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MATERIALS APPRAISAL MANUAL

MANUAL

MATERIAL MANAGEMENT

PETRONAS TECHNICAL STANDARDS

PTS 30.451

1991

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PREFACE

PETRONAS Technical Standards (PTS) publications reflect the views, at the time of publication,of PETRONAS OPUs/Divisions.

They are based on the experience acquired during the involvement with the design, construction,operation and maintenance of processing units and facilities. Where appropriate they are basedon, or reference is made to, national and international standards and codes of practice.

The objective is to set the recommended standard for good technical practice to be applied byPETRONAS' OPUs in oil and gas production facilities, refineries, gas processing plants, chemicalplants, marketing facilities or any other such facility, and thereby to achieve maximum technicaland economic benefit from standardisation.

The information set forth in these publications is provided to users for their consideration anddecision to implement. This is of particular importance where PTS may not cover everyrequirement or diversity of condition at each locality. The system of PTS is expected to besufficiently flexible to allow individual operating units to adapt the information set forth in PTS totheir own environment and requirements.

When Contractors or Manufacturers/Suppliers use PTS they shall be solely responsible for thequality of work and the attainment of the required design and engineering standards. Inparticular, for those requirements not specifically covered, the Principal will expect them to followthose design and engineering practices which will achieve the same level of integrity as reflectedin the PTS. If in doubt, the Contractor or Manufacturer/Supplier shall, without detracting from hisown responsibility, consult the Principal or its technical advisor.

The right to use PTS rests with three categories of users :

1) PETRONAS and its affiliates.2) Other parties who are authorised to use PTS subject to appropriate contractual

arrangements.

3) Contractors/subcontractors and Manufacturers/Suppliers under a contract withusers referred to under 1) and 2) which requires that tenders for projects,materials supplied or - generally - work performed on behalf of the said userscomply with the relevant standards.

Subject to any particular terms and conditions as may be set forth in specific agreements withusers, PETRONAS disclaims any liability of whatsoever nature for any damage (including injuryor death) suffered by any company or person whomsoever as a result of or in connection with theuse, application or implementation of any PTS, combination of PTS or any part thereof. Thebenefit of this disclaimer shall inure in all respects to PETRONAS and/or any company affiliatedto PETRONAS that may issue PTS or require the use of PTS.

Without prejudice to any specific terms in respect of confidentiality under relevant contractual

arrangements, PTS shall not, without the prior written consent of PETRONAS, be disclosed byusers to any company or person whomsoever and the PTS shall be used exclusively for thepurpose they have been provided to the user. They shall be returned after use, including anycopies which shall only be made by users with the express prior written consent of PETRONAS.The copyright of PTS vests in PETRONAS. Users shall arrange for PTS to be held in safecustody and PETRONAS may at any time require information satisfactory to PETRONAS in orderto ascertain how users implement this requirement.

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TABLE OF CONTENTS

1.0 INTRODUCTION

1.1 SCOPE OF MANUAL

1.2 OBJECTIVE OF QUESTIONNAIRE

1.3 STRUCTURE OF QUESTIONNAIRE

1.4 CONDUCTING THE INTERVIEWS

1.5 REPORTING

2.0 MATERIALS APPRAISAL

2.1 PURPOSE

2.2 OBJECTIVE

2.3 INTERNAL AUDIT

2.4 APPRAISAL TEAM

2.5 FACILITIES

3.0 OUTLINE OF THE APPRAISAL

3.1 PRE-VISIT PREPARATION

3.2 DISCUSSION WITH SENIOR OPU MANAGEMENT

3.3 ORGANIZATING AND STAFFING

3.4 MANAGEMENT CONTROLS

3.5 INVENTORY MANAGEMENT

3.6 PROCUREMENT

3.7 ADMINISTRATION

3.8 OPERATIONS

3.9 OTHER

3.10 CLOSE-OUT/REPORTING

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4.0 APPRAISAL PREPARATION

4.1 BASIC INFORMATION COLLECTION

4.2 INFORMING EMPLOYEES

5.0 ORGANISATION AND STAFFING

5.1 GENERAL

5.2 STRUCTURE

5.3 RESPONSIBILITIES

5.4 MANAGEMENT CONTROLS AND YARDSTICKS

5.5 MANNING LEVELS

5.6 STAFF EXPERIENCE

5.7 TRAINING

5.8 SAFETY


6.1 GENERAL

6.2 STRUCTURE

6.3 STANDARDISATION AND CODING

6.4 INVENTORY CONTROL

6.5 SURPLUS AND SALVAGE

7.0 PROCUREMENT

7.1 GENERAL

7.2 STRUCTURE

7.3 PROCUREMENT COORDINATION

7.4 PROJECT PROCUREMENT

7.5 PURCHASING

7.6 AGREEMENTS

7.7 CONTROLS

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8.0 ADMINISTRATION

8.1 GENERAL

8.2 STRUCTURE

8.3 STOCK RECORDS AND ACCOUNTS

8.4 STOCK CHECKING

8.5 DATA PROCESSING SYSTEM

8.6 METHODS AND PROCEDURES

9.0 MATERIALS OPERATIONS

9.1 GENERAL

9.2 STRUCTURE

9.3 RECEIVING AND DESPATCH

9.4 WAREHOUSES

9.5 YARDS

9.6 SPECIAL STORAGE

9.7 MOVABLES

9.8 MATERIALS HANDLING

9.9 SALVAGE AND SCRAP

9.10 WASTE DISPOSAL

10.0 TRANSPORT

10.1 GENERAL

10.2 STRUCTURE

10.3 LAND TRANSPORT

10.4 WATER TRANSPORT

10.5 AIR TRANSPORT

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11.0 INTERFACE WITH USERS DEPARTMENTS

11.1 PERSONNEL

11.2 FINANCE

11.3 ENGINEERING

11.4 PROJECTS

11.5 MAINTENANCE

11.6 PETROLEUM ENGINEERING

11.7 DRILLING

11.8 OPERATIONS

11.9 SAFETY AND ENVIRONMENT

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1.0. INTRODUCTION

1.1 SCOPE OF MANUAL

The Materials Appraisal Manual provides the general information and describes ESU led MaterialsAppraisals of PETRONAS operating Units materials activities. The primary intention is to make clearthe scope of work and responsibilities for preparation, execution and follow-up of an ESU ledappraisal, for the information of management and participants. The questionnaire is primarily intendedas an aide memoir for the appraisal team members.

1.2 OBJECTIVE OF QUESTIONNAIRE

The objective of the Materials Appraisal Questionnaire is to provide a basis for the execution of thedescribed Materials Appraisals of PETRONAS OPUs materials activities. It aims to ensure thatappraisals are conducted effectively and in a structured manner.

Users of this Manual are reminded that, though the intention is to embrace every eventuality, existingand potential, no publication of this type can be complete. It should be edited and amended to suit thetype and size of the OPU and to ensure coverage of any special subjects raised by the OPU.

1.3 STRUCTURE OF QUESTIONNAIRE

The questionnaire does not only cover the basic materials activities such as

Inventory Management

Procurement

Coding and standardisation

Administration

Operations

but also covers the interfaces with related activities, organisation, staffing and training matters.

The questionnaire is divided into various chapters and has been construed in such a way thatindividual chapters can be allocated to specific team members.

It is useful to spend sufficient time in editing the questionnaire before starting the interviews. Theteam leader will need to endorse any such amendments.

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1.4 CONDUCTING THE INTERVIEWS

A top-down approach of the interviews has the risk of getting a distorted picture, i.e. information maybe obtained on how things should run, rather than how it is happening in actual practice. It istherefore recommended to conduct the interviews from the bottom up and check findings on thehigher levels.

A primary general question is how and where the Materials service could be improved (rather thanasking for complaints). The key element is to define how both parties (Materials and Users) cancontribute to improving the business.

Make the interviewed party do the talking and steer where necessary. Summarise the key points aftereach interview and ask whether points have been missed.

Ideally, the interviews are held in the direct working environment of the individuals, so that physicalexamples are at hand. In certain instances though, it may be required to divert to a quiet interviewroom. The important thing is to keep the interviewer at ease and in an atmosphere of mutual trust inorder to ensure a reliable flow of information.

Duration of interviews should generally be kept to approximately one hour. Interviews combined with

visits to e.g. yards or workshops can take longer. The programme should allow for sufficient time inbetween the scheduled interviews to allow for small overruns and for writing of initial findings for thedraft report. The programme should also have room for follow-up visits when required.

