An Introduction to the Construction Industry Institute January 20, 2009

A research institute of leading owners, contractors, and academics working together to advance the business effectiveness and sustainability of the world’s capital facilities.

History Established as a recommendation from The Business Roundtable Construction Industry Cost Effectiveness (CICE) Project to address: - construction research - fragmentation of the industry Founded in 1983 by 28 companies; now over 110 members. First to bring research to the engineering-construction world. First owner-contractor-academic research collaboration for the constructed project. An industry forum for the engineer-procure-construct process.

Mission Enhance business effectiveness and sustainability of the capital facility life cycle Expand the global competitive advantage of its members through: –active involvement & participation –effective use of CII research findings, including CII Best Practices. Purpose To measurably improve the delivery of capital facilities.

Owner Members Abbott The AES Corporation Air Products and Chemicals Alcoa Ameren Corporation American Transmission Co. Amgen Anheuser-Busch InBev Aramco Services Company Archer Daniels Midland Co. BP America Bristol-Myers Squibb CO> Cargill Chevron CITGO Petroleum Codelco-Chile ConocoPhillips DFW International Airport The Dow Chemical Company DuPont Eastman Chemical Company Eli Lilly and Company ExxonMobil Corporation General Motors Corporation GlaxoSmithKline Hovensa L.L.C. Intel Corporation International Paper Kaiser Permanente Marathon Oil Corporation NASA Naval Facilities Engineering Cmd. NOVA Chemicals Corp. Occidental Petroleum Corp. Ontario Power Generation Petrobras Praxair, Inc. The Procter & Gamble Co. Progress Energy Rohm and Haas Company Sasol Technology Shell Oil Company Smithsonian Institution Solutia Southern Company Sunoco Tennessee Valley Authority Tyson Foods U.S. Architect of the Capitol U.S. Army Corps of Engineers U.S. Dept. of Commerce/NIST/BFRL U.S. Dept. of Energy U.S. Dept. of Health & Human Srvcs. U.S. Dept. of State U.S. General Services Administration U.S. Steel Vale

Contractor Members Adolfson & Peterson Construction Aker Solutions Alstom Power AMEC Atkins Faithful & Gould Autodesk AZCO Baker Concrete Construction Barton Malow Company Bateman Engineering N.V. Bechtel Group BIS Frucon Industrial Services Black & Veatch Bowen Engineering Corporation Burns & McDonnell CB&I CCC Group CDI Engineering Solutions CH2M HILL CSA Group Day & Zimmermann dck worldwide, LLC Dresser-Rand Company Emerson Process Management Fluor Corporation Foster Wheeler USA Corporation Grinaker-LTA/E+PC Gross Mechanical Contractors GS Engineering & Construction Hargrove and Associates Hatch Hill International Hilti Corporation Jacobs JMJ Associates KBR Kiewit Power Construction Lauren Engineers & Constructors M. A,. Mortenson Company Mustang Parsons Pathfinder LLC Pegasus Global Holdings Primavera Systems R. J. Mycka S&B Engineers and Constructors, Ltd. The Shaw Group Siemens Energy SNC-Lavalin Technip URS Corporation Victaulic Company Walbridge The Weitz Company Worldwater & Solar Technology WorleyParsons Zachry Zurich

University of Alabama Arizona State University Auburn University Bucknell University Carnegie Mellon University University of Cincinnati Clemson University University of Colorado-Boulder Colorado State University University of California-Berkeley East Carolina University University of Florida Georgia Institute of Technology University of Houston University of Illinois Iowa State University University of Kansas University of Kentucky Lehigh University University of Maryland University of Michigan Mississippi State University Universities involved University of New Mexico North Carolina State University North Dakota State University Oklahoma State University Oregon State University The Pennsylvania State University University of Pittsburgh Purdue University Polytechnic University San Diego State University San Jose State University Stanford University State University of New York-Albany Vanderbilt University Virginia Polytechnic Institute and State University Texas A&M University The University of Texas at Austin University of Washington University of Waterloo University of Wisconsin-Madison Worcester Polytechnic Institute

CII Principles Place a premium on safety, ethics, continuous improvement (cost, schedule and quality), and leadership. Owner / contractor member balance and influence. Promote a high level of knowledge transfer. Provide leadership development through member participation. High member involvement; small professional staff.

