Project Procedures 1.0 PURPOSE 2.0 SCOPE 3.0 REFERENCES. No.: P /21/2012 PAGE 1 OF 13 BASIS OF OPERATION

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1 Project Procedures BASIS OF OPERATION 09/21/2012 PAGE 1 OF PURPOSE The purpose of this procedure is to establish the basis of operations that ensures that Project activities, including engineering, design, procurement, construction, erection, inspection, testing, and startup activities conform to the contract requirements, approved drawings and specifications, applicable codes and standards, and other Project requirements. 2.0 SCOPE This procedure applies to all Project activities under the responsibility of Pike unless otherwise established by the Contract or corporate management. 3.0 REFERENCES 3.1 Project Procedure P 1 4, Quality Control Functions and Responsibilities (Construction Site) 3.2 Project Procedure P 1 5, Quality Control Personnel Assignments (Construction Site) 3.3 Project Procedure P 1 6, Nonconformance and Stop Work Reporting 3.4 Project Procedure P 1 7, Technical Document Control (Construction Site) 3.5 Project Procedure P 1 8, Quality Control Records 3.6 Project Procedure P 1 9, Quality Control Interface with Subcontractors 3.7 Project Procedure P 1 12, Measuring and Test Equipment 3.8 Project Procedure P 1 13, Material Receipt and Control 3.9 Project Procedure P 1 14, Material and Equipment Storage and Maintenance 3.10 Project Procedure P 1 15, Special Process Control (Welding and Nondestructive Examination) 3.11 Project Procedure P 1 17, Surveillance Procedure (Construction Site) 3.12 Project Procedure P 1 18, Quality Control Personnel Training and Qualification 3.13 Project Procedure P 1 19, Reading for Understanding

2 PAGE 2 OF Project Procedure P 3 3, Project Execution Plan 3.15 Project Procedure P 7 1, Substation Checkout and Wiring Verification (Draft) 3.16 Project Procedure P 7 2, Inspection, Testing and Commissioning (Draft) 4.0 DEFINITIONS 4.1 Project Execution Plan: A formalized document that is prepared by the person assigned to manage the work. This plan defines the activities to be performed, the schedule, budget, and other contractual requirements. 5.0 RESPONSIBILITIES 5.1 MANAGEMENT Specific duties and responsibilities of personnel outlined in this procedure are generic and functional in nature and are subject to modification and/or delegation to allow for effective implementation under varying Project organizational conditions This program has been developed to effectively provide an organized, planned approach to ensure that applicable Project activities are performed in compliance with specified contract requirements. An essential part of this program is to monitor various activities, bringing to the attention of responsible personnel those conditions that may need attention or require rework to correct and/or resolve them prior to presenting completed work for formal acceptance. Understanding the requirements, including the work processes associated with each Project task, is an integral part of the Quality Program and fosters the identification of task obstacles and avoidance of mistakes and rework The quality accountability aspects of this program will assist the Project Staff in identifying those problem areas requiring closer attention in an effort to prevent or mitigate the effects of repetitive problems The Project Manager and Quality Assurance (QA)/Quality Control (QC) Manager shall determine how and to what degree this program will be implemented. This determination will normally be made based upon, but not limited to, the following: Size of the Project Scope of Work Whether the work will be done by Pike employees or subcontracted

3 PAGE 3 OF 13 If subcontracted, whether the Subcontractor will implement their own Quality Program (as reviewed and approved by Pike) or work to the appropriate sections of the Pike Quality Program Past experience Client and contractual considerations If the work is subcontracted, the Subcontractor is responsible for supplying his/her own quality personnel and will be responsible for quality and for implementing the measures necessary to achieve and document the compliance to contractual requirements. Subcontractors are required to comply with their own Companyaccepted program or this Quality Program, as applicable. Subcontractor Quality Programs, when utilized, shall contain the necessary quality procedures and documentation forms for implementing the Quality Program. The Subcontractor s Quality Program shall include provisions for agreed Pike and Client hold and witness points. The QA/QC Manager is responsible for monitoring Subcontractor construction and quality control to the extent necessary to provide construction management with adequate confidence that appropriate measures are taken by the subcontractors to control and achieve quality. See the procedures Quality Control Interface with Subcontractors (Reference 3.6) and Surveillance Procedure (Construction Site) (Reference 3.11) for more information If Pike employees will perform the work, the QA/QC Manager is responsible for implementing Quality Control for the Project in accordance with the Project Quality Plan and the Project Execution Plan. This includes hiring (with home office QA/QC Management approval) Staff/Contract Quality Control Inspectors as needed to meet Project needs. See the procedure Quality Control Functions and Responsibilities (Construction Site) (Reference 3.1). 5.2 QUALITY PROGRAM The primary objective of this quality system is to ensure that engineering and design, as well as construction, conforms to the Contract requirements and the drawings and specifications. A second objective is to produce auditable quality records that will provide written confirmation that the primary objective has been met. The program is primarily aimed at preventing nonconformances to contract and to drawings and specifications, but provides the means to detect and correct them if they occur.

