Presentation to: AACEI Houston Gulf Coast Section Oil and Gas Benchmarking

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Presentation to AACEI Houston Gulf Coast
Section Oil and Gas Benchmarking

• Construction Industry Institute (CII)
• The University of Texas at Austin
• January 15, 2008
• Stephen P. Mulva, Ph.D.

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Outline

• CII and its Benchmarking Program
• CII Benchmarking Database
• Uses for Benchmarking
• Metrics
• Downstream Oil and Gas
• Productivity
• Analysis and Reporting
• Questions

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Construction Industry Institute

• A consortium of leading owners, contractors,
  suppliers, and academia working to improve the
  constructed project and the capital facility
  delivery process.

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CII Mission

• Add value for members by enhancing the business
  effectiveness and sustainability of the capital
  facility life cycle through CII research, related
  initiatives, and industry alliances.
• Expand the global competitive advantage realized
  through active involvement and effective use of
  research findings, including CII Best Practices.

CII Strategic Plan January 2005
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Owner Members

• 3M
• Abbott
• The AES Corporation
• Air Products and Chemicals
• Alcoa
• Amgen
• Anheuser-Busch
• Aramco Services
• BHP Billiton
• Biogen Idec
• BP America
• Cargill
• Chevron
• CITGO Petroleum
• Codelco-Chile
• ConocoPhillips
• Dow Chemical
• DuPont

Eastman Chemical Eli Lilly and Company ExxonMobil
General Motors GlaxoSmithKline Intel International
Paper Kaiser Permanente Kraft Foods Marathon
Oil NASA NAVFAC NOVA Chemicals Ontario Power
Generation Petrobras Praxair Procter
Gamble Progress Energy
Rohm and Haas Sasol Technology Shell Smithsonian
Institution Solutia Southern Company Sunoco TVA U.
S. Architect of the Capitol U.S. Army Corps of
Engrs. NIST U.S. Dept. of Energy U.S. Dept. of
Health Human Services U.S. Dept. of State U.S.
General Svcs. Admin. U.S. Steel Weyerhaeuer
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Owner Members
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Owner Members
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Contractor Members
ABB Lummus Global Adolfson Peterson
Constr. Aker Kvaerner Alstom Power AMEC Atkins
Faithful Gould Autodesk AZCO Baker Concrete
Construction BEK Bechtel Group Black
Veatch Bowen Engineering Burns
McDonnell CBI CCC Group CDI Engineering
Solutions CH2M HILL CSA Group Day Zimmermann
Dick Corporation Dresser-Rand Emerson Process
Mgmt. Fluor Foster Wheeler USA Fru-Con
Construction Grinaker-LTA GS Engrg.
Construction Hargrove and Associates Harper
Industries Hatch Hill International Hilti Hyundai
Engrg. Constr. J. Ray McDermott Jacobs JMJ
Associates KBR Kiewit Construction Group M. A.
Mortenson
Mustang Engineering Nielsen-Wurster
Group Parsons Pathfinder Perot Systems Primavera
Systems R. J. Mycka SB Engrs.
Constructors Shaw Group Siemens Power
Generation Skire SNC-Lavalin Technip URS
Corporation Victaulic Walbridge
Aldinger WorleyParsons Yates Construction Zachry
Construction Zurich
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Contractor Members
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Contractor Members
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Point of Departure

• Five Elements of Project Success
• Work and Work Process
• Organizational Engineering
• Leadership and Governance
• Communication and Information Flow
• Culture and Environment (Macro, Micro)
• Lack Material, Information, Equipment, Labor?
• Results in Poor Productivity (Metrics)
• Results in Poor Project Performance (Metrics)
• Need for Reliable Metrics

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CII Benchmarking Metrics Overview

• CII Benchmarking is a user friendly, resource
  efficient, statistically credible benchmarking
  system that provides quantitative data essential
  for the support of cost/benefit analyses. ...

