PROCESS SYSTEMS ENGINEERING

FABRICATION AND ERECTION SPECIFICATION 600.100

Construction Management Guidelines and Revision 0
June 1996
Procedures for International Projects Page 1 of 10

RESPONSIBLE GROUP: Construction Engineering

Table of Contents

Section Title Page

1. Purpose 2
2. Scope 2
3. Related Documents 2
4. Construction Execution 2
5. Safety 3
6. Bidding Procedures 4
7. Contractor and Subcontractor Management 5
8. Schedule Control 5
9. Weekly Meetings 6
10. Field Reporting 6
11. Quality Assurance/Quality Control 7
12. Construction Change Orders (CCO) 7
13. Backcharges 7
14. Material Handling and Receiving 7
15. Local Approvals and Inspections 8
16. Design Constructibility Review 8
17. Supplier Inspections 8
18. Site Security 9
19. Imports and Transportation 9
20. Translation 9
21. Incentives 9
22. Submittals Required with CM Bid 9
23. Responsibility Chart 10
24. Final Acceptance of the CM's Work 10

Authorization for this document is on file in the GEG Engineering Standards Department.
All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER Air Products and Chemicals, Inc. 1996
 600.100, Rev. 0, Page 2 of 10

1. PURPOSE

1.1. This fabrication and erection specification defines guidelines and procedures for Air Products
projects to be constructed using an integrated construction management (ICM) team, in
conjunction with Air Products representatives.

2. SCOPE

2.1 This specification applies to projects, when Air Products has construction management
responsibility, that are to be managed by one or more Air Products site representatives and a
local Construction Management firm (CM).

2.2 Air Products' and CM responsibilities are further defined in the contract specifications.

3. RELATED DOCUMENTS

3.1 Air Products Engineering Documents

600.001 General Specifications for a Contract

600.730 Safety and Construction Procedures for International Projects
T-9 Weekly Progress Meetings
T-20 How to Prepare a Construction Package
T-22 Commercial Documentation for Construction Bid Packages - Related Documents
T-23 Checklist for Successful Bidder

4. CONSTRUCTION EXECUTION

4.1. Air Products plans to execute the construction phase of this project using an ICM team approach,
utilizing specialized contractors and subcontractors contracted to execute the specified work.

4.2 The Air Products integrated construction management approach emphasizes the following:

• Qualified and experienced site based team.

• Close involvement with the Air Products project team members to provide front-end
planning and constructibility reviews.

• Development of logical sequenced construction bid packages, both from a design and
construction standpoint.

• Determination of effective scheduling methods and development of effective monitoring

controls to achieve milestones. Air Products' existing scheduling methods will be the
core base of these schedules.

• Development of project and construction procedures and definition of the team's and
individual's areas of responsibility.

• Safety is the number one priority in all aspects of the project.

• Organization, coordination, supervision, and completion of the work efficiently and cost
effectively while maintaining schedule and safety priorities.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
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 600.100, Rev. 0, Page 3 of 10

4.3 The on-site organization shall operate as an integral team comprised of various members from
Air Products and the CM. The project team philosophy emphasizes the importance of a
contractor and owner relationship. The construction team shall maintain regular contact with the
other members of the project team to ensure the proper coordination of the construction work,
commissioning, and eventual start-up of the facility.

4.4 The CM has a key role in determining project site specifics and how this plan will be
implemented.

4.5 Areas of responsibility for Air Products and the CM are defined in Section 23 of this specification.

4.6 The CM shall give attention to the execution of this contract and shall provide full-time
supervision throughout the entire contract duration. The CM's supervision shall be empowered,
with full authority, to act on all matters pertaining to the CM's work.

4.7 The CM shall employ responsible and competent personnel who are qualified by experience and
training to capably supervise all phases of construction and erection. When applicable, this
experience must include:

• Administrative organization and execution of all contract requirements.

• Commitment to safety procedures and their enforcement.
• Job planning, forecasting, and scheduling.
• Utilization of effective manpower, equipment, and material control techniques.
• Construction change estimating ability and execution authority.
• Ability to manage and interface with other contractors and their subcontractors.