4 PAGE 4 OF The Quality Assurance Manual describes the quality control system and the methods applied by the staff to obtain quality in performance of the work. The Quality Assurance Manual and the Quality Project Procedures are the governing documents for Pike s Quality Program and will be maintained and implemented to achieve Project quality objectives Implementation of the administrative activities requires the participation of Management as described in Sections through The Project QA/QC organization is described in the procedures Quality Control Functions and Responsibilities (Construction Site) and Quality Control Personnel Assignments (Construction Site) (References 3.1 and 3.2) The Project Manager is responsible for reviewing and approving the Project Execution Plan and ensuring that the Project Quality Plan is implemented consistent with the Client s requirements The Project Manager and Construction Site Supervisor are responsible for implementation of this program in engineering and design, as well as at the construction site. When conditions adverse to proper program execution are identified, the Project Manager and Construction Site Supervisor shall initiate timely corrective actions, coordinating activities with the QA/QC Manager and Site Quality Control Manager, as well as the responsible management to resolve the problem and prevent recurrence The QA/QC Manager is responsible for the following: Coordinate the Project Quality Control activities in a staff capacity. This shall generally include participation in the following areas: o Program establishment o Program monitoring activities o Nonconformance resolution o Office and field assistance o Program close out guidance Assure audit/surveillance of the Quality Program as deemed necessary during the life of the Project activities to verify compliance. Perform the necessary quality planning activities to ensure consistency with other requirements of the Quality Program and suitability to meet project quality

5 PAGE 5 OF 13 objectives as stated in the Project Execution Plan. Such activities should include the following: o Prepare the job specific Project Quality Plan, if required. o Identify the requisite controls, inspection equipment, and personnel skills needed. o Ensure compatibility of processes and procedures with the inspection, test, and commissioning procedures and documentation. o Identify the inspection required at various stages of the work and provide clarification of acceptability standards. Evaluate the need for formal qualification of personnel performing specialized operations, processes, audits, tests, or inspections, and ensure qualification needs are satisfied (Reference 3.12) The Site Quality Control Manager is responsible for the administration of the Quality Program at the construction site. His/her functions and reporting responsibilities are addressed in the procedure for Quality Control Functions and Responsibilities (Construction Site) (Reference 3.1) The Construction Site Supervisor is responsible for engineering liaison between the site and the Engineering and Design Group and for supervision of the technical staff at the field office. The Construction Site Supervisor is also responsible for managing site document control to provide accurate, current information (including drawings, schedules, correspondence, purchase orders, and other field originated data), and for the retention of records generated as a result of the Project Quality Plan. On larger construction projects, retention of quality records may be delegated to a Systems Turnover Coordinator, who reports to the Construction Site Supervisor or the Site Quality Control Manager The Assistant Construction Supervisor or Project Administrator is responsible for the administration of Contracts, including maintenance of accurate, current Contract status information in the site Master Contract Files The Managers, Supervisors, and Engineers are responsible for directing and/or overseeing assigned work. Additionally, they are responsible for the following: Verifying and documenting that work in progress is performed in accordance with applicable contract requirements, specification, drawing, and procedural requirements Maintaining an up to date status of the progress of the work

