CII Best Practices The Saudi Aramco Experience Musaad Al-Said Saudi Aramco October 6, 2010 © Copyright 2010, Saudi Aramco. All Rights Reserved. CII-KFUPM Workshop

2 Agenda Definitions Background and History Value Practices Implementation Cycle Why Use Value Practices? When to Use Value Practices? Internal Study Findings Conclusion

3 Definitions Value Practices: Strategies, techniques, methods or procedures that have proven to produce results of the highest value to an organization. Best Practices are interchangeable with Value Improvement Practices (VIPs) or “Value Practices.” Value Practices are usually from an outside source – CII and Save International.

4 Background and History – Present IPA 2000 and 2004 System Benchmarking Studies Internal Benchmarking

5 Value Practice Implementation Cycle Embed ImportValuePractice BENCHMARK INTEGRATE DEVELOP IMPLEMENT

6 Why Use Value Practices? Support Saudi Aramco’s large capital program: ‒ Reduced schedule durations ‒ Reduced costs ‒ Achieve safety and quality requirements Benefits to Saudi Aramco include: ‒ Improved project planning and execution ‒ Avoidance of major changes ‒ Improved project processes ‒ Enhanced use of lessons learned and historical data ‒ Improved team alignment

7 HIGH Ability to Influence Outcome LOW HIGH LOW Cost of Changes $$$$$ PROJECT PROGRESS Procurement Construction Start-Up DBSP Proposal Design Optimum Time for Value Practices When to Use Value Practices?

8 VE CONST PFSU 30% ConstConstructability LL-IImplement Lessons Learned LL-CCollect New Lessons Learned PDRIProject Definition Rating Index PEPProj Execution Plng Workshop PFSU Planning for Start-Up SC&CM Scope Control & Change Mgt SO Schedule Optimization VE Value Engineering FUNDING MCOS StartUp Construction Detail Design / Procurement Prelim Design DesignBasis 100% PFSUConst 20% 20% PEPWSC&CM0% 0% PEPW0% PFSU10%PDRISOSC&CM60% 90% VE LL-I LL-C LL-C 100% LL-C LL-l

9 Internal Study Findings Study Data Selected 381 projects started during Focused on 255 projects started during : ‒ Comparable project environment. ‒ Significant numbers of projects either using or not using best practices Low informal use of value practices Increasing formal use of value practices Limited use of value practices

10 Internal Study Findings Avg BPs per BI Schedule Growth Joined CIIFormed BPT Limited use of Best Practices Low informal use of Best Practices Increasing formal use of BPs Trends for Best Practice Use and Schedule Growth

11 Internal Study Findings 1998 Baseline = 1.00 Actual Original Plan Avg BPs per BI Joined CII Formed BPT Limited use of Best Practices Low informal use of Best Practices Increasing formal use of BPs Trends for Historical Cycle Time Index PPS-OS Duration Compared with 1998 Baseline

12 Internal Study Findings ~0 BPs 126 Projects 8.8% % 1.4% 0-1 BPs 156 Projects 2+ BPs 99 Projects Schedule Growth vs. Best Practice Use

13 Internal Study Findings $ MM $ MM <$10 MM>$50 MM 9.0% - 0.4% 6.3% 2.9%2.3% 3.5% 3.1% 1.9% 2+ BPs BPs BPs BPs BPs BPs BPs BPs 23 Schedule Growth vs. Best Practice Use by Project Size

14 Conclusion Value Practices use is a journey, not a destination. VPs are not a cure-all solution. VP implementation is a continuous process and key to achieving Saudi Aramco’s objectives.

CII Best Practices The Saudi Aramco Experience Musaad Al-Said Saudi Aramco October 6, 2010 © Copyright 2010, Saudi Aramco. All Rights Reserved. CII-KFUPM Workshop