Interviews with senior staff in Materials and other departments are often of mutual interest to moremembers of the appraisal team. When tailoring the questionnaire, it should also be decided whichsessions will be carried out jointly.

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1.5 REPORTING

1.5.1 General

The report should present the findings and recommendations of the Materials Appraisal carriedout on request of OPU in MONTH YEAR of the materials activities of OPU. The Appraisal, beingled by ESU as a specific service including staff from ESU and OPUs.

The team carried out an Appraisal to determine whether a sound basis is in place for contributingto the OPUs objectives and profitability, by reviewing the quality, effectiveness and efficiency ofthe way in which the OPUs materials activities are performed.

The questions raised by the appraisal team were discussed with OPU Materials staff and Users

Departments staff during a X day visit of OPUs Operations.

Preliminary findings and conclusions were discussed with OPU specialist staff, to agree onfactual findings and the feasibility of recommendations.

The summary of the findings and recommendations were presented to OPU management onDATE.

Sensitive issues should always first be checked on sufficient high level, before going into print.

It will save time to have the section "Back ground" written by a competent staff of the Materialsand Services department.

The information in this section could be :

- Company structure

- main activities/locations

- Size of operations (production, rig count, refinery throughput, etc.)

- Scope and size of Materials and Services department (incl. staff, stock, procurement figures)

- Present and future activities (incl. trends, major projects).

Each chapter (5 to10)starts with a section "General", followed by a section on "Structure". it isthe intention to have the objective, policies and related aspects covered under "General". Thesection on "Structure" includes questions on how these are implemented, i.e. how is thedepartment/section operating.

In many cases it will be useful send a draft copy of the report to the OPU for comments (but mainfindings and action points should already have been agreed). A date for return with commentsshould be agreed to avoid delays in issuing the final report. The report is normally issued by ESUunder covering letter. Distribution of the report in the OPU is left to the discretion of the OPUsenior management, to which extent sufficient copies will be made available.

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1.5.2 Overall Rating

Each appraisal report will typically contain a large number of detailed findings or apparentshortcomings each of which can individually be explained or even justified. In some cases theshortcomings may result from a structural problem rather than individual aberrations so that thereis a need for an OVERALL RATING to indicate the quality of the performance of the materialsactivities, as either

Satisfactory

Unsatisfactory

according to the definitions :

SATISFACTORY - Although some weaknesses were identified which require timely

corrective actions, such weaknesses, either individually or taken inaggregate, do not significantly impair the quality of the OPUs Materialsactivities.

UNSATISFACTORY - The weaknesses identified individually or in aggregate significantlyimpair the quality of the OPUs materials activities to the extent thatprompt corrective measures are necessary to bring performance up to asatisfactory level.

1.5.3 Main Findings

The main findings not only summarise the major concerns, but also areas that are particularlywell managed or reflect innovative approached. They should include positive comments as wellas those concerns which may require urgent action, a major cost or a change in practices.

1.5.4 Action Items

Action : OPU should appoint a coordinator to progress resolution of the recommended actionsitems.

Action : The first progress report should be issued by DATE and thereafter quarterly until allrecommended action items have been closed out.

Actions are recommended to help identify the problem as well as indicate solutions. For brevity,these are identified in text as 'ACTION' rather than 'Recommended Action' but this should not betaken to imply that they are mandatory. OPU should explore alternatives to find the optimumsolution for each problem.

If these alternatives differ significantly from the appraisal recommendations, the considerationsunderlying OPUs decision should be discussed with ESU.

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2.0 MATERIALS APPRAISAL

2.1 PURPOSE

To appraise the materials activities from a professional viewpoint. The appraisal includes topics likeMaterials Management, optimum use of modern tools and techniques, effective use of computer andcoding systems and procedures, controls and identify any potential areas for improvement.

2.2 OBJECTIVE

- To determine whether a sound basis is in place for contributing to the OPU's objectives andprofitability of the way in which the OPU's materials activities are performed.

- To assess the potential for performance improvement by evaluating whether adequate use ismade off - and attention is paid to - professional human resources, tools systems andprocedures.

2.3 INTERNAL AUDIT

Duplication or overlap with internal audits is to be avoided. The basic objective of an auditor is toappraise whether the correct business controls are in place and applied, which should lead to aneffective and efficient operation.

This implies that the auditor is not auditing whether activity is performed in a sound and efficient way,but whether management has sufficient possibilities to control the activities.

In other words, the Materials Appraisals are to be focussed on the business side, and meant to forman opinion on how efficiently and effectively the materials activities are carried out.

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2.4 APPRAISAL TEAM

The appraisal team would consist of 2-3 persons and preferably be composed as follows :

a) Team leader with organisational/staffing/ operational experience to be provided by PETRONAS

b) Staff member from ESU

c) Inventory management specialist with user know-how of computer systems provided byPETRONAS

The team would be supplemented by an appraisal focal point to be nominated by the OPUconcerned.

In practice, the persons selected for position (a) and (c) should be an executive member of a

PETRONAS OPU nominated by ESU. The team set up will be assisted by focal points established byrespective OPUs concerned. The focal point will also serve as facilitator and should be accessible forthe duration of the appraisal to ensure that timely action can be taken when problems surface. Hemust, of course, be sufficiently senior to be able to sort out problems during appraisal.

2.5 FACILITIES

a) Office Accommodation

An office which is large enough to hold all the members of the appraisal team will be required

throughout the duration of the exercise. The office should be equipped with a telephone, conferencetable, one lockable filing cabinet or cupboard, flip-chart, and appropriate stationery. A black or white-board will also be useful. Team members should be able to have access to the office outside normalworking hours.

b) Secretarial service

Word-processors with operators are required throughout the exercise. Members should have accessto these facilities outside office hours and on week-ends. The operators must also be available at alltimes when required. During the last few days of appraisal, it is envisaged that a number of view-graphs will be required for presentation purposes. The team should be given priority access todraughtsmen, the drawing office, and other relevant facilities.

c) Accommodation And Transportation

All team members should be put up in the same accommodation. A vehicle should be reserved foruse of team members at all times, even outside of normal working hours.

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3.0 OUTLINE OF THE APPRAISAL

3.1 PRE-VISIT PREPARATION

Collect and study all data pertinent to the appraisal of relevant OPU. When possible obtain statisticaldata and performance indicators of similar companies.

3.2 DISCUSSION WITH SENIOR OPU MANAGEMENT (incl. User Dept.)

Management and User perception of the role and responsibilities of the Materials Department.(Strengths and Weaknesses). What are the relevant policies of OPU concerned.

3.3 ORGANIZATING AND STAFFING

Evaluate effectiveness of organization, quality/quantity of staff, workload, career progression andtraining programmes.

3.4 MANAGEMENT CONTROLS

Is there a healthy delegation of authorities, information and responsibilities, as well as adequateinformation flow? Are controls adequately exercised? What use is made of information provided byESU.


What is the policy and how is it applied? (service level, standardisation, spare parts selection,surplus/non-moving stock write-off)?

Evaluate stock turnover (non-moving items, insurance spares, contingency items, authorizedreserves). Is MESC used in a professional manner?

Are stockist, call-off agreements used in an optimum way? To what extend do "squirrel? stores exist?

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3.6 PROCUREMENT

What is the policy practice in the OPU and is it considered Sound?

Is sufficient commodity know-how available?

What use is made company-wide price agreements?

How many local price agreements are in place?

Are prices for key commodities regularly checked/compared with other OPUs.

Are Purchase Orders handled in an efficient and professional way?

Is full use made of OPU/Group bargaining power?

What Quality Management activities are taking place?

Is the materials function represented in the Tender Board?

3.7 ADMINISTRATION

Is proper use being made of adequate computer systems?

What managerial type data is available?

Are accounts regularly reconciled with Finance?

Method and frequency of stock checking and results obtained? Is document processing up-to-date?

Are written Materials procedures available, up-to-date and in line with Group guide-lines (PMAG)?

Are movable assets properly administered and controlled?

Are claims properly administered and progressed?

3.8 OPERATIONS

Are materials properly stored, handled and transported (efficiency, preservation, safety)?

Are receiving and despatch procedure properly implemented?

Are security arrangements adequate?

Is storage capacity sufficient to cover (future) demands?

