PIP Overview American Society for Quality Design and Construction Division September 2005

PIP Working in Harmony Improving Capital & Maintenance Efficiency

Objectives Broaden understanding of PIP initiative. Raise awareness of PIP “value proposition”. Advocate “knowledge management” opportunity and quality of Practices. Display current state of PIP Practices. Validate PIP harmonization process and applicability to other industry segments.

Process Industry Practices A consortium of companies sharing the goal of reducing plant costs through development and implementation of common industry practices for detailed design, construction, procurement, operation, and maintenance of manufacturing facilities.

Value Proposition Owners –Project costs reduced. Estimated 2-5% reduction in Total Installed Costs. Application to maintenance work also. Contractors –Visibility and working with clients. Owners and Contractors - Impact on internal standards effort and effective use of technical resources: –Reduced creation / maintenance costs –Capturing “knowledge & experience” –Higher quality & consistently current –Leveraging of scarce resources –Networking opportunities within industry

PIP - “a small seed” PIP indeed began in 1992 as “a small seed”, planted and nurtured in the minds of a few visionaries for our industry.

The Small Seed “Is A Ladder Really Just A Ladder?”

PIP Member Consortium Fifteen members established PIP in Self-funded under CII. Now includes 37 U.S. process industry companies: –26 owners –11 EPC contractors Represents a significant share of the industry.

PIP Members: Owners 3M Adv. Silicon Mat’ls. Aramco Services Arkema Inc. BP Celanese Chevron Corp. Citgo ConocoPhillips CYTEC Degussa Corp. DuPont Eastman Chemical Flint Hills Resources FMC Great Lakes Chemical Honeywell HOVENSA L.L.C. Huntsman Monsanto PPG Rohm and Haas Shell Oil Solutia Sunoco UOP

PIP Members: Contractors Aker Kvaerner BE&K Bechtel Burns & McDonnell Chemtex International Fluor Jacobs KBR S&B E&C Technip WorleyParsons Ltd.

PIP Membership Requirements (1 of 2) Annual dues payment Active Steering Team participant At least one active qualified participant on a function team More active participation encouraged

PIP Membership Requirements (2 of 2) Provide internal non-proprietary standards for harmonization of industry Practices Input for Practices revisions Voluntarily adopt & implement Practices Follow PIP business guidelines Commitment to improvement of the process

PIP Vision PIP Practices are: the “universal language” in the industry for engineering, procurement, and construction, widely recognized and available electronically, up to date, of high quality, and used essentially “as is”, voluntarily adopted and used by a majority.

With PIP INTRNL STDS SOCIETYSTANDARDS INTERNALSTANDARDSINTERNALSTANDARDS PIP SITE SPECIFIC Before PIP SOCIETYSTANDARDS

Principles for Success (1 of 2) Participation is voluntary and open to all qualified. Funded & supported by participating companies. Develop recommended Practices based on existing company internal standards. Influence other organizations to adapt their standards to meet process industry needs. No duplication of work of others. Work only with non-proprietary information.

Principles for Success (2 of 2) High level of participation. Operate on “break-even” basis; small staff. Published Practices available for purchase by any interested party. Provide long-term support for updating. Use streamlined, short cycle time, technically sound process.

PIP Engineering Disciplines Civil, Structural, Architectural Coatings, Insulation, and Refractory Electrical Machinery P&ID Piping Process Control and Analyzers Vessels (Includes shell & tube exchangers and tanks) Work Processes (Internal to PIP)

Organization STRATEGIC PLANNING GLOBALIZATION

Practices by Discipline Number of Practices

Members’ Reported Successes (1 of 2) More than 30 percent reduction in costs for maintaining internal company standards. Reduced valve inventory by 10 percent using PIP Practices. PIP Piping Practices save up to 1.6 percent of total installed cost and 2 weeks on schedule.

Members’ Reported Successes (2 of 2) Reduced piping group work hours by 25% on typical project. Saving $250,000 per year on annual maintenance of internal specifications. Reduced specification development and set-up time by 5-10%. Substantial reduction in hours required to develop/maintain valve data sheets.

