Produced by: The Predictable Future Ron Babich, Vice President Hard Dollar Corporation

Hard Dollar Corporate Objectives Slide 2 Leading PCM solution 100% customer success The “Southwest Airlines” of software employers Fast Growing HD CUSTOMERS BY INDUSTRY

“Future Man” Predicts… No offense Future Man but do you have all your marbles?

Uni Planning/ Design Estimating SchedulingProgress Finance 4 Unified Visibility - Control

The Reality…Now Direct Causes of Failure Errors or oversights in the planning and preparation phase Indirect Causes of Technical Failure Inadequate execution of operation and maintenance

Planning/ Design Numerous Take Off Systems Spreadsheet Output Lack of Change Support in Real Time 6 Unified Visibility - Control

Estimate Centralized History Lack of Detail Integration to Schedule “Norms” Data Dependency on Spreadsheet 7 Unified Visibility - Control

Schedule % Complete – Lack of Quantity Information Disconnected from Progress and Estimating Tools CPI not included Scheduled work varies from how the work was estimated 8 Unified Visibility - Control

Progress Disconnect from Finance Level of Detail not Matched with Plan and Reported in Finance Discipline of Collection % Complete Guess vs. Actual Quantities 9 Unified Visibility - Control

Finance Manual Reconciliation to Estimate Origin Level of Detail not Matched with Plan Cash Flow Calculations Resource Ties Accrued Earned Calculations 10 Unified Visibility - Control

Is it possible to manage the unplanned? Use historical data for agile planning? Use ‘What if?’ scenarios on the fly? The Future is…Predictable?

The Future Lies in History Slide 12

Where did the Number come from? 13 Proprietary & Confidential

Common Failures by Stages Setting goals Unclear description of STO goals Planning Procedures not easy to follow or up-to-date Tools are incorrectly specified Improper technical skills requirements Unclear or incomplete work orders

Common Failures by Stages Execution Inadequate failure diagnosis Failures not detected during testing or inspection Bad on-site load measurement Inadequate quality control of executed work Delayed installation of component Installation of wrong or damaged components Ignored maintenance

Common Failures by Stages Reporting Bad cause description Data Analyses Inadequate utilization of company internal data Inadequate exchange of reliability data between operating companies Improvements No improvements suggested at all Insufficient quality on suggestions

Global spending in 2011 on oil & gas STO services will total $13.17bn. Predicting the Present Source: visiongain $676 Million+ at Risk

Audited Spreadsheet Errors Audits done shows that nearly 90% of the spreadsheets contained serious errors The average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2% Source

This Formula Has Legs Slide 19 E = 1 – (1 – e) n

Dilution in the Culture “Evidence shows that most downstream and midstream operators…leave 3% to 5% of potential cost-reduction savings on the table annually because addressing them requires a change in organizational behavior and business culture.” Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn. November 2010 edition of OIL & GAS FINANCIAL JOURNAL

Is Software Used to Schedule the Project? Case Study on STO on 44 Projects

Case Study on STO Is Pre-task Planning a Regular Part of Project Planning?

Where do the Workers Come From? Slide 23

Duration of Project Slide 24

Industry Experts Know… An acceptable range of error for a detailed work order scope is of about 10% When work orders are "guesstimated" without any detail, the degree of error is very high. The error range could span from 25% up to 60% and more.

Cascading KPIs “How can we get by with one less water hauling truck this week?” or… Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn. November 2010 edition of OIL & GAS FINANCIAL JOURNAL …“How can we provide enough information about a maintenance need to ensure the instrumentation technician arrives onsite with the correct parts and tools?””

Characteristics of Credible Cost Planning Clear Identification of Task Broad Participation in Preparation Availability of Valid Data Standardized Structure For Estimate Standardized Structure For Estimate Provision for Program Uncertainties Provision for Program Uncertainties Recognition of Inflation Recognition of Excluded Costs Independent Review Of Estimates Independent Review Of Estimates

Layout project needs with the Cost Breakdown Schedule (CBS) Create task templates, norms, standardized coding, and work packages 1. Plan Slide 28 Plan

Rate Storage Slide 29 Store Re-Usable Updated Rates Store Re-Usable Updated Rates

Assembly Storage Slide 30 Standardize Crew Make Up And other Assembly Like Resources Standardize Crew Make Up And other Assembly Like Resources

Norms Database Storage Slide 31 Build Best Practice History to Draw Durations Build Best Practice History to Draw Durations

Planning Slide 32 Allow for Flexibility in Scope Allow for Flexibility in Scope

Create cost and resource loaded schedules Dynamically link with Oracle’s Primavera (P6) or Microsoft Project 2. Schedule Slide 33 PlanSchedule

Estimating Slide 34

Scheduling Slide 35 What If Scenarios, Changes, Resource- Productivity Consequences What If Scenarios, Changes, Resource- Productivity Consequences

Track the actual data vs. projected data Use actual performance factors to drive accurate forecasts Cost visibility from start to finish Automated change tracking Team collaboration and updates 3. Execute Slide 36 PlanScheduleExecute

Analyze trends and get alerts to successfully resolve issues Access web-based HD Projectfacts for instant reports Save full historical data for future use 4. Complete & Analyze Slide 37 PlanScheduleExecute Complete & Analyze

Spreadsheet Virus Slide 38

A Formula for Bad PI / Pie Slide 39 Audits done shows that nearly 90% of the spreadsheets contained serious errors Even experienced users succeed in only finding 54% on average Results show that 94% of spreadsheets have errors and that the average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2% Source:

A Small Error Slide 40

A Small Error Slide 41

Scope (History) Schedule (Resources) Cost / Productivity Avoiding Mistakes Slide 42

Produced by: Ron Babich, Vice President Hard Dollar Corporation