Industry-Specific Metrics The Case for Tailored, Transparent Metrics Benchmarking & Metrics Committee July 27, 2006

Moderator & Panel Harold Helland, Abbott (Moderator) Mike Nielsen, Merck & Co. Paul Woldy, Chevron Corp. Charlie Green, Aramco Services Company Steve Thomas, CII Deborah DeGezelle, CII

Why Industry-Specific Metrics? Measure performance and processes specific to industry groups Provide more tailored metrics Provide greater transparency to metrics

Pharmaceutical Benchmarking

Pharmaceutical Participants Abbott Amgen Biogen Idec Bristol-Myers Squibb Eli Lilly and Company Genentech GlaxoSmithKline Merck Wyeth-Ayerst Laboratories

Pharma Industry Benchmarking Objectives Establish Benchmarking Metrics that provide:  Insight to capital projects cost and schedule relative to other companies in the industry.  Ability to observe industry trends related to capital investment.  Ability to evaluate project designs and cost estimates prior to commitment.

Pharma Scope & Approach Round I: Mar 04 – Sep 05 Metric and Key Report development Pharma Summary Report Round II: Sep 05 – Dec 06 Automation of adjustment factors Development of Data Mining Tool Refinement of metrics Forums to promote and expand participation Data collection and key reports

Selection of Pharma Metrics Extensive brainstorming and rationalization Representatives from 5 Pharma Companies  Abbott ■ Eli Lilly and Company  Amgen ■ Merck  GlaxoSmithKline Terminology, definition and agreement Some metrics are included on a trial basis and may be eliminated in the future Other metrics may be added as need is recognized

Absolute Cost Benchmarking Requires Normalization Location and Time Adjustments provide reasonable comparisons at a common location and time. Normalizing cost to a common basis allows:  The project to be benchmarked against a representative dataset.  The project data to become a part of the normalized dataset for future blinded comparisons.

Currency, Location & Time Adjustments Cost data are recorded in the local currency. Base Location: Chicago, US Base Year (Current)

Normalization Indices For Location: US Projects: RS Means City Cost Index International Projects: Hanscomb Means City Cost index For Escalation: RS Means Historical Cost Index

Metrics Framework Pharmaceutical Industry Pharmaceutical Bulk Manufacturing Biological Direct Derived Fermentation Cell Culture Attachment Dependent Stirred Tank Pilot Plant Chemical Manufacturing Pilot Plant Pharmaceutical Secondary Manufacturing Fill Finish Parenteral Syringe Delivery Device Vial Pilot Plant Non-Parenteral Inhalents Solid Dosage Cream / Ointment Pilot Plant Packaging Pharmaceutical Warehouse Pharmaceutical Laboratory Research Biological Chemical Quality Control / Quality Assurance Vivarium Process Development

Sample Cost Metrics Pharmaceutical Industry $TIC / GSF $TIC / GCF $Hard Cost / GSF $Soft Cost / $TIC $Soft Cost / $Hard Cost $Facility Construction / GSF $Facility Construction / GCF *Hard Cost = Facility Construction Cost + Process Construction Cost *Soft Cost = Design & Construction Management Cost + Qualification & Validation Cost *Process Construction Cost = Process Equipment Cost + Process Installation Cost + Process Automation Cost

Sample Dimension and Schedule Metrics Pharmaceutical Industry Mechanical SF / GSF Shell Space SF / GSF (IQ ~ OQ Duration) / (IQ + OQ Protocols) (IQ ~ OQ Duration) / Validated Equipment Piece Count (Design ~ OQ Duration) / GSF (Design ~ OQ Duration) / GCF (Design ~ OQ Duration) / Total Equipment Piece Count *IQ: Installation Qualification *OQ: Operational Qualification

Status of Database Currently holds 40 Projects Database is diverse enough to return data to the level of:  Bulk API  Fill Finish  All Labs plus  Research Labs More projects needed to get finer results (close on Biotech (1), Chem (3), Non-Parenteral, Biolabs,and Chemlabs

