2. Dr. Robert M. Patty, MBA, PE Performance Improvement Facilitator / Consultant 832-717-7027 rmpatty@sbcglobal.netrmpatty@sbcglobal.net Former KBR Sr. Project Manager Lean-Constructability Program Manager & Consultant Dr. Robert M. Patty, MBA, PE Performance Improvement Facilitator / Consultant 832-717-7027 rmpatty@sbcglobal.netrmpatty@sbcglobal.net Former KBR Sr. Project Manager Lean-Constructability Program Manager & Consultant Lean Operations for FEL and EPC Lean EPC Facilitator Shorten Cycle Time, Eliminate Error, Improve Quality, Reduce Cost

3. Overview  Define lean facility delivery service – including lean construction  Benefits and examples –Business case  Implementation –Getting started  Key take away –Differential success i.e. benefits using lean –Requires differential sponsorship by executives  Define lean facility delivery service – including lean construction  Benefits and examples –Business case  Implementation –Getting started  Key take away –Differential success i.e. benefits using lean –Requires differential sponsorship by executives

4. The 20,000 ft View of Lean  Extract & align vision – top priorities –Of Client / EPC / Supplier executives  Engage employees –Of Clients / EPC / Supply chain  Extend – ultrahigh safety & quality focus –With principles and emergent change tools –To achieve downward spiraling cost & time  Different – the way the team works together –To improve performance for Clients With mutual stakeholder benefit  Extract & align vision – top priorities –Of Client / EPC / Supplier executives  Engage employees –Of Clients / EPC / Supply chain  Extend – ultrahigh safety & quality focus –With principles and emergent change tools –To achieve downward spiraling cost & time  Different – the way the team works together –To improve performance for Clients With mutual stakeholder benefit

5. Traditional vs. Lean Project Delivery  Assessment of initial impact on pilot projects –Major oil company, senior project managers & value improving practices team  Assessment of initial impact on pilot projects –Major oil company, senior project managers & value improving practices team ERA Traditional Project Design Basis Project Proposal Bid Procurement, Fabrication & Delivery Detailed Design OS ConstructionStart Up MC Lean Project Delivery Project Criteria WRLP Procurement, Fabrication & Delivery Detailed Design ERA ConstructionStart Up OS MC System Criteria Component Criteria Construction Planning

6. Why – What Happens  TIC - logistics & operations savings –~4.5% to 15% used in balance with other VIPs  Raising task completions as planned –from 20 to 80%  Example on Mega PreFEED project –Increased national content 28% –Avoided scope growth 2.5% –Schedule-assurance avoided revenue loss 41% –Saved CAPEX 0.5% –Reduced OPEX 0.5% /year  TIC - logistics & operations savings –~4.5% to 15% used in balance with other VIPs  Raising task completions as planned –from 20 to 80%  Example on Mega PreFEED project –Increased national content 28% –Avoided scope growth 2.5% –Schedule-assurance avoided revenue loss 41% –Saved CAPEX 0.5% –Reduced OPEX 0.5% /year

7. Core Performance Enhancing Strategies  Enhance –Voice-of-the-customer in decisions –Workface level productivity  Engage an emergent change tool set  Extract & manage by standards –Task-level –Manager-performer aligned  Sequence standards –For flow optimization & reliability  Enhance –Voice-of-the-customer in decisions –Workface level productivity  Engage an emergent change tool set  Extract & manage by standards –Task-level –Manager-performer aligned  Sequence standards –For flow optimization & reliability

8. All work should be planned in work packages developed from standards All work should be planned in work packages developed from standards ITP – Q/A Requirements Safety Requirements Construction Equipment Scaffold Builds Planned Value - Manhours Timesheet Cost Code System Designation Material Status IFC Drawings Activity ID & dates 3D snap shots of work FIWP Field Installation Work Package Field Work Package FEL Work Package Eng. Work Package Manuf. Work Package

9. Leadership Strategies  Transparent-status –Execution control boards –Balanced scorecards  Better fitness for outcomes –Aligned commitment –Task level operational excellence  More robust response to –Near misses –Performance breeches –Creative voices  Transparent-status –Execution control boards –Balanced scorecards  Better fitness for outcomes –Aligned commitment –Task level operational excellence  More robust response to –Near misses –Performance breeches –Creative voices

10. Management by Lean Work-task-level Standards If any standard does not cause –the right things to happen »consistently and reliably –it is not considered lean If any standard does not cause –the right things to happen »consistently and reliably –it is not considered lean It must be improved until it does –the standard itself and/or –the standard’s deployment policy –workface progress visibility & control Project Critical Chain Schedule Front End Planning Standards EPC Planning Standards Detailed Engineer, Procure, Construct Phase FEED - Select & Define Phase PreFEED- Appraise Design Basis 4 to 6 Week moving work-task package execution plan

