Benchmarking the Value of Best Practices CPI Conference September 30, 2002 Austin, Texas

Session Participants Moderator John Tato - U.S. Department of StateJohn Tato - U.S. Department of StatePanelists Jack Yarbrough – JacobsJack Yarbrough – Jacobs Steve Thomas - CIISteve Thomas - CII

Goals of this Session Highlight recent Benchmarking & Metrics Program improvementsHighlight recent Benchmarking & Metrics Program improvements Present key findings from the programPresent key findings from the program Illustrate the value of benchmarkingIllustrate the value of benchmarking Address barriers to benchmarkingAddress barriers to benchmarking

Reasons for not benchmarking: Lack of time and other resources. Lack of time and other resources. Project management reporting process not formally established. Project management reporting process not formally established. Q: Are you currently benchmarking your projects? NO 26% YES 74%

No in-house system No in-house system Reason for “No” responses : Q: Do you have a data collection infrastructure that facilitates the collection of data essential to an effective benchmarking system? Q: Do you have a data collection infrastructure that facilitates the collection of data essential to an effective benchmarking system? YES 50% NO 50%

No program has been implemented No program has been implemented More consistency/standardization needed in More consistency/standardization needed in benchmarking projects benchmarking projects Benchmarking efforts need to be focused on other types of projects Benchmarking efforts need to be focused on other types of projects Data systems should be more flexible/automated Data systems should be more flexible/automated Reasons for “No” responses: Q: Are you satisfied with your benchmarking program? YES 30% NO 57% YES/NO 4% NA 2% NR 7%

Our Charter Establish common definitions. Establish common definitions. Establish metric norms. Establish metric norms. Determine value of best practices. Determine value of best practices. Provide members a basis for self-analysis. Provide members a basis for self-analysis. Support CII research and implementation activities through feedback. Support CII research and implementation activities through feedback.

Our Customers Member Companies Member Companies Research and Implementation Research and Implementation Funded Studies Funded Studies Alliances Alliances Benchmarking Participants Program (BMPP) Benchmarking Participants Program (BMPP)

Owner Participants Abbott Labs Eastman Chemical Ontario Power Generation Air Products and Chemicals, Eli Lilly and Company Procter & Gamble Anheuser-BuschEnron Rohm and Haas Aramco Services Company Exxon Research & Engineering Shell Oil Arco FINA Oil and Chemical Solutia Bayer Corporation General Motors Corporation TVA Bethlehem Steel GlaxoSmithKlineTexaco BP Amoco Intel Army Corps of Engineers Celanese a James River U.S. Steel Champion International LTV Steel Union Carbide CITGO Petroleum Merck U.S. Department of State Dow Chemical NASA University of Texas System DuPontNAVFAC

Contractor Participants ABB Lummus Global Dick Corporation Kellogg Brown & Root Atkinson Construction Dillingham Construction Kvaerner BE&K, Inc. Fluor Daniel M. A. Mortenson Bechtel Group, Inc. Foster Wheeler USA Morrison Knudsen Black and Veatch Fru-Con Construction Parsons Energy & Chemicals BMW Constructors Inc. Graycor PT Rekayasa Industri Cherne Contracting H.B. Zachry Company Raytheon Engineers & Constructors Chiyoda Corporation Honeywell S&B Engineers and Constructors Cianbro Corporation J.A. Jones TPA CoSyn Technology Jacobs Turner Construction Company Day and Zimmerman Intl James N. Gray Watkins Engineers & Constructors

Most Active OwnersContractors Anheuser-Busch BE&K, Inc. Aramco Services Company Bechtel Group Bethlehem Steel BMW Constructors General Motors Day and Zimmerman Intl NAVFAC Dick Corporation TVA H.B. Zachry Company U.S. Department of State Kvaerner Jacobs Parsons Energy & Chemicals Group

Benchmarking User Award Owner Aramco Services CompanyAramco Services CompanyContractor S&B Engineers and Constructors Ltd.S&B Engineers and Constructors Ltd. Watkins Engineers & Constructors Inc.Watkins Engineers & Constructors Inc.