Industry Leaders Choose CII Benchmarking Because
it Leads to Success
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Enhance Business Effectiveness

• Highlight Problems and Root Causes
• Establish Improvement Goals
• Implement CII Best Practices (BP)
• Realize Up to
• 22 Schedule Reduction
• 16 Cost Savings
• Continuously Improve

What Gets Measured Gets Improved Benchmark with
CII and Get Results
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CII Benchmarking Metrics Primer

• 1,600 Projects Entered Since 1996
• Confidential
• Inexpensive
• Free with CII Membership
• No Consultants Required (Self Evaluation)
• Compelling Metrics
• Unique Measures of Best Practices Productivity
  for Engineering and Construction
• Not a Black Box Easy to Comprehend
• External Performance Benchmarks of Cost,
  Schedule, Safety, Change, and Rework

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CII Benchmarking Products

• Enable Best in Class Performance
• Identify Industry Trends and Drivers

Project Key Reports
Industry Reports
24/7 Internet Data Entry
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BMM Committee

• Gibson, Jim (Co-Chair) Alstom Power
• Helland, Harold (Co-Chair) Abbott
• Allmen, Carol - General Motors
• Caggiano, John U.S. Corps of Engineers
• Chapman, Bob NIST
• Curbello, Chris CBI
• Davis, Shari Mustang Engineering
• Dove, Ralph CH2M HILL
• Gokey, Mark Bechtel
• Gordon, Scott Shell Oil Company
• Green, Charlie Aramco Services
• Herrington, Bob Jacobs
• Hile, Dave Black Veatch
• Kass, Howard NASA

• Neale, David Fluor
• Nielsen, Mike Merck
• Orellana, Roberto Procter Gamble
• Perkins, David Rohm and Haas
• Pitcher, Jon Eli Lilly
• Scott, Danny BEK
• Slaughter, Jimmy SB Engineers and Constructors
• Warnock, Steve Washington Group
• Woldy, Paul Chevron
• Mulva, Stephen (Ex-Officio) CII
• Dai, Jiukun (Ex-Officio) CII
• DeGezelle, Deborah (Ex-Officio) CII

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CII Benchmarking
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Which Questionnaire?
Small or Large?

• TIC 100K-5M
• Duration 14 mo.
• Site Wk-Hrs 100K
• Full-time PM resources not required

• TIC ? 5M
• Duration ? 14 mo.
• Site Wk-Hrs ? 100K
• Full-time PM resources
• required

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Large Project Questionnaire
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Targeted Industry Metrics
Large Project Supplements

• Pharma Bulk Mfg.
• Pharma Secondary Mfg.
• Pharma Laboratory

• Project and Process Metrics
• Sulfur Recovery Units
• Coker Units
• Hydrotreaters

Targeted Metrics Programs Available Through
Annual Subscription
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System Features
CII Database
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CII Database
Domestic

• 1,562 projects
• Worth gt 72 Billion
• Large Small Projects Combined

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CII Database
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CII Database
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CII Database
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The Value of Benchmarking

• Improves project company performance when used
  as an ongoing measure
• Establishes improvement goals based on
  external/competitive benchmarks
• Enables your company to understand achieve
  best in class performance

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Uses for Benchmarking

• Continuous Improvement

Implement Best Practices
Conduct Training
Measure Results
Select Implementation Tools
Compare to Competition
Identify Opportunities to Improve
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Uses for Benchmarking

• Validation of Project Definition/ Gated Approval

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Uses for Benchmarking

• Establishing Performance Objectives

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Uses for Benchmarking

• Determining Performance Relative to Peers

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Benchmarking Roadmap
Adapted from Robert C. Camp
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Single Project Concept Adopted Formal Project
Team Established
Project Sanction
Release of all Drawings Specs
Contract Award to Engineering Firm
All Major Equipment Delivered to Site
Substantial Completion
Development of Procurement Plan for Major
Equipment
Commencement of Foundations or Driving Piles
Mechanical Completion
Custody Transfer
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Effort vs. Value
High
No
Collection Effort
Yes
Low
High
Data Value
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Types of Metrics

