deliverables are complete, Phase review objectives and crite-

ria are largely met • Expected project maturity is achieved and no major/significant actions are

identified.

Significant Issues

Project under threat due to significant or “abnormal” issues to be resolved • Expected maturity is achieved with some exceptions, no major risks

and/or show stoppers identified. • A plan for remedial actions must be implemented within an agreed time-

scale. • Assessor will meet again with project team to ensure recommended ac-

tions are taken and effective.

Blocking issues

Project in real trouble, immediate senior management support needed • Major risks and/or showstoppers have been identified, recorded and need

immediate mitigation • Expected project maturity is not achieved and specific actions have to be

launched for recovery actions. • Project team to provide weekly status review of recommended actions. • Assessor will meet again with project team, together with relevant senior

management, to ensure recommended actions are taken and effective.




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4.12 Quality




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4.13 Health and Safety

A sustainable safe working environment depends on three basic conditions as follows;

1. Safe facilities and equipment

2. Safe operating procedures

3. A safety culture based on good safety behavior and practices

If any one of these conditions is missing, the result will not meet our initial require-ments.

If we are missing item 1, then we are exposing our people to hazards without controls, and accidents are inevitable.

If we are missing item 2, then despite a safe environment, people are at risk because they do not have clear and safe procedures on how to run their processes.

Even if we have a safe workplace and good safety procedures, the end results will fail if our people do not work and perform in a safe manner.

So, how do we ensure that these three legs are always in place? We do so by a series of inspections and audits.

4.13.1 Safety Inspections

Workplace inspections are performed regularly to ensure a safe working environment is maintained. The inspections aim to identify any potential and occurring hazards in the workplace, and to determine the causes of the hazards. The inspections examine unsafe or unhealthy physical conditions.

The typical inspection focuses on hazards related to buildings, storage facilities, first aid facilities, walkways, production equipment, fire and protection equipment, ha-zardous materials, PPE, tools, etc.

Safety Inspections are normally carried out by a team which include representatives from management, safety, operations and other departmental representatives. These inspections are carried out at regular intervals. Deviations and corresponding correc-tive actions are recorded and followed up.

4.13.2 Safety Audits

Health and safety audits are done to verify how the requirements of the OHS man-agement system: procedures, instructions, objectives, plans, schedules, etc. are being implemented. There are external audits (performed by third party) and internal audits.




ABB Ltd; 2010

4.13.3 Safety Observation Tours (SOTs)

These tours must be focused on the behavior of individuals and teams and are much more than inspections. In an SOT, the team members should identify and record both good and bad practices and be prepared to discuss these with the individuals con-cerned; praising and encouraging them for good behavior and coaching them where the behavior is not in accordance with requirements. It involves open and unemotion-al discussion on a one to one basis so that the reasons for and the potential impact of negative behavior are explored and there is influence, coaching and agreement (a con-tract) on how the behavior should change.




ABB Ltd; 2010

4.14 Scalability & Process Tailoring Guidelines

4.14.1 Dimensions of Scalability

Following are some of the dimensions that need to be considered while scaling the process mentioned in this document for the project needs by the Project Manager.

Project Complexity

Consortium with different ABB Units (Cross BU / Country)

Consortium with External Partners

4.14.2 Process Tailoring Guidelines

The local business units have flexibility to adapt this document as part of local Quality Management System (QMS).

The Project Manager has flexibility to adapt the process mentioned in this document to suit the particular project needs as part of Process Plan. The Process Plan is a document used to define how a process applies to a specific project, i.e. if a certain process activity is not applicable, or apply only to a limited degree, this is to be do-cumented. This Process Plan can be sub-section of Project Management Plan.




ABB Ltd; 2010

5 Organization

5.1 Project Organization

The following is the high-level functional view of a project organization.

PM Tasks

Project Manager

Contract & Claims Manager

Interface Manager

Project Safety Manager

Project Quality Manager

Site Manager

Construction Manager

Commissioning Engineer /Manager

Design Engineer, Discip-line Engineer,

Documentation Engineer / Manager

Lead Engineer / Project Engineering

Manager

Project Controller

Commercial Manager

Project Planner

Project Cost Controller

Project HR & Compliance Manager

Supply Chain Manager

Project Logistics Manager

Sponsor




ABB Ltd; 2010

5.1.1 Scalability of Project Organization

Characteristic < 200 Project Complexity

Points

200-450 Project Complexity

Points

450-750 Project Complexity

Points

> 750 Project Complexity Points

Project Manager level

ABB Certified Associate PM

ABB Certified Project Manager

ABB Certified Senior Project Manager

ABB Certified Project Director

Project Organization

PM does all with support from respective line functions.

Identify named people for each block. May be part-time.

Identify named people for each block. Some dedicated and some part-time.

Dedicated people for each block.

Identified named people for each of PM’s tasks may be part time

5.1.2 Responsibilities

5.1.2.1 Project Sponsor For all projects determined by the Project Complexity calculator at Complexity de-gree more than 650 points a Project Sponsor shall be identified.

Project Complexity Points Project Sponsor

Less than 650 -

650 to 950 LBU or Local Division Manager or Country Manager

950 and above Respective Region Division Manager or Global BU or Division Manager

The Project Sponsor is generally a senior executive in the organization with the au-thority to assign resources and enforce decisions regarding the project. The project sponsor should be named in the project charter end. The project sponsor shall not be involved on the project day today activities but handles the “political level” escalated issues from PM or from Customer.

Sponsor, removes organizational obstacles and handles escalation with the organiza-tion. The Sponsor is representing all stakeholders (Project benefits takers) and ba-lancing the VOB (Voice of Business) with the voice of customer.




ABB Ltd; 2010

5.1.2.2 Project Manager Project Manager is:

Accountable for ensuring the project is executed as per contract, ABB Policies, Standards and Processes.

Responsible for high level project objectives and goals defined for the project are achieved. E.g.

o The project is always on time, on cost and on quality; o Control and improve cash flow; o Change Control and new business opportunities; o Risks follow up and mitigate; o Health and Safety

Responsible for motivating and leading project team to ensure project success; Responsible for ensuring following project roles are well integrated for the successful execution of the project:

o Project Controller o Project HR & Compliance Manager o Project Engineering Manager o Contract and Claims Manager o Commercial Manager o Interface Manager o Safety Manager o Quality Manager o Logistics Manager o Supply Chain Manager o Site Manager o Project Managers and Associate Project Managers for different

sections o Construction Manager o Project Planner o Project Cost Controller

Responsible to ensure the project follows good methodology and execution practices and the project team work in accordance with ABB procedures using applicable tools.