Knowledge creation through CII research to define best practices, breakthroughs, and industry norms. Knowledge dissemination through CII research publications, implementation guides, educational materials, workshops, and conferences. Knowledge management, organization, and assessment of relevance of the 450-plus CII documents and publications. Knowledge assessment of the impact of CII practices through the benchmarking and metrics program. CII: A Leader in the Construction Industry Through these knowledge processes, CII enhances the business effectiveness, sustainability, and global competitiveness of CII members and lifting the construction industry.

“CII is the one place that owners, contractors and academia work jointly on key initiatives to improve our industry. The depth of knowledgeable resources that actively participate is unparalleled in the industry. CII is also the one industry forum that through research provides deliverables and tools that its members can immediately put into practice. The benchmarking metrics from its members consistently validate the value of participation and membership. The opportunity to network and learn from industry leaders is also invaluable.” John W. Dalton, Sr. Mustang

Benefits of CII Membership Collaboration with leading industry, government, and academic institutions on key industry issues without the risk of anti-trust problems. Competitive edge through immediate access to new research findings, offering a first-to-market competitive advantage. Equal vote by all CII members in the selection of research and other CII activities. CII Product Library – Free, unlimited organizational access to CII Products Online, a 24/7 web-based resource of CII Best Practices, practices, products, and tools that when successfully implemented produce significant improvements in cost, schedule, and safety.

Benefits of CII Membership Networking and CII committee/team participation that lead to partnerships and long-term personal relationships. Education Programs to help members develop leadership and competence in their staff, from entry level to executive level, including online courses, modules for member self- instruction, and registered instructors for customized training. CII Implementation Training to integrate CII Best Practices into business strategies. CII implementation tools and workshops explain the methodology and applied skills required to implement CII research findings. CII Benchmarking & Metrics Program provides tools for members to compare their capital and maintenance projects with the best in class.

Benefits of CII Membership Ability to input an unlimited number of projects into a secure database managed by CII where self-analysis tools point to CII resources to improve specific project parameters throughout the project process. Implementation support to integrate CII Best Practices into planning and execution processes, resulting in organizational improvements in planning, execution, and delivery of capital facilities projects. Member pricing on CII products, conference/workshops, education modules, and online training. Access to member-only products and events.

What Drives Our Industry Today? Work Force and Human Capability Increased Environmental Considerations Global Growth and Interconnectedness Productivity/Efficiency Improvement 14

Driver 1. Workforce & Human Capability 231Construction Industry Craft Training 256Project Site Leadership Role in Improving Construction Safety √ 261Optimizing Jobsite Organization √ 269Real-time Pro-Active Work Zone Safety in Construction √ Driver 2. Increased Environmental Considerations 242Front End Planning for Renovation/Revamp Projects 250Sustainable Design & Construction 264Product Integrity Concerns in Low-Cost Sourcing Countries √ 268Project Definition Rating Index for Infrastructure Projects √ CII Research: Addressing the Drivers √ Research Just Starting

Driver 3. Global Growth and Interconnectedness 244Global Project Control & Mgt. Systems 257Global Procurement & Materials Management √ 260Reimbursable Contracts √ 263Globalization √ Driver 4. Productivity/Efficiency Enhancements 215Workforce View of Construction Productivity 233Planning, Facilitating, Evaluating Design Effectiveness 245Optimizing Engineering Value in Projects 252Craft Productivity Research √ 255Adaptation of Ship Building Production Systems to Construction 258Information Integration Work Process Changes √ 266Std. Approach to Identify/Define Owner Value & Align E&C Response √ CII Research: Addressing the Drivers √ Research Just Starting

CII Practices (Research Findings) Project Planning Phase Attract and Maintain Skilled Workers Automated Identification Effective Use of Global Engineering Workforce Environmental Remediation Management Equitable Risk Allocation International Project Risk Assessment Leader Selection Modularization/Preassembly Organizational Work Structure Project Delivery and Contract Strategies Project Security Project Teams Technology Implementation Value Management Work Process Simulation Design/ Construction/ Startup Phases Craft Productivity Practices- Design for Maintainability Design for Safety Engineering Productivity Measurement- Piping Design Project Life Cost & Schedule Control Employee Incentives Fully Integrated & Automated Project Processes (FIAPP) Management of Education & Training Managing Workers’ Compensation Project Health Assessment Small Projects Execution

CII Best Practices A process or method that, when executed effectively, leads to enhanced project performance. To qualify, a practice must be sufficiently proven through extensive industry use and/or validation. Pre-Project Planning Alignment Constructability Lessons Learned Materials Management Team Building Planning for Start-Up Partnering Quality Management Change Management Disputes Resolution Zero Accidents Techniques Implementation of Products Benchmarking

