Managing Environmental Project at PT Inco; Actualization of Professional Ethics as a Professional Engineer of Indonesia

(Nursery Project)

Habibie, Ir., IP, Ridwan Setiawan, IrPT Inco Central Engineering DP.08, Sorowako, South Sulawesi 92984, Indonesia

Andi Erwin Syarif, Ir, IP., MTPT Inco Government Relation, DP.23, Sorowako, South Sulawesi 92984, Indonesia

1. PT Inco Profile; One of the World’s Premier Nickel Producers

1.1. General Overview

PT Inco for more than three decades, since the signing of its Contract of Work with the Indonesian Government in 1968, the Company has provided skilled jobs, shown concern for the needs of the communities in which it operates, benefited shareholders and contributed positively to the Indonesian economy.

PT Inco produces nickel in matte, an intermediate product, from lateritic ores at its integrated mining and processing facilities near Sorowako on the island of Sulawesi. Its entire production is sold in US Dollars under long-term contracts for refining in Japan. PT Inco’s competitive strengths include abundant ore reserves, a skilled, well-trained workforce, low-cost hydroelectric power, modern production facilities and an assured market for its product.

The Company is owned 60,80 percent owned by CVRD Inco, 20,1 percent owned by Sumitomo Metal Mining Co. Ltd, 17,9 percent owned by publics and The others are owned by consortium of 4 Japanese Company.

Through the strength of our people and resources, we strive to be a safe, reliable, and profitable growth-oriented primary nickel producer.

1.2. Vision

PT Inco intends to remain a leader among multinational businesses based in Indonesia by consistently producing high returns on investment while adhering to strong corporate values.

We will realize our vision by enabling employees to reach their full career potential and achieve outstanding results for our Company.

We will strive to provide a safe, healthy and stimulating work environment that maximizes opportunities to enhance PT Inco’s success as a high quality nickel producer.

We take pride in promoting environmental responsibility and advancing community development.

1.3. Mission

We will meet our commitment to:

Investors through sustainable and consistent long-term earnings growth.

Employees by ensuring safe, healthy and rewarding work.

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Customers by meeting our obligations with respect to the quality and timely delivery of our products.

Indonesia through responsible corporate citizenship, fulfilling our Contract of Work commitments and community and environmental responsibilities.

PT Inco is committed to ensuring that it will operate in a clean, healthy and safe work environment; will take necessary steps and invest approximately to meet its environmental obligation

2. PT Inco’s Commitment in Environmental around Contract of Work

2.1. Environmental Management in Mining Land Operation

The commitment is spelled out in the Company policy relating to environment, health and safety stating that PT Inco is committed to sustainable development concept, taking into account the equitable balance between economic growth and sound handling of human health and environmental protection

Figure 1 - Nursery Activities for Mining Rehabilitation

The policy necessitates PT Inco not only to meet, but whenever possible, to surpass environmental national standard established by existing regulation.

PT Inco is committed to ensuring that it will operate in a healthy environment, by conducting continual improvement on the living environment performance, in the form of Post Mining Areas Rehabilitation, Sediment Control, Liquid Waste Control as well as Dust Emission Control.

Figure 2 - Plantation of Work in Post Mining Land

Since the post mining area reclamation was started on 1980, PT Inco has conducted continual improvement on their performance with sustainable development principle. When the post mining area reclamation was started, they focused on erosion control. Since then many efforts has been done to improve the performance.

In 2003, PT Inco created standardization of post mining area reclamation which has been certified by Directorate General of Mining to meet the demand for an optimum result entirely. It consists of best practice of post mining area reclamation activities. Since then, the activities became an un-separated part of mining plan until execution level.

Up to the end of 2005 PT Inco Tbk has re-vegetated 2.844 hectares of post mining areas. PT Inco Tbk has cooperated with PSl-UNHAS and The Biotechnological Forest Laboratorium IPB in doing repeated surveys and studying the reproduction of many local endemic plants to support the local endemic revegetation program.

PT. Inco always tries to integrate the post mining area reclamation program with the community development program so

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people can take advantages from the company. The company invited Mr. Zukri Saad (consultant, former Executive Director of WALHI), to evaluate the reclamation program and to give recommendation over reclamation program which is integrated with community and local government development program.