Responsible for maintaining and improving customer relationship during the lifetime of a project by serving as prime interface with customers and project participants, on all project and contractual matters;

Responsible for the establishment and close follow up of project review meetings protocol, employee performance documentation and feedback to line management;

Responsible for managing change/variation requests, delays, warranties, disputes, etc. Decides on/implement actions to fully explore all possibilities and eliminate/minimize problems;




ABB Ltd; 2010

The Project Manager as Interface Manager is: Responsible for all issues related with interfacing with other contractors:

o Establish and implement a project Communication Plan that coordinates activities directly with other project participants (internal and external) to ensure an effective exchange of critical information;

o Identify critical interfaces early in the project through a structured process leading to early definition of issues with potential for impact to cost os schedule ir order to minimize their impact;

o Facilitate agreement with other “Stakeholders” on roles, responsibilities and timing for providing interface information;

o Expedite and ensure clear, accurate, timely, and consistent communication with other persons/organizations for transferring interface information.

Responsible for all issues related with interfacing with Govt. agencies along with Contracts & Claim Manager and Logistics Manager.

5.1.2.3 Contracts & Claim Manager Contracts & Claim Manager is:

Responsible for ensuring all the legal aspects of the contract are met. o Support and advice sales and project management regarding contract,

commercial, risk, and tax management activities; o Determine and evaluate commercial risks of customer projects; o Analyze, comment, and develop contractual terms; o Contribute to contract negotiations;

Responsible for ensuring a good change and claim management process established identifying which are the contractual articles to be used in order to give more effectiveness to the claim.

Responsible for ensuring all correspondence to Customer/Consultant/Interface Contractors are as per contract.

Responsible to define Contract Management Strategy identifying what are the behaviors and actions to be carried out in order to match contractual requirement and which are relevant deliverable and communication lines

5.1.2.4 Project Quality Manager Project Quality Manager is:

Responsible for developing and implementing Project Quality Plan including Method Statements as per contract, ABB Policies, Standards, Methods, Processes and Systems.

o Conduct Customer Satisfaction survey with key stakeholders; o Coordinate and maintain customer complaints; o Ensure compliance with the Project Quality Plan

Responsible for implementing the Project Quality Plan for the project Responsible for defining quality procedure during construction, pre-

commissioning, commissioning, guaranteeing Site implementation.




ABB Ltd; 2010

5.1.2.5 Project Safety Manager Project Safety Manager is:

Responsible for ensuring zero incidents (accidents) and near-misses. Responsible for developing and implementing Project Safety Plan as per

contract, ABB Policies, Standards, Methods, Processes and Systems. o Release work in the field, such as working at height, confined space,

hot work (welding), etc; o Participating security dialogue; o Reporting safety statistics on the project; o Ensuring the execution of internal and external audits to maintain

compliance with HSE practices. Responsible for safety training to sub-contractors, project team Responsible for carrying out Safety Observation Tours on a regular basis and

ensuring the discrepancies if any are resolved.

5.1.2.6 Site Manager Site Manager is:

Responsible for coordination with Project Team, Contractors for activities related to:

o Equipment Installation as per Method Statement o Equipment Integration as per Method Statement o Site Safety o Relationship with local community o Interfacing with all key people working on Site o Ensure people travel from e to Site, including accommodation, meals,

local transportation etc. o Maintain efficiency for vehicle and industrial vehicles and or office

devices o Coordinate activities for locally purchased material (if any) o Resource management and assignment of resources to tasks; o Time tracking and progress reporting; o Review all requests for changes to ensure that proper change

management continues through the site phase; o Manage change requests to ensure that all approvals are in place prior

to implementing; o Collaborate to manage change/claim referring to Customers o Collaborate to manage claim submitted by Subcontractor o Ensure that project standards are followed for additions/changes; o Proactively look for ways to improve the start-up schedule and reduce

costs; o Maintain the deficiency lag and take action to resolve; o Training requirements of ABB’s site personnel; o Site program management.




ABB Ltd; 2010

5.1.2.7 Construction Manager Construction Manager is:

Responsible for coordination with Project Team, Contractors for activities related to:

o All Civil works, o Site Safety o Manage change/claim referring to Customers, preparing necessary

documentation o Manage claim submitted by Subcontractors, preparing necessary

documentation o Engineers and assistants responsible for infrastructure during Assembly

/ Commissioning Phase. o Coordinate all work in site; o Source the staff required to deliver the project, requesting resources

when required from Engineering, Automation and Construction personnel;

o Responsible for allocate resources in site; o Work with the Safety team to ensure safe practices are adhered to

within the projects; o Organize activities in site, so that is met the priorities of the customer; o Be the Site Manager’s Right-Hand Man.

5.1.2.8 Project Planner Project Planner is:

Responsible for ensuring all activities and tasks for meeting Contractual Key Dates (KDs) are entered in Microsoft/Primavera Schedule, updated time to time.

o Monitoring of project activities; o Project Planning and Control; o Progress reports; o Resource control; o S Curve; o Elaboration and Update schedule;

Contact with the suppliers for implementing supplier schedule in project schedule to do Responsible for following up with project team members to ensure their allocated tasks are carried out as per schedule.

Responsible for escalating any changes in critical path to all concerned.

5.1.2.9 Project Cost Controller Project Cost Controller is:

Responsible for project cost including estimation to end for sure together with PM and stakeholders

Responsible for issuing the project cost control report identifying committed and booked cost, variance vs. budget , etc..




ABB Ltd; 2010

5.1.2.10 Project Controller Project Controller is:

Responsible for all the financial related aspects of the project e.g Payables, Receivables, coordination with Contract & Claim Manager, Commercial Manager, Supply Chain Manager.

o SAP / BAAN routines to access the project control; o Issuing invoices; o Cost control; o Control of cash flow; o Customer contact; o Contract Review; o Opening of CVI; o Opening and control of purchase order.

Responsible for providing MIS reporting for the project.

5.1.2.11 Commercial Manager Commercial Manager is:

Responsible for all matters related to contract interpretation, follow-up and implementation for the successful execution of the project.

Responsible for all taxation and insurance related issues of the project. Responsible for all procedures of import and export of equipment;

5.1.2.12 Project HR & Compliance Manager Project HR & Compliance Manager is:

Responsible for ensuring proper ramping-up and ramping-down of project resources on the advice of Project Manager.

Responsible for ensuring all related of compliance of statutory laws and obligations are adhered while executing the project.

Maintains traceability of the performance of all team members, based on assessment by Project Manager or key personnel of the Project Team (Project Engineer, Project Procurement Coordinator, etc.)

Establishes a policy of extraordinary compensation based on the target matched during project (according to ABB policy) for particular challenging projects.

Takes care of all aspects related to compensation of people sent on Site, with particular reference to the countries with safety, logistic or ambiental onerous conditions.




