Nick Lavingia 1 Panel Four: Managing the Work Owner’s Role (Better, Cheaper, Faster and Safer Projects) Dr. Nick J. Lavingia, P.E. Project Management Consultant APEGGA Conference Edmonton, Canada April 18, 2008

Nick Lavingia 2 Dr. Nick J. Lavingia, P.E. Project Management Consultant Chevron Nick has over 30 years of Global Project Engineering, Management, Consulting and Training experience in the Energy industry. As a Project Management Consultant at Chevron, he provides Consultation and Training to Project Professionals worldwide. Nick has a B.S. and M.S. in Chemical & Petroleum-Refining Engineering and a Ph.D. in Engineering Economics & Management from the Colorado School of Mines. He is a registered Professional Chemical Engineer in the State of California. Nick is a member of Project Management subcommittee for Athabasca Oil Sands expansion project. He has published and presented many papers at technical organizations. He is a recipient of industry award from Pathfinder for outstanding Contribution to the advancement of Project Management Technology and Chevron Chairman’s award for implementing Value Engineering throughout the corporation.

Nick Lavingia 3 Owner’s Role  Responsible for overall project life cycle from initiation to planning to execution through to operations  Responsible for project safety, cost, schedule, operability and ultimate business outcome  Effective communication between decision makers, multi-functional project team and stakeholders such as partners, regulators, community, contractors, suppliers, NGOs, etc.  Manage project risks and control the project

Nick Lavingia 4 PHASE 2 SELECT from Alternatives Clearly Frame Goal Test for Strategic Fit Preliminary Overall Plan Preliminary Assessment ~1 % Engng. Phase 1 Estimate Project Development & Execution Process (Effective Communication between Decision Makers, Multi Functional Project Team and Stakeholders) PHASE 1 IDENTIFY & Assess Opportunities Fully Define Scope Develop Detailed Execution Plans Refine Estimate Submit Funding for Approval ~25 % Engng. Phase 3 Est. (+/- 10 % Accuracy) Generate Alternatives Preliminary Development of Alternatives Develop Expected Value Identify Preferred Alternative Phase 2 Est. Operate Asset Monitor & Evaluate Performance Identify New Opportunities PHASE 3 DEVELOP Preferred Alternative PHASE 4 EXECUTE (Detail EPC) PHASE 5 OPERATE & Evaluate Implement Execution Plan Min. Changes Finalize Operating Plan Business Plan for Phase 5 Project Review AFE AFE = Appropriation For Expenditure

Nick Lavingia 5 Pre-Funding Assessment Value Improving Practices Peer Review (Share) Decision & Risk Analysis Project Execution Planning Lessons Learned (Seek) Legend: AFE = Appropriation for Expenditure D = Decision Point PFD = Process Flow Diagram IPA = Independent Project Analysis, Inc. P&ID = Piping & Instrumentation Diagram P&ID $ EST AFE PFD D D D D D $ EST Phase 1 IDENTIFY & Assess Opportunities Phase 2 SELECT from Alternatives Phase 3 DEVELOP Preferred Alternative Phase 4 EXECUTE (Detail EPC) Phase 5 OPERATE & Evaluate Value Improving / Best Practices (Optimize Cost, Schedule, Performance and Safety aspects of any project) Post Project Assessment Business Evaluation

Nick Lavingia 6 Contracting/Procurement (Strategy) Cost Control/Forecasting (WBS) Progress reporting Finance/Audit Total Cost Management ( Plan, Schedule, Estimate, Monitor and Report) Phase 1 IDENTIFY & Assess Opportunities Phase 2 SELECT from Alternatives Phase 3 DEVELOP Preferred Alternative Phase 4 EXECUTE (Detail EPC) Phase 5 OPERATE & Evaluate Economic Analysis (NPV, ROR, Payout) Cost Estimating (Conceptual) Planning/Scheduling (Milestone) Benchmarking (Cost / Capacity) Legend: AFE = Appropriation for Expenditure NPV = Net Present Value PFD = Process Flow Diagram D = Decision Point ROR = Rate of Return P&ID = Piping & Instrumentation Diagram EPC = Engineer, Procure & Construct CPM = Critical Path MethodWBS = Work Breakdown Structure P&ID $ EST AFE PFD D D D D D $ EST (Funding +/- 10% Accuracy) (Definitive) (CPM Bar Chart)(CPM Resource Loaded)(Monitor & Update) (Pre-Funding Assessment)(Post-Project Assessment) (Pre-Qualification)(Award / Monitor) Performance Measurement (Establish Progress Payments) (Earned Value) (Establish Cost Accounts & Budgets)(Trend / Forecast) (Closeout) (Cost Collection / Analysis) (Set Pacesetter Target) (Asset Accounting) (Capital versus Expense)