Figure 3 - Areas Rehabilitation Status at the End of 2004 PT International Nickel Indonesia

Performance Monitoring Post Mining Areas Re-vegetation Status Q4 - 2004

Figure 4 – ADITAMA Reward Gold Achievement from Energy and Mineral Resources Department, Republic of Indonesia.

2.2. Environmental Management in Processing Plant Area

In the year of 2006, PT Inco also Achieve the Gold of Aditama Reward from Energy and Mineral Resources Department, Republic of Indonesia due to the successful in controlling the erosion and managing the sedimentation in during Mining exploration, operation and post mining operation.

PT Inco also had been doing the installation of new high technology called Off Gas Cleaning System throughout all the Processing Plant System starting from Furnace System since year of 2004. The objective of this project is to reduce the amount of gas emission produced by the process plant operation.

The other program is Hydrocarbon Management which is ensuring that all the hydrocarbon use must comply with environmental regulation by Indonesian Law. The scopes of the program covered in Environmental Management Standard – EMS 01 produced by PT Inco with the purposes are:

a. To ensure all Hydrocarbon facilities at PT Inco recorded in a Central PTI Hydrocarbon Management Register that will be accessible and kept up to date.

b. To ensure all Hydrocarbon facilities are subject to a formal environmental risk assessment and that appropriate control are implemented.

3. Support and Engineering Services Department of PT Inco; Place for Managing the Capital Projects

3.1. General Overview

Support and Engineering Services (SES) provides support to the entire PTI organization in the form of Capital Project Management, Engineering services,

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Construction Services, Fabrication, Maintenance System support and Shutdown Planning. There are approximately 500 PTI employees in the department, while approximately another 500 people are managed through contractors.

3.2. Vision

Excellence in selection, installation and maintenance of Assets required by PTI to meet is vision. A team of highly skilled, energized professionals delivering this Support Safely, reliably and predictably.

3.3. Mission

Provide Asset Management Support to the entire PTI organization in the form of Capital Project Management, Engineering services, Construction Services, Fabrication, Maintenance System support and Shutdown Planning.

3.4. Goals and Objective

a. Capital Projects delivered safely, on time, on budget and meeting the owner’s expectations.

b. Safe, cost effective, timely and high quality delivery of construction projects.

c. Installation of the Asset Management Framework.

d. Support for the operating departments to maintain PTI’s assets to fulfill the stakeholders’ sustainability expectations. e. Effective and efficient maintenance

shutdowns every time. f. Effective People meeting personal

and organizational goals.

4. Nursery Facility Project

4.1. The Background and Key Objectives

The background of this project was the previous nursery facility could not provide more contribution to rehabilitation need since the land of post mining required more seeding and variety of trees to be re-vegetated. The existing facility also was not presenting the face of commitment of PT Inco to provide international quality of re-vegetation result in post mining process.

In 2005, PT Inco decided to start to build the world class of Nursery (total area is 2.5 Ha) with the objectives are:

1. To provide facilities that will be able to cover the nursery process in one complete facility. The new Nursery was intended to get 1 Million of trees per year.

2. To provide the international class of nursery which also a laboratory for students and to learn how to understand the reproduction of endemic population in Sorowako area.

3. A recreation place for various of plantation in Sorowako which also can be a training facility for community around Luwu Timur area.

4.2. Project Life Cycle

The life cycle of the project was started from project initiation until close out process as follows:

4.2.1. Project Initiation

Project initiation, was started in January 2005, there were several part in this phase:a. Business case submission to strengthen

the justification was submitted by Manager Mining and the Project Sponsor. It was consisting of the background why the request should be approved, the safety and environment risk ranking process, defining the alternatives of what we’re going to do to solve the issue, and providing

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sensitivity analysis of return on investment and payback period.

b. Capital review committee was doing the risk ranking and approved to be capitalized as unplanned capital project in early of 2005.

c. Engineering work request (EWR) was raised by the Mining Department as the Owner to Central Engineering to continue the project to the process.

d. Superintendent of Engineering to assign the Project Manager and Team.

In this phase, the sponsor also provided the presentation called “Preliminary Study Stage” as the part of business case submission consist the background of the request, the benefit for the company, was it opportunity or stay in business and how significant the product will impact the production and long term company business.