ABB Ltd; 2010

5.1.2.13 Supply Chain Manager (Procurement Manager) Supply Chain Manager is:

Responsible for all aspects related to suppliers such as: o Plan Procurements (issuing Procurement Plan); o Perform Supplier Qualification Process; o Administer Procurements; o Procurement of production and stock material; o Co-operation with the organization of efficient procurement processes; o Structure and care of the data records in the SAP system; o Support the commercial negotiations to achieve best value and

accurate estimates; o Reviewing, approve, and implement Project Terms and Conditions in

supply packages. o Selection of Suppliers, o Vendor Approval, o Maintain updated Vendor rating o Release of Purchase Orders, o Expediting/follow-up with suppliers, o Inspection, Dispatch and Warranty

5.1.2.14 Logistics Manager Logistics Manager is:

Responsible for all issues related to logistics such as: o Follow-up with Suppliers, Contractors o Customs Clearance o Selection of Transporter for transporting and installation of equipment. o Storage/Warehousing, o Security o Planning and release of material etc., o Receipt and dispatch of materials; o Prepare a list of packages; o Determine the best transportation; o Accommodation and Transportation Logistic on site; o Packaging and numbering of packages.

5.1.2.15 Project Engineering Manager / Lead Engineer Project Engineering Manager / Lead Engineer is:

Accountable for the technical design of the complete solution. o Technical solutions responsibility; o Technical Management; o Coordination and management of technical matters; o Review of technical project documents produced by ABB and third

parts. o Monitoring of work progress and reporting to project manager and

planner; o Ensuring the scope of supply of sub-suppliers engineering

Subcontractors and partners;




ABB Ltd; 2010

o Manage claim of Suppliers engineering Subcontractors and Partners; o Collaborate to prepare documentation and technical solutions for

changes/claims referring to Customer; o Ensuring that resources are used effectively; o Change Management; o Be always searching for better solutions for cost-benefit analysis; o Best solutions for less cost, saving money for full cost model;

Responsible for ensuring the project is executed as per contract, ABB Policies, Standards and Processes.

Responsible for ensuring following project technical roles are well integrated for the successful execution of this project

o Project Engineer o Engineering/ Design Specialists o Commissioning Manager / Commissioning Engineer o Design and Engineering Documentation Manager

Responsible for building technical competencies including building up engineering & design team for the project.

5.1.2.16 Commissioning Manager / Engineer Commissioning Manager / Engineer is:

Responsible for developing Integrated Test Plan o Preparing schedule of works according to the contractual dates and

Site construction progress; o Develop commissioning procedures and check lists; o Develop plant system subdivision, system priority, system start up o Perform commissioning activities on Site according to the

commissioning procedure and check lists; o Defining priorities in punch list resolutions; o Defining necessary tools and instrumentation for activities; o Manage all safety matters in particular permit to work, when

energization is on and during stat up with fluids; o Take responsibility of activities avoiding damages or accident to

systems; o Perform the Site Acceptance Test, according to the customer

procedures, and plant hand over; o Provide operations support during commissioning; o Report on non-conforming items so that they are entered into the

deficiency log; o Completion of punch list items for final Acceptance; o Responsible for organize the Commissioning Team, allocating

resources according to customer/project’s need. Responsible for implementing the Integrated Test Plan for the project. Responsible for ensuring all equipment is installed and integrated as per

method statement before energizing or commissioning any equipment or system related to this project.

Responsible for ensuring correct workmanship such as crimping, terminations.




ABB Ltd; 2010

5.1.2.17 Design and Engineering Documentation Manager Design and Engineering Documentation Manager is:

Responsible to ensure there is a system for creating documents as per the contract such as Document Numbering System, Document Register, Document Storage and Retrieval, Versioning of Documents.

o Ensure that the documents are leaving with ABB standard and/or contractual requirements;

o Notify the customer and own team about the issue of documents; o Administer the document management environment, including cabinet

structure, user privileges and document security; o Documents Revision Control; o Issue Assist in the formal transmittal and receipt of documentation

to/from ABB and the project stakeholders o Archive documents (source files, pdf files, commented files) in

managing document software o Prepare final documentation for Customer and for ABB archive.

Responsible for ensuring all technical documentation related to contract are available and properly updated from time to time.

Responsible for all document exchange between ABB and Customer and/or Subcontractors;

Responsible for organizing the project documents so that it is easy to locate.




ABB Ltd; 2010

5.1.3 Roles and Responsibilities, RACI Chart

Responsible (R) The person involved in performing the committed task who has to make something happen.

The degree of responsibility is defined by the accountable person.

Responsibility can be shared amongst different persons.

Accountable (A)

The person who has the power of veto and is in charge of the fact that the task will be performed:

in the right way with the right outcomes in the assigned time with the involvement of right resources

This person has power to make the final decision. Important: for each task there is one and only “A”.

Consulted (C) The person that is in charge of providing needed information or ad-vice before the task is executed or decision is taken.

It can range from a simple information input to a genuine veto pow-er, but whatever the case the person must always be consulted.

Informed (I) The individuals that must always be informed after a decision/ action is taken or a task is executed

The RACI chart for a typical project is shown as part of this section in next few pag-es. The Project Manager has flexibility to adapt this based on project organization de-fined for the project as part of Project Management Plan.




ABB Ltd; 2010

5.1.3.1 Project Initiation & Start-up

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Nominate Prj. Mgr (PM) A

Define the project team and relevant kick off meeting sche-dule

A R R

Organize project handover from sales

A

Review the contract and sum-marize deliverables

A R R R

Review and endorse the budget from sales

A R R R R R R

Purchase Order/ Contract is acknowledged to Customer

A R

Open project in the business system (ERP)

A R

Open repository in Documentum

A R R

Open ProMIS document A R

Arrange parent company guar-antees/bonds, issue invoice and collect advanced payments

C A R

Update currency risk, hedging C A R R

Perform the stakeholder analysis for the project

A R R R

Re-evaluate the complexity cal-culator results and use this data while preparing Project Management Plan

A R R R R

Approve Project Charter A




ABB Ltd; 2010

5.1.3.2 Project Planning

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Review the contract A R R R R R R R R R R R R R R R R R

Define/organize the project team and Roles & Responsibilities

A R R

Analyze resource planning A R R

Define/refine WBS A R R R R R R R R R R R R R R R R R

Review the costing of the project incl. insurance & taxes

A R R

Create/refine Project Schedule Network Diagram

A R

Create/refine Project Risk Man-agement Plan

A R R

Create Communication Plan A R

Create/refine Quality Plan A R

Create/refine H&S Plan A R

Conduct risk analysis and open Risk Register

A R

Create/refine Project Procure-ments Plan

A R

Create/refine Project Schedule A R

Create/refine cash-flow/budget A R

Compile & get approval for Project Management Plan

A R R

Conduct kick-off meetings with Internal team, Consortium (if applicable) and, Client

A R R

Review the Project Planning & Start-up

A R




ABB Ltd; 2010

5.1.3.3 Project Execution

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Direct and Manage the Project Execution by executing the Project Management Plan

A R R R R R R R R R R R R R R R R

Complete the work packages A R R R R R R R R R R R R R R R R

Perform the quality assurance activities

A R

Conduct Safety Observation Tours (SOT)

A R

Perform Supplier Qualification Assurance (SQA)

A R R

Conduct procurements A R

Update ERP System & ProMIS A R R

Organize project relevant project review meetings

A R

Manage stakeholder needs and expectations

A R R R R R

Ramp-up and ramp-down project team based on the project needs and requirements

A R R R

Develop project team A R R R

Organize project team building activities

A R R R

Resolve open issues that have been escalated through Issue Escalation Matrix

A R R R

Resolve issues that have come through CCRP

A R

Take preventive actions to avoid/mitigate risks

A R




ABB Ltd; 2010

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Take proactive actions to purse/enhance opportunities

A R R

Look for and respond to new risks and opportunities

A R R

Look for changes and claims. A R R

Manage audits (project, exter-nal, IS, safety, SOX, etc.)