11. Engineering Workface Sampling

12. Urgency Justifies Executive Sponsorship  Alignment of work-process excellence –clients, EPC departments & supply chain  Remove comfort zone –If it doesn’t get worse We will be ok –If it gets worse We are victims of circumstance, still ok  Executive demand-to-improve –Render traditional cost & schedule ‘Not-good enough’ –Figure out how to apply lean here  Alignment of work-process excellence –clients, EPC departments & supply chain  Remove comfort zone –If it doesn’t get worse We will be ok –If it gets worse We are victims of circumstance, still ok  Executive demand-to-improve –Render traditional cost & schedule ‘Not-good enough’ –Figure out how to apply lean here

13. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Non Contributory, Waiting & Non Value Added Work 25.2% Direct Value Added Work 35.8% Contributory Work 39.0%

14. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Fabrication & PreAssembly, 5.8% Dismantle, 1.9% Excavating & Backfilling, 2.8% Placing, 0.4% Final Assembly 11.4% Effective Setup 13.5% Direct Value Added Work 35.8% Non Contributory, Waiting & Non Value Added Work 25.2% Contributory Work 39.0%

15. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Non Contributory, Waiting & Non Value Added Work 25.2% Direct Value Added Work 35.8% Contributory Work 39.0% Safety Work, 3.8% Rigging & Flagging, 1.3% Inspection & Testing; 0.5% Material and Equipment Loading, Unloading & Storage, 1.6% Clean Up, 3.2% Maintenance & Repair, 1.0% Personal Time, 1.3% Move Self, 8.9% Move Tools & Materials 14.8% Locating & Positioning 2.2% Holding Materials or Equipment, 0.4%

16. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Direct Value Added Work 35.8% Contributory Work 39.0% Non-Contributory, Non-Value Added Work & Waiting 25.2% Idle - Crew Balance; 6.2% Idle - Interference; 2.6% Idle - Talk; 0.4% Idle - Over Manning; 2.5% Idle - Late Start or Early Quit; 3.2% Idle - Discretionary; 3.2% Idle - Institutionalized Standby; 4.2% Ineffective Work; 1.5% Rework; 1.5%

17. Situation-at-a-Glance LeJeune ® Bolt  Metallurgy of twist-off end –Limits bolt size –≤ 1.125” Diameter max  Friction–dependent tension indication –Dirt or rust –Causes premature twist-off  Cannot be removed once installed  Ergonomic –Non-impact –Single side/operator installation LeJeune ® Bolt  Metallurgy of twist-off end –Limits bolt size –≤ 1.125” Diameter max  Friction–dependent tension indication –Dirt or rust –Causes premature twist-off  Cannot be removed once installed  Ergonomic –Non-impact –Single side/operator installation  Operator must stop –to check washer compression  Inspector –must use feeler gage  Not ergonomic –2 operators –Impact tool required Direct Tension Indicating Washer

18. Implementation  Visual Red Squirt Material –occurs upon advent of Proper Tension  Is just what installer needs to know  Altered metallurgy –So serrated end does not twist off  Visual Red Squirt Material –occurs upon advent of Proper Tension  Is just what installer needs to know  Altered metallurgy –So serrated end does not twist off Results  Installer tightens –without stopping  Inspection is Visual –or with feeler gage  Non-impacting wrench –used from one side  No size limits –reduces number of bolts  Friction independent –rust & dirt irrelevant  Easily removed –and reinstalled if needed

19. Executive Sponsorship of Chief Improvement Officer  Differentiation now & future dominance –individuals professionally project teams & companies –is achievable by real executive commitment of time, resources –and intellect to learn and implement Call or send email for primer of new handbook Patty, Robert M; Denton, Michael A; Lean Operations for Front-end- loading, Engineering, Procurement, and Construction: Shorten Cycle Time, Eliminate Error, Improve Quality, Reduce Cost, Universal-Publishers, 500+ pgs, being typeset for 2009.  Differentiation now & future dominance –individuals professionally project teams & companies –is achievable by real executive commitment of time, resources –and intellect to learn and implement Call or send email for primer of new handbook Patty, Robert M; Denton, Michael A; Lean Operations for Front-end- loading, Engineering, Procurement, and Construction: Shorten Cycle Time, Eliminate Error, Improve Quality, Reduce Cost, Universal-Publishers, 500+ pgs, being typeset for 2009.