• Performance
• Relative Cost Growth, Schedule Growth (Compares
  actual to planned)
• Absolute /SF, TIC/Process Equipment,
  Execution Duration/GSF (Actual or should cost)
• Process Equipment Count/Capacity (Industry
  Specific)
• Productivity Engineering Construction
• Practice Use Front End Planning,
  Constructability, Zero Accident Techniques

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NormalizationHard Cost (Absolute) Benchmarking
Requires

• Location and Time Adjustments provide a common
  basis for comparisons
• Projects can be grouped geographically and by
  time or
• Projects can be normalized to a common location
  time
• Foreign currency exchange

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Traditional Performance Practice
Use Metrics
Practice Use
Performance
Practice Use

• Cost Performance
• Schedule Performance
• Safety Performance
• Change Performance
• Rework Performance
• Construction Productivity
• Engineering Productivity

• Front-End Planning
• Alignment
• Team Building
• Partnering
• Project Risk Management
• Change Management
• Constructability
• Zero Accident Techniques
• Planning for Startup
• Proj. Delivery Contract Systems
• Benchmarking

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Best Practice Use (Safety) TRIR (1989-2006)
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Cost Performance Metrics
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Schedule Performance Metrics
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Safety Performance Metrics
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Change Performance Metrics
Rework Performance Metrics
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Industry Sector-Specific Metrics

• Current
• Pharmaceutical
• D/S Oil Gas
• COAA (Contract)
• Upcoming
• Healthcare Facilities
• U/S Oil Gas
• Aviation Facilities
• Future
• Power Generation
• Food and Beverage
• K-12 Education

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Downstream Oil and GasIndustry-Specific Metrics
Program
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Purpose Scope

• Purpose
• Develop a user defined, transparent, real time
  accessible, credible and cost effective
  benchmarking resource for the oil and gas
  industry
• Scope
• Development of the metrics framework, metric
  definitions, and data collection instrument
• Project selection and data input
• Data analysis
• Report development

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Downstream Participants

• Round I
• Current Participants
• Aramco Services
• Chevron
• Citgo
• Marathon Oil
• Shell Oil
• Petrobras
• Potential Participants
• ConocoPhillips
• Sunoco
• 60 Projects (10/Company) Committed

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Questionnaire

• Scope Focused on Refinery Projects
• Detailed Cost Metrics
• Two Levels of Benchmarking
• Project Level
• Process Unit Level
• Hydrotreating
• Sulfur Recovery
• Coking
• Owner Project Management Team (PMT)
• Two points of Benchmarking
• AFE (Authorization For Expenditure)
• Project Completion

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Metrics

• Project Metrics
• Cost (20 Absolute)
• 15 are applicable at AFE Completion
• Schedule (12 Absolute)
• 8 are applicable at AFE Completion
• Productivity (11 Absolute)
• 9 are applicable at AFE Completion
• Safety (3 Absolute)
• Others (8 Absolute)
• 6 are applicable at AFE Completion

• Process Unit Metrics
• Cost (14 Absolute)
• 12 are applicable at AFE Completion
• Others (3 Absolute)
• 3 are applicable at AFE Completion
• Process Parameters
• Hydrotreaters (9 Parameters)
• Sulfur Recovery Units
• Cokers

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Cost Structure

• Project Level

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Cost Structure contd

• Process Unit Level

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Metrics Example

• Cost

• Schedule

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Downstream Work Plan

• Finished Activities
• Define Oil and Gas Metrics
• Program Data Collection Tool
• Training for Data Collection
• Currently Ongoing Activities
• Input Project Data
• Normalization Issues
• Future Activities
• Analyze data
• Generate Key and Summary Reports
• Assess Path Forward

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Productivity

• Engineering

Actual Wk-Hrs
Productivity
IFC Quantity
Per Design Component

• Construction

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Categories

• Concrete
• Structural Steel
• Equipment
• Piping
• Electrical
• Instrumentation
• Insulation (Construction Only)
• Scaffolding (Construction Only)