6 PAGE 6 OF 13 Informing responsible personnel about unsatisfactory items, while ensuring that corrective actions are taken to resolve these conditions The Testing and Commissioning (Startup) Coordinator is responsible for acting as the liaison between the construction and Testing and Commissioning Manager, as well as the Project Manager The Vice President Project Management is responsible for operational aspects of the activities for all Engineer Procure Construct (EPC) Construction and approval of new and revised Quality Control Project Procedures The methods by and degree to which the requirements of the Quality Program are invoked on a Subcontractor will be established in the Subcontract documents. The Project Quality Plan details the control and monitoring of fabrication and erection activities. The responsibilities, procedures, and documentation requirements contained in this document are typical for large EPC construction projects. The Quality Program may be tailored to meet individual project requirements and needs. Inspection criteria in each section can be adapted/revised to show actual contract quality requirements. Maintenance work and Small Capital Construction Projects may require development of project specific quality procedures and quality forms to address the limited scope, task oriented nature of this type of work. Maintenance and Small Capital Construction Projects may use appropriate procedures and forms from this manual to create or supplement Specific Maintenance or Small Capital Construction quality procedures. 5.3 CONTRACT REVIEW Pike Management shall review the initial Contract for Projects to assure that Pike has the capability to meet the contractual requirements, the requirements are adequately defined, and the requirements are the same as the tender documents or the differences resolved. The resultant schedules, bid/budget estimates, organization charts, alignment meetings, Client meetings, etc., provide evidence that a thorough review of the Prime Contract has occurred. Amendments to the Contract are also reviewed in a similar manner. Documentation of this review shall be maintained in the Project Documentation Files. 5.4 DESIGN CONTROL The procedure Quality Control Records (Reference 3.5) shall be used to identify, document, and ensure the appropriate reviews and approvals of changes and

7 PAGE 7 OF 13 modifications to design documents that are requested by site construction and erection personnel. 5.5 DOCUMENT AND DATA CONTROL The procedure Quality Control Records (Reference 3.5) shall be used to control documents and data to ensure the latest applicable drawings, specifications, and instructions required by Contract documents, as well as authorized changes thereto, are used for fabrication, inspection, and testing. The procedure Quality Control Records shall apply to technical document control for the Project. 5.6 PURCHASING Project procurement procedures shall be used for procurement and documentation of products purchased by Pike. 5.7 CONTROL OF CLIENT SUPPLIED PRODUCT Site procedures, according to Contract requirements, shall be used for control and documentation of products supplied by the Client that are to be incorporated into the work. 5.8 IDENTIFICATION AND TRACEABILITY Typically, identification requirements for equipment and materials are defined in the Contract specifications and purchase orders. The purpose of the identification and traceability system is to prevent the use of incorrect or defective items. This topic is further addressed in procedure Material and Equipment Storage and Maintenance (Reference 3.9). 5.9 PROCESS CONTROL Specifications and codes establish the quality criteria and requirements for the processes of welding, heat treatment, nondestructive examination, and pressure testing. Procedures shall be prepared to control these processes. The requirements for these procedures include personnel and procedure qualifications, materials, tests and examinations, and documentation Project specifications contain the requirements for controlling welding. The referenced codes establish requirements for welding procedure, material, and welder qualifications. Construction site welding control is addressed in the procedures for Substation Checkout and Wiring Verification and Inspection, Testing, and Commissioning (References 3.15 and 3.16).

8 PAGE 8 OF Specifications and codes establish the requirements for Nondestructive Examination (NDE). Construction Management is responsible for ensuring that required NDE tests and examinations are accomplished and documented. NDE is addressed in the procedure Special Process Control (Welding and Nondestructive Examination) (Reference 3.10) INSPECTION AND TESTING Appropriate procedures shall be used for inspection and testing activities to verify that the purchased materials and constructed items meet the requirements of the purchasing/contract documents (see References 3.8 and 3.9). Equipment, components, and materials received in the field require inspection to varying extents based upon the type and criticality of the item, extent of shop inspection, project requirements, and company experience. Incoming items are normally checked for overages, shortages, and damages as a minimum and will be held until the required receiving inspections are completed (see Reference 3.8) The Field Construction organization has primary responsibility for construction quality and will implement the measures necessary to build quality into the work and assist startup in performing pre commissioning, checkout, and testing requirements in accordance with drawings, specifications, and Contract requirements. Inspection measures to be applied are presented in this Quality Program. These procedures provide for the in process inspections and tests necessary to determine that the product is acceptable and for the documentation to record compliance with the established acceptance criteria. Adequate inspection will be performed to cover assembly, erection, and construction operations. The work shall be inspected for quality, workmanship, and completeness Records that provide evidence that the work has passed inspection and/or testing in accordance with the engineering and design documentation shall be prepared and maintained as a Quality Record in accordance with procedure Quality Control Records (Reference 3.5) CONTROL OF INSPECTION, MEASURING, AND TEST EQUIPMENT Inspection, measuring, and testing equipment and devices used for acceptance inspections shall be controlled and maintained by the organization performing the measurements or tests in accordance with procedure Measuring and Test Equipment (Reference 3.7).