4.8 During the execution of this project, Air Products will be represented by one or more on-site
construction representatives. The Air Products representative(s) will have the ultimate
responsibility for the execution of this project. The Air Products representative(s) will work
integrally with the CM.

4.8.1 All material and workmanship are subject to the inspection and approval of the Air Products
representative at any location where fabrication, installation, or erection is being performed. This
individual will represent Air Products in all matters relating to the scheduling and execution of the
work or the interpretation of contract documents. The Air Products representative is empowered,
with full authority, to act on all matters related to the work being performed.

5. SAFETY

5.1 Safety is always Air Products' highest priority. Air Products has achieved a safety record that is
world class, and these principles shall be applied to every phase of the construction and
operation activities. To effectively manage the safety performance of the contractors and their
subcontractors, Air Products and the CM require all personnel to actively:

• Perform constructibility reviews of the various local phases of execution.

• Proactively engage in the safe planning of the project activities.
• Develop proper procedures for the execution, as necessary.
• Actively participate in the daily safety management of the site activities.
• Continually measure and improve performance.

5.2 Air Products Specification 600.730 shall be used as the basis for safety requirements at the site.
This will, however, be superseded should there be a local, state, or federal government
regulation that is more stringent. Air Products will assume the primary role of coordinating the
respective groups and assisting in establishing safety expectations.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER
 600.100, Rev. 0, Page 4 of 10

5.3 Safety audits and meetings are an integral part of a successful safety program. Safety meetings
and site audits shall be performed on a regular basis throughout the construction and start-up
phases. Air Products, with the assistance of the CM, will take key roles implementation of these
audits, solicitation of support and participation from contractors and subcontractors on the job
site.

6. BIDDING PROCEDURES

6.1 Construction Management Contract

6.1.1 All formal correspondence and questions concerning commercial documents, prior to the award
of the contract, shall be directed to:

Purchasing Department - Project and Logistics Supply

Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
USA

6.1.2 All technical questions, prior to the award of the contract, shall be directed to Project Engineering
at the same address as listed in paragraph 6.1.1.

6.1.3 All correspondence shall include the Air Products inquiry number, project name and number, and
the related subject matter, as applicable.

6.2 After Site Mobilization

6.2.1 All formal correspondence and technical questions shall be directed to the Air Products
representative at the job site, unless otherwise determined.

6.2.2 All correspondence shall include the Air Products purchase order/contract number, project name
and number, and the related subject matter, as applicable.

6.3 Execution of Site Construction Contracts

6.3.1 With the assistance and approval of Air Products, the CM has a key role of:

• Defining the construction bid package scope.

• Segregating the packages for logical sequential execution.
• Preparing the bidders list.
• Preparing the packages for release.
• Conducting bid meetings at the site.
• Developing bid tabulation of contractors for evaluation by the team.

6.3.2 The bidders list shall be prepared using the contractors' safety program and performance as one
of the qualifying factors. These factors shall include evidence of a safety program and continual
improvement over a determined period of time.

6.3.3 A bid breakdown shall be created to effectively evaluate the bids. This breakdown lists all of the
major and minor areas that are to be constructed, including information for estimated man-hours
per area, construction equipment and materials needed to perform the related work activities.
Air Products can provide assistance. More information can be found in the T-20, T-22, and T-23
procedures. The information in these three procedures can be used as a guideline unless local,
state, or federal regulations take precedence.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER
 600.100, Rev. 0, Page 5 of 10

7. CONTRACTOR AND SUBCONTRACTOR MANAGEMENT

7.1 The primary goal of successfully managing contractors includes, but is not limited to, the
following:

• Ensure the work is performed safely.

• Ensure subcontractors understand the scope of work and their bid is realistic.
• Ensure all work installed is of the highest quality.
• Assign appropriate number of supervisors to coordinate each contractor's work.
• Meet formally once per week, to review site safety, total scope, and clear up any outstanding
issues. These meetings shall be documented and minutes distributed to team members.
• Ensure cooperation between all contractors on the site.
• Complete work areas or systems within scheduled milestones and within budget.
• Minimize claims and the amount of field changes.