 Process Development 4  Vivarium 2  Quality Control / Quality Assurance 8  Chemical 8  Biological 13 Research 21 Pharmaceutical Laboratory 35  Pharmaceutical Warehouse 3  Packaging 0  Pilot Plant 0  Cream / Ointment 0  Solid Dosage 11  Inhalents 2 Non- Parenteral 13  Pilot Plant 1  Vial 7  Delivery Device 1  Syringe 3 Parenteral 12 Fill Finish25 Pharmaceutical Secondary Manufacturing 28  Pilot Plant 3  Manufacturing 11 Chemical14  Pilot Plant 2  Stirred Tank 8  Attachment Dependent 2 Cell Culture 10  Fermentation 5  Direct Derived 1 Biological18 Pharmaceutical Bulk Manufacturing 32 Expected Database after Round II

Reference Report for Industry Norms Performance & Practice Use Metrics Pharma Industry Absolute Metrics Breakouts by: Domestic & International Industry Group (HI, LI, Bldg., Infrastructure) Project Nature (GR, Add., & Mod.) Pharma Project Type Cost Category Contractor Function (D, C, D&C) Data Reports

Pharma Schedule Metrics Report

Pharma Cost Metrics Report

Downstream Oil & Gas Benchmarking

Oil & Gas Team Participation Aramco Chevron Corporation ExxonMobil Marathon Oil Company Shell Oil

Oil & Gas Scope & Approach Nov 2005 – Feb 2006 scoping meetings Companies in attendance: Aramco, Chevron Corporation, ExxonMobil, Marathon Oil Company, Shell Oil Approach: Initial effort: Downstream refining projects only Round I: Define framework & metrics for a couple of project types Initial data collection in late 2006 Follow-on effort: Upstream to commence Aug 2006

Oil & Gas Timeline Scoping Meetings Q 1Q 2Q 3Q 4Q 1Q 2Q Activities Define Metrics Questionnaire Conduct Training Collect Data Analyze Data Develop Reports Assess Results

Metrics Framework Oil & Gas Process Categories Auxiliary Operations and Facilities Other Refining Operations Treatment Conversion Distillation Pretreatment

Metrics Framework Oil & Gas Treatment Project Types (Examples) Treatment Hydrotreater (Naptha, Kerosene, Diesel, VGO) Sour Water Stripper Acid Gas Removal Aromatics Removal Gas Recovery Unit

Sample Cost Metrics Total ISBL Cost / Capacity TIC (ISBL+OSBL) / Capacity Total Owner Project Management Team Cost / TIC Total Detail Engineering Cost / TIC Total Indirect Detail Engineering Cost / Total Direct Detail Engineering Cost Total Const. Cost / TIC Total Direct Construction Cost / TIC Total Indirect Construction Cost / TIC Total Indirect Construction Cost / Total Direct Const. Labor Cost Total ISBL Cost / Major Equip Cost Total Detail Engineering Cost / Total Direct Detail Engineering Wk-Hrs

Sample Schedule Metrics FEED Duration / Total Direct Const. Wk-Hrs Execution Duration / Capacity Execution Duration / Engr Equip Cost Overall Duration / Capacity Overall Duration / Engr Equip Cost FEED Duration / Overall Duration Detailed Eng. Duration / Overall Duration Construction Duration / Overall Duration Shutdown Duration Project Schedule Extension Due to Change Orders Project Schedule Growth

What’s Next? Oil and Gas Upstream - Team forming in Fall 2006 Public Sector Buildings Power Generation Automotive Now Gauging Interest in Other Industries

Information & Contacts Pharma Contacts: Chair – Harold Helland: CII – Steve Thomas: Information: Product Display Room benchmarking.org/pharma/pharma- bmm.cfm Oil & Gas Contacts: CII – Kirk Morrow: Information: Product Display Room

Industry-Specific Metrics The Case for Tailored, Transparent Metrics Benchmarking & Metrics Committee July 27, 2006