9 PAGE 9 OF INSPECTION AND TEST STATUS A system to identify inspection and test status and acceptability of items throughout fabrication, test, and field installation shall be established in accordance with procedures Nonconformance and Stop Work Reporting and Quality Control Records (References 3.3 and 3.5) CONTROL OF NONCONFORMING PRODUCTS Measures shall be taken to ensure that any feature of the work containing uncorrected deficiencies is not built upon or concealed until satisfactorily corrected or the disposition approved by designated authority. Acceptance authority of conditions that violate Contract requirements belongs to Design Engineering and/or Client. Any authority delegated to Pike will be established in writing. Repair or rework of nonconforming material shall be performed in accordance with approved procedures. Control of nonconforming product on construction site is addressed in Nonconformance and Stop Work Reporting (Reference 3.3) CORRECTIVE AND PREVENTIVE ACTION The Quality Program requires prompt identification of nonconforming or unsatisfactory conditions. This identification occurs as a result of inspections, examinations, tests, reviews, and surveillance by Home Office and/or Field Personnel. Corrective and preventive actions are initiated upon discovery of conditions adverse to quality that are identified in nonconformance reports, inspection reports, receipt inspection deficiency reports, or surveillance reports. The corrective and preventive action taken should correspond to the level of risk encountered and the impact that the activity has on the project costs, schedules, safety, quality, performance, and Client satisfaction. Selection of the appropriate corrective and preventive action should be coordinated among the Project Manager, Construction Site Supervisor, the QA/QC Manager, and the Site Quality Control Manager. Corrective and preventive action will extend to the performance of Suppliers and Subcontractors In implementing the corrective and preventive action process, the QA/QC Manager and staff will perform the following: Evaluate the nonconforming or unsatisfactory condition in conjunction with the responsible parties to determine the need for corrective action. Determine the cause of the nonconforming or unsatisfactory condition, analyze trends, and institute prompt corrective action measures to prevent recurrence of these conditions.

10 PAGE 10 OF 13 Follow up by surveillance or other appropriate means to verify that the corrective and preventive action was effective. Document and report to appropriate levels of management the cause of the conditions and the corrective/preventive action taken HANDLING, STORAGE, PACKING, PRESERVATION, AND DELIVERY Procedures Material Receipt and Control and Material and Equipment Storage and Maintenance (References 3.8 and 3.9) shall be followed to document and track the handling, storage, packing, preservation, and delivery of materials and equipment CONTROL OF QUALITY RECORDS The Quality Program provides for maintaining control of records of inspections and tests. These records shall be addressed in accordance with procedure Quality Control Records (Reference 3.5). The maintenance of quality control records is normally delegated to the Construction Site Supervisor or the Site Quality Control Manager. However, maintenance of the records may be decentralized, under the control of the individual/department responsible for the quality of the work being performed, including Subcontractors, until the work is completed INTERNAL QUALITY SURVEILLANCE The QA/QC Manager shall prepare a schedule for quality surveillance inspections to verify compliance to the requirements of the Quality Program, engineering and construction procedures, and the Project Execution Plan. These audits shall be planned in such a manner as to evaluate home office and site control of Project activities. The surveillance schedule shall be coordinated so that Quality Program implementation and effectiveness have been assessed at least once during the construction duration depending on the size and type of Project. Site control of Subcontractor s work shall also be included in the surveillance schedule. Where Project size, duration, or location warrant, surveillance responsibility may be delegated to the QA/QC Manager. Construction site surveillances are addressed in procedure Surveillance Procedure (Construction Site) (Reference 3.11) The QA/QC Manager shall select the surveillance personnel and direct the preparation of surveillance checklists Surveillance findings shall be presented to the Project Manager, Construction Site Supervisor, QA/QC Manager, and the Pike Quality Standards Committee in an exit