A R R R R R R R

Perform contractual and com-mercial related activities re-quired for the contract

A R R R

Perform Permanent Establish-ment (PE) related activities if applicable for the project

A R R R R

Perform consortium related ac-tivities if applicable for the project

A R R R R R

Manage exceptions to the Project Management Plan


Organize lessons learned work-shop and provide feedback





ABB Ltd; 2010

5.1.3.4 Project Monitoring & Control

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Ensuring compliance to the Project Management Plan


Monitoring the project activities against the Project Management Plan and the performance base-line for the project

A

Monitor and control resource utilization

A R R

Monitor and control scope A R R

Monitor and control schedule A R

Monitor and control risks and opportunities


Monitor and control safety A R R R R R R R R R R R R R R R R

Monitor and control quality A R R R R R R R R R R R R R R R R

Monitor and control contract and commercial activities

A R R R

Monitor and control Permanent Establishment activities

A R R R R

Monitor and control Consortium related activities (if applicable)

A R R R

Monitor punch list resolution A R R R R R R R R R

Monitor compliance and initiate appropriate actions

A R R

Monitoring the issues associated with Cost of Poor Quality (COPQ)

A R R

Taking proactive actions and controlling changes in anticipa-tion of possible problems





ABB Ltd; 2010

Activity

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Administering the project procurements

A R R R R R

Verifying scope A R R R R R R R R R

Report OHS and environmental progress report

A R R

Report project claim status A R R

Report project performance to relevant stakeholders

A R

Update the Project Manage-ment Plan

A R




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5.1.3.5 Project Closure

Activity

Proj

ect R

evie

w C

omm

ittee

(PR

C)

Proj

ect M

anag

er

Proj

ect C

ontro

ller

Proj

ect H

R &

Com

plia

nce

Man

ager

Pr

ojec

t Eng

inee

ring

Man

ager

C

ontra

cts

& C

laim

Man

ager

C

omm

erci

al M

anag

er

Supp

ly C

hain

Man

ager

Lo

gist

ics M

anag

er

Inte

rfac

e M

anag

er

Proj

ect P

lann

er &

Cos

t Con

trolle

r Pr

ojec

t Qua

lity

Man

ager

Pr

ojec

t Saf

ety

Man

ager

Si

te M

anag

er

Con

stru

ctio

n M

anag

er

Com

mis

sion

ing

Man

ager

Pr

ojec

t Eng

inee

rs

Doc

umen

tatio

n M

anag

er

Organize Final Acceptance (FAC) and take over by custom-er

A R R

Issue final invoice and collect money

A R R

Close Bonds and Bank Guaran-tees

C A R

Close parent company guarantee C A R

Close PE activities including tax matters

C A R R

Close project related consortium agreements

C A R

Close procurements A R R

Archive key contractual docu-ments

A R R

Update As-built documents C A R R

Archive project related technical documentation

C A R R

Publish final project perfor-mance report/ProMIS

A R

Organize handover to Service A

Organize lessons learned work-shop and provide feedback


Close the project in Business System (SAP)

A R

Formally close the project A R R




ABB Ltd; 2010

5.2 Execution of Cross – BU / Country Contracts

The Term “Collaboration Projects” refers to:

projects that are executed by more than one legal entity within the same BU / System Group as equal partners (even if one unit has the formal project lead); typically two entities are involved,

which often have some degree of commonly shared risks beyond Joint & Several liabilities, and

with a division of work that typically is vertical (WBS) and horizontal (activities1) creating a broad interface between the parties.

Due to above, the interactions between the participating units require a quality and depth that is beyond typical consortia - thus the term “Collaboration project”. Con-sortia do form a typical legal structure for legal entities to collaborate however. Cross BU Contracts fall under three categories:

1. ABB Unit participating as sub-supplier to main ABB Unit 2. Internal Consortium (closed/silent). Applicable to ABB and third party companies. 3. External Consortium (open), between ABB and/or third party companies.

Cross-BU / Country Collaboration projects are a very strong vehicle to leverage and share the available in BU global- (technology, processes, adv.engineering, global SCM, contract/project management etc.) and local expertise (demand and supply market, cost advantages), and thus properly execute projects (i.e. on schedule, on budget and with required quality) with optimized cost base and secure a profitable growth in selected markets.

1 e.g. base design, detailed design, project management, procurement, logistics, on- and offshore project management, site management, installation & commissioning, etc.




ABB Ltd; 2010

While the responsibility for the scope of Collaboration projects is split between the parties, successful project execution requires the participating units to act as one enti-ty executing one project. This fact has wide ranging effect on the project setup and procedures, and the required mindset of the project team members. The following table specifies the peculiarities of Collaboration projects, in a comparison to the tradi-tional internal or external consortia.

S.No Criteria Traditional consortium

Collaboration project

1 Legal setup Ext/int consortium, J&S liability

Ext/ int consortium, J&S liability

2 DOW Largely independent packages (e.g. civil works and rest of S/S; or: EBoP of Power plant and S/S, etc.)

Often tightly interdependent packages (e.g. 50%/50% scope split between the LBUs)

3 Coordination with Customer / consul-tant

Often each Party represent its scope

Scope is mostly not divisible in front of customer, one voice required

4 Internal project mi-lestones

Largely independent, or few (-> parties execute their packages largely in pa-rallel, independently)

Mostly interdependent (-> parties execute their pack-ages in sequence to each other, often recurrently)

5 Impact of one Party’s rescheduled/ delayed milestones on the other Party

Generally low, based on aforementioned

Generally higher, based on aforementioned

6 Ability of one Party optimize its bottom line w/o impact on the other Party

Desired, mostly possi-ble.

Risk/reward trade-off impacts Party itself.

Desired, often problematical.

Risk/reward trade-off of one Party might have undesirable/ unexpected impact on the other Party, when time/ quality/ technology is optimized.

7 Degree of risk shar-ing.

Risk is borne initially and primarily by origi-nator Party.

Originator is usually easy to establish.

Risk is supposed to be borne by originator Party, except scope components with a-priory shared risks (e.g. civil).

Originator is usually not easy to establish (interrelated work execution)




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8 Need of sophisticated risk sharing model

Generally limited, based on aforementioned


9 Conflict potential between the parties during the project execution

Generally limited, based on aforementioned


10 STECO (BU(s), LBU heads) (PS Division Guideline No: 3VAA100106).

Recommended Mandatory, to resolve potential opinion differences between LBUs.

