1. Paul G Williams 19 June 2013 Houston, TX THE IMPACT MEGA PROJECTS HAVE ON IN-PLANT PROJECT EXECUTION

2.  Owners in today’s chemical and hydrocarbon process industries have aggressive expansion plans  Incorporates additional yearly capital spending and several mega-scale expansions  Resurgence driven by low energy costs –contributes to over 50% of production cost for most facilities INDUSTRY PERSPECTIVE

3.  Major expansions, new facilities and increased maintenance are draining available engineering, construction and fabrication resources  Mega projects draw resources from small in-plant projects and plant based technical/operational organizations  Large projects also suffer from lack of skilled resources from project management level to craft worker BACKGROUND

4.  Problem deepens when project drivers are defined by business goals to achieve completion date during high price cycles  Forces organizations to implement execution strategies without understanding complications that would occur (compared to conventional execution)  Example: the fast track execution  Requires level of organizational maturity and rigid and detailed planning from early project phase to completion BACKGROUND

5.  Plant based project resources must plan and manage projects out of range of their experience level  Concepts are similar  Volume of data & complex interfaces is overwhelming  Traditional decision-making processes /communication lines not structured to address management’s need for decision-making details required on mega projects PROJECT IMPACT

6.  Plant based practice of going to local alliance contractors does not always work  Typically focus on small, in-plant, project workload and do an excellent job  When overstretched, they struggle to execute quality deliverables in a timely manner  Pricing is also an issue PROJECT IMPACT

7.  Resources experienced in planning /executing complex projects tend to cost 12% to 17% more per man hour than plant-based counterparts  Large-sized projects warrant experienced team members  Typically comes with high price  Needs to be planned for accordingly REALITY

8.  Good time to become a Project Manager (PM) from a demand standpoint OPPORTUNITY

9.  Unfavorable time to become a PM from a guidance standpoint  Minimal mentorship  Thrown into a plant-based PM role soon after being hired  No time for honing skills through execution of various day-to-day roles /responsibilities  Expected to manage with 1 - 3 years experience rather than 10–15 year maturation process that once existed  Can be excellent plant-based project PMs, but with limited “battle wounds” and lessons learned, may have difficulty being successful on major projects PITFALLS

10.  Owners sometimes hire Project Management Contractors (PMC) as Owner representatives  Not always a successful tactic  They believe this addresses lack of owner personnel in key project positions  PMCs are usually EPC contractors who are unfamiliar with Owner role TRENDS

11.  Effectively executing mega-scale project in a plant- based environment can be achieved  As in any project, planning is key  Knowing what skills are available  Identifying gaps that exist  Understanding what drives our projects  Identifying how success is measured  These plans will NOT look similar to those of 10 years ago! ADDRESSING THE ISSUE

12.  Innovative methodologies need to be developed to allow execution of projects in resource-constrained environments  Innovative contract strategies are required to capture best available resources  Pricing realities need to be built into baselines  Realistic schedules are necessary to communicate achievable results  Validated cost estimates are required to assure cost expectations are able to be met  Resource plans need to be better defined (but may not match traditional organization charts) ADDRESSING THE ISSUE

13. CONTACT INFORMATION Stephen L. Cabano Pathfinder, LLC slcabano@pathfinderinc.com www.pathfinderinc.com Corporate Office 11 Allison Drive Cherry Hill, NJ 08003 P: (856) 424 – 7100 F: (856) 424 – 6414 Gulf-Coast Office 16225 Park Ten Place Suite 500 Houston, TX 77084 P: (281) 292 – 5655 F: (281) 419 – 9977 Calgary Cherry Hill Houston Mexico City