1. Study of Adjustment Orders in Projects K-LEAD LEARNING EXPERIENCE
COHORT NO. – 2
TEAM MEMBERS
ABDULLA AL AWADHI (KOC)
SAUD RAKHEES (KNPC)
SULAIMAN AL ABDUL SALAM (PIC)
AMEENA RAJAB (KOC)

2. Study of Adjustment Orders in Projects
What is an Adjustment Order?
Typical definition of Adjustment Order
“Adjustment Order means, where required to be issued in accordance with the Contract, an order issued by the Superintendent adjusting the Contract Price and/or Scheduled Turnover Date and/or amending any of the Contractor’s obligations under the Contract”.
Adjustment Orders (AO) arise from Variations to any of the contract terms and conditions including scope, technical requirements and specifications. Variations can be proposed by:
Company
Contractor
As claims based on contract provisions
Adjustment Orders could be for contract price, schedule or both

3. Study of Adjustment Orders in Projects
High number of Adjustment Orders are undesirable
Cost
Schedule
Quality
Project dependencies
Success of any project depends on completing the project on time, within the budget and with required quality
Large number of AOs upset project budget and schedule
Affects other connected projects
May impact production targets

4. Study of Adjustment Orders in Projects
What causes Adjustment Orders?
Changes in Scope Of Work (SCOW)
Extension of Time (EOT)
Adjustment Orders
Others
In order to reduce number of AOs we have to get to the root causes
Others include: Changes to conditions of contract, Impact due to other Projects/Entities, late Shutdowns & from Health Safety and Environmental studies (HSE). etc.

5. Study of Adjustment Orders in Projects
Typical distribution of Adjustment Order causes
Main contributors to AOs
Change of scope
Change of scope [with cost + Extension of time]
Extension of time [without scope change, example: Tie in availability, shutdowns, client inputs]
Others [slit trenching findings, Hazard & Operability Studies (HAZOP) recommendations, etc.]

6. Study of Adjustment Orders in Projects
Are Adjustment Orders preventable?
AOs are preventable to a great extent though not totally eliminated.
Requires careful root cause analysis
Typical engineering root cause analysis methodology:
Analyze the visible causes --> find out latent causes --> arrive at the root causes
|--Immediate causes-|
|--Latent causes--|
|---Root causes---|

7. Study of Adjustment Orders in Projects
Immediate cause
Latent causes
Root causes
Additions /deletions / relocation of equipment / units
Lack of adherence to FEED scope and parameters by concerned stakeholders
Changes to input data
Change in equipment design/ material /specifications
Lack of involvement by concerned stakeholders during feasibility studies / FEED
Change of Scope
Route changes for pipelines and piping
Potential for pipeline reroutes not foreseen during FEED
Changes from the FEED at the interface points
Interface issues with facilities, other projects, & outside entities
Major equipment additions during detailed engineering, DCS expansions
FEED quality issues
Non availability / reliability of As-Built documentation
Quantities increase in re-measurement
Quality of HSE studies during FEED
Impacts from Hazop / SIL studies
Impact from Tie ins issues

8. Study of Adjustment Orders in Projects
Immediate cause
Latent causes
Root causes
Additions /deletions / relocation of equipment / units
Changes to input data
Interface management issues with all stakeholders
Change in equipment design/ material /specifications
Extension of Time
Contractor performance
Route changes for pipelines and piping
Changes from the FEED at the interface points
Operational reasons
(Shutdowns, etc.)
Major equipment additions during detailed engineering, DCS expansions
Quantities increase in re-measurement
Impacts from Hazop / SIL studies
Impact from Tie ins issues

9. Study of Adjustment Orders in Projects
Immediate cause
Latent causes
Root causes
Others
Impacts from Hazop / SIL studies
Quality of Design / Safety reviews during FEED
Lack /change of reservations for location, power, space. Etc.
Absence of systems and procedures
Unforeseen incidents (fire etc.)

10. Study of Adjustment Orders in Projects
Lessons Learned
Scope creep and specification changes need to be controlled. Preferential engineering requirements must be identified and eliminated
Project delays due to Interface issues are a repeated feature. Issues within stakeholders as well as third parties must be addressed.
Conditional scoping & grey areas in in the FEED are to be minimized
Contractor’s non agreements with estimates on various changes are to be handled effectively.
5. Availability and reliability of As-Built documentation is a serious over arching issue impacting projects and in turn operations and safety. System for maintaining of as built drawings / continuous updating in a centralized repository are needed

11. Study of Adjustment Orders in Projects
Recommendations
1. Encourage active & effective participation of all concerned stakeholders during Concept selection and FEED development phases. Ensure continuity of key personnel in project.
2 Establish a permanent Project Interface Coordination Committee (PICC) with external entities in order to have proactive and effective coordination. Ensure that each project has an ‘Interface Diagram’ that is approved by all concerned teams. A signed ‘Interface Agreement’ at the senior management level will be preferable for critical projects.
Interface management:
First option -- Avoid engineering and execution of projects within the Battery Limit of other entities.
Second option--> FEED within another battery limit to be engineered by the concerned entities. Any changes within their battery limits will be managed the concerned entities directly with the contractor.

12. Study of Adjustment Orders in Projects
Recommendations continued
4. Improve quality of FEED deliverables by enhancing effectiveness of ‘Third party’ review during FEED by utilizing in house experts who are not involved in project.
5. Create mechanism for proper As-Built documentation and continuous updating. A comprehensive Centralized Document Management System (CDMS) is recommended with suitable accessibility options by all stakeholders.
Outsourcing of the entire document updating work is the suggested model.

13. Thank you.