Are direct charge and project materials properly managed?

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3.9 OTHER

Are possible other tasks/responsibilities of the Materials Function properly managed. (e.g. Transport,General Service Contracts, office services, lease contracts).

3.10 CLOSE-OUT/REPORTING

Main findings will be presented to Management and Materials Management Steering Committee.

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4.0 APPRAISAL PREPARATION

4.1 BASIC INFORMATION COLLECTION

The OPUs coordinator for the appraisal is responsible for ensuring that the following information isavailable to the team on the first day of the appraisal.

In some cases an index is required listing the information itself is required from the beginning.

The information listed is the basic minimum. The appraisal can still be carried out with incomplete oroutdated information but this would itself lead to a negative observation.

(a) Company Business Plan

The Company's business plan and/or data book.

(b) Targets and 0bjectives

Company, department and individual targets and objectives that relate to the Materials activitiesof the OPU in the widest sense.

(c) Health, Safety and Environmental Policy

The published policy on Health, Safety and Environmental Matters.

(d) Purchasing Policy

The purchasing policy describes how to obtain maximum total value, both in the short and thelong term, for expenditures on materials and equipment.

(e) Stocking Policy

The stocking policy defines what materials are to be stocked, for what purpose, and the requiredavailability of stocked materials for users.

(f) Standardisation Philosophy

This lays down the philosophy with regard to the standardisation of facilities, equipment andmaterial.

(g) External Requirements

A list in index form, of the requirements of government, partners, ministry, custom authorities orother official bodies that affect the materials activities of the Company.

(h) Procedures

A copy of the materials and services procedure manual, including relevant parts of proceduresfrom other department from other departments or disciplines (e.g. maintenance, projectengineering) affecting the materials activities. If not included in the above mentioned manual thetender board procedures and a list of financial authorities should be included.

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(i) Reports

Report of the latest internal or external audits covering all or part of the materials activities, withany follow-up or progress reports.

(j) Organisation

A chart showing the organisational relationship of the Materials and Services Department and oftheir main customers together with a list of their names.

A list of materials and services staff with age, job groups, formal training courses attended for thepast two years and planned for the next two years.

Details of changes in the organisation which have been accepted, but not yet implemented.

(k) Contracts

A sample of a standard contract, stockist - or supply agreement with details of the terms andconditions.

A list of current stockist -, price agreements indicating (main) commodity, supplier and yearlyturnover.

(l) Claims

A list of claims or criticism of materials handled during the past 12 months and its current status.

(m) Statistics and Performance Indicators

Statistics and indicators over the past two years, used in the OPU to manage and measure theefficiency and effectiveness of the materials activities.

(n) Geographical Information

Maps of the area/country is which the operations take place, indicating main fields, facilities,warehouses, yards, ports, airports, etc.

4.2 INFORMING EMPLOYEES

All those directly involved in the materials activities should be informed before the appraisal starts. Allconcerned should be asked to give their full support and co-operation to the appraisal, in particular,they should be asked to list their current problems in relation to materials in their field of activities fordiscussion with the appraisal team.

The duration of the appraisal visit is 3-4 working days. Roughly of the time available is to beplanned for interviews and visits to the stores, yards and possibly other facilities.

In line with the purpose and objectives of the appraisal the emphasis will be on feed-back from thepeople who know, from the bottom of the pyramid to those at the top. The programme for theinterviews is to be arranged accordingly.

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5.0 ORGANISATION AND STAFFING

5.1 GENERAL

- What is (are) prime objective(s) of OPU?

- How is OPU organised?

- Is there a statement of general business ethics?

- Does statement adequately cover department, including an inambigious policy on conflict ofinterest?

- Is statement incorporated in departmental procedures?

- Is there a departmental core statement?

- What are the departmental objectives?

- Does senior management support the core statement?

- Does senior management support the objectives?

- How do they give this support?

- Are there separate objectives/targets for the sections?

- Are the objectives/targets documented?

- Are the targets measured?

- Is there a departmental commitment (budget and targets) plan?

- Is there a periodical follow up?

- How often is a departmental meeting held?

- Is there a separate safety meeting?

- Is there a monthly department report?

- Is there a management summary of the monthly report?

- Is there a departmental procedure manual?

- Is distribution controlled?

- Are control sheets available?

- When was last update issued?

- Is there a simple guide for user departments?

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5.2 STRUCTURE

- Is there a formal organisation structure published?

- Is the reporting relationship hierarchial of functional?

- Is information provided by ESU used in Materials Department?

- Is this information distributed where needed with guidance to user departments?

- Are the services from ESU up the mark?

- Is there a need for additional ESU support?

- Was there a major re-organisation in the department over the last 4 years?

- Were there minor re-organisations in the department over the last three years?

- Are there new systems introduced in the department over the last 3 years?

- Have the re-organisations lead to a reduction of staff and/or costs.

- Has the introduction of new systems lead to a reduction of staff and/or costs.

- Have these savings been recorded?

System = Reduction in staff?

Reduction in costs?

Reorganisation = Reduction in staff?

Reduction in costs?

- Is the present organisation of department/section best tailored to fit requirements?

- Is corrective action contemplated?

- Has corrective action been taken?

- Who are major customers?

- Where are constraints/weaknesses?

- Is there any area with consistent and high overtime?

- Is overtime monitored and reported?

- Have causes of overtime been investigated?

- Have proposals for improvement been made?

- What is frequency of Management visits?

- Can you split it in discipline?

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5.3 RESPONSIBILITIES

- What is the responsibility of the department?

- What is the responsibility of the sections?

- Where and how are responsibilities documented?

- Descriptions complete and still valid?

- Is authority in line with these tasks?

- Are documents to be signed in line with authority?

- Where is authority for signatures laid down?

- Is staff aware of their own duties and responsibilities?

- Is there adequate time available for the individual to carry out the job?

- Are responsibilities in line with functions and authorities?

- Are responsibilities clear?

- Is there a healthy delegation of responsibilities?

- Is delegation of authorities formally arranged?

- Is there a healthy delegation of information?

- Is the information flow bottom/up functional or hierachical?

- Is the information flow top/down functional or hierachical?

- Are there information filters in the organisation e.g. information not or not completely reaches therelevant?

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5.4 MANAGEMENT CONTROLS AND YARDSTICKS

- Is there a OPU plan to ensure regular review of the adequacy of the business controls?

- What controls are exercised?

- At what level are controls exercised?

- When was last external audit?

- When was last internal audit?

- What are main conclusions and recommendations of these reports?

- Have agreed corrective actions been implemented?

- Is there a plan of action with time scale for implementation?

- Is there a departmental plan for business controls?

- What controls are exercised?

- Are the controls adequate?

- Are the main areas (inventory control, procurement, administration, e.d.p and operations)covered?

- At what level are controls exercised?

- Is there a healthy delegation of authorities?

- Is the delegation of authorities formally arranged?

- Is Materials involved at the right level in the OPU decision-making/communication process?

- Does Materials Manager regularly attend contract committee meetings?

- Does Materials Manager attend Dept. Head meetings?

- Is there a Materials Dept. representative in

o Project meetings?

o Morning meetings (E & P)?

o Pipespec meetings?

o Major overhaul meetings?

o General Maintenance meetings?

o General Safety meetings?

o Tenderboard?

- Are there locally established performance indicators?

- Are the centrally developed performance indicators used?

- Is there Management awareness of the p.i.'s?

- Is there departmental awareness of the p.i.'s?

- Is there guidance for evaluation of the p.i.'s?

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5.5 MANNING LEVELS

- Is there a forecast establishment plan?

- Is there a staff development planning?

- Is the planning stable?

- What is the age distribution of staff?

- Is manpower distribution correctly representing workload?

- Is workload monitored?

- What is turnover in staff?

- Is there a high turnover of warehouse personnel?

- How does absenteeism compare with other departments?

- Is there expatriate staff?

- Is there a succession plan?

- Is there contracted staff?

- What is duration of the contract(s)?

- Is there part-time staff?

- Is manpower distribution correctly representing workload?

- What is jobgroup differentiation?

- What is the span of control of department head?

- What is the span of control of each section?

- How frequently is span of control changed?

- Does it correctly represent department/section?

- Since when is/are anomaly(s) in existence?

- Are there any vacancies?

- How long do vacancies remain unfulfilled?

