SIL-800-PM-PR-001 - Project Controls 20130711.pptx

Project Control

1. Project Controls Roll Out Outcomes from SMMCI Board Meeting Project Organisation and Scope Owners Commitment, Expenditure and Payment Control Procurement Process Project Procedures and Forms

2. SMMCI Board Meeting Outcomes First SMMCI Board meeting held 26 June Board (or SOC) to meet monthly SMMCI independent entity to Philex Mining Initial project organisation agreed Approach to Commitment, Expenditure and Payment controls approved Procurement procedures approved 3

3. Project Organization and Scope Owners

4. 5 Organisation Chart – Management Admin Manager Study Manager HR Manager Finance Manager Project Services Manager Site General Manager Site Construction Manager Project Director Bruce F. Price President & COO Yulo E. Perez

5. 6 Organisation Chart - Studies Study Manager Project Director Bruce F. Price President & COO Yulo E. Perez Lead Consultant Study Manager Package Managers SMMCI Team - Mining - Metallurgical - Mechanical - Electrical - Civil Package Consultants

6. 7 Organisation Chart - Construction Site Construction Manager Lando Ocumen Project Director Bruce F. Price President & COO Yulo E. Perez Engineering & Maintenance Rolly Soriano Surface Infrastructure Ronnie Cubelo Vent Shaft Albert C han Decline Romy Punzalan Technical Services

7. 8 Organisation Chart – Site Support Site General Manager Robert Wagtingan Project Director Bruce F. Price President & COO Yulo E. Perez Environment Safety Security Finance HR Land Banking Purchasing & Materials Management Site Support Services Community Relations

8. 9 Organisation Chart – Project Services Project Services Manager Project Director Bruce F. Price President & COO Yulo E. Perez Purchasing Contracts Scheduling Cost Control

9. Scope Owners Scope Owners responsible and accountable for : Safe and effective management of activities Adherence to SMMCI project procedures Commitment of budget line items and work packages in a timely manner Achievement of quarterly expenditure targets

10. Commitment, Expenditure and Payment Control

11. Commitment Control Project Expenditure Requests (PER) used to authorise commitment of project funds for all items of expenditure for the period PER Applications Minor items – PER for quarterly allocations Recurrent items – PER for quarterly allocations Equipment and materials – PER for individual items or scopes of work Construction work and services – PER for work packages 12

12. Commitment Processing 13 Prepare PR/SR & PER Scope Owner SMMCI Project Services Budget & WBS Input Draft PER EOI / RFT / RTA Philex Purchasing Generate PO RFQ / RTA Issue Contract/PO to Contractor/Vendor Purchases Contracts Develop Contract Authorize Contract/PO

13. Expenditure and Payment Processing 14 Submit Claim Contractor / Vendor SMMCI Project Services Review Claim / Prepare PPC Submit Invoice Prepare RFP Authorize RFP within SMMCI Philex Accounts Payable Process Payment Prepare Remittance Advise Project of Payment Advise Vendor of Payment

14. DOCUMENT BUDGETED ITEM ( Php ) NON BUDGETED ITEM ( Php ) (Justification Needed) PER < APPROVED BUDGET PER > APPROVED BUDGET (Contingency Used) Approved PER Site/Study Mgr < 0.5M Pres or Proj Dir < 5M Pres & Proj Dir < 50M SMMCI Board > 50M (% of Approved Budget) Site/Study Mgr = 0% Pres or Proj Dir < 20% SMMCI Board > 20 % Site/Study Mg r < 0.5M Pres or Proj Dir < 5M Pres & Proj Dir < 50M SMMCI Board > 50M Purchase Order Notice to Proceed Contract Recommendation for Payment Site/Study Mgr < 1M Pres or Proj Dir < 10M Pres & Proj Dir > 10M Site/Study Mgr < 0.5M Pres or Proj Dir < 5M Pres & Proj Dir > 5M 15 Delegations

15. Procurement Process

16. Procurement Process – Key Points PR/SR and Draft PER required prior to Bid Technical and commercial conditions issued with invitations to quote/tender Approved PER required prior to award SMMCI Management delegated to sign Purchase Orders and Contracts Purchasing by Corporate/Site Purchasing Expediting by Corporate/Site Purchasing Logistics by Corporate/Site MMD Payments by Corporate Finance

17. 18 Yes No Yes No SMMCI Purchase Order Flow Chart Project Quarterly Plan Draft Project Expenditure Request (PER) Technical Input Does PR require Technical Input? Request for Quotation Bids Do Bids require Technical Evaluation ? Technical Evaluation Approved PER Purchase Order Purchase Requisition Yes Commercial Evaluation & Recommendation to Award