7.2 The responsibilities of the entire ICM team include, but are not limited to, ensuring that all
contractors maintain:

• Appropriate business standards.

• Procedures.
• Appropriate lines of communication and authority.
• Communication and controls.
• Contractor compliance monitoring as stipulated in the contract.
• Safety.
• Quality control.
• Documentation.
• Submission of drawings and data reporting.
• Schedule development and control assistance.
• Certified invoices for payment.
• Written changes to the contract.
• Timely negotiations and settlement of claims.
• Obtaining necessary releases.
• Final acceptance of contractors work.

8. SCHEDULE CONTROL

8.1 Air Products, with the assistance of the CM, will generate the critical path schedule for use
throughout the construction phase.

8.2 Air Products will establish the major milestone dates for the project. These milestone dates can
be presented in a variety of formats but will, as a minimum, include the following information:

• Major equipment delivery dates

• Valve/instrument on-site dates (50%, 80%, 100%)
• Civil and foundation work
• Major equipment erection dates
• Customer supplied services; i.e. electrical power, process tie-ins, IAS, steam,
• Mechanical completion dates, including insulation, pressure testing, painting, etc.
• Commissioning start dates for Machinery, Electrical, and Instrumentation
• Contractual completion dates
• Start-up date

The ICM team will use this information to develop an overall construction schedule that shows all
of the construction contracts to be administered. The information listed above shall be supplied
by the CM to the respective contractor(s) for estimating purposes. The resulting schedule will be

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER
 600.100, Rev. 0, Page 6 of 10

developed using the Air Products format and will be updated as determined necessary. The team
may elect to use another type of schedule method or program, however, this must be agreed
upon by all team members.

8.3 Each individual contract will have its own earned value construction schedule, using the
Air Products computerized format. Information provided on the successful contractor's bid
breakdown will be used to develop the initial construction schedule. The man-hours from the bid
breakdown, along with the sequencing information in the bar chart, will be used by Air Products
to develop and review the initial schedule. This schedule, when approved by the ICM team, shall
be signed by all parties and will constitute the contractual construction plan and/or schedule.

8.4 Contractors will be required to update these schedules and actual work progress will be
measured against the baseline schedule. The management team will intervene when schedule
slippage begins to develop or is anticipated. This intervention requires that recovery plans be
developed, implemented, and closely tracked by the ICM team. Work progress shall be
monitored by the ICM team through the use of daily inspections, daily interfaces with the
contractor supervisors, and/or by regularly documented weekly meetings. The standard agenda
shall include a review of the week's progress, a projection of the coming week's work and a two
to three week look ahead. Also included shall be identifying material restrictions, interferences,
and any other types of delays. This will allow timely correction of the problems. The ICM team
shall document the minutes of these meetings and distribute them to the team members.

9. WEEKLY MEETINGS

9.1. The ICM team will conduct weekly meetings with all contractor representatives. The CM shall
provide assistance to Air Products in the preparation and distribution of the minutes.

9.2 The purpose of these meetings is to exchange and document information with the contractors
on-site and shall address, as a minimum, the following issues:
• Site safety and performance
• Schedule performance and/or restrictions
• Quality of workmanship; scope and cost-related issues
• Material status
• Claim-related issues
Other issues might include: crane locations, excavations, major equipment erection, etc.

9.3 Further guidance can be found in the T-9 procedure.

10. FIELD REPORTING

10.1 The ICM team shall work closely with the contractors to gather relevant data and information for
daily and weekly reporting.