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5.6 STAFF EXPERIENCE

- Are individual employees competent to do the work allocated to them?

- Is there an adequate number of competent employees at each level?

- Is there a system of planned job rotation within the department?

- Is there a planned interdepartmental job rotation?

- Is annual leave programmed and taken?

- Is outstanding leave monitored?

- Are the abilities of individuals equal to, in excess or below the requirement to exercise their job?

- Is there an organisation chart showing responsibilities and reporting relationships?

- Is there an appropriate working environment with suitable supporting aids to efficient work?

- Are job descriptions available and up to date?

- Are the job descriptions covering all functions?

- Are the job descriptions reflecting all aspects of the job(s)?

- Dates of issues?

- Dates of last job evaluation exercise?

- Which method is used?

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5.7 TRAINING

- Where is responsibility for training vested?

- Is classroom training available?

- Is there a documented system to identify training needs?

- Is there a documented departmental training plan?

- What subjects are covered in departmental training plan?

- When was last formal departmental training?

- When was last formal company training?

- When was last formal group training?

- Are PERMATA training modules used?

- Which modules have been used?

- Is there enough awareness of the existence of training modules?

- Is there access to copies of group training guide?

- How many hours are spent on training per individual?

- How many hours are spent on training in total?

- Is department head giving training in department?

- Are section heads giving training in department?

- How are people trained to fill a position?

- Does on-the-job training apply?

- Is there a staff development position?

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5.8 SAFETY

- Is there a safety policy statement by senior management?

- Do managers support the policy through visits an audits?

- Is there a safety bulletin board in the department?

- Has one person been designated as safety and health control coordinator?

- Is there a departmental safety meeting?

- Is safety subject of discussion in section head meetings?

- Is there a department safety plan?

- Is there a periodical follow up?

- How frequently does senior management make a safety tour through department?

- How often does department head make a safety tour through department?

- Are records (checklists) kept on the tours?

- What hazardous material is there in stock?

- Is hazardous material well controlled?

- Number of lost time incidents

this year?

last two years?

- Number of reported "near misses?

this year?

last year?

- Which percentage of supervisory staff received safety training?

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6.1 GENERAL

- What is the OPU policy on stardardisation?

- Is there a detailed OPU stocking policy?

- Are there guidelines within this policy?

- Is there a documented policy for capitalisation of high value insurance items?

- Are insurance items clearly defined?

- Is there a stocking policy for spare parts?

- Is there a stocking policy for general materials?

- Is there a policy on a mandatory use of the MESC number when applicable?

- Is there a documented OPU policy on surplus?

- Is there active Management support to reduce surplus?

- Are there guidelines to execute the above policies?

- What are the objectives of the section responsible for the inventory management?

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6.2 STRUCTURE

- Is there an equipment record system?

- Is the equipment record system centrally maintained?

- Who is responsible for up-keep?

- Is "distribution controlled?

- Is there a equipment classification?

- What is percentage of the total stock value of the total capital replacement value of the OPU?

- What is percentage of the total stock value of the spare parts of the capital replacement value ofthe equipment?

- Are there regular reviews of the range of spare parts?

- Are SPIRs being used?- Are staff aware of Spare Parts Advisory Services in ESU?

- Are spares written off at the same time of the equipment?

- Are spares sold with equipment?

- Is there an effective method of implementing policy changes?

- Is there an effective method of estimating the effect of policy changes?

- Are there stock-out reports? How many?

- Are there low-stock reports? How many?

- Are there focal points in User Departments for Programme Materials stock control?

- How is projected Programme and/or work schedule advised?

- Is Programme ordering system meeting the complexity of OPU's operations?

- Are there shopping lists in existence and how many?

- Is there an effective method of estimating the cost impact of standard changes?

- Are there focal points in under department for Project Materials stock control?

- Are there shopping lists in existence and how many?

- How much is value and percentage of Surplus Construction Materials?

- Is Project Materials ordering system meeting complexity of OPU's requirements?

- Is there an equipment standardisation committee?- Is there a documented system to regularly review Company Selected Standards?

- Is there a standardisation committee?

- What is composition/competence of this committee?

- Is there a consistent approach regarding the criticality of items stocked?

- Is (are) there expressed service level target(s)?

- Is there an understanding of the service level concept?

- Are users aware that there is a target service level for different categories of items?

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6.3 STANDARDISATION AND CODING

- How many Standard MESC CD-ROMs are distributed within the OPU?

- To which departments?

- Are number of revisions received in accordance with sets distributed?

- Have latest revisions been incorporated in manuals?

- How many Local MESC catalogues are distributed within the OPU?

- To which departments?

- Are buying descriptions up to date?

- Is there a Standardisation action plan?

- Is the MESC-Section represented :-

in the Standardisation committee?

in the Pipespec. committee?

in the ordering notes (clauses) committee?

- Is there a periodical review of stock items?

- Is there a selection revision programme?

- Are there written guidelines for these revisions?

- Are the results of selection revisions reported?

- Are these reports incorporated in monthly materials report?

- Is a Spare Parts computer module being used?

- Are SPIRs actively being used?

- Are there other forms used to select Spare Parts?

- Is Materials Dept. aware of the existence of the MESC training module?

- Are user departments aware of the existence of the training module?

- What formal training did Standardisers receive?

- Did they receive on-the-job training?

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6.4 INVENTORY CONTROL

- Is there up to date management information to provide them with the costs of maintainingmaterials stocks?

- Is there a regular consideration for justification for holding stocks?

- Does Materials play an active (anticipating and challenging) role in inventory control?

- What is the stock turnover and where are the black spots?

- Are records up to date?

- What is accuracy of the records?

- When were OPU standards last reviewed?

- What is the mechanism for reviewing standards?

- What is the policy on reserve stocks?

- Are there authorised reserves?

- Are project stocks sensibly integrated with MRO requirements?

- Are SPIR or other Spare Parts selection forms actively scrutinised?

- Who authorises stock proposals?

- Are stock proposals suppressed?

- How is decision taken when what and how much to stock?

- Are return-vouchers routed through stock-analyst?

- What is Service level?

- How is stock value determined?

- What is stock value in months consumption of :

o Total Stock?

o Programme Materials?

o Cement and Chemicals?

o Spare Parts?

o General Consumables?

o Process Chemicals?

- What is stock value of Non Moved items

o Total Stock?

o Programme Materials

o Cement and Chemical?

o Spare Parts

o General Consumables?

o Process Chemicals

- What is percentage of non-moved items?

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- How does value and percentage compare to a year ago?

- How were reductions achieved:

value/percentage of write-offs?

value/percentage of sales to other OPUs?

value/percentage of sales to 3rd parties?

value/percentage substituting?

- What is considered as non-recurring consumption?

- Which percentage of your stock items is based on recurring consumption?

- Which percentage of your stock items is based on non-recurring consumption?

- Is Min./Max. stock + order method used?

- Is the K-factor known/updated?

- Are the carrying costs of the inventory known?- What value is placed on money tied up in materials stocks?

- How is the value of the stock determined?

- Are there Materials Dept. controlled Satellite stores in User Departments?

- What are main commodities?

- What is value of this stock?

- Are there "squirrel" stores with Users Department?

- Has "the reason why" been investigated?

- What are main commodities?

- What is estimated value of these "stocks"

- Have "corrective steps" been taken to reduce/eliminate the squirrel stores

- How do you assure sufficient current knowledge of your stock analysts?

- Did stock analysts receive formal training on:

Inventory techniques?

PMMS System?

Commodities under their responsibilities?

On-the-job?

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6.5 SURPLUS AND SALVAGE

- Is there a documented OPU policy on Surplus?

- Is there a Departmental procedure on Surplus?

- Is there a Surplus Coordinator?

- Are Surplus lists available?

- Is it specified whether it is Dead, Excess and/or material?

- Is lay-out clear and concise?

- Are the lists actively scrutinised?

- Circulated and advertised within OPU?

- Circulated to other OPUs?

- What is value of Surplus of:

o Dead Stock?

o Excess Stock?

o Project Stock?

- How is Excess Stock determined?

- How is Dead Stock determined?

- How is value of Project Stock determined?

- Is there Direct Charge Surplus?

- When is Surplus written off?

- Who initiates write-offs?

- What is policy/procedure for write-off and disposal?

- Is there a Salvage procedure?

- Is accounting procedure included?

- Is there a Salvage record?