11 PAGE 11 OF 13 meeting at the end of the surveillance. Each surveillance shall be documented in a surveillance report. The implementation and effectiveness of surveillance finding corrective action shall be verified to the satisfaction of the QA/QC Manager TRAINING Orientation of the Construction staff shall be conducted to ensure an understanding of the Quality Program and of the tools and techniques to be used in the operation of the program (see References 3.12 and 3.13) STARTUP The Startup personnel will provide contractually required commissioning and startup services. Startup activities are controlled and documented in accordance with procedures and forms unique to each project. 6.0 PROCEDURE 6.1 The extent to which the Quality Program is to be implemented for each individual construction project is addressed in the Project Execution Plan. 6.2 In situations where construction activities will be accomplished by a Subcontractor, the conditions of the Contract shall be reviewed and applicable procedural and contractual requirements shall be included in the Project Execution Plan. The Construction Subcontractors have primary responsibility for quality and are to implement the measures necessary to build quality into the product and perform inspections, mechanical completion checkout, and testing requirements in accordance with the drawings and specifications, and contract requirements. 6.3 The frequency of in process monitoring and verification activities shall be consistent with the construction progress and specification requirements, in addition to past performance (i.e., the frequency may be increased or decreased if the quality of workmanship warrants). Those activities showing a higher incidence of problems or difficulty shall be given special attention in an effort to determine their root cause. 6.4 Authority for control and/or oversight of construction activities at the site rests with the Construction Site Supervisor, in conjunction with the Site Quality Control Manager. The start and termination of any activity must be authorized and adhere to the criteria listed in through

12 PAGE 12 OF Work shall not start until specified preconditions and prerequisites have been met, including an understanding of the task requirements by involved personnel in accordance with procedure Reading for Understanding (Reference 3.13) Work shall not proceed beyond specified inspection points without proper authorization. Quality Program activities shall be planned to preclude undue delays in the work at inspection points. Construction schedules shall allow adequate time for required inspections If it is observed that work is not conforming to specifications and drawings, the Project Manager or Construction Management shall initiate prompt corrective action In situations where continued work would cause damage to permanent plant equipment, systems, or structures; jeopardize the safety of personnel; preclude further inspection; or render corrective actions ineffective, the Construction Site Supervisor shall stop the work in progress. This will be consistent with procedure Nonconformance and Stop Work Reporting (Reference 3.3) until an adequate resolution is provided Turnover of construction work to the Startup or commissioning authority shall be in accordance with Project Procedures. The Construction Management, in conjunction with the Site Quality Control Manager, shall resolve any open items affecting a component or system, or portion thereof, being turned over to Startup personnel or the Client. 6.5 In addition to providing the basis for controlling, dispositioning, and correcting reported conditions, Quality Control Documentation Forms, Construction Supervisor Reports, Nonconformance Reports, and punch lists (if applicable) shall provide the basic input to the Site Quality Accountability Program The Site Quality Control Manager shall prepare a monthly quality report for the Construction Site Supervisor that summarizes site quality information and quality status. This quality report information is typically included in the general project monthly report The Construction Site Supervisor shall review the quality information and status, and, if necessary, convene and chair a quality meeting with the Project s Management Staff and, if warranted, representatives of Subcontractors which, as indicated by the data, show a high incidence of problems. Normally, these meetings will be conducted in conjunction with regular Project Planning and Coordination Meetings. The object of the meeting is to review the reports, establish responsibilities, and identify specific courses of action to resolve the problems and/or minimize the potential of the problems reoccurring. These efforts shall also assess the effectiveness of previously assigned

13 PAGE 13 OF 13 preventative actions to assure a cooperative and coordinated effort in solving problems. The results of these meetings shall be documented (meeting minutes) with copies distributed in accordance with project procedures. 7.0 ATTACHMENTS None 8.0 FORMS None 9.0 REVISIONS AND APPROVALS Revision Level Revision Date Revision Description Department Head (Approver) 0 01/15/2010 Original Issue Brian R. Hay 1 07/26/2011 Updated logo and company name N/A 2 09/21/2012 General updating and editing Brian R. Hay