10.2 A daily report shall be obtained from each contractor for each contract being performed on the
site. These reports shall show, as a minimum, the total manpower on site, major equipment on
site, general description of which areas were worked on, problems/hold-ups, weather conditions,
and material shortages. These reports shall be filed by the ICM team as a permanent record.
The information in these reports shall be used by the ICM team to update the construction
schedule.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER
 600.100, Rev. 0, Page 7 of 10

11. QUALITY ASSURANCE/QUALITY CONTROL (QA/QC)

11.1 The ICM team shall implement a QA/QC program under the guidance of Air Products. These
records might include, but are not limited to, the following:

• Contract for certified testing laboratory and personnel who will be performing various testing
functions for the project.
• Management of testing laboratories for timing of tests in conjunction with various site
construction activities.
• Coordination of contractors for the transfer of various documents for testing performed.
• Maintenance and transfer of the quality records to the customer or Air Products.
• Visual inspections of critical piping systems and various machinery internals.
• Soil and subsurface investigation and testing.
• Concrete design mix, sampling, and compressive strength test.
• Piping radiography and other nondestructive testing.
• Pressure testing.
• Electrical test results.
• Oxygen cleanliness inspection logs.
• Machinery alignment and erection records.
• Welding procedures and welder qualifications.
• As-built drawing records from contractors. These include, as a minimum: underground
piping and electrical, P&ID, electrical schematics, and instrument loop diagrams.

12. CONSTRUCTION CHANGE ORDERS (CCO)

12.1 A Construction Change Order (CCO) is issued to perform an activity that is not included in the
original scope of work. A CCO can be issued to correct a design error or interference, supply
material, repair damaged equipment, etc. Any changes must be approved by the Air Products
representative(s) before the work is started. The CM shall implement, execute, and manage this
policy. In order for Air Products to reimburse the respective contractor, each change must be
adequately documented.

13. BACKCHARGES

13.1 Backcharges are claims by Air Products against a supplier, contracted by Air Products. They
are caused by defects, errors, omissions, damage during shipment, or not meeting Air Products
specifications. They apply only to materials or equipment furnished by Air Products.

13.2 The ICM team shall notify Air Products immediately of any deficiencies, as defined in paragraph
12.1 of this specification, in order for Air Products to respond with a corrective action plan and
initiate notification to the supplier. The ICM team and/or the respective contractor shall not start
any corrections without consent from the Air Products representative. Air Products will not be
liable if work is performed before permission is obtained.

13.3 The ICM team shall provide back-up documentation for costs, explanation of repairs, and any
required testing. This may be accomplished by photographs, time and material vouchers,
invoices, etc.

14. MATERIAL HANDLING AND RECEIVING

14.1 The CM shall provide adequate supervision, labor, equipment, storage space, and protective
cover for receiving and temporary storage of all materials supplied by Air Products whether on or
off site.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
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 600.100, Rev. 0, Page 8 of 10

14.2 The Air Products representative will provide the necessary information and documentation to
accurately determine the various material handling and material needs. These include, but are
not limited to:

• Shipping container/crate sizes and packing lists.

• Valve Summary.
• Instrument Summary.
• Equipment Summary, including weights and dimensions of the major equipment.

14.3 The CM shall provide a controlled environment storage area as required, for delicate items such
as: DCS cabinets, computer equipment, analyzers, electrical equipment, motor control centers,
etc. Dry storage space shall be provided for: instruments, valves, small fittings, control valves,
catalysts, desiccants, etc. Outside storage may be used for larger items such as: large valves,
containerized materials, etc. as long as these items are protected from the weather elements
with tarps or other means. If the CM has a question regarding the required level of protection for
any particular item, the CM shall consult with the Air Products representative.

14.4 The CM shall control access to these storage areas to prevent damage, theft, sabotage, etc.

14.5 The CM shall maintain material lists or status reports to indicate which materials or equipment
are presently on-site and in storage. The CM shall also control and document what has been
released to contractors on-site and shall control it to the point of installation. This typically
includes sign-off when material is released, to ensure accountability and prevent possible loss.

15. LOCAL APPROVALS AND INSPECTIONS

15.1 Air Products will obtain all necessary permits required for the project and to operate the facility.
Air Products will take the lead role in providing any necessary information. The CM shall provide
local expertise regarding contacts and procedures. The CM shall identify and manage all permits
required to execute the construction of the facility.