11 Overall project man-agement

Has coordination cha-racter, with decision power limited by the Consortium Agreement

Has direct management charac-ter, sufficient & significant decision power is needed (Overall PM). This to avoid negotiations for every decision with LBUs or delegation of every decision to STECO.

12 Complexity of Over-all Project manage-ment / requirements to Overall Project manager

moderate / moderate High / high

13 Management of the each Party resources (incl. optimization)

Party’s project manager supported by Line man-agement. Resource conflict reso-lution: by Line man-agement.

Overall PM and Parties’ project managers (Local PMs), supported by Line manage-ment.

Resource conflict resolution: Line management needs to coordinate with Overall PM. Escalation to STECO when required.

14 Degree of dedication of resources to the project

Depends on Party’s operational model.

Depends on the Collaboration project needs, cannot be each Party unilateral decision.

15 Availability & Trans-parency of Project Balance sheet and P&L of each Party:

- to Overall PM:

- to STECO:

Voluntary

Mandatory for ABB ICA/ECA

Mandatory

Mandatory




ABB Ltd; 2010



16 Responsibility of Overall PM for each Party bottom line

Voluntary Mandatory, via Partys’ project managers

17 Responsibility of Party’s project man-ager for Party’s P&L and Balance sheet, execution schedule

Mandatory, indepen-dent

Mandatory, in coordination with Overall PM to avoid ad-verse impact on another Party

18 Optimization of the Party’s execution schedule, resource utilization

Independent by Parties in coordination with Overall PM to avoid adverse impact on another Party

5.2.1 Key Aspects of Collaboration projects The following complement the principles defined in the previous section and require up-front written agreement between the participating units (on each one of those), to enable successful execution of a Collaboration project.

5.2.1.1 KA: Division of Works (DOW) A clear DOW is the single most important pre-requisite to successful execution of any project with multiple project participants.

Due to the typically broad interface between partners in Collaboration projects, the DOW has an even higher importance. Unclear areas of responsibility tend to block decision making, and potentially cause lengthy arguments, both leading to delays in execution and associated risks.

Therefore utmost care shall be taken to ensure a comprehensive and detailed DOW is defined prior to Contract Award. Such DOW shall include responsibility for packages as per ABB WBS for base and detailed engineering, procurement, logistics, PM, Site Services, and installation and commissioning.

Each party shall then take full responsibility for the execution of its own portion of the DOW, in the mutually agreed time and sequence, and shall manage any associated risks (even if shared), under the leadership of the Overall PM and in line with the overall project execution schedule.

In case DOW generates conflicts, it is of utmost importance that the parties are able to resolve unclarities quickly – including agreement on potential cost implications. Rules to resolve a.m. conflits shall be agreed upfront by the parties, whenever possi-ble. If the teams aren’t able to resolve such differences within reasonable time, the decision shall be escalated to the STECO to get closure quickly.




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5.2.1.2 KA: Transparency across units Fast and unhindered access to key project data is a pre-requisite for successful execu-tion of any project. In Collaboration projects, transparency is also a key to building and maintaining mutual trust between the parties.

Therefore the required information that shall be accessible to the joint project team and the Overall PM, and the infrastructure to support this in an expedient manner shall be defined and documented.

Such information includes Purchase Orders, Time sheets, Project Cost reports incl. P&L and cash flow, Project time schedules, Resource schedules of each party and other documents as agreed by Parties.

Overall PM is accountable for the consolidated Project cost report.

5.2.1.3 KA: Project Organization As the project team is representing multiple units with individual targets, management cultures, and working habits, the forming of a strong project team, with individuals intent on delivering the best result for ABB is a key for successful execution of Col-laboration projects.

The project organization shall be finalized and documented prior to Contract Award: Both parties shall agree on the individuals taking key roles in the project team.

The roles and responsibilities of key project staff members shall be documented and signed-off. Such key functions include: Overall PM, if required each partie’s local PM, Site Manager etc.

The Overall PM is specifically critical to the success of Collaboration projects and shall be given the mandate and resources to act and speak for the project and not for one unit only. The Project Manager from Lead Unit (Lead PM) has ultimate authori-ty on Contract Execution

A detailed RACI chart shall be issued to all participating units as part of Project Management Plan.

The Lead PM has the authority to appoint the following project roles to coordi-nate with different units on defining an integrated technical solution to the cus-tomer as per the contract:

o Lead Project Engineering Manager

o Lead Commissioning Manager

o Lead Site Manager

As per ABB PM Model, all involved Project Managers must be enabled to act and decide on behalf of their organizations without requiring constant involvement of their line management.

The overall PM must be a permanent ABB employee and can be selected out of any of the ABB units, parties to the contract, provided she/he fulfills ABB PM Certifica-tion requirements relevant to the project size and complexity.




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5.2.1.4 KA: Project Reporting and Reviews A project STECO shall be formed consisting of the Heads of the respective units, and representatives of the BU/SG in order to make sure the project is executed in the best interest of all involved parties, to monitor the progress of the execution and project financial performance, and take measures if last prove unsatisfactory. The STECO shall be proposed by the involved LBUs and approved by SG immediately after the Project Award.

The STECO shall also serve the fast resolution of escalated decisions, and shall sup-port the project team in ensuring the timely availability of resources.

The responsibility to run the project and for the resulting bottom line remains with Overall PM and the participating units. Required decisions shall be taken by the project team or the management of the participating units in mutual agreement and without STECO involvement, as long as Risk review provision are respected and project risk profile is not negatively affected.

5.2.1.5 KA: Organizational Development In case one of the participating units is required to develop the entire organization or specific functions in the organization, in order to perform as required within the Col-laboration project and beyond, a Development project shall be set-up by the Man-agement of the affected unit together with partner unit. It shall be done latest in the tender phase of a potential Collaboration Project. Such a Development project shall identify the areas in need for development, define development targets and action plans and shall follow-up on the execution of the plan. It will be approved and moni-tored by BU/SG, to make sure that it is in line with BU strategy.

N.B. The personnel temporarily hired for the Collaboration project execution is not a subject of Development project.

The project team executing a Collaboration Project under such circumstances will need to be aware of the development progress of the organization and shall support the development to the defined extent, but should not be required to do the build-up of an organization in parallel to executing a complex project. Organizational devel-opment remains the unit’s management task.

The STECO monitoring the Collaboration project shall also monitor the organiza-tional development of the respective unit, and in case the targets aren’t met shall agree on supporting measures allowing the Collaboration project to execute in accor-dance to the contractual obligations, and ABB’s targets.




ABB Ltd; 2010

5.3 Career Path and Required Competency Levels

5.3.1 Project Management Career Path

I II III

Project Team Member

SalespersonGraduate/New hire

Project Manager Project DirectorAssociate Project Manager

Senior Project Manager

IV

The project team member, salesperson etc. may start the project management career at Associate PM level or PM level depending on the age, experience, skills, etc.,

5.3.2 Required Competency Levels – Project Manager Each competence is described on a scale 1-7. Each career step has required levels set as shown below.