Implementation Resource Center Member’s addenda Systems examples Success stories Tools Metrics Lessons Learned (

Members’ Adoption and Implementation Data Adopted Plan to adopt Undecided Adoption not planned Implemented (84% “as is”) 51% 12% 19% 17% 25% Individual Practices

Data Collection Existing company standards Data Analysis Define similarities, differences Model Development Align similarities and harmonize Model Test Industry “experts” Model Application PIP Industry Practice PIP Harmonization Process

PIP Member Co. C Engineering Standards PIP Member Co. B Engineering Standards PIP Practices PIP Member Co. A Engineering Standards Member Companies Harmonizing Adopting Process Industry Engineering – Procurement – Construction Process

Harmonization Potential Promote use of PIP as core for harmonizing EPC industry practices. Key adjunct to “knowledge management” strategy with loss of technical resources. Continue providing input to industry on standards and code development. Guide technology development and application. Help globalization of EPC industry practices.

PIP Impact: Industry “Voice” Actively interfaced with other industry groups (e.g. Hydraulic Institute, Steel Plate Fabricators Association, Material Technology Institute, National Insulation Association, etc.). Successfully petitioned International Building Code (IBC) for code exceptions on industrial equipment platforms.

PIP Impact: Collaborative and Joint Efforts (1 of 2) API (American Petroleum Institute) –Machinery Installation (API RP 686) –Welding (API RP 582) –DCS Process Instrumentation & Control (API RP 554) –Other Standards Revisions ASME (American Society of Mechanical Engineers) –Pump Data Sheets (ASME B 73.1) –Granular Storage Bins & Tanks FIATECH (Fully Integrated & Automated Technologies) –AEX-XML Project for data sheets –Global Valve Cross-Reference eCatalog

PIP Impact: Collaborative and Joint Efforts (2 of 2) ISA (Instrumentation Systems & Automation Society) –P&IDs (Piping & Instrumentation Diagram) –Safety Instrumented Systems Guidelines IEEE (The Institute of Electrical & Electronic Engineers) –Motor Data Sheets (IEEE 841) NIA (National Insulation Association) –Insulation Practices for National training session

Globalization As A Priority Lack of globalization is seen as impediment to adoption. Most major projects now international and trend will continue. Globalization is a trend for all business sectors.

Global Distribution of PIP Practices Australia Brazil Canada France Germany Great Britain Indonesia Italy Japan Korea Saudi Arabia Spain Trinidad UAE

Purpose of Globalization Committee Develop strategies and action plans to enable use of PIPs outside U.S. Frame issues for presentation to Steering Team. Result should be phased action plan. Committee reports to Steering Team and will monitor, provide information regarding globalization progress.

Subscription Program Annual electronic subscription (PDF files and Electronic Entry Data Sheets from PIP web site) Potential subscribers: – Owners and contractors unable to commit resources to participate – Suppliers and vendors Cost - All Practices $30K per year (currently discounted from $33K): - or by discipline ($500 - $6K )

PIP Subscribers Agrium* Ambitech Engineering Arrington Companies Canadian Natural Resources Limited (CNRL) Carboline Coffeyville Resource Refining & Marketing LLC* Emerson Process Management GE Energy GE Silicones-OSI Specialties* Invista* Kraton Polymers* Petroleum Company of Trinidad & Tobago* Phoenix Park Gas Processors Ltd.* Saudi Basic Industries (SABIC)* Saudi International Petro-chemical Co. (SIPCHEM)* Sherwin Williams Southern Company* Stone & Webster Ltd.* The Williams Companies* WMC Resources Ltd.

Licensing Program Available to related e-commerce providers, systems developers, and value-added resellers. Allows including PIP Practices and derivatives in licensee’s product. Significant P&ID application Educational institutions

PIP Licensees ASME Aspen Technology Aveva Bentley Systems Conestoga College IEEE Intergraph ISA National Insulation Association St. Paul Technical College Universidad Nacional Autonoma de Mexico University of South Dakota

PIP Successes “Case for Change” development Published over 450 PIP Practices Collaboration with Standards Development Organizations (SDO) Membership, Subscription, and License growth PIP is heard as an “industry voice” Enabling global application of Practices

Practices Distribution Copyright: “Process Industry Practices, Construction Industry Institute, The University of Texas at Austin” Distribution: Member companies as benefit of membership Unlimited right to copy for members and subscribers Electronic to members and subscribers Paper copies to non-members

Value Proposition for PIP Reduced Costs for: –Projects and Maintenance –Maintaining internal standards –Commodity equipment procurement –Detail design and construction hours Reduced inventories of valves and piping materials Improved “Knowledge Management” & Quality: –Fewer spec conflicts and code inconsistencies –Alignment with industry “Best Practices” –Widespread understanding of common specs

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