15.2 The CM shall take the lead role of coordinating all necessary local inspections with the local
authorities and the respective contractors.

16. DESIGN CONSTRUCTIBILITY REVIEW

16.1 The CM shall provide constructibility input on the Air Products design. The primary focus shall be
on local construction practices, techniques, and presentation styles.

16.2 Air Products will provide input on designs that are performed locally. The primary focus will be
adherence to design codes, plant reliability, plant efficiency, or anything else that might affect
the operation of the plant.

17. SUPPLIER INSPECTIONS

17.1 The CM shall provide appropriately qualified personnel to visit various regional fabrication
facilities to inspect and verify the proper fabrication procedures and compliance with the
specifications. These inspections shall take place as required, and specific inspections will be
determined on a project basis. These inspections might include: prefabricated piping,
prefabricated structural steel, vessels, skidded equipment, etc. and might or might not include
equipment supplied or contracted by Air Products.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
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 600.100, Rev. 0, Page 9 of 10

17.2 Upon return from the inspection, the CM shall distribute a Trip/Inspection Report to the project
team.

18. SITE SECURITY

18.1 The CM shall arrange for any required ingress and egress control of personnel, material and
equipment. Requirements will be determined on a project basis.

19. IMPORTS AND TRANSPORTATION

19.1 Air Products will provide some materials and equipment, as defined in the contract documents.
Air Products will make arrangements for exporting these items from the USA to the country
where the construction work is being performed.

19.2 Air Products will have primary responsibility for import clearance and package inspections. Some
projects might transfer these tasks to the CM; this will be detailed in the project-specific contract
documents.

19.3 The CM has the primary coordination and contracting responsibility for the transportation of the
materials and equipment from their respective point(s) of entry.

20. TRANSLATION

20.1 All correspondence and communication will be in English.

20.2 The CM has primary responsibility for the translation of documents, local correspondence, and
site verbal communication.

21. INCENTIVES

21.1 Air Products will determine the availability and focus of incentives to be used on the project.

21.2 Incentives will be focused on the CM home office and site personnel.

21.3 Any incentive plan will be designed by Air Products and agreed to by the CM. The primary focus
is to distribute the funds in an equitable manner, typically to encourage some or all of the
following:

• Safety performance
• Longevity of project service
• Quality of workmanship
• Cost and/or schedule goals

22. SUBMITTALS REQUIRED WITH CM BID

22.1 The following must be submitted with the CM bid:

• Labor rates shall be submitted with the proposal document.

• Bar chart construction schedule with proposed weekly manpower loading that coincides with
the Air Products milestone dates.
• CM safety procedures or program and CM safety record.
• Completed bid breakdown and proposal form.
• Completed insurance certificate.
• Resume(s) of proposed key personnel (submit multiple resume(s) when applicable).

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER
 600.100, Rev. 0, Page 10 of 10

• Organization chart of home office and proposed site personnel.

• Listing of supplied site equipment.
• Equipment storage/laydown requirements.
• Details of site set-up and office space for Air Products and CM.

23. RESPONSIBILITY CHART

Executing International Projects Primary = P

with a Construction Manager Secondary = S
Approval = A

Air Products CM
Subcontractor Management P S
Safety P S
Schedule Control P S
Material Handling/Receiving P
Supplier Inspection P as required
Backcharges P
CCOs P
Field Reports P
Weekly Meetings P S
Site Security P
QA/QC P
Design Constructibility Review P
Bid Packages A P
Local Approvals/Inspection P S
Import Clearance P S
Translation P
Transportation S P
Design Translation P

24. FINAL ACCEPTANCE OF THE CM'S WORK

24.1 Final acceptance of the CM's work will be based on the completion of all the subcontractor's work
as described in acceptance criteria outlined in the contract documents.

All information herein is the confidential property of Air Products and Chemicals, Inc., unless another source is shown.
This information is subject to return on demand and must not be disclosed or reproduced without prior written consent.
CONTROLLED COPIES OF THIS DOCUMENT ARE ON GREEN PAPER