Career Step 1 Career Step 2 Career Step 3 Career Step 4Associate PM PM Sr PM Project

DirectorProject Planning and Scheduling 2 3 5 5Customer Satisfaction Mgmt. in Projects 2 4 5 6Project Financial and Cost Management 2 4 5 5Legal & Contract Management for Projects 2 4 5 5Project Execution Tracking and Reporting 1 2 3 4Scope and Change Management for Projects 2 4 5 6Project Risk and Opportunity Management 2 4 5 6Procurement Management for Projects 2 4 4 4Note: The “required level“ should be reached latest after two years on the job.

Competency Levels 1-2 3-5 6-7

Basic Medium High




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5.4 Training and Certification Program

5.4.1 Overview of Project Management Training

Targeted Audience / PM Level

Competencies/Skills

Tools & Techniques

External Courses

Senior PMs and Project Directors

ABB Mentoring and

Coaching

ABB Advanced

Project Risk Management

Independent Peer

Reviews - Assessment

and Reporting

ESI Rapid Assessment and

Recovery of Troubled Projects

Project Managers

ABB Negotiations

ABB Change & Claim

Management

ABB 4Q for Project Managers

Project Leader-ship, Manage-

ment & Commn.

ABB Leadership

Competencies

ABB Project Risk

Management

Tools 2:

Planning & Execution Tracking

ProMIS

ESI Project Management Applications

Associate Project Managers

ABB Project Management Framework

ABB Health & Safety

Tools 1:

Business System / ERP

ESI Project Planning,

Analysis and Control

5.4.2 Project Management Certification Requirements

Certification Level

No. of years of PM

Experience

No. of Projects with Project Complexity

PM Functional Competency Assessment

Project Director

10 2 projects; > 650 project com-plexity points per project

Mandatory

Senior Project Manager


Mandatory

Project Manager


Recommended

Associate PM 1 2 projects; > 100 project com-plexity points per project

Optional




ABB Ltd; 2010

5.4.3 Project Management Re-Certification Requirements Recertification is needed in following cases:

The candidate wants to upgrade to next level during or expiry of 3 years.

The candidate wants to extend the certificate for another period of 3 years at the same level after the expiry of the certification period.

5.4.3.1 Upgrading to next certification level The candidate needs to complete the required courses relevant for the next certifica-tion level. These requirements are mentioned in the Certification Requirements.

Undergo the full Functional Competency Assessment (FCA) for Senior PM and above levels.

Ensure all development actions in Performance & Development Appraisal (PDA) closed.

5.4.3.2 Extending the certificate by another 3 years at the same level * Undergo mini Functional Competency Assessment as part of PDA (PDA – plus) for PM and above levels.

Ensure all development actions in Performance & Development Appraisal (PDA) closed.

* For Sr PMs and ABB Certified Project Directors, recertification is not required if the PM has moved to other functions. The certificate will stay valid during this time.

5.4.4 Functional Competency Assessment for Project Managers Functional Competency Assessments are:

Mandatory for PMs applying for Senior PM or Project Director Certification.

Recommended for already Certified PMs applying for Recertification.

The competency assessment process has three parts:

1. The first part of the process is a self-assessment by the candidate.

2. The second part is a 90 minute PM functional competency assessment interview which will be conducted by Local Division Assessors.

3. The third part focuses on training and development. The candidate will be invited for a feedback interview to receive a Personal Competence Development Plan. This Plan includes feedback on candidate’s PM functional competency assessment results and any necessary development actions to close gaps and enhance compe-tencies to achieve the targeted level. The actions to close any identified gaps will be agreed upon by candidate and Local Division Assessors.

Gaps are then closed through targeted activities such as Mentoring, Coaching, and Training etc.




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5.5 Assessment and Certification of Execution Centers/LBUs

5.5.1 Assessment of Project Management Maturity

The assessment of project management maturity determines the degree to which a Local Division or Local Business Unit (LBU) practices the project management ex-cellence.

ABB’s assessment of project management maturity will be based on global standards such as Organizational Project Management Maturity Model (OPM3®) from Project Management Institute USA, and our ABB's business needs. These assessments are flexible to assess maturity based on best practices implemented in

Organizational Enablers or

Process Improvement Stages (Standardize, Measure, Control, continuously Improve)

A typical PMI’s OPM3® improvement cycle will have following four steps:

Step One: Prepare for Assessment (Knowledge)

Step Two: Perform High-Level Assessment

Perform Comprehensive Assessment

Step Three: Plan for Improvement

Step Four: Implement Improvements




ABB Ltd; 2010

6 Project Management Tools

6.1 Overview This tool landscape provides us the basis for further developing our work in execut-ing projects. It supports project teams during the project with an aim to meet project success criteria outlined in this document.

6.2 ABB Collaboration Program The ABB Collaboration Program will make an extensive set of online collaboration tools and services which aim to increase personal and business productivity.

6.3 Document Management System (Documentum) Enterprise Content Management (ECM) is the strategies, methods and tools used to capture, manage, store, preserve, and deliver content and documents related to Project or other organizational processes.

The primary mission of ECM service is to:

Facilitate Global Collaboration in projects and between engineering centres

Ensure Security and Compliance

Reduce Infrastructure Footprint

6.4 ProSales ABB ProSales is a business initiative to facilitate effective project sales collaboration across ABB from lead identification to project award.

6.5 Risk Review The Risk Review application and process is designed to support and minimize the number of risk review meetings while ensuring consistency and compliance with GD/LC-24.

ERP System

ProSales Risk Review dB

Document Management System (Documentum)

SharePoint 2010 Collaboration

ProMIS

Lessons Learned Knowledge Base

ServIS

Project Planning and Execution Tracking




ABB Ltd; 2010

6.6 ProMIS Web ProMIS is a Group tool that is used as a framework for holding Project Execu-tion Risk Review meetings.

6.7 ServIS ServIS is a common global tool to track and help manage ABB installed base of products and systems.




ABB Ltd; 2010

7 Project Management Communities

7.1 Overview Region/Local Project Management Communities are established to support the work of ABB PM Council.

7.2 Project Management Council Collectively;

decide which improvement actions should be prioritized for implementation group-wide and which should be promoted as best practices for optional Divi-sion/Local adoption

approve and implement an “ABB Project Management Framework” to for-malize agreed Rules & Guidelines for Project Management in ABB

Individually;

members take responsibility for ensuring their respective Division/ Country remain aligned and positively engaged

represent the PM’s of their home country by acting as Key Country PM Champions

7.3 PM Champions and Project Managers PM Champions & Project Managers

Actively spread best practices and lessons learned in project management across ABB

Provide mutual support and problem solving on critical project challenges

Support independent phase/project reviews within and across Units & Coun-tries

Support the PM Council by providing constructive feedback from a practi-tioners viewpoint

Prepare and propose content for the “ABB Project Management Framework” for PM Council approval

Project Management Council

Local PM Champions

Project Managers




ABB Ltd; 2010

7.4 PM Council & Network – Links to Division & Country




ABB Ltd; 2010

8 Glossary

ABB 4Q

ABB's 4Q Method is our common approach to making improve-ments in our business. The name "4Q" comes from the four Qua-drants of the reporting template. As improvement teams step through each quadrant, they will progressively Measure, Analyze, Improve, and then Control the cause of their problems. Using simple quality tools and a four step process, teams all across ABB can make significant improvements in our business.