Major Influence Rapidly Decreasing Influence Low Influence Scope Definition Influence Commitment$$ Conceptual Analysis and R&D Pre-Project Planning Basic Data and Scoping Project Authorization Production Engineering and Procurement Construction Engineering Complete Turnover and Start-up Level of Influence Project Expenditures Project Life Cycle Opportunity for Influence

The Owner’s experience…

21 “Those companies that actively participate in CII find opportunities to interact with others who share similar core values and come together for the common purpose of improving not only their own bottom line but the industry as a whole. Carol P. Arnold DuPont

Cost Growth (Owner) Note: Average Budget 44 Million, submitted after 2002 (n=127) Better

Schedule Growth (Owner) Note: Average Planned Duration 131 weeks, submitted after 2002 (n=155) Better

The Contractor’s experience…

“CII is absolutely the best resource available for continuously improving a Project Delivery System. Participation by either an Owner or Contractor organization in CII brings with it the valuable opportunity of rapid personnel development largely due to the interaction of people with the common objective of improving the efficiency of capital deployment. People develop and execute projects, CII exposes people to ever improving project results.” Bernard C. Fedak Aker Solutions

Value of CII Best Practices - Budget (Contractors) Note: Average Budget =58 Million, submitted after 2002 (n=81) Better

Value of CII Best Practices – Schedule (Contractors) Note: Average Planned Duration=109 weeks, submitted after 2002 (n=81) Better

CII Benchmarking & Metrics 1,647 Projects Entered Since 1996 Confidential Inexpensive –Free with CII Membership (General Program) –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

The Value of Benchmarking Improves project & company performance when used as an ongoing measure Determine performance relative to peers Establishes improvement goals based on external / competitive benchmarks Enables your company to understand & achieve “best in class” performance

Continuous Improvement Implement Best Practices Measure Results Identify Opportunities to Improve Select Implementation Tools Conduct Training Compare to Competition CII Continuous Improvement Process

CII Member Resources Research Products Research Summaries Implementation Resources Research Reports Mentoring Communities of Practice Implementation Champion Program Experienced ISC members CII Staff CII Online Implementation Tool Box Professional Development Executive Leadership Program Education Modules Courses Online Education Professional Development Continuum Registered Education Providers Web Seminars Events Annual Conference Performance Improvement Workshops Benchmarking Seminars / Workshops

"I have seen and experienced first-hand the truly special collaboration between owners, contractors and academics. These efforts have produced new knowledge and useful products positively impacting the industry. But in my opinion the most valuable legacy of CII's first 25 years has been the outstanding personal and professional development of the thousands of volunteer participants.” Dr. G. Edward Gibson, Jr. University of Alabama

CII’s Net Value Add (NVA)

NVA for the Member Company Improved capital delivery Transparent methodology to measure progress –Best Practice Use –Productivity –Industry Smarter, more confident, better prepared employees Implementation tool set Forum for company to company and company to academia relationships Industry intelligence and knowledge Recognition for employees

NVA for the Member Employee Builds: –Knowledge –Leadership skills –Confidence –Industry intelligence Builds trusting relationships with customers and potential customers Grows the employee’s peer group – owners, contractors and academics Increases employee value to member company Forum for self actualization – accomplishing something for the greater good Satisfy professional development requirements

You are Invited to the CII Performance Improvement Workshop March 30 – April 1, 2009 Phoenix, Arizona Focused on: CII Product Implementation Best Practices New Practices Case Studies Networking Register today –

2009 CII Annual Conference “Leadership for the Next Generation” July 28-30, 2009 Over 500 Top Industry Attendees Presentations on: –New CII research –CII product implementation case studies New CII Initiatives –Professional Development –Implementation –Benchmarking –Other Notable Speakers The Peppermill Resort – Reno, Nevada

New Research to be Unveiled at 2009 Annual Conference Estimating as a Competency in Capital Projects Quality Management in the Capital Facilities Delivery Industry – A Best Practice Refreshment Adaptation of Shipbuilding Production Systems to Construction Project Site Leadership Role in Improving Construction Safety Global Procurement & Materials Management Best Practice Refresh Enhancing & Expanding Innovation in the Construction Industry Information Integration Work Process Changes

CII Senior Staff Wayne Crew, CII Director Research, Breakthrough Strategy, & Academic Liaison Steve Thomas, CII Associate Director Education & Implementation Manuel Garcia, CII Associate Director Benchmarking & Metrics Stephen Mulva, CII Associate Director Knowledge Management & Branding Kim Allen, CII Associate Director

Questions? Contact Jewell Walters: