Rapid Deployment Project Management Business Perspective Market and Product Trends Product Plan – Capacity Planning R&D Projects Capital Project Planning R&D Process Development Design Engineering - Facilities Project Definition Funding Approvals Design Engineering Long Lead Launch Project Startup-Operations-Closeout Design Engineering Process Procurement and Contracting Construction Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Overview Characterized by need to get new product to Market. Very Capital Intensive Business, Typical Projects $10MM -$100MM, with 6 -18 months duration. Parallel Activities R&D, Engineering, Manufacturing Facility. Critical Decision Points Throughout Process and Product development up to start-up Jan 8, 2014 Prepared by Greg Scott PMP

Major Players in Program Rapid Deployment Project Management Major Players in Program Marketing: Identifies Product and Market Parameters. Management: Determines Cost/Benefit and alignment to Corp Strategy. Funding. R&D: Determines feasibility, Initiates Development, Builds and operates prototype Corp Engineering: Develops project plan, initiates engineering efforts, Construction Plans, Procurement, Etc. Mfg Facility: Integrated throughout for impacts, logistics, operator training. QC Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Success First to Market, Superior product, Gain Market Share Establish foothold for new family of products. Major Cost improvements on existing products Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Risks Shorter than expected product life cycle. Insufficient ROI Unforeseen Market Conditions, changes scope during execution. Must assume parameters at many stages to size utilities, long lead equipment, facility High cost, schedule and process risk as prototype facility is scaled up to full production configuration May enter into operation without optimized process conditions established Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Project Appropriation Package Defines high level requirements Business case, assumptions, ROI Schedule, In House Staffing Roles & Responsibilities- Stakeholders Cost Estimates for Design Engineering Specialty Item Procurement Construction Start-up, training, operating spares Risks, High Contingency Factors Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Design Phase Contract Design Engineering Resource Establish major design criteria for: Facility Footprint Capacities (Power, water, process materials) Modularize Design Process Equipment Logistics for product Utilities, support facilities Identify critical long lead items and or specialty process equipment Identify factors not finalized dependent on R&D efforts. Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Procurement and Construction Phase Generally have a Prime Contractor established Usually a cost+ contract Contractor participates at times in design phase Identify project items suited for: Design-Build Contract Design-Bid: Fixed Price, Guaranteed Max price, Other Procurement: Items specified and procured by Company Items specified by Company, procured by Prime Process unique components, 1st article validation Drawing and Specifications release schedule Interim estimating milestones Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Project Controls Define Go-No Go Gateway control points: What must be completed (all stakeholders) What decisions needed (all stakeholders) Cost Check-Points Cost Control – do not rely on expenditures only Closely Track value of Commitments: Purchase Orders and Contracts Design phase releases with estimates Design and Construction % complete with costs: Validate actual payments with previous estimates Consume Contingency Consume as needed for defined risk items Early recognition for total actual estimate vs.. Approved Cash Flow Requirements for funding Jan 8, 2014 Prepared by Greg Scott PMP

Rapid Deployment Project Management Comments Suitable if completion timing is critical Has many characteristics as in Agile Organizational Impact Requires a culture of action, commitment Qualified Staffing needed to minimize risk Organization needs to commit to contingency funding Requires qualified team of Designers, Builders Partnership to achieve results, communication leverage experience to maximize value Jan 8, 2014 Prepared by Greg Scott PMP

$100M New Site Process Facility Project Example #1 $100M New Site Process Facility Jan 8, 2014 Prepared by Greg Scott PMP

$100M New Site Process Facility Project Structure Project Example #1 $100M New Site Process Facility Project Structure Corp Engineering R & D Plant Operations Project Engineering Construction Manager Prime Contractor (Daniel Const) Design Engineers (Catalytic Engineering) Procurement (in House) Direct Contracts (AdminBld: design-build) (Storage Siles: design Build) Jan 8, 2014 Prepared by Greg Scott PMP

$100M New Site Process Facility Project Example #1 $100M New Site Process Facility Project Challenges: 15 Month Ground break to start-up Green Field site environmental challenges Historic archeological site clearance All utilities, logistical support included Unique Project Contract Cost Plus with Incentive Fee Prime paid 0 -100% of monthly earned fee Performance criteria rated monthly Project Outcome: Project cancelled 9 months after ground break Market demand disappeared Jan 8, 2014 Prepared by Greg Scott PMP

Prepared by Greg Scott PMP Project Example #1 Site Today Jan 8, 2014 Prepared by Greg Scott PMP

Prepared by Greg Scott PMP Project Example #2 $7M Worship Facility Jan 8, 2014 Prepared by Greg Scott PMP

$7M New Worship Facility Project Structure Project Example #2 $7M New Worship Facility Project Structure Building Committee Architect Project Manager General Contractor Sub Contractors Soils Engineer Hazardous Mat’l Inspection Hazardous Mat’l Remediation AV Contract Pews, Phone/Data, Other misc Jan 8, 2014 Prepared by Greg Scott PMP

$7M New Worship Facility Project Example #2 $7M New Worship Facility Project Execution More Traditional: Scope, Budget, Quality more important Traditional Architect design phases Funding and Design Preliminary Budget Approved Architect Selected – Competitive Evaluation Contractor participation - Selected based on GMP Bid, reputation, referals Included pre-construction design participation Jan 8, 2014 Prepared by Greg Scott PMP

Project Example #2 $7M New Worship Facility – Outcome Design Development through permitting Benchmark estimates at stages by GC Value Engineering to improve costs After best efforts, preliminary budget inadequate Funding re-approved from $6M to $7M Construction inflation over two years Scope Changes from original assumptions GMP Value set prior to construction start Results Opened on Schedule Overcame several permitting challenges Realized a 3% favorable change order impact Facility met and/or exceed expectations Operational Quality, durability realized over time Jan 8, 2014 Prepared by Greg Scott PMP

Comments on Major Contract Types Fixed Price Bid Requires high % complete design Caution on selecting qualified contractors Best when overall schedule (Concept to Completion) not most critical constraint Design-Build (Single Prime or Design plus Prime) Most be suitable for fast paced requirements Owners tend to have limited in house skills Cost control by owners more difficult Design- Guaranteed max Price Common in Architect- General Contractor type projects Best with GC assisting in design phase constructability GMP built from first construction permit set. Pricing basis details must be visible to owner ALL – Stay on top of change orders Jan 8, 2014 Prepared by Greg Scott PMP

References Major Contract Types American Institute of Architects (AIA) http://buildingadvisor.com/welcome-to-the-building-advisor/project-management/contracts/industry-standard-construction-contracts/#jumper1 American Society of Civil Engineers (ASCE) http://www.asce.org/contractdocuments/ International Federation of Consulting Engineers (FIDIC) http://fidic.org/node/747 Many other specialty disciplines in addition to government agencies will have their specific versions of contracts Jan 8, 2014 Prepared by Greg Scott PMP