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Levels of Detail
Construction Example for Concrete
Level I (Future)
Project
Total Concrete
Level II
Level III
Concrete Structures
Foundations
Slabs
lt 5 CY 5 20 CY 20 50 CY gt 50 CY
On Grade Elevated Area Paving
Level IV
N/A
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Construction Productivity - Concrete
Foundations Example

• Small sample
• Use with caution

Better
Your Circle?
Foundation Size
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Piping Engineering Productivity by 2D/3D
Implementation
Lower Productivity
Productivity Index
Better Productivity
3 year moving average
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Piping Engineering Productivity by Project
Characteristics
Hr / LF
Better Productivity
Lower Productivity
Note at the 90 confidence level
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Analyzing CII Productivity Measures(Construction
Productivity (ISBL Pipe) vs. Engineering
Complete)
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What do we Measure?
Practice Use
Performance
Correlations
Value of Practice Use
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Quantifying Value of Best Practices
What is the relationship?
How good is the fit?
Is it significant?
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How to analyze the relationship?
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How to analyze the relationship?
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Improvement Potential
Low Use
High Use
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Project Reports
Individual Project Performance
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Project Reports
Metric Details
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Industry Analysis
Funded Studies Reports

• Impacts of Design IT on Project
• Outcomes
• Impact of the Delivery System DB
• vs. DBB
• Best Practices for Project Security

• Hardcopy

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Industry Analysis
Special Pharmaceutical Metrics
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CII Confidentiality PolicySummary of Key Features

• Company data are considered confidential.
• Data can be used to support CII benchmarking,
  research, and related academic activities only if
  the confidentiality of companies submitting the
  data is protected.
• Access to data is limited to CII staff and
  authorized researchers only.
• All persons with access to CII data must sign
  confidentiality agreements and abide by CII
  confidentiality policies.
• When data are provided in support of research
  activities, all confidential identifiers will be
  removed and only essential subsets of data will
  be provided.
• All data published and/or presented must reflect
  the aggregate of at least 10 projects from 3
  separate companies.
• Reports and data files containing only individual
  project or company data are considered
  confidential will not be published or provided to
  researchers.
• In cases where a disproportionate amount of data
  are provided by a single company, CII will
  suppress publication of results until the data
  set is sufficiently large to mitigate
  confidentiality or bias concerns.

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CII Web and Project Central

• CII Website http//www.construction-institute.o
  rg/

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Project Central My Projects
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Select a Section of the Questionnaire to input or
update data
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Data Entry

• Easy to Use
• Consistent format

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Validation Process
Company Benchmarking Associate
CII Staff, Account Mgrs. Committee
Project Managers

• Key Participants
• BMA Responsibility
• CII Responsibility
• 30 Day Goal

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Project Central - Reports
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Progress Key Report
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Progress Key ReportSummary View with Percentiles
Click Here!
Click on the bar or the n number to get a
statistical summary
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Project Key Report
Statistical summary and Project Score for
Process Constr. Cost Process Equip. Cost
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Data Report
1
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Select the level of detail and a metric, click
chart-o-rama.

• Pick your X Axis
• Select your level of detail.
• Get your chart!

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Data Report
2

• Pick your X Axis
• Select your level of detail.
• Get your chart!

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1
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Under Development
Chart-o-Rama V2
Dynamic data mining and reporting tool with
aggregate reporting features (Sep 08)
Performance Summary Dashboard
High level performance summary (Mar 08)
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eCommunity
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eCommunity
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A Look Ahead

• Upstream Oil Gas Program
• Support from Fluminense Federal University (UFF)
  / Petrobras (Brazil)
• Joint Industry Program (JIP) with UT Petroleum
  Engineering
• Other Geographic Areas of Offshore Activity
• Healthcare Specialty Metrics Program
• Extension of COAA Contract
• Aviation Facilities

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What gets measured, gets improved!
When you're average, you're just as close to the
bottom as you are the top.
- Unknown