Benchmarking at Saudi Aramco 4/19/2017 Benchmarking at Saudi Aramco Presented By: Ken Ostrowski

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

Introduction to Saudi Aramco 4/19/2017 Introduction to Saudi Aramco 100% owned by Saudi Arabian Government No. 1 oil company 13th straight year (Petroleum Intelligence Weekly) Project types being planned and executed: Oil & gas Infrastructure Pipelines Power generation Communications Grass roots and modernization Large capital program

Saudi Aramco Project Workload 4/19/2017 Saudi Aramco Project Workload Averaging 140 active projects per year over past 5 years Project size over past 10 years ranges from $2 million to $2 billion Maintenance-type projects less than $2 million Project expenditures average $2-$3 billion per year Approximately 700 engineers involved in planning and executing projects

Saudi Aramco Corporate Structure 4/19/2017 Saudi Aramco Corporate Structure PRESIDENT & CHIEF EXECUTIVE OFFICER CORPORATE PLANNING EXPLORATION & PRODUCING MANAGEMENT SERVICES LAW GAS OPERATIONS REFINING & MARKETING ENGINEERING & OPERATIONS SERVICES INFORMATION TECHNOLOGY INDUSTRIAL RELATIONS AND AFFAIRS FINANCE

Project Performance Optimization Division Benchmarking, Development 4/19/2017 Project Performance Optimization Division Benchmarking, Development & Training Best Practices Value Engineering

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

Benchmarking in Saudi Aramco 4/19/2017 Benchmarking in Saudi Aramco Integration Research & Development Benchmarking VALUE VALUE Implementation Integration

Three Levels of Benchmarking Analysis 4/19/2017 Three Levels of Benchmarking Analysis Benchmarking the company relative to the industry (CII and IPA) External (company vs. industry) Review of the efficiency of the Project System Internal (comparing projects over time) Evaluation of individual projects Internal (comparing one project with another)

Criteria for Selecting Projects 4/19/2017 Criteria for Selecting Projects Review our “Master Scheduling System” for Project Proposal finish and funding date Review project type and scope Review for duplication of project scopes Assess project value Exclude projects that are non-capital or “one off” projects Projects benchmarked at completion use similar criteria

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

Saudi Aramco’s Benchmarking 4/19/2017 Saudi Aramco’s Benchmarking Benchmarking study showed that Saudi Aramco had many areas of project planning and execution performance that could be improved Management set objectives to improve project performance: Reduce project durations Reduce project costs “Formal” program to increase use of best practices

Benchmarking Benefits 4/19/2017 Benchmarking Benefits Assess Front End Definition of a project Evaluate competitiveness of the project for cost, schedule, quality and safety Identifies potential risks and methods to mitigate risk Compare the completed project with the industry Develop trends and areas for improvements Review project performance data Set new targets based upon improvements over historical performance

What Have We Learned About Our Project Processes? 4/19/2017 What Have We Learned About Our Project Processes? Continue with definition activities and strive to achieve “Best Practical” Front End Definition at Authorization Obtain Stake-holder buy in Produce a level III integrated project schedule Produce a project execution plans that includes an integrated execution schedule Show same commitment for smaller projects as large Develop contingency value reflecting project risk Maintain continuity during projects

What Have We Learned About Our Project Processes? 4/19/2017 What Have We Learned About Our Project Processes? Reduce gap between preliminary engineering completion and detailed design start (bidding cycle) Adopt a “scope freeze” policy after funding Establish contingency plans for material deliveries Detailed schedule planning is needed, including hot-tap tie-ins, shutdown and start-up planning Develop resources for selected Value Practices Improve historical cost and schedule databases

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

Benchmarking Enhancements 4/19/2017 Benchmarking Enhancements Move toward a “program” vs. ad hoc benchmarking activity More comprehensive use of CII/IPA/Internal benchmarking tools More active interaction with CII and IPA Better understanding of CII benchmarking and metrics capabilities How can we maximize the use of CII benchmarking? Can we use CII benchmarking to assess competitiveness of projects prior to funding? Develop historic benchmarking database

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

Benchmarking and Value Improvement Accomplishments 4/19/2017 Benchmarking and Value Improvement Accomplishments 2002 15 projects benchmarked 137 best practices workshops on 63 Major Projects 26 value engineering studies $100+ Million in life cycle cost avoidance 637 personnel trained in benchmarking, best practices and value engineering Past 3 Years Cost performance: Project costs have decreased by more than 10% over the past three years Schedule Performance: Project cycle times have improved by almost 25% over the past three years

Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco 4/19/2017 Agenda Overview of Saudi Aramco Benchmarking in Saudi Aramco Benefits and Lessons Learned Benchmarking Enhancements Related Accomplishments Conclusion

4/19/2017 Conclusion Benchmarking is the key driver of Saudi Aramco’s project value improvement effort Improvement in project performance metrics are being realized

4/19/2017 Thank You

Benchmarking in Saudi Aramco 4/19/2017 Benchmarking in Saudi Aramco Integration Research & Development Benchmarking VALUE VALUE Implementation Integration

4/19/2017 Thank You