- Is the Salvage listing distributed within Department and Users Departments?

- Is there reconditioning of Salvage?

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7.0 PROCUREMENT

7.1 GENERAL

- What is OPU policy regarding

o

Central Purchase?

o Regional Purchase?

o Local Purchase?

o Direct outside Purchase?

o Procurement for Projects?

- Where and how documented?

- Are the OPU's general terms and conditions of purchase orders regularly reviewed?

- Are the OPU safety and environmental policies reflected?

- Is there a letter send to suppliers specifying the policy of the OPU on business ethics and gifts?

- Is this policy incorporated in the working procedures?

- What is OPU policy regarding QA/QC?

- Are product quality plans requested at the enquiry stage?

- Is the cost of inspection recorded separately from product cost?

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7.2 STRUCTURE

- Is Purchasing organisation structured to meet OPU Policy?

- Are Purchasing methods structured towards efficient handling of different types of order e.g.Simplified orders, price agreements/offtake orders?

- How many buying sections are there?

- Is buying done commodity wise?

- How many buying groups are there?

- Is there a separate project procurement section?

- Are buyers moved between various commodities?

- Is there preferential treatment for any supply source(s)?

- Where is this defined?

- How many staff members are, as a rule, present in negotiating agreements and/or contracts?

- Are parameters clearly documented and adhered to?

- At which level(s) is decision taken how and where to order?

- Is there a list of approved suppliers?

- Where is responsibility for upkeep?

- Is it organised along commodity lines?

- Is supplier's performance monitored and recorded?

- Is there a documented system for Quality Audits on suppliers?

- Is there a reasonable suppliers basis?

- Is there an effective filing and retrieval system for the purchasing files?

- Is it a central filing system?

- Where is responsibility for upkeep?

- Are there "personal files"?

- Are various stages of a purchase order (including enquiries being monitored and reported?

- At what intervals?

- Is workload monitored and regularly reported?

- Are details analysed for trends?

- Do requests for enquiries and orders, clearly describe requirements, including necessary test,inspection and documentation requirements?

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- Are requisition fit for purchase?

- Is it often necessary to revert back to originators for additional information?

- Are such occasions monitored, reported and analysed?

- Are spare parts ordered with equipment?

- Are there any specific areas of concern?

- Are there standard ordering clauses/notes?

- Are ordering clauses judged by Legal?

- Is there a procedure for the handling of claims?

- Are claims dealt with in accordance with the procedures and properly progressed?

- Are cashflow calculations made before replacement of capital items?

- Is lease being considered?

- Did buyers receive formal training/education on:

Commodity(ies) handled?

Negotiation skills?

Contracts?

Quality systems?

Financial decision taking techniques?

- Is there a working agreement with another OPU to cater for regional purchasing?

- What is basis and method of cost recovery?

- Is there a financing and payment procedure?

- What is "mark-up"?

- Is there a price control mechanism?

- How many orders are placed via agreement?

- For which commodities is agreement used?

- Is agreement working satisfactorily?

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7.3 PROCUREMENT COORDINATION

- Is full use made of OPU/Group bargaining power?

- Is there active participation in aggregating forecasted demands?

- Is pricing information exchanged with other OPUs?

- Are current Price Agreements exchanged?

- Is confidentiality secured?

- Is there other active participation in Procurement Coordination process activities?

- Which commodities?

- Are there tangible benefits and/or "added value obtained?

- Are they registered and reported?

7.4 PROJECT PROCUREMENT

- Is the department involved in projects from the project definition phase?

- Does Materials have permanent/part-time attendance in the project team(s)?

- What is the reporting relationship?

- Are parties satisfied with this arrangement?

- Are the standard duties of the Project Materials Coordinator known and executed?

o contribution to project spec. and to bid book

o (co)-responsible for approved equipment list and for approved vendor list

o contribute to planning (processing/delivery/ shipping times)

o bid evaluation procurement part

o evaluation contractor's procurement set-up

o ensure procedures and document flow diagram available

o check timely issue/actioning of requisitions

o check whether QA/QC requirements included

o follow progress and ensure progress reporting

o liaise with parties concerned (contractors, shippers, receivers)

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- Where is the PMC located?

- Are his authorities adequate?

- Does he receive sufficient support?

- Is the SPIR systems introduced during bid-phase?

- Who checks spare part selection?

- When are spare parts ordered?

- What period do they cover (running-in, 1 year, 2 years)

- Has warehouse space been allocated for new spares?

- Has a policy/procedure been agreed on acceptance of initial spares for the operational phase?

- Has a policy/procedure been agreed on surplus re:

o accounting?

o transferring?

o write-off?

- What is maximum retention period?

- Is the department aware of services from ESU for SPIR support?

- Are inspection, expediting and shipping coordinated?

- Who is responsible for receipt inspection?

- Who checks and who files materials certificates?

- Who is responsible for handling and storage?

- Are safety requirements laid down?

- Are there contractual repercussions (by construction contractor) in case of late delivery of freeissue materials?

- Is adequate time allowed for slippage in delivery time of notorious suppliers/manufacturers?

- Has this been taken up in the construction planning?

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7.5 PURCHASING

- Is there a legistation by the government to encourage local purchases and/or services?

- Is there a Local Purchase Development position in the department?

- Is there a Local Purchase procedure?

- Is there a good segregation of duties?

- Is there periodically a re-allocation of buyers' responsibilities for the various commodity groupspurchased?

- Are orders properly priced?

- Are there unpriced orders?

- What is price control mechanism?

- Is there a record of price trends?

- What are the major classes of materials purchased locally?

- How are these orders handled?

- Are the materials obtained locally purchased

o via local agent back orders?

o from stockists?

o from manufacturer?

- Are receipts routed through the Receiving Section?

- How many suppliers are selected for enquiries?

- Are price comparisons made?

- Is reason for selection of supplier mentioned?

- Is there evidence in order files?

- What methods are used for direct outside purchases?

- Which materials are purchased under this procedure?

- Are there Agreements with Purchasing Agents and/or Suppliers?

- Are Price Agreements used?

- What is total value purchased via Outside Purchases?

- How are Shipment, Insurance and Claims been arranged?

- Is system of Direct Outside Purchasing working satisfactorily?

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7.6 AGREEMENTS

- Is there a standard form of contract approved by Finance and/or Legal?

- Are exchange fluctuations covered?

- Are the company's general terms and conditions of contract regularly reviewed?

- Does a standard procedure exist for bidding for contracts?

- Are your using Centrally made Price Agreements?

- Are your using these agreements for price comparison or for purchasing?

- Are there Locally made Price Agreements?

- For which commodities are you using the p.a.'s?

- How much (value and percentage) is purchased via the p.a.'s?

- What is benefit and/or added value by using the Centrally made Price Agreements?

- How many items are purchased via Price Agreements?

- What is total value of purchases via Price Agreements?

- What is duration of Agreements?

- Are you using call-off orders?

- Is call-off authority also delegated to under departments?

- Are there pre-printed "laundry lists" and/or simplified order forms?

- How is unauthorised use prevented?

- Are you using Supply Agreements for bulk orders?

- Is Materials Dept. monitoring all Supply Agreements ensuring that:

o the service level meets the required standard?

o terms and conditions of agreement are complied with?

o the price continues to be justified?

o quality is maintained?

- How is unauthorised use prevented?

- Are you using Stockist Agreements?

- For which commodities are Stockist Agreements used?

- How many items are covered in Stockist Agreements?

- What is total value of purchases via Stockist Agreements?

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- Have commercial bid evaluations been carried out?

- Are the comparisons and results laid down?

- Can the benefits be specified?

- Is Service Level monitored?

- What is mechanism to check that prices continued to be justified?

- Is quality control secured?

- Have economics been evaluated by Materials Dept. in conjunction with local Finance Dept.

- Are there other Agreements, such as Supply and Repair and Supply and Service Agreements?

- Are they made in consultation with Operations Dept.

- Are there adequate controls on the usage of materials?

7.7 CONTROLS

- Is there a flowchart for Materials Requisitions etc.?

- Is there a control system monitoring the flow?

- Are details reported and analysed?

- What is processing time of Requisitions?

- What is processing time of Direct Charge requests?

- What is processing time of Purchase Orders?

- What is processing time of Enquiries?

- What is processing time of indents?

- Are Materials Request document properly Authorised?

- Is this being checked and where?

