1. PIP: Working in Harmony to Change Industry www.pip.org Steve Franke Shell Chemical Company Process Industry Practices 2000 CII Annual Conference Nashville, Tennessee

2. Objectives Broaden understanding of PIP initiative.Broaden understanding of PIP initiative. Raise awareness of PIP “value proposition.”Raise awareness of PIP “value proposition.” Validate PIP harmonization process.Validate PIP harmonization process. Publicize spin-off opportunities for harmonization process.Publicize spin-off opportunities for harmonization process. Relate PIP readiness and electronic availability.Relate PIP readiness and electronic availability. Advocate use of PIP “best practices.”Advocate use of PIP “best practices.”

3. A Ladder Is A Ladder?

4. Vision PIP is “universal language” in U.S. process industry for EPC industry practices.PIP is “universal language” in U.S. process industry for EPC industry practices. PIPs are widely recognized and available electronically.PIPs are widely recognized and available electronically. PIPs are up to date, of high quality, and can be used “essentially as is.”PIPs are up to date, of high quality, and can be used “essentially as is.” A preponderance of owner and contractor companies voluntarily adopt and use PIPs.A preponderance of owner and contractor companies voluntarily adopt and use PIPs.

5. Mission Increase EPC work process value globally.Increase EPC work process value globally. Enhance compliance with safety, health, and environmental objectives.Enhance compliance with safety, health, and environmental objectives. Have PIP represent preponderance of industry.Have PIP represent preponderance of industry. Create and use EPC “industry practices” (PIPs).Create and use EPC “industry practices” (PIPs). Establish IT collaborative and distribution tools to facilitate PIP development and usage.Establish IT collaborative and distribution tools to facilitate PIP development and usage.

6. PIP Member Consortium Chartered in 1993 and affiliated with CII.Chartered in 1993 and affiliated with CII. 33 U.S. process industry companies (24 owners; nine EPC contractors)33 U.S. process industry companies (24 owners; nine EPC contractors)

7. PIP Member Consortium Category 20002002 goal Owners 50+%70-75% EPC Contractors70+%75-80% PIP Members’ U.S. Market Share (Revenue)

8. PIP Value Proposition Objective Perform an engineering-style estimate in order to quantify the value of PIP.

9. Value Proposition Study Approach Base estimate on actual EPC project.Base estimate on actual EPC project. Use study team of experienced owner, contractor, and supplier members.Use study team of experienced owner, contractor, and supplier members. Estimate standardization impact.Estimate standardization impact. Focus on work process impact (before and after).Focus on work process impact (before and after).

10. PIP: Where Is the Value? More efficient communication with EPC.More efficient communication with EPC. Reduced specifications conflicts and errors; less rework and redesign.Reduced specifications conflicts and errors; less rework and redesign. Reduced inspection and testing.Reduced inspection and testing. Improved automation and productivity of engineering, construction, fabrication.Improved automation and productivity of engineering, construction, fabrication. Reduced standards maintenance and training.Reduced standards maintenance and training. Reduced materials and equipment inventories.Reduced materials and equipment inventories.

11. PIP Value Proposition Study Results Value Potential 6.7 percent (Greater than $1.3 billion annually for U.S. process industry)

12. Harmonizing Adopting PIP Practices Company A Engineering Standards Company B Engineering Standards Company C Engineering Standards

13. CII ResearchPIP Harmonization CII ResearchPIP Harmonization Data CollectionLiterature and Existing Company Case StudiesStandards Data AnalysisDefine CausalDefine Similarities Relationshipsand Differences Model DevelopmentRigorous —Align Similarities Statisticaland Harmonize Differences Model TestIndustry SurveyIndustry “Experts” Review Model ApplicationCII Best PracticePIP Industry Practice Research vs. Harmonization

14. Creation Costs Creation Time ($M/guide)(months/guide) Creation Costs Creation Time ($M/guide)(months/guide) Standards Development 500-70030-42 Organizations PIP370-50022-30 Standards and Practices: Typical Costs and Timing Organizations

15. 0 100 200 300 400 500 600 ‘95‘96‘97‘98‘99‘00‘01 Number of Practices Through June 2000 CRITICAL MASS Practices Published EXPECTED TOTAL estimates

16. Practices by Discipline Number of Practices

17. 0 20 40 60 80 100 120 14012 1998 $31MM 47 1999 $496MM 56 2000 $120MM 115 2001 $436MM PIPs PIP Usage: Sample Owner Company

18. PIP Impact: Collaborative and Joint Efforts APIPump InstallationWeldingMechanical Seals ASMEPump Data SheetsSpecialty Vessels/Bins ISAP&IDs (Process & Instrumentation Diagrams)

19. PIP Impact: Industry “Voice” Successfully petitioned exceptions for industrial equipment platforms from international group.Successfully petitioned exceptions for industrial equipment platforms from international group. Led Owner Operator Forum-FIATECH alignment.Led Owner Operator Forum-FIATECH alignment. Actively interfacing with other industry groups.Actively interfacing with other industry groups.

20. PIP Impact: Future Potential Harmonize EPC industry practices for related industries.Harmonize EPC industry practices for related industries. Provide input to industry on standards and code development.Provide input to industry on standards and code development. Guide technology development and application.Guide technology development and application. Help globalization of EPC industry practices.Help globalization of EPC industry practices. Other HARMONIZATION opportunities?Other HARMONIZATION opportunities?

21. To Learn More About PIP Visit Product Display in Conference Center.Visit Product Display in Conference Center. –Meet PIP representatives. –See demo of PIP Web site. –See sample PIPs. –Get “Overview” and “Value Proposition” papers. Visit PIP Web site (www.pip.org).Visit PIP Web site (www.pip.org). Attend PIP workshop at CPI Conference.Attend PIP workshop at CPI Conference.

22. PIP & Harmonization “Over 330 Best Practices and Still Growing” www.pip.org