More Construction for the Money “Back to the Future” Jim Porter 2004 Recipient Carroll H. Dunn Award of Excellence

Core Values Safety and Health Environmental Stewardship Highest Ethical Standards Respect for People The Goal Is “Zero”

Productivity Gap

Product Innovations Expand Addressable Markets Sustainable Projects: Safer, Better, Faster Shared Vision: Safer, Better, Healthier Lives Go Where The Growth Is Let’s talk about GROWTH………

Keys to Success Execution StrategyPeople

CORE VALUES OPERATIONS STRATEGY CUSTOMER FOCUS & QUALITY SUPPLY CHAIN PRODUCTIVITY PEOPLE ORGANIZATIONAL PRODUCTIVITY ASSET PRODUCTIVITY CAPITAL PRODUCTIVITY People Strategy Execution Eight Operations Centers of Competency

Delivery Effectiveness Strategy Shift From Coopetition Academia Contractor s& Suppliers Owners To Collaboration Owners Academia Contractors & Suppliers Contractors & Suppliers

OWNERS SERVICESSERVICES WHO WHAT WHERE HOW  Owners lead cross-functional teams to: ― determine “who, what, where” …. business priorities. ― integrate performance delivery at customer interface. ― be locomotives for growth.  Service teams responsible to execute the “how”… deliver business value for the money.  Requires mutual accommodation and collaboration to a higher degree. Work Processes

? Compete with Who? Regionals Locals Multi-nationals Combinations

Build What? Core values PSM requirements Affordability Facility standards Operating strategy

The “Right” Plant

HIGH: Custom Piece Production PRODUCT VARIETY LOW: Standard Quality Consistency Amount of Rework 80% 10% % < 1< 1 Sustainable Competitiveness through Manufacturing Effectiveness

HIGH: Custom Piece Production PRODUCT VARIETY LOW: Standard Quality Consistency Amount of Rework 80% 10% % < 1 Mass Production Sustainable Competitiveness through Manufacturing Effectiveness

HIGH: Custom Piece Production PRODUCT VARIETY LOW: Standard Quality Consistency Amount of Rework 80% 10% % < 1 Mass Production Lean Production Sustainable Competitiveness through Manufacturing Effectiveness

HIGH: Custom Piece Production PRODUCT VARIETY LOW: Standard Quality Consistency Amount of Rework 80% 10% % < 1 Mass Production Lean Production Agile Production Sustainable Competitiveness through Manufacturing Effectiveness

Build Where? Region Country Existing site New site Independent Integrated Others….

Business Strategy & Objectives Site Selection Project Objectives & Scopes Site Screening Survey Preliminary Site Survey Final Site Survey Option Best Site & FEL1 Business Business Planning Site Selection Site Selection Project Planning Site Selection Site Selection Phase I I Site Selection Site Selection Phase I Site Selection Site Selection Phase III (New Sites)Define Project (Existing Sites) FEL-1 Site Selection Project Execution Glocalization Process (FEL-0)

The GAP Current Experience Anecdotal Claims The Opportunity Site Factors - Core Values- Contracting Strategies - Site Selection- Specs/Standards - Operation Strategy- PSM Requirements Decisions that impact project cost most are made during Front-End Loading !! High Civil Content Low Process Content High IP Content High Process Content ABC A = Infrastructure: 0.35 B = Process Plant: 0.76 C = Process Plant: 0.61 China Project Costs: Reality Check

Build How? Core values Estimating Contracting Engineering and design Procurement Construction Resource deployment and renewal

Front-end load vs. business goals. Install competitively superior technology. Minimize non-value adding investment. Execute projects with no changes. Capital Productivity Best Practices

Business Planning FEL-1 Facility Planning FEL-2 Facility Startup Project Planning FEL-3 Project Implementation Project Basis, Capital Budget Production Des Basis, CAC, Project Auth Products That Continuously Meet Global Customer Needs & Requirements Better Than All Competitive Products Facilities Engineering Process Front-End Loading Owner Leads Execution/Operation Owner Audits Owner Leads Contractor Involved Contractor Leads Contractor Supports Global Customer Needs & Requirements Business Objectives, Capital Forecasts Competitive Facility That Meets Business Needs Operate Maintain Improve

Productivity Enhancements 1.Information Technology 2.Project Delivery 3.Automation and Prefabrication 4.Workforce Development 5.Materials

“Knowledge Management” The Right Information at the Right Place at the Right Time at the Right Price enables rapid, effective Decision Making and Problem Solving delivering Sustainable Business Results

The Vision of an Integrated and Automated Capital Projects Industry

“The most dangerous time in the life of nations is the time between systems, when the old ways are discredited and the new habits are still unknown.” It’s not the change people don’t like, it’s the transition. – Mikhail Gorbachev

Cultural Evolution Organizational Environment Adversarial Relationship Authority Control Compliance Short-Term Focus Standard of Behavior Policies Rules Standards Hierarchy Standard of Excellence Communications Involvement Openness Trust Collaboration Commitment Stakeholders Self- Accountability Organizational Unity Principles Purpose Understanding Long-Term Focus Tendency to Drift Leadership Energy

Focus the Conversation on Great Performance “Don’t get sidetracked into talking about side issues. The main issue in any organization is performance — great performance. Keep the conversations tightly focused on what it takes to produce great performance, and what you and the performer can do, separately and together, to assure that great performance.” Flight of the Buffalo Soaring to Excellence, Learning to Let Employees Lead James Belasco and Ralph Stayer