- Who is responsible for checking?

- Is there a backlog of orders/indents to be placed?

- Is this monitored/reported?

- Who is responsible for checking?

- Is there a backlog of orders/indents to be placed?

- Is this monitored/reported?

- Is there an OPU Tender procedure?

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8.0 ADMINISTRATION

8.1 GENERAL

- What is the policy on document retention?

- What is the policy on stock checking?

- Is there a departmental "clean desk" policy?

- Is the procedure of "clean desk" adhered to?

- Who is checking?

- What are the objectives of the admin. section?

- Is there a computerisation plan?

- Is the PMAG available?

- To whom is the PMAG available?

- Is it up-to-date and being utilised?

- Is there local legislation or company rule pertaining registration of staff details in a manual orcomputerised record?

- Are staff aware of these regulations and are they adhered to?

- What is the capital budget?

o this year?

o last year?

o next year?

- What is the operating budget?

o this year?

o last year?

o next year?

- Who is responsible for budget control?

- How is budget control carried out?

- How much, in percentage, was over/underspending last two years?

- Which statistics are reported to Materials Management?

- Which statistics and/or reports are distributed to OPU Management and/or Management UsersDepartments?

- What is reporting interval?

- How are they produced?

- What is the inflation over the past year and how are statistics affected?

- Is adequacy of insurance cover regularly reviewed?

- Who is responsible?

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8.2 STRUCTURE

- Is there a focal point responsible for the distribution of:

o PMAG revisions?

o MESC revisions?

o Other ESU publications?

- Is there a charging system to customers

- If used what is mark-up?

- Is there a charge for handling returns?

- Are the following documents available and up-to-date:

o

List of specimen signatures?

o Lists of account descriptions and codes?

o Authority manuals?

o Document retention guidelines

o Detailed descriptions of work processes?

- Is there a procedure which ensures an periodic review of these documents?

- Can relevant function check authorisation signatures?

- Are import duties reclaimed where possible?

- Is mark-up for orders placed abroad differentiated?

- Are there conditions for sale of materials to ensure that the company is not liable for soldmaterials?

- Is there a simple administration for returnable packing such as cable reels, containers, palletsetc.?

- Who is responsible for the contracts in the department?

- Is there a centrally maintained list of contracts with renewal dates?

- Are timely advices sent to parties concerned when a contract is due for review?

- Is progress of contract negotiations monitored?

- Is there a central filing system?

- How does it operate?

- Are files easily accessible by authorised staff?

- Is there backlog in filing?

- Are retention periods maintained?

- What happens with files after retention period?

- What happens with dead files?

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8.3 STOCK RECORDS AND ACCOUNTS

- Is stock recording system geared to meet complexity of companies operations?

- With which departments/sections is there interfacing?

- Is system integrated with other company systems?

- Is document flow monitored for progress?

- Are there specific areas of concern?

- How long is average processing time for documents such as MIV's, MRV's, MTV's and MRS's?

- Who is responsible for invoice checking and who for payment?

- How long is average time for invoice processing?

- How many days after receipt are invoices paid?

- Is there a backlog and is this monitored/reported?

- Is there a procedure of invoice differences?

- Is authorisation of differences delegated to others then the buyer?

- How many invoices are paid?

- What is percentage of invoices being paid too late?

- Are causes of "late payments" investigated and analysed?

- Are accounts regularly reconciled with Finance?

- At which intervals?

- Are discrepancies investigated and reported?

- Are there many discrepancies?

- How much time is involved in solving discrepancies?

- Are there old uncleared items in suspense accounts?

- Are these items monitored and reported?

- Are there active efforts to clear the uncleared items?

- How many

o Pending invoices? Since when?

o Pending receipt? Since when?

o Pending claims? since when?

o Materials transfers? Since when?

o Other documents? Since when?

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8.4 STOCK CHECKING

- Is there a documented stock checking plan?

- Who is responsible for compiling stock check plan?

- Are there stock checking procedures?

- Which method is used:

o Annual?

o Semi-annual?

o Perpetual?

- What is stock check cycle of complete inventory?

- Are fast moving items checked more frequently?- Who is authorising write-off and write-on vouchers?

- What are the authorised quantity and value tolerances?

- Is there periodic a 'Certificate of Correctness' of the materials inventory required?

- Are the write-on and write-off vouchers routed via the Ordering sections?

- Is actual progress in accordance with planning?

- Is there a proper balance between the stock check plan and those MESC groups which are vitalto companies operations?

- Do warehouse personnel know in advance which groups and when will be checked?

- Do stock checkers have prior experience in warehouse-operations and/or with the materialsunder their responsibility?

- On what basis are stock-checkers selected?

- How long are they normally planned to stay on the job?

- What is the average accuracy of stock records

o percentage at first count (on yearly basis)?

o percentage at final count (on yearly basis)?

o what are values involved?

- What are yearly cost of:

o theft?

o damage?

o lost materials?

- Are stock check results regularly reported?

- Are records maintained in sufficient detail to permit investigation of differences?

- Are the results analysed for trends?

- Are there active efforts to reduce stock check differences?

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8.5 DATA PROCESSING SYSTEM

- Are f0or the systems in use following documents available and up-to-date?

o Functional Specifications?

o Operating Instructions?

o Construction Guide?

o Operators Guide?

o User Guide?

o Audit report?

o Flowcharts?

o

Fallback procedure?- Is responsibility accepted for operational computer systems?

- Is there adequate involvement in new systems under development?

- Is there one focal point for all computer matters?

- How many and which housekeeping jobs were done during last 12 months?

- Are there an unreasonable number of errors in the computer systems?

- What action is being taken to reduce the error factor?

- Have Material Staff been reduced after the introduction and full working of the systems?

- Did Staff reductions form part of the economic justification for the computer systems?

- What are yearly computing costs?

- Is there adequate security of computer data?

- Are Users departments, Finance and Head Materials satisfied that in event of a break down,adequate arrangements exist for processing work?

- Are offsite storage arrangements for critical data satisfactory?

- Are there interfaces with other systems?

- Are these interfaces on-line or via batches?

- Are or can Materials Systems, with advantage, be integrated with systems for other departments?

- What is availability of system for

o input ?

o retrieval?

- How many terminals are connected within Materials Dept.?

- How many terminals and which Users Departments are connected?

- Have you adopted a "password" system?

- Is inputting centralised and/or real time decentralised?

- Is document processing up-to-date?

- Have Materials staff attended training courses aimed at improving the efficiency by better use of

computers?

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8.6 METHODS AND PROCEDURES

- Are there established procedures to ensure that analyses and financial reports are

o up to date?

o designed to meet management requirements?

o produced at appropriately regular intervals to provide meaningful comparisons period toperiod?

- Are these procedures

o designed to incorporate yardsticks and performance indicators?

o

sufficiently detailed to highlight operational and financial factors warranting managementattention avoiding unauthorised and/or unnecessary expenditures?

- Is there a departmental plan to ensure regular review of the adequacy of the procedures?

- Is it documented?

- Is it monitored for progress and reported?

- Is it actual in line with planned progress?

- Is active interest taken for reviewing/simplifying paperwork in Materials Dept.?

- Is there a focal point responsible for the distribution of all internal procedures?

- Is mastercopy available?

- Is there controlled distribution?

- Are procedures such that, where possible, routine work is in front of non-routine work?

- Are procedures clear and understandable?

- Are aspects of any transaction connected with

o authorisation

o receiving

o recording (record keeping)

o reconciliation (comparing book/physical and control of accounts)

o safeguarding

clearly segregated?

- If segregation of duties is impossible or impractical, are areas of possible risk identified and arereasonable alternative controls in operation?

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9.0 MATERIALS OPERATIONS

9.1 GENERAL

- What are the objectives of the operations section?

- Are the OPU policies known on safety and environmental issues?

- Is there a OPU policy which defines who is responsible for storage of which categories ofmaterials and equipment?

- What is the policy on inspection of goods on arrival, during storage and at issue?

- Are adequate work instructions prepared and implemented for handling, receiving, storage anddelivery of materials?

- Are these instructions monitored/re-evaluated regularly?

- Are there separate instructions for safe handling and storage of

o chemicals?

o explosives?

o gasses?

- Are these procedures and instructions monitored and re-evaluated regularly?