The flowchart below (Figure 5) is showing the management of capital project development process at PT Inco.

4.2.2. Project Planning

Project planning, was started the in March 2005 under PT Inco Project Manager. This phase comprise of:

a. Project Engineer will be assigned to help the Project Manager related to Technical Issue during project life cycle.

b. Established project scope definition meeting with the sponsor to get information deeper about “why are we doing this?”, the objectives, the generic project scope requirements, the location and tie in location, the major material and equipment required for this project, environment, health and safety requirement, what the product will be, schedule, budget, project constraints and risk planning, and other related things.

c. Scope planning and project communication development, to seek more input about the requirement of

the project, this phase was really important to ensure the operation people, sponsor representative and the owner were in the same perception of the end product will be. The project manager required to understand what the process will happen in this nursery (Hazop study), what kind of facility and its size was required to ensure the operation is running, the type of materials to ensure no future interruption after the product completed. There were so many questions must be addressed prior to procurement and design phase.

Figure 5 - Inco Capital Project Development Process (Project Initiation Process Group)

d. Risk Planning, the Project Manager, Project Engineer and Team to review the documentation of related

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information, gathering the information such as the location of the project in term of physical condition, community and social condition, the topographical assessment, the security and safety aspects to be considered during the project life cycles so the risk can be planned, solved, monitored and responded as it should be. Also the analysis of assumptions and constraints should be collected to ensure we had the quick and proper response risk planning.

e. Provided preliminary Layout and Work Breakdown Structure (WBS) to ensure there were no work packages were missed as agreed scope with the sponsor of the project.

f. Arranged CAR and budget book comprises of:- Statement of objectives and

deliverables of the project,- Budget Estimate,- Scope of Work.- Schedule Development and

Network Diagram,- Hazard and Operability (Hazop)

study result, technical feasibility study (including environment and safety evaluation).

- Human resources planning and organization chart. The type of the organization is Composite type where all the project Manager’s team were taken from different Functional Manager and some of the team also were doing other projects and daily activities and report to their Manager which was outside this project activities.

Figure 6 - Failure to Communicate Scope

In this phase, the Project Manager worked with the Project Engineer to ensure all the related aspects of the project requirements were fulfilled. The organization chart of the project was shown in CAR/Budget Book submission as shown below. The budget of the project was US$150,000 at the first stage, due to scope creep the project value became US$ 350,000 by the end of the project.

Figure 7 - Simple Project Organization Chart of Nursery Project

4.2.3. Project Execution

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Project ManagerGlenn Schrum, P.Eng

Project EngineerHabibie, Ir., IP

Construction ManagerTerry Cavender

Contractor: PT. Capra KaryaPT. Mitra Ateda Selaras

Design Engineer:PT. Mitra Ateda, JakartaHabibie, Oesman Reza, Alamsyah Syamsuddin

Sponsor: Dwayne KrollMine Engineering Department

Owner: Harry AsmarManager of Mining

Project Execution, was started on June 2005 and finish on April 2006. There were several phases to be included as the part of execution phase, these could continue after the CAR/Budget Book have been approved by PTI Senior Management Level.a. Continued the Approved Preliminary

Lay Out into the detail design phase. The process of the design consist drafting of the drawing and bill of material calculation, scope of work, specification detail. These whole works were collected into the product called “Engineering Work Package – EWP”.

b. Tendering and Contract Process. This process was involving contract services department to assign Contract Engineer to help the Project Manager in arranging the tender (pretender meeting and site visit with the contractor) and contract submission with the awarded contractor afterward.

c. Procurement Process. The required materials as per Bill of Material could be directly ordered as warehouse stock and/or direct purchase. The phase of the purchase could be divided by three major processes are: provided MR, select the best vendor and produce the contract to liaise with the selected vendors.

d. Construction Process. The construction of the Nursery Project was undertaken by 2 main contractors as the project was divided by two major works:i. Landscaping work by PT Mitra

Ateda using Turnkey project type. The contractor was responsible to design, procure, construct and provide 3 months warranty after the product of the project was completed. The landscaping work product will be detailed in deliverables of the project.

ii. Main access road, drainage, electrical power supply and lighting facilities.

e. Commissioning Process. The commissioning of the facilities to be

divided in four major disciplines, the building itself, the electrical and instrumentation system and mechanical commissioning consists of pump, tank and sprinkler commissioning.

