The Construction Industry Institute (CII) Wayne A. Crew, Director Construction Industry Institute Saudi Arabia October 6, 2010

Today’s Presentation Who is The CII? What does The CII do? What is The CII’s value? Summary.

A consortium of leading owners, contractors & suppliers, and academia working to improve the constructed project and the capital investment process. An organized research unit of the Cockrell School of Engineering at The University of Texas at Austin

History  Established as a recommendation from The Business Roundtable Construction Industry Cost Effectiveness (CICE) Project to address: - construction research - fragmentation of the industry  Founded at The University of Texas at Austin in 1983 by 28 companies; now over 100 members.  First structured owner-contractor-academic research collaboration for the constructed project.  The 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.

CII Principles  Place a premium on safety, ethics, continuous improvement (cost, schedule and quality), and leadership.  Owner/contractor member balance.  Lead industry improvement through an engaged membership.  Provide leadership development through member participation.  Promote a high level of knowledge transfer.

Owner Members Abbott Air Liquide Air Products and Chemicals Ameren American Transmission Anheuser-Busch InBev Aramco Services Archer Daniels Midland Barrick Gold BP America Bristol-Myers Squibb Cargill Chevron CITGO Petroleum ConocoPhillips Dow Chemical DuPont Eastman Chemical Eli Lilly ExxonMobil GlaxoSmithKline Hovensa International Paper Irving Oil Kaiser Permanente Marathon Oil NASA NAVFAC NOVA Chemicals Occidental Petroleum Ontario Power Generation Petrobras Praxair Procter & Gamble Progress Energy SABIC Sasol Technology Shell Global Solutions US Smithsonian Institution Southern Company Teck Resources Limited Tennessee Valley Authority TransCanada Corporation U.S. Architect of the Capitol U.S. Army Corps of Engineers U.S. Dept. of Commerce/NIST/ Building and Fire Research Lab U.S. Dept. of Energy U.S. Dept. of Health & Human Services U.S. Dept. of State U.S. General Services Administration

Contractor Members Aker Solutions Alstom Power AMEC AZCO Baker Concrete Construction Bateman Engineering Bechtel Group Bentley Systems BIS Frucon Industrial Services Black & Veatch Bowen Engineering Burns & McDonnell CB&I CCC Group CDI Engineering Solutions CH2M HILL Coreworx CSA Group Day & Zimmermann Dresser-Rand Company Emerson Process Management eProject Management Faithful+Gould Flad & Associates Fluor Foster Wheeler USA Grinaker-LTA/E+PC Gross Mechanical Contractors GS Engineering & Construction Hargrove Engineers + Constructors Hilti Jacobs JMJ Associates KBR Lauren Engineers & Constructors M. A. Mortenson McDermott International Mustang Omniware Oracle USA Parsons Pathfinder Pegasus Global Holdings S&B Engineers and Constructors The Shaw Group Siemens Energy SNC-Lavalin Technip URS Corporation Victaulic Company Walbridge Wanzek Construction WorleyParsons Zachry Zurich

Membership

CII Organization Board of Advisors Communities of Practice Product Review Board Knowledge CreationKnowledge Dissemination Implementation Strategy Committee Professional Development Committee Benchmarking & Metrics Committee Knowledge Management Committee Special Functions Branding Implementation Committee Conference Committee Finance Committee Membership Committee Nominating Committee Alliances Research Teams Academic Committee Breakthrough Strategy Committee Research Committee Knowledge Assessment Knowledge Management Executive Committee Strategic Planning Committee Standing Committees Industry-Sector Benchmarking

CII Executive Committee David McKinney, Southern Co (Chairman) Richard Haller, Walbridge (Vice Chairman) John Dalton, Mustang Glenn Doran, ConocoPhillips Glenn Gilkey, Fluor Clair Gill, Smithsonian Joseph Gionfriddo, Procter & Gamble James Harlan, Eastman Chemical John Lambert, Eli Lilly Keith Manning, Zachry Michael McAreavy, Day & Zimmermann Wayne Crew, CII (ex-officio)

Today’s Presentation Who is The CII? What does The CII do? What is The CII’s value? Summary.

CII Knowledge Processes Knowledge Management Knowledge Assessment Knowledge Dissemination Knowledge Creation Research to define best practices, breakthroughs, & industry norms. Dissemination through publications, implementation guides, educational materials, workshops, and conferences. Assessment of the impact of CII practices through benchmarking. Organization, and assessment of the 500-plus CII documents and publications. Communities of Practice

CII Research Team Process

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

Best Practice 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. Front End 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

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

Research Reports Reports to CII. Written by principal investigators. Target audience: researchers, academics. Final edit by CII technical writer/editor. Available online.

Research Summaries Reports from CII; short, concise. Target audience: executive management. Written by team members for industry view. Edited by CII technical writer/editor. Reviewed by CII Product Review Board (PRB). Printed; also available online.

Implementation Resources Reports from CII; “how to” guides Target audience: implementers, users, PMs, managers. Primarily written by research team members. Edited by CII technical writer/editor. Reviewed by CII Product Review Board (PRB). Printed; also available online.

Project Procedure xxx CII Best Practice Incorporated Company ProceduresCII Best Practices Guide

IR Implementation Model + Knowledge Structure Guide Provides a “Jump Start Kit.” Use CII Implementation Model to drive your implementation program. Use the CII Knowledge Structure to identify CII Best Practices to adapt within your organization.

IR CII Best Practices Guide All 14 Practices Described. Assesses Implementation Level of a Best Practice. Benefits of Using Each Best Practice. List of CII References for Each Best Practice.