- Are designated quantities of materials required for emergencies such as fire, explosion, oilwellblowouts etc. separately stored in the warehouse and not drawn on for normal issues?

- Are these materials regularly and frequently examined to ensure good condition and readiness forimmediate use?

- Have materials received been cleared by Customs?

- Is there a special area for uncleared materials?

- How is Customs clearance organised?

- Are delays created by missing documents?

- What is average time lapse between arrival of goods in port and delivery to the Company?

- What is safety record of operations?

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9.2 STRUCTURE

- How is the operations section organised?

- Which types of administration are carried out by this section (e.g. movables, contracts, customsclearance)?

- Are there any obvious shortcomings in the location of warehouse and/or yards which hinderefficient materials handling?

- Is there a potentially dangerous proximity to public areas?

- Any plans for new warehouses?

- Is advice available on modern methods/designs?

- Have alternatives been considered?

- Are there procedures and regular schedules for the inspection of materials and products instorage?

- Are these procedures adequate to prevent deterioration and/or damage?

- Is there an effective filing and duplicating system for materials and equipment certificates?

- Is there a location-code system?

- Are documents such as MIV, MRV, MTV and MRS processed into the computer system bywarehouse personnel?

- Centralised or decentralised?

- Are sufficient terminals available?

- Are there clearly segregated areas for

o Receiving?

o Inspection?

o Issue/despatch?

o

Returns?

o Claims?

o Salvage?

o Scrap?

o Waste?

o Direct Charge awaiting collection

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- Are hazardous materials covered by a separate procedure?

- Is there first in first out storage?

- Are fast moving items and slow moving items stored separately?

- Is direct charge material sensibly under control?

- Is there integrated or separated storage of "standard" surplus items?

- Is there integrated or separated storage of standard project material?

- Are valuable items locked away?

- Are there free issues for materials stocks of low value fast moving items?

- Are there free issues points on plant site for low value fast moving items?

- Is there a delivery service to users?

- How is it organised?

- Are stock-outs followed up and are User Departments properly advised of stock-outs and actiontaken?

- Are User Departments using squirrel stores?

- Why do User Departments have these stores?

- Does Materials Dept. play an active role in discovering and eliminating unnecessary squirrelstores?

- Is there unidentified Project Surplus?

- Is there materials in warehouse/yards which is not on the books?

- How many items are there in the warehouse?

- How many movements are there per man-hour of warehouse personnel?

- Are OPU owned materials and goods stored with third parties, if any, clearly identified as OPUproperty?

- Are these materials registered and monitored?

- Are there written instructions for preservation of materials?

- Are the results of preservation effective?

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9.3 RECEIVING AND DESPATCH

- Are incoming materials counted, measured and weighed to the extent necessary on receipt?

- Are weighing machines regularly tested?

- Are materials labelled with MESC Nos and descriptions?

- What is system to control any inspection requirements?

- How is conformance established?

- Is checked and approved material identified and segregated from that not checked andapproved?

- Is there effective control to prevent use of non-conforming material?

- Is receiving clerk responsible for MRS preparation?

- When and where is MRS prepared?- Is MRS containing all necessary information to allow proper checking?

- How are outstanding MRS/s monitored?

- Which unit is responsible for storage of received materials?

- Who is responsible for preservation if required?

- What are arrangements to prevent double handling?

- How are new receipts distinguished from existing stocks?

- Is there central control to ensure clearance of all items of each Bill of lading?

- Is receiving section responsible for checking "direct charge" materials?

- How are Users Departments advised that material is awaiting collection?

- Are materials awaiting collection monitored?

- Is there a documented procedure in case "direct charge" materials cannot be collected by clientdepartments for a protracted period of time?

- Is there a separate receiving section for "project materials"?

- How are Users Departmental advised that material has been received?

- Is receiving section reasonable clear of material?

- Is there a standard procedure to lodge a claim on

o Shipping line?

o Transporter?

o Manufacturer, suppliers, agents (COM)?

o Insurance Company?

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- Are claims monitored?

- What is date of "oldest" outstanding claim?

- Which method/facility is available to users to enquire items held in stock?

- In case of inventory print-outs are used

o How often are updates distributed?

o Is distribution controlled and who is responsible?

o How many copies are distributed?

o Is there an effective spread throughout organisation?

o Is there a "telephone-service" on availability of stock items?

- In case of on-line facility

o Linked to Users Department system(s)?

o Is on-line real time (direct into Materials systems)?

- If on-line is not real time but via Users Departments systems how is actual stock position knownto Users?

- Is (are) there (a) central point(s) to receive MIV's?

- How are MIV's controlled?

- Is there a check on authorisation?

- Is there a check on cost allocation?

- What is average delivery time?

- Are frustrated issues monitored and reported?- Is there a system by which frustrated issues are issued upon receipt of new stock?

- Is there on-line MIV preparation?

- Are there printer facilities in the warehouse?

- Is there a counter service?

- How many clients per day?

- Does counter service require full time despatchers?

- Is there a delivery service?

- Is there a trip schedule?

- Are unscheduled trips (rush issues) monitored and reported?

- Are items ready for despatch properly labelled and addressed?

- Are special containers and/or pallets provided for handling/despatch of materials?

- Are returns of containers and pallets monitored?

- Are there (regular) complaints about damages, shortages and/or losses?

- Are these complaints registered and reported?

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9.4 WAREHOUSES

- Are sizes and layout of warehouses adequate?

- Do they cover future plans?

- Are there offices and/or workshops in the warehouse building?

- Is there good overview (security) from the supervisory's office?

- Are storage facilities appropriate for climate conditions and type of operation?

- Is entrance to the warehouses restricted?

- How is access controlled?

- Are the various warehouses lockable?

- Is there a central key cabinet?

- Is there a list of key holders?

- Is key holders list up-to-date?

- What is system to determine storage sequence?

- Is effective use being made of available space?

- Is space utilisation regularly monitored and reported?

- Is "at random storage" introduced or contemplated?

- Are Storage areas clearly marked?

- How is first-in, first-out system secured?

- Does available space between racks, storage bays etc. allow for effective manoeuvring with theavailable handling equipment?

- Are warehouse floors in good conditions and constructed to bear the loads of full racks and fullyloaded handling equipment?

- Are there separate storage areas provided for

o Paint products? (ventilated)

o Rubber? (air conditioned?

o Electrodes? (heated cupboards)

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- Is the racking system flexible, can it easily be modified?

- Is there a special system to store

o large gaskets?

o stud bolts?

o heat exchanger tubes?

- Is there a "partition-off" in the warehouse for the safe keeping of "attractive" items?

- Are arrangements in connection with risks sufficient?

- Is material clearly marked with MESC number and descriptions?

- Is Surplus material, in addition marked whether it is Dead of Excess?

- What type of marking is used?

- Is there good housekeeping?

- Is there a good standard of tidiness and cleanness in the warehouses?

- Is there a safe disposal of waste?

- Are safety standards followed in the warehouses?

- Is there good lighting?

- Is security adequate?

- What is procedure for "out of hours" service?

9.5 YARDS

- Are yards adequate in size and layout?

- Do they cover future requirements?

- Are storage facilities appropriate for climate conditions and type of operation?

- Is there a adequate system for access control?

- Are security passes being used and checked?

- Are their special instructions provided to control transport 24 hours access?

- Who is responsible for liaison with local police authorities?

- Does fencing around allow for an inside perimeter road?

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- Is there a system to regularly control condition of fence?

- Is perimeter lighting installed?

- Are there exists for use in the event of an emergency?- Are yard roads and platforms in good condition?

- Are they built to bear the loads and fully loaded trucks and handling equipment?

- Are there dedicated storage areas for

o Timber (baulks)?

o Rock/Sand/Gravel bins?

o Industrial gasses?

o Cables?

o Ropes?

o Marine hoses?

- Are these areas/platforms sheltered against sun?

- Is proper handling gear available?

- Are these materials correctly stacked/stored according to written instructions?

- Are adequate and enough pipe/drill collar racks available?

- Are there written instructions for stacking pipes/ collars?

- Are the pipes/drill collars stacked correctly?

- How is first-in, first-out secured?

- Is there a dedicated storage area for Project Materials?

- Are all project materials stored in that area?

- Is there properly identification by project?

- Is there a dedicated despatcher?

- Are items stored in the yard properly preserved against corrosion/weather conditions?

- Is there no water accumulation inside?