During Project Execution Process Group the Project Manager will give more responsibility to Project Engineer to set up and implement the Quality Assurance; is the application of planned, systematic quality activities to ensure that the project will employ all process needed to meet the requirements.

4.2.4. Project Monitoring and Controlling

This phase consisted of several Process Group:a. Mana

ged Project Team, during this phase the Project Manager was strongly recommended to keep the team consistent to the completion of the project. Building the team spirit and resolving the conflict during the execution of the project. The Project Manager should be able to ensure the project was finished on time, on budget, on schedule without Disabling Injuries.

b. Quality Control Program, the inspection of quality control should be the part of the Project Manager’s responsibility to ensure the satisfaction of the client after the project was handed over to the Operation (project Sponsor). The quality control program such as concrete compressive strength test, galvanized film and painting thickness of the structure, electrical grounding test, pressure test, and other related inspection and testing plan (ITP).

c. Scope Control and Verification, to ensure the scope of the project still meet the updated project scope definition as the Project Sponsor requested and ensuring the product of the project to

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be accepted in every phase or process of the project.

d. Risk Monitoring and Controlling, this process was intended to identify, analyze, and planning for new risk and keeping on track the current risk that has been identified in Risk Identification/Risk Planning. In this particular case, the risk of the project was only concern on schedule achievement due to the new facilities will be inaugurated by the Minister of Forestry on April 2007. Other related risk such as material and equipment delivery from manufacturer to project site was very low.

4.2.5. Project Close Out

This phase was intended to close out the project that was started on May 2006 and completed on August 2007. The closing out process divided into two major activities; administrative closure and contract close out. Arrangement of Care, Custody and Control was taking place formalizing the final acceptance of the Sponsor to the final product.

The final product from this project comprised of several facilities as follows: Office building, Senior Supervisor of

Re-vegetation of PT Inco and his crews getting the office for daily activities to plan, execute, monitor and control the nursery activities.

Parking area access road along the area.

Water tank with capacity 50,000 liters for watering the plantation.

Electric pump to operate the sprinkler/spray system.

Open area for watering area/hardening (sprinkling area). Place for seed to adapt before planted on the field, automatic spray system. The capacity is 600,000 plants per cycle.

Media handling, the open building to prepare the seed.

Germination house, the facility to for seed reproduction using generative method and place for sprinkling the seed. The capacity is around 300,000 seeds per cycle.

Propagation house, facility for local plant reproduction using vegetative method. The capacity is 400,000 per cycles. The use of sprinkling for adequate watering, the light intensity is 75% and the roof type of the facility is using UV plastic.

Mycorrhiza house, the facility to produce the fertilizer with the capacity 2 tons/year.

Hydroponik training facility. Seed storage container. Wooden house for recreation and

refreshing.

Other things should be the part of close out process group is to complete the post audit contains lessons learned with the purposes as follows:

To provide valuable source of information for improving the project and any lesson shared.

To provide opportunity to create accountability within the process for estimates given and any decision made during the project execution phase.

To provide an important financial control mechanism, to look back and determine the actual results of the

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project with respect to Savings, Profits, etc.

To recognize subsequent actions which may be necessary that was not taken in the project from beginning till the end. We called it work breakdown structure lessons learned.

Figure 8 - Final Product of Nursery Facility Project

5. Code of Ethics as Professional Engineer of Indonesia

5.1. The Ethical Professional Engineers

The Institution of Engineers, Indonesia (PII) declared the professional ethics that should be practiced by all the Engineers of Indonesia as per Anggaran Dasar and Anggaran Rumah Tangga of PII.

We know exactly that the Engineering is an important and learned profession. As

members of PII, engineers are expected to exhibit the highest standards of honesty and integrity. Engineering has a direct and vital impact on the quality of life for all people. Accordingly, the services are provided by the engineers require honesty, impartiality, fairness and equity, and must be dedicated to the protection of the public health, safety and welfare.