Fall Performance Improvement Workshop Focused on: CII Product Implementation Best Practices New Practices Case Studies Networking Houston, Texas November 8-10, 2010

CII Professional Development Executive Leadership Course Education Modules Best Practice Graduate Class and Continuing Education Online Education and Web Seminars

CII Benchmarking & Metrics 2,000+ Projects Entered Since 1996, > $110 Billion Confidential Inexpensive –General Program included with CII Membership –Self Evaluation, No Consultants 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

Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Construction Productivity Engineering Productivity Practice Use Front-End Planning Alignment Team Building Partnering Project Risk Management Change Management Constructability Zero Accident Techniques Planning for Startup Proj. Delivery & Contract Systems Benchmarking Performance Practice Use CII Standard Metrics

CII Sector-Specific Research Current –Pharmaceutical –D/S Oil & Gas –Oil Sands (COAA) –U/S Oil & Gas Future –Healthcare Facilities –Others

Do Industry Specific Metrics Work? CII Pharmaceutical and Biotech Performance Research Cost Performance 6% Less Schedule Performance 26% Less

Productivity Hierarchy Piping Engineering

Project-Level Productivity Example Poor Good 1Q1Q 2Q2Q 3Q3Q 4Q4Q 11% Improvement (2 nd to 1 st Quartile) 26% Improvement (4 th to 1 st Quartile)

Benchmarking Conferences & Workshops Essential for implementation of reliable benchmarking process Updates improvements in the online system Explains new metrics & interactive reports Delivers annual training needed to stay in tune with improvements Ensures greatest benefit from this valuable CII resource

CII PAL Global Network Upstream O&G Downstream O&G Pharma / Biotech Healthcare Power Aviation High Tech Chemicals General Program Oil Sands Food / Beverage Metals & Mining FUTURE

Performance Assessment Laboratory (PAL) University-Based –Industry, Faculty, and Students –Economical Transparent Performance Norms –Quantitative Performance Data –24/7 Access to Data Sector-Specific Research –Regional Focus (PAL) –Global Focus (CII Platform / Members)

Where We Were Knowledge Access Codified Stored Tends to be static Centrally available Knowledge Exchange Created in Communities of Practice Interactive and dynamic Driven by productive inquiry Knowledge Structure Communities of Practice LEARNING Now CII Communities of Practice

Current CII Communities of Practice Safety (March, 2007) Sustainability (May, 2007) Globalization (December, 2007) Partnering (June, 2008) Modularization (August, 2008) Information Management (June, 2009) Front End Planning (July, 2009) New Board of Advisors (June, 2010) Next Generation Leaders (June, 2010)

Keynotes ▪ Research Findings ▪ Case Studies 2011 Annual Conference Chicago, Illinois July 25-27, 2011

CII Web Portal 39

Today’s Presentation Who is The CII? What does The CII do? What is The CII’s value? Summary.

CII Leadership - Safety Performance

*OSHA Construction Division, SIC Reflects OSHA Reporting Change CII Leadership - Safety Performance

An Owner’s Results The membership of CII represents some of the most successful companies in the world. Having a forum for researching and sharing best practices from our industry makes participation in CII a tremendous advantage. The vision for CII is improvement of the capital facilities sector, and CII member companies are helping to drive that success. David McKinney Southern Company

Cost Growth (Owner) Average budget = 44 million, n = 127 (submitted after 2002) Better

Schedule Growth (Owner) Average planned duration = 131 weeks, n = 155 (submitted after 2002) Better

Bernard C. Fedak Aker Solutions A Contractor’s Results 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 for rapid personnel development—people develop and execute projects, CII exposes people to ever-improving project results.

Value of CII Best Practices – Budget (Contractors) Average budget = 58 million, n = 81 (submitted after 2002) Better

Value of CII Best Practices – Schedule (Contractors) Average planned duration = 109 weeks, n = 81 (submitted after 2002) Better

An Academic’s Experience I have experienced first-hand the truly remarkable collaboration between owners, contractors, and academics at CII. Their efforts have produced new knowledge and useful products that positively affect the industry. The most valuable legacy of CII’s first 25 years has been the outstanding personal and professional development of the thousands of volunteer participants. Edd Gibson Arizona State University

# of Journal Article Publications of CII Products 100 articles (sources: Web of Science, ScienceDirect, Engineering Village, Emerald, EBSCO, and PI Input) – CII Research 50

Non CII Research Referencing CII Research (# of Journal Article Citations of CII Products) 343 articles (sources: Web of Science, ScienceDirect, Engineering Village, Emerald, EBSCO) – Non-CII Research 51

Today’s Presentation Who is The CII? What does The CII do? What is The CII’s value? Summary.

Value of Best Practices Theoretical Relationship High th Quartile2nd Quartile1st Quartile Practice Use Performance Better 3rd Quartile Low

Increased Use of Best PracticesPerformance Gap Potential Cost Savings Average project cost = $81 MM 4 th Quartile Use to 1 st Quartile Use $6,400,000 3 rd Quartile Use to 1 st Quartile Use0.0313$2,500,000 2 nd Quartile Use to 1 st Quartile Use0.0057$500,000 4 th Quartile Use to 2 nd Quartile Use0.0733$5,900,000 Project Budget Factor vs. Practice Use Index – Contractor All Industries Global Data

Net Value Add for the Industry  Measurable improvement in: –Safety –Cost –Schedule –Quality  Predictable and sustainable capital project delivery performance –Reduced variability in project outcomes  Improved life-cycle capital management

Net Value Add 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

Net Value Add for the Member’s 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

Net Value Add for The University of Texas and the Academic Community  Research $ and topics  Technical publications  Graduate student support  Access to industry leaders  CII class instructors  CII staff expertise

Thank You.