- Is Surplus material, in addition marked whether it is Dead of Excess?



- Is there a good standard of tidiness and cleanliness in the yards?

- Is there a safe disposal of waste?

- Are safety standards followed in yard operations?

- What is the speed limit on the yards?

- Is there one-way traffic?

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9.6 SPECIAL STORAGE

- What hazardous material is there in stock?

- Is it well controlled?

- Are there procedures and working instructions for discharging and handling of hazardouscargo's?

- Are there any Governments/Statutory requirements?

- Are there adequate controls on adherence to procedures and safe work instructions for thesematerials?

- Are there separate warehouses and/or "partitioned-off" areas provided for

o bulk materials

o luboils and greases

o chemicals

o carbide

o explosives

o radio active materials?

Bulk storage

- Which racking is used?

- Is the racking system flexible, can it easily be modified?

- Are stacks of large items and bulk material carefully stacked and is there a reasonable selectionpossibility?

- Are stacks self-supporting and kept clear of the walls?

- Is a drive-in racking system used for slow moving items like insurance items or bulk storagewhere selectivity is less important and the first-in, first-out principal is not critical?




- Are safety standards followed?

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Luboil and greases

- Are there special instructions for storage of oil and greases?

- Are these instructions regularly reviewed with maintenance departments?

- Is storage racking used?

- Is suitable auxiliary equipment for the safe and easy handling of drums and containers available?



Chemicals

- Are there planned procedures for safe handling, storage, issuing and transport of chemicals?

- Is the operation of the procedures monitored by supervisory staff and are deviations investigated?

- Is the warehouse capable of being locked?

- Are there emergency exits other than those afforded by the main doors?

- If there is an offices and/or chaining rooms in the warehouses are they separated from thewarehouse by fire walls and self closing fire doors?

- Is the warehouse bounded?

- Is there a copy of the "PETRONAS guide to the Warehousing of Chemicals"?

- Are products which may produce flammable atmospheres during handling or storage defined andclassified?

- Is there an Area Classification?

- Is there product separation/segregation?

- Is the building ventilated in accordance with given guidance for zones?

- Is labelling such that chemicals can be recognised on all aspects?


- Is there a storage plan?

- Is there a copy of the storage plan filed outside the warehouse?

- Is there, in case of spillage, adequate protective clothing and equipment (including air supplied orself contained breathing apparatus) readily available?


- Are stocks frequently inspected for leakage or mechanical damage?

- Is the whole area free of dirt, rags, rubbish and any redundant machinery?

- Are chemicals wastes be disposed of in a safe manner?

- How are obsolete stocks disposed of?

- Are internal safety audits of the whole operation held?

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Carbide

- Are there written procedures on handling and storage of Carbide?

- Is Carbide stored in closed drums?

- Are these drums in a building exclusively used for Carbide storage?

- Is building fitted with special ventilation arrangements?

- Are drums stored on raised platforms?

- Can entrance/exit be reached at all times?

- Are drums inspected regularly?

Explosives

- Is applicable local legislation known and adhered to?

- Are there written procedures on receiving, storage, handling and issuing of Explosives?

- Are Explosives stored in a dedicated well ventilated building away from other buildings?

- Are there separate stores for dynamite and detonators?

- Are special shoes (without nails soles of heels? or suitable overshoes readily available?

- Are safety procedures in operations regularly monitored?

- Is there a strict system of recording receipts and issues?

- How is security arranged?

- Are there frequent stockchecks carried out?

- Is there excellent housekeeping?

- What are disposal procedures?

9.7 MOVABLES

- Is there a manual of computerised Movables Administration?

- Are rental movables included in the administration?

- Is purchasing, receiving, storage (until use) and surplus controlled by Materials Department?

- Are there Movables purchased by others?

- Are these Movables accepted "on-return"

- Is there always a technical specification with "returns"?

- Are all Movables under control of Materials Department?

- Is there a Movables section?

- Where are back-up spares and small tools for movable equipment stored?

- How are these spare administrated?

- Are all Movables capitalised?

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- If not all Movables are capitalised what is financial limit?

- What is reason for taking non-capitalised items into Movables Administration?

- Are movables numbered in MESC framework?- Is there an itemised inventory?

- Which percentage (value) is

o own stock?

o rented?

o leased?

- Are following data registered

o movables/MESC code number?

o order reference

o acquisition value?

o book value?

o physical condition code/life expectation?

o inspection scheme?

o location code, sponsor and field details?

- Does returning procedure include an inspection?

- Is there an administration of "Movables in repair"?

- Is period of repair monitored?

- Can all Movables be located?

- What is stock-checking cycle?

- Are there often stock-check differences?

- Are stock-check differences reported and investigated?

- Is there orderly storage in Warehouse and Yard?

- Are Movables stored in the open well preserved?

9.8 MATERIALS HANDLING

- Is Materials Dept. involved in materials movements outside the warehouses and yards?

(if so refer also tosection 10Transportation)

- What equipment is available for materials handling inside the warehouses and yards?

- Is hoisting and lifting gear inspected on a regular base?

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- Are safe handling procedures strictly observed?

- Are there regular operational inspection of contractors?

- Is there a planning for efficient handling to avoid delays and extra costs?

- Who coordinates loading, unloading and required handling equipment?

- Is there a good planning to ensure a quick turn around of containers to avoid excessive rentalrates?

- Is there a good selection of slings available for warehouse and yard operations?

- Are slings periodically examined?

- Are safe working loads clearly marked?

- Is "lifetime" known and monitored?

- Are certificates readily available?

- Are regulations regarding use and control of slings strictly observed?

- Is there an economical quantity and range of pallets available?

- Are unit load principles applied?

- Are returns of pallets monitored?

- Are OPU (Mat. Dept.) owned pallets marked as such?

- Is there, on a regular base, inspection of pallets?

- Are there adequate and enough general accessories available and utilised such as

o spreader bars

o scales, crane weighers and fork lift load indicators?

o porter's trolleys, four-wheeled handtrucks and dollies?

o adequate handtools and strapping machines?

- Is the use avoided of packing materials which could harm the environment (e.g. expandedpolystyrene)?

- Are special regulations for the safe handling of hazardous materials known?

- Are they reflected in handling procedures?

- Do staff know what to do in case of calamities?

- Is suitable safety clothing available?

- Is there a procedure for wearing gloves, safety helmets, safety glasses and safety shoes?

- Is only authorised and trained personnel allowed to operate mechanical devices for materialshandling?

- Are there departmental safety audits on Materials handling in warehouses and yards?

- Is there assessment of staff on safe handling?

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9.9 SALVAGE AND SCRAP

- Is there a salvage and scrap yard?

- Are operations under control of Materials Dept.?

- Is the yard

o fenced?

o properly drained?

o provided with roads?

o kept to the minimum required for storage and work to be undertaken?

Salvage- Has the receiving function the ability to identify materials?

- Are the materials differentiated between repairable and/or foreseen use and not repairable and/ornot foreseen use?

- Is the Salvage yard also used for temporary storage of Surplus used equipment awaitingdisposal?

- Is material clearly identified and stored in an orderly manner?

- Is there also "retention material" on request of user departments?

- Is reconditioning done against firm requirement only?

- What is the accounting system?

- Is there a simple administration which includes, where required, certificates?

- Does the pricing system for salvage materials encourage the usage?

- Are salvage lists, grouped by MESC number, up to date?

Scrap

- How is scrap disposed of?

- Is there a scrap disposal contract?

- Are international price levels known?

- Is there a segregation of non-ferrous and ferrous?

- Is there a further segregation?

- Is the re-use possibility for the original purpose of the material being prevented?

- Is the yard divided in to clear defined areas?

- Are the defined areas sub-divided so that accumulation and storage can continue while soldscrap is awaiting removal?

- Is there a weighbridge available?

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- Is special attention given to security measures for high value scrap such as alloy and preciousmetals?

- What are yearly proceedings of

o sales of scrap?

o issues form salvage?

o other sales?

- Is there a Salvage/Scrap procedure for material and equipment which has been used inconnection with hazardous substances?

- Is the returning department responsible for making the material safe for handling?

- Are there special procedures for disposal of contaminated scrap and/or other materials?

- Who is responsible for the registration of the movements of these disposals?

- Are these procedures strictly adhered to?

- Who is monitoring, investigating and reporting?


- Is there a good standard of tidi

30451- PTS spec

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