In fulfilling our professional duties, we shall: Hold paramount the public’s health,

safety and welfare. Perform services only in areas of our

competences. Avoids conflict of interests. Act as a faithful agents or trustees of

our client’s interest. Avoid improper conduct in the

solicitations for assignments. Act to uphold honor, integrity and the

dignity of our professions. Maintain competence in our

professions through continuing education and training.

Respect our community and environment in all of our endeavors.

5.2. Project Engineer’s Role as an Actor who Implemented Professional Ethics

In PT Inco, Project Engineer has more responsibility rather than other project team to run the project to meet the deliverables of the final product, safety, cost and related Key Performance Indicator (KPI) factors.

In this case, the purpose of Project Engineer’s role is to provide Civil Engineering Technical Expertise to support all civil work related to Engineering Department’s Accountability. Managing Engineering projects related to civil engineering and implementation program. Generic Accountabilities (all

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Areal pembibitan berdiri di atas lahan seluas 2,5 hektar. Fasilitas pembibitan terbesar industri tambang di Indonesia.

Propagation House

Seed Container

Water Tank

Mycorrhiza House

Media handling

Germinationn House

Shaded House

Hardening

Pump

Hydroponik Training Facility

Office

employees will be accountable for the following):

Develops and implements the planning, scheduling and estimating of the Engineering function.

Responsible for the quality, technical competence and professionalism of the Engineering effort.

Complete engineering design calculations to meet accepted design standards, project scope and PTI standard specifications.

Prepare and collate Engineering Work Package documentation, to ensure all aspects of construction, safety and quality are clearly defined.

Provides Engineering direction and support for Procurement and Construction groups in the formulation of the Procurement and Construction Plans.

Resolve technical issues during project execution and commissioning, to ensure the project meets the planned objectives and quality.

Informing the project manager regarding progress on tasks and report immediately when a judgment is made that the output targets cannot be met, or more can be achieved.

Asking the project manager for clarification, when needed, on what is expected of the role.

Taking the initiative to improve your work, the overall business, and promote the goals of the organization.

Working effectively and collaterally with immediate colleagues and others in cross-functional relationships, on tasks within the context of corporate policy, values, and culture.

There are a lot of accountabilities should be performed by Project Engineer of PT Inco and should be relevant to actualization of Professional Ethics as Professional Engineers.

During working in Nursery Project, there were several engineering activities decisions made up by the project engineer such as: Determined the best location of new

Nursery Facility as per Feasibility Study conducted together with project team. This means, the decision was made based technical judgment as the way should be (no conflict of interest).

Managed the scope limitation between the two contractors who did the works. The scope of works had been performed in the contract and tender arrangement before then. No works shall proceed without contract agreement and so the contract must be detailed on what and who’s doing the related works.

Managed the construction works on the field, fair in making the decision if there was a deviation to quality or scope of works performed by the contractors. They should rework and/or repair the defects if it was not meeting the quality satisfaction.

Conducted the safety layer audit (SLA) to ensure all the workers were working safely and returns at home safely. The professional engineers should hold the responsibility to protect and help the project team (from PTI project team or contractor) with ensuring the done the right, safe and proper actions.

Improved the designs that were raised by the consultant to meet the standard and specification of PT Inco such as the installation of vertical and horizontal bar inside the concrete block walls to ensure the building is strong enough from seismic design since Sorowako area is very closed to central of earth work (zone#4).

Approved all the design changes done by the contractor which were expected to change the quality of required designs and specifications. Professional Engineers should always rely on technical judgment during project execution.

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Decided to install the disconnect switch outside the office building for electric pump to ensure the power could be switch off if the failure occur to the existing system.

Reference: 1Project Management Body of Knowledge, 3rd Edition. Project Management Institute, Four Campus Boulevard, Newton Square, USA, 2004

2Capital Project Owner’s and Sponsor’s Handbook. PT International Nickel Indonesia, 2005

3Engineering Procedures Manual. PT International Nickel Indonesia, 2006

4AD/ART & Susunan Pengurus Masa Bakti 2006 - 2009 Persatuan Insinyur Indonesia. Persatuan Insinyur Indonesia (PII), 2006

5Sid Dewberry GMU Graduation Speech, 2005.

6PT Inco website: http://www.pt-inco.co.id/new/profil.php, 2006.

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