18. 19 SMMCI Contract Award Flow Chart Draft Project Expenditure Request (PER) Project Quarterly Plan Yes No Commercial & Technical Input Tender and Evaluation Process Approved PER Contract Next Slide Defined Scope of Work Recommendation to Award Notice To Proceed Is Preferred Bid <50M or >50M? < 50M > 50M SMMCI Board Approval Does Contract Scope require Commercial & Technical Input? Yes Service Requisition

19. 20 SMMCI Tender and Evaluation Flow Chart Tenders Technical Tender Evaluation - Technical Clarification - Third Party Support - Compliance to SOW - Review of Rates Request for Tender Is Expression of Interest or Prequalification required? Defined Scope of Work Recommendation to Award Expressions of Interest or Prequalification EOI or Prequalification Documentation - Tender, Forms & Schedules - Commercial & Contract Requirements - Tender Evaluation Criteria and Weightings Assessment & Short List Commercial Tender Evaluation - Legal - HSEC Compliance - Price - Commercial Clarifications Commercial Recommendation Contract Risk Assessment Technical Recommendation Yes No Tender Evaluation Panel The Panel is established in advance of the tendering process to oversight the process, evaluate bids, arrange for technical evaluation as required, recommend the preferred bidder and document the process for audit purposes. Flow chart text in red identifies Panel input.

20. Procurement Process Responsibilities DOCUMENT ABBREVIATION DEFINITION RESPONSIBILITY Project Quarterly Plan   PQP Identifies major activities and commitments for the coming quarter. Submitted each quarter for Board approval. Defines the approved scope, schedule and budget, including contingency. Monthly reporting shows commitments, incurred costs, unpaid amounts and payments made against the approved budget. Project Services Manager Project Expenditure Request PER   Authority to commit funds from within the Board approved budget. If item is not budgeted: Minor item – Contingency is used Major item – Board approval is required Draft PER: contains budget item, budget allowance, current estimated cost, PER number, WBS and cost code. Approved PER: includes delegated approval signatures. If current estimated cost exceeds budget allowance, Contingency is used. Scope Owner

21. Procurement Process Responsibilities DOCUMENT ABBREVIATION DEFINITION RESPONSIBILITY Purchase or Service Requisition   PR or SR Defines scope, technical requirements, commercial requirements and schedule of item. Referenced to Draft PER, PER number, WBS and cost codes . PR for Purchases; SR for Contracts Scope Owner Request for Quotation   RFQ Formal document used to seek quotations based on Draft PER and content of PR Procurement Manager Expression of Interest   EOI Formal process to short list capable suppliers/contractors for high risk works and services requiring a full Request for Tender package . Shortlisted organisation may be invited to competitively tender or individual organisations may be selected for individual work packages. Scope Owner Contracts Manager

22. Procurement Process Responsibilities DOCUMENT ABBREVIATION DEFINITION RESPONSIBILITY Request for Tender   RFT Formal process including commercial development of tender package seeking supplier/contractor submissions before evaluation and final recommendations. Scope Owner Contracts Manager Recommendation to Award RTA Recommendation on preferred Supplier or Contractor based on commercial and technical evaluations. Commercial evaluation for purchases is conducted by Corporate Purchasing. Technical evaluations and commercial evaluation of contracts are conducted by the Project Team. Procurement Manager Scope Owner Notice to Proceed   NTP Limited use with no formal commitment to contract while Board approvals are being sought. NTP’s state the commitment is limited to early works and an agreed amount within delegated authority limit. Scope Owner Contracts Manager

23. Procurement Process Responsibilities DOCUMENT ABBREVIATION DEFINITION RESPONSIBILITY Purchase Order   PO Formal notification of supply agreement to successful Supplier based on Approved PER and RTA. Endorsed by Scope Owner and Project Services Manager. Procurement Manager Request for Payment   RFP Authority for releasing a payment to a Supplier based on the Earned Value (EV) of the supply. Payments through Finance. Scope Owner Project or Purchase Completion Certificate PCC Authority to certify supply and conditions of supply, including warranty conditions have been met. Forwarded to Supplier. Scope Owner

24. Procurement Process Responsibilities DOCUMENT CREATION AND ENDORSEMENT Draft PER Approved PER Originator, Scope Owner, Cost Control Purchase Requisition Originator, Scope Owner Request for Quotation Request for Tender Originator, Scope Owner, Contracts Recommendation to Award Originator, Scope Owner Purchase Order Notice to Proceed Contract Scope Owner, Cost Control, Contracts Recommendation for Payment Originator, Scope Owner, Cost Control Project Completion Certificate Purchase Completion Certificate Originator, Scope Owner, Contracts

25. Forms

26. Forms – Purchase Requisition (PR)

27. Forms – Services Requisition (SR)

28. Forms – Project Expenditure Request (PER)

29. Forms – Change Order