Activity An element of work performed during the course of a project. An activity normally has an expected duration an expected cost, and expected resource requirements.

Activity Description (AD).

A short phrase or label used in a project network diagram. The activity description normally describes the scope of work of the activity.

Activity Duration Estimating.

Estimating the number of work periods which will be needed to complete individual activities.

AR&G Accountancy Rules & Guidelines

Backward Pass

The calculation of late finish dates and late start dates for the uncompleted portions of all network activities. Determined by working backwards through the network logic from the project’s end date. The end date may be calculated in a forward pass or set by the customer or sponsor.

Bar Chart

A graphic display of schedule related information. In the typical bar chart, activities or other project elements are listed down the left side of the chart, dates are shown across the top, and activity durations are shown as date placed horizontal bars. Also called a Gantt chart

Baseline

The original plan (for a project, a work package, or an activity), plus or minus approved changes. Usually used with a modifier (e.g. cost baseline, schedule baseline, performance measurement baseline).

Change A deviation from an AGREED on set of specification, definitions, functionalities, or plans. (Definitions not agreed to are still under definition development and do NOT constitute a change)

Change Control, Board (CCB)

A formally constituted group of stakeholders responsible for ap-proving or rejecting changes to the project baselines.

Chart of Accounts

Any numbering system used to monitor project costs by category (e.g., labour, supplies, materials). The project chart of accounts is usually based upon the corporate chart of accounts of the primary performing organization




ABB Ltd; 2010

Code of Accounts Any numbering system used to uniquely identify each element of the work breakdown structure..

Communications Plan-ning

Determining the information and communications needs of the project stakeholders.

Contingency Planning

The development of a management plan that identifies alternative strategies to be used to ensure project success if specified risk events occur.

Contingency Reserve

A separately planned quantity used to allow for future situations which may be planned for only in part (sometimes called ‘know - unknowns”). For example, rework is certain; the amount of re-work is not. Contingency reserves may involve cost schedule, or both. Contingency reserves are intended to reduce the impact of missing cost or schedule objectives. Contingency reserves are normally included in the project’s cost and schedule baselines.

Contract

A contract is a mutually binding agreement which obligates the seller to provide the specified product and obligates the buyer to pay for it.

Contracts generally fall into one of three broad categories:

1. Fixed price or lump sum contracts 2. Cost reimbursable contracts 3. Unit price contracts

Lump Sum Contract is where the contractor agrees to perform all the services as specified in the contractor for a fixed amount

Unit Rate Contract delivers a specific unit of work for a fixed price. It is typically in combination with lump sum contracts be-cause of change in scope of work during project execution

Reimbursable Contracts are time plus material cost plus a certain overhead and margin rate.

Risk/Reward Scheme are usually incentive schemes to accelerate and/or ensure contractors performance

Escalation Clause should be included where we have inflation and currency volatility

Control The process of comparing actual performance with planned per-formance, analyzing variances, evaluating possible alternatives, and taking appropriate corrective action as needed.

Corrective Action Changes made to bring expected future performance of the project into line with the plan.

Customer Complaint & Resolution Process (CCRP)

CCRP is the Group selected process and supporting tool to man-age the resolution of customer complaints. The capture and man-agement of customer dissatisfaction is key to customer relation-ship building and improvement our products, service and processes.




ABB Ltd; 2010

Cost of Poor Quality (COPQ)

Cost of Poor Quality (COPQ) is a systematic way of quantifying the financial impact of wastes and inefficiencies in a business;

Creates a sense of urgency with Management, all managers un-derstand finances;

Focuses organization on where greatest opportunities for improvement are;

Focuses on eliminating root causes of wastes (costs) in the business.

Cost of Quality The costs incurred to ensure quality. The cost of quality includes quality planning, quality control, quality assurance, and rework.

Crashing Taking action to decrease the total project duration after analyz-ing a number of alternatives to determine how to get the maxi-mum duration compression for the least cost.

Critical Activity Any activity on a critical path.

Critical Path

In a project network diagram, the series of activities which de-termines the earliest completion of the project (or has the greatest duration.)

The critical path will generally change from time to time as activi-ties are completed ahead of or behind schedule.

Although normally calculated for the entire project, the critical path can also be determined for a milestone or subproject.

The critical path is usually defined as those activities with float less than or equal to a specified value, often zero.

Critical Path Method (CPM)

A network analysis technique used to predict project duration by analyzing which sequence of activities or path has the least amount of scheduling flexibility (the least amount of float).

Deliverable.

Any measurable, tangible, verifiable outcome, result, or item that must be produced to complete a project or part of a project. Of-ten used more narrowly in reference, to an external deliverable, which is a deliverable that) is subject to approval by the project sponsor or customer.

Early Finish Date (EF)

In the critical path method, the earliest possible point in time on which the uncompleted portions of an activity (or the project) can finish based on the network logic and any schedule constraints. Early finish dates can, change as the project progresses and changes are made to the project plan.

Early Start Date (ES)

In the critical path method, the earliest possible point in time on which the uncompleted portions of an activity (or the project) can start, based on the network logic and any schedule constraints. Early start dates can change as the project progresses and changes are made to the project plan.




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End User The organization who will be the final acceptor and user of the project deliverables

Estimate

An assessment of the likely quantitative result. Usually applied to project costs and durations and should always include some indi-cation of accuracy (e.g., +x percent). Usually used with a modifi-er (e.g., preliminary, conceptual, feasibility). Some application areas have specific modifiers that imply particular accuracy ranges. (e.g., budget estimate).

Exception Report Document that includes only major variations from plan.

Expected Monetary Value (EMV)

The product of an event’s probability of occurrence and the gain or loss that will result. For example, if there is a 50 percent prob-ability that it will rain, and rain will result in a $100 loss, the ex-pected monetary value of the rain event is $50 (0.5 x $100).

FAT Factory Acceptance Test

FAC Final Acceptance Certificate

Fast Tracking Compressing the project schedule by overlapping activities that would normally be done in sequence, such as design and con-struction. Sometimes confused with concurrent engineering.

Feasibility Study Preliminary Analysis of a problem followed by an impact analysis and a proposed solution set.

Float

The amount of time that an activity may be delayed from its early start without delaying the project finish date. Float is a mathemat-ical calculation and can change as the project progresses and changes are made to the project plan.