Questionnaire Development Version 1 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Pre-Project Planning Constructability Team Building Zero Accident Techniques 209 Projects $ Billion First version

Questionnaire Development Version 2 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Design/Info. Tech. 442 Projects (Cumulative) $ Billion (Cumulative) Refinements Addition of Two practices   Version 2

Questionnaire Development Version 3 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Design/Info. Tech. 745 Projects (Cumulative) $ Billion (Cumulative) PDRI For Buildings (part of Pre-Project Planning) Version 3 

Questionnaire Development Version 4 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Design/Info. Tech. 906 Projects (Cumulative) $ Billion (Cumulative) Electronic/Web Questionnaire  Version 4

Version 5 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Design/Info. Tech. Materials Management Planning for Startup 988 Projects (Cumulative) $ Billion (Cumulative) Entire PDRI - (part of Pre- Project Planning) Materials Management Planning for Startup   Questionnaire Development Version 5 

Version 6 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Construction Productivity Metrics Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Design/Info. Tech. Materials Management Planning for Startup Quality Management Project Environment Quality Management Construction Productivity Metrics 1037 Projects (Cumulative) $ Billion (Cumulative)     Questionnaire Development Version 6

Version 7 Best Practices Metrics Performance Metrics Cost Performance Schedule Performance Safety Performance Change Performance Rework Performance Construction Productivity Metrics Pre-Project Planning Constructability Team Building Zero Accident Techniques Project Change Mgmt Technology Auto. / Integ. Materials Management Planning for Startup Quality Management 1057 Projects (Cumulative) $ 56 Billion (Cumulative) Major Upgrade !!! 100% Review/Rewrite & 32% Reduction in Basic Questionnaire  Questionnaire Development Version 7 

Customers Member CompaniesMember Companies Research & ImplementationResearch & Implementation Funded StudiesFunded Studies AlliancesAlliances BMPPBMPP QuestionnaireMetrics Cost & ScheduleCost & Schedule Safety Safety Best Practices Best Practices Environment Environment Data Data Productivity Productivity −Construction −Engineering Questionnaire

Questionnaire Streamlining Process October 25-26, 2001Diagnose December 11-12, 2001 Data Analysis & 1 st RevisionWorkshop January 17-18, nd RevisionWorkshop February 5, 2002 Power User Workshop March 4, 2002Analysis/Value of Best PracticesWorkshop March 4 – April 30, 2002 Final Revisions &Reprogramming

Questionnaire Streamlining Process May 9, 2002Release of of Version 7

The Results SectionDescriptionQuestionDelta Percent Change Front End Participant Data, Cost, Schedule, Safety, Project Environment, Changes, & Rework % Best Practice Pre-Project Planning 00% Best Practice Constructability-5-39% Team Building 00% Best Practice Zero Accident Tech +2+12% Best Practice Project Change Management -7% Best Practice Materials Management % Best Practice Quality Management -7-36% Proposed Best Practice Planning for Startup % Other Practice Design/Information Tech - Tech Auto/Integ % PDRI Project Definition Rating Index 00% Total-32%

Revise Practice Use Questions or Drop Practice Survey Practice Use &Performance Perform Preliminary Analysis (Correlation) Add Practice to BM&M to BM&MQuestionnaire PerformComprehensiveAnalysis ReportOutput Continue Data Collection PreliminaryAssessment Failed Passed Process of Determining Value of Best Practices Determine Practice to BM 1. Recommended 1. Recommended Status as BP Status as BP 2. Value of BP 2. Value of BP

Preliminary Analysis Expected Correlation

Preliminary Analysis No Correlation

Comprehensive Assessment

Cost Savings

$10.9MM – Cost of average building project x 8.5% – Cost growth savings $926K – Potential savings for typical project project

Schedule Reductions

28 Month – Total duration of average building project project x 31.7% – Schedule growth savings 8 Month – Potential savings for typical project project

Project Budget Factor= Actual Total Project Cost (Initial Predicted Project Cost + Approved Changes)

Gap Analysis Ver Ver Ver Ver Ver Ver Questionnaire Version and Year Project Cost Growth Time Project Outcome Δ Opportunity CII Average Practice Use CII 1 st Quartile Practice Use

The Effects of Best Practice Use by Industry Sector – Project Cost Impact Comprehensive Assessment Impact on Cost Performance

Comprehensive Assessment Impact on Schedule Performance The Effects of Best Practice Use by Industry Sector – Project Schedule Impact

The Results Safety Performance Owners & Contractors Year and Work-hours (MM) Recordable Incidence Rate Industry CII Note: Industry based on OSHA SIC Est ,115

Benchmarking Is critical to continuous improvement process. Is critical to continuous improvement process. Requires senior management commitment. Requires senior management commitment. Requires continual analysis and assessment. Requires continual analysis and assessment. Requires a structured approach. Requires a structured approach. Is not resource-intensive. Is not resource-intensive. Is available now. Is available now. Is important to the “bottom-line.” Is important to the “bottom-line.”

Get Involved Measure Your Performance Attend a Benchmarking training session to get your password to Project Central – CII Benchmarking’s websiteAttend a Benchmarking training session to get your password to Project Central – CII Benchmarking’s website Add your project data to Project Central at your project data to Project Central at Assess Evaluate your performanceEvaluate your performance Determine the gapDetermine the gapImprove Use the Benchmarking and CII tools to improveUse the Benchmarking and CII tools to improve

You Need To Benchmark!