CII Annual Conference San Diego, California July 25-27, 2006 Committee Presentation Benchmarking & Metrics Committee Industry Demands Clear Measurements: The Case for Tailored, Transparent Metrics

Provide industry performance norms. Quantify the use and value of CII Best Practices. Help focus CII research and implementation efforts. Allow member organizations to assess their performance against collective data. Help identify CII Best Practices and other opportunities to improve capital effectiveness. Benchmarking & Metrics Committee Mission

Principles For Selection of Metrics Provide value to CII stakeholders. Focus on continuous improvement and establish objective targets. Be ones we have the ability to influence. BM&M Essentials Workbook, 9/18/95 CII metrics should:

CII Metrics Development Journey

Relative Metrics Relative metrics compare actual to planned: For example, total installed cost to budget at authorization. Are high-level metrics intended for broad application. Are suitable for assessing the impacts of Best Practices.

Practice Use Metrics Practice use metrics assess the level of implementation of CII recommended Best Practices: For example, Pre-Project Planning, Constructability, Zero Accidents Techniques. Are process oriented. Assist in explaining project performance.

Correlation of Relative Performance & Practice Use Metrics Determines Value of Best Practices High th Quartile2nd Quartile1st Quartile Practice Use Performance Better 3rd Quartile Low Theoretical Relationship

Productivity Metrics Productivity Metrics measure engineering & construction productivity in terms of work-hours and quantities: For example, design-hours per linear foot of pipe for engineering and work-hours per linear foot of pipe for construction. Are available for most disciplines. Are suitable for improving engineering and construction processes.

Better Total Foundations Wk-hr/CY n= 38 < 5 CY Wk-hr/CY n= CY Wk-hr/CY n= CY Wk-hr/CY n= 18 > 50 CY Wk-hr/CY n= 21 Concrete Construction Productivity Foundation Size Your Circle?

Industry Specific Metrics Industry specific metrics establish benchmarking metrics that provide: Insight to capital projects cost and schedule relative to other companies in the industry. Ability to observe industry trends related to capital investment. Ability to evaluate project designs and cost estimates prior to commitment.

Industry Specific Benchmarking Measure performance and processes specific to industry groups. Examples: ― Pharmaceutical: total installed cost per process equipment cost or design through operation qualification duration per gross square foot. ― Oil & Gas: Hydrotreater, total installed cost per capacity. Currently exist for pharmaceutical bulk and secondary manufacturing and pharmaceutical labs. Are in development for oil & gas downstream projects.

Pharmaceutical Benchmarking

Metrics Framework Pharmaceutical Industry Pharmaceutical Bulk Manufacturing Biological Direct Derived Fermentation Cell Culture Attachment Dependent Stirred Tank Pilot Plant Chemical Manufacturing Pilot Plant Pharmaceutical Secondary Manufacturing Fill Finish Parenteral Syringe Delivery Device Vial Pilot Plant Non-Parenteral Inhalents Solid Dosage Cream / Ointment Pilot Plant Packaging Pharmaceutical Warehouse Pharmaceutical Laboratory Research Biological Chemical Quality Control / Quality Assurance Vivarium Process Development

Absolute Cost Benchmarking Requires Normalization Location and Time Adjustments provide comparisons at a common location and time Normalizing cost to a common basis allows:  The project to be benchmarked against a representative dataset  The project data to become a part of the normalized dataset for future blinded comparisons

Pharma Absolute Cost Metrics Manufacturing (Examples) $TIC / $Process Equipment $TIC / Total Equipment Piece Count $Hard Cost / $Process Equipment $Soft Cost / Total Equipment Piece Count $Design + $Construction Management / Total Equipment Piece Count $Process Equipment / Validated Equipment Piece Count $Process Installation / Validated Equipment Piece Count

Pharmaceutical Absolute Metrics Data Mining Engine

Downstream Oil & Gas Benchmarking

Metrics Framework Oil & Gas Process Categories Auxiliary Operations and Facilities Other Refining Operations Treatment Conversion Distillation Pretreatment

Metrics Framework Oil & Gas Treatment Project Types (Examples) Treatment Hydrotreater (Naptha, Kerosene, Diesel, VGO) Sour Water Stripper Acid Gas Removal Aromatics Removal Gas Recovery Unit

CII Metrics Development Journey What’s next? Oil & Gas Upstream - Team forming, Fall 2006Oil & Gas Upstream - Team forming, Fall 2006 Public Sector BuildingsPublic Sector Buildings Power GenerationPower Generation AutomotiveAutomotive

CII BM&M Implementation Sessions Productivity Metrics: Which Circle is Yours? WEDNESDAY - July 26 Time: 10:00 am 11:15 am Industry-Specific Metrics: The Case for Tailored, Transparent Metrics THURSDAY - July 27 Time: 1:00 pm 2:15 pm Organization/definition Data collection / findings Use and reports Path forward Status Development approach Solicit interest in other industries