FOREX Foreign Exchange

Forward Pass The calculation of the early start and early finish dates for the uncompleted portions of all network activities. See also network analysis and backward pass.

FCM Full Cost Model. ABB’s standard calculation model

Functional Manager A manager responsible for activities in a specialized department or function (e.g., engineering, manufacturing, ).

Functional Organization

An organization structure in which staff are grouped hierarchical-ly by specialty (e.g., . production, marketing, engineering, and accounting at the top level; with engineering, further divided into mechanical, electrical, and others).

Hedging A type of insurance taken to mitigate Foreign Exchange risks.

Late Finish Date (LF) In the critical path method, the latest possible point in time that an activity may be completed without delaying a specified miles-tone (usually the project finish date).

Late Start Date (LS) In the critical path method, the latest possible point in time that an activity may begin without delaying a specified milestone.




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Matrix Organization Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project.

Milestone A significant event in the project, of zero duration.

Milestone Schedule A summary level schedule with ‘the major milestones.

Mitigation Taking steps to lessen risk by lowering the probability of a risk event’s occurrence or reducing its effect should it occur.

Net Promoter Score. (NPS)

Net Promoter Score is both a loyalty metric and a discipline for using customer feedback to aid profitable growth in ABB.

OHS Occupational, Health & Safety

OTD On Time Delivery.

PAC Partial Acceptance Certificate

PDA Performance Development Appraisal

Peer Review Review of a project or phase of a project, or a deliverable by in-dividuals with equivalent knowledge and background who are not currently members of the reviewed element.

Performance Reporting Collecting and disseminating information about project perfor-mance to help ensure project progress.

Project A temporary endeavor undertaken to create a unique product, service, or result.

Project Charter

A document issued by PM Responsible and approved by the Project Sponsor or the Chairperson of the Project Review Com-mittee that formally authorizes the existence of the project and provides the Project Manager (PM) with the necessary authority to apply organization resources for the successful completion of the project. Can have following elements at a minimum:

Executive Summary High Level Goals and Objectives for the Project Project Manager and other key project roles Project Ground Rules Project Key Milestones

Project Phase A collection of logically related project activities, usually culmi-nating in the completion of a major deliverable.

Project Plan

(Also called as Project Management Plan or Project Execution Plan)

A formal, approved document that defines how the project is executed, monitored, controlled and closed. The primary uses of the project plan are to document planning assumptions- and deci-sions, to facilitate communication, among stakeholders, and to document approved scope, cost, and schedule baselines. It may be a summary or detailed, and may be composed of following subsidiary planning documents: Scope including approach to change/claim management Project schedule




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Project Organization, Roles and Responsibilities Project Finance and Cost including Revenue Recognition,

Full Cost Model (FCM), Project cash-flow, bonds and guar-antees, FOREX exposure and mitigation like hedging, taxes, duties and insurance.

Consortium (if applicable) Permanent Establishment (if applicable) Statutory Approvals including Permits and Licenses applica-

ble for the project. Quality Heath, Safety & Environment (HSE) Communication including stakeholder management, project

reviews & reports Risk and opportunity management including response. Procurement including logistics & transportation Site works and Project closure.

Project Review Regular, periodic monitoring of the project activities and tasks.

PRC Project Review Committee.

Project Schedule The planned dates for performing activities and the planned dates for meeting milestones.

Reserve

A provision in the project plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, con-tingency reserve) to provide further detail on what types of risk are meant to be mitigated. The specific meaning of the modified term varies by application area and ABB Financial standards.

Resource People, skills, equipment, material, time, money tools etc. re-quired to implement a project.

Resource Leveling Any form of network analysis in which scheduling decisions (start & finish dates) are driven by resource concerns.

Retainage A portion of a contract payment that is held until contract com-pletion in order to ensure full performance of the contract terms.

Revenue Billed expenses, submitted to the client.

Safety Observation Tour (SOT)

ABB's health and safety mission is to stop hurting people, and an integral part of this is embedding a safe culture. One initiative which aims to highlight safe and unsafe practices is the safety observation tour.

S-Curve

Graphic display of cumulative costs, labor hours, or other quanti-ties, plotted against time. The name derives from the S like shape of the curve (flatter at the beginning and end, steeper in the mid-dle) produced on a project that starts slowly, accelerates, and then tails off.

SAT Site Acceptance Test




ABB Ltd; 2010

Stakeholder

Project Stakeholders are individuals or organizations (Customer, Consortium Partners, ABB companies, Suppliers, Contractors, Consultants and Government Agencies etc.,) that are actively involved in the project, or whose interests, stakes etc., are af-fected by the execution or completion of the project. The stakeholders can exert influence over the success of the project and its deliverables either positively or negatively. The Project Manager and the project team have to determine and address the needs, concerns, and expectations of the stakeholders through the project life-cycle. A good stakeholder engagement is the key to success of the project.

Standards A recognized level of performance or achievement, as compari-son for the purpose of measurement of deviation.

Statement of Work (SOW)

A narrative description of products or services to be supplied under contract.

Status Meeting Regular, periodic review of all the elements of a project.

Status Report Formal report on the input, issues and actions resulting from the status meeting.

STECO or SteCo Steering Committee.

Work Around A response to a negative risk event. Distinguished from contin-gency plan in that a work around is not planned in advance of the occurrence of the risk event.

Work Breakdown Structure (WBS)

A deliverable oriented grouping of project elements which orga-nizes and defines the total scope of the project. Each descending level represents an increasingly detailed definition of a project component. Project components may be products or services.

Work Package A deliverable at the lowest level of the work breakdown struc-ture. A work package may be divided into activities.




ABB Ltd; 2010

9 References

S.No Category Title Reference Number

1 Group Directive

GDLC 24 Project Risk Evaluation and Order Approval

7ABA101069

2 GDHR 01 Human Resources 7ABA101014

3 GD QO 01 Quality 7ABA102116

4 Group Guidelines

GG/LC – 007 Site & logistics risk evaluation

5 GG/LC – 012 Civil Works

6 GG/LC-36 Resources and capabili-ties

7 GG/LC-37 Project Manager

8 GG/LC-39 Scope & division of work

9 GG/LC-050 Project planning, sche-duling and resources

10 GG/LC-051 Engineering risks

11 GG/LC-052 Claim Management

12 GG/LC-053 Site Management

13 GG/LC-054 Project close-out, punch list

14 GG/LC-055 Project Reviews

15

16

17

18

19 Project Management Institute (PMI) USA

A Guide to the Project Management Body of Knowledge, Fourth Edition

ANSI/PMI 99-001-2008

20 Organization Project Management Maturity Model , Second Edition

ANSI/PMI 08-004-2008




ABB Ltd; 2010

10 Approvals

Revisions Rev. ind.

Page (P) Chapt. (C)

Description Date Dept./Init.

Draft - A

All All All

Initial Final draft Released for Implementation

2010-06-23, GF-QO-PM/Sai Kanuparthi 2011-01-04 PM Council 2011-01-31 GF QO, PM Council