Produced by: Cost Management Best Practices for STO Christen Bergerud EcoSys

Introduction STO Cost Management Challenges Attributes of a STO Controls System Marathon Petroleum Turnaround Case Study STO Controls Systems – Other Examples and Screenshots Questions Agenda

EcoSys Company Background Planning and Controls Software Vendor o Designers & Developers of original Primavera P6 o Current focus is EcoSys Enterprise Planning and Controls (EPC) Software Consulting Practice o Focuses on Implementing Processes and Systems for Planning and Controls of Capital Projects including Shutdowns, Turnarounds, Outages Partnerships with Oracle, SAP, Microsoft, & IBM

EcoSys Enterprise Planning and Controls Software

Over 200 Customers Globally Public & Private Sectors

STO Cost Management Challenges Shutdowns, Turnarounds and Outages can have vast cost implications on a company Cost of Delay can be immense Lost Revenue, Lost Market Share, Regulatory Impacts Cost tends to be a Principal Way that Management Evaluates the Success of Turnarounds

STO Cost Management Challenges Better STO Cost Management Has Many Benefits Confident cost analysis justifies further investments in improvements to STO processes Tom Lenahan provided example in keynote - $2.5 MM estimate was actually $10 MM true cost. This led to greater management engagement.

STO Cost Management Challenges Better STO Cost Management Has Many Benefits Understanding of Cost allows fine-tuning of model for future STO events Monitor planned and actual against past performance Understand directs/indirects Understand performance by cost type, phase, contractor…

STO Cost Management Challenges But Really, You Don’t Have Time to Track Cost during a Shutdown, Turnaround or Outage During a Turnaround it’s easy to conclude that what matters more is: Safety Regulatory Requirements Productivity Schedule

STO Cost Management Challenges But Really, You Don’t Have Time to Track Cost during a Shutdown, Turnaround or Outage And if you focus on safety, productivity and schedule, your costs should stay in line… right?

STO Cost Management Challenges STO Status Quo: Big contingencies Sometimes big enough to allow even poor cost performance to come in under budget Limited accuracy of cost performance reporting by: Direct / Indirect Cost Type Cost Breakdown Structure Asset

STO Cost Management Challenges STO Status Quo: Lots of Manual Effort During and After a STO event to make sense out of the cost picture

STO Cost Management Challenges Management Demanding More Picture of True Cost of a Shutdown, Turnaround, or Outage Understanding how STO costs interrelate with Capital Projects and Operations Planning and Budgeting based upon real understanding of Past Performance Better Control over Late and Emergent Work

Schedules, ERPs, Timesheets Rarely Integrated If Integrated, don’t deliver easy to use, real-time tools for managing schedule, productivity and cost Excel = time consuming, error-prone manual entry Very short time windows to capture productivity between shifts “We have people in at 4 AM racing to compile productivity data in Excel before the next shift. We type in the actuals twice daily. Challenges for Cost Controls Systems Fall Short during a Turnaround “We create a bunch of change orders in SAP in advance, in anticipation of emergent work.

Budgeting often based on blended rates Scheduling systems co-opted into budgeting systems Not a lot of controls over late work Challenges for Cost Controls Systems Fall Short before a Turnaround

Lack of Integrated Systems makes visibility by KPI or cost attribute hard to achieve Very intensive efforts to reconcile cost reports with true cost “Well, then we re-type the data into our Japanese parent company’s general ledger system.” “The actuals in the schedule don’t tie out to the G/L or vendor invoices. We think maybe an activity got deleted.” Challenges for Cost Controls Systems Fall Short after a Turnaround “We may not see the real costs from SAP for months.”

20% 16% 13% 12% 30% 6% 2% 1% Reconciling General Ledger Data Correcting Labor Coding Collating Internal & External Reports Manual Downloading Monitoring & Controlling Costs Change Management Forecasting & Trending Analyzing Budgets & Actuals 17 Source: Internal Study by EcoSys Customer Current Utilization Cost Analysts Spent 61% of Time on “wasteful” activities

18 65% 25% 5% Analyzing Data Forecasting & Trending Running Reports Troubleshooting Source: Internal Study by EcoSys Customer Target Utilization Cost Analysts provide much greater value added

Attributes of a STO Controls System

Single, Integrated System to Track Hours, Productivity, Cost Consolidates Data from Multiple Systems: o Scheduling o G/L o Timesheets o Estimating Attributes of a STO Controls System

Web-based Dashboards with Drill-down based on Role (Executive to Foreman) Variable Access Rights with Spreadsheets or Forms that Enforce Business Rules Attributes of a STO Controls System

Ability to reclassify direct/indirect Structured change control and scenario analysis Rate Tables Multicurrency (if needed) Versioning and variance analysis Attributes of a STO Controls System

What If Analysis Single Database manages STO and Capital Projects Visibility by Any Attribute and at Any Level Attributes of a STO Controls System

Projects / WBS Schedule Dates Resource-loading (units & costs) - Baseline - Current - Remaining Activities Resources Codes (activity, resource, project) Percent Complete Timesheets Integrated Earned Value Management Consolidated Performance Reporting Budgets, Forecasts, Commitments Actual Costs Change Management Data Transformations Historical Snapshots Transaction/Audit Repository Projects/WBS Activity Networks Cost Elements Actual Costs Timesheets Commitments WBS & WBS Status Budget / Planned Costs Contractor & Other Timesheets Typical Integration Scenarios - Turnarounds

Turnaround Case Study Marathon Petroleum

6 Refineries in US Legacy Artemis reporting system integrated with P6, Time & Attendance Tried several tools to replace, none met functionality and performance requirements Successful pilot in 2010 Advantages seen in EcoSys: o Flexibility and speed of P6 Integration o Performance of integrations and reporting with large datasets o Flexibility of configuration and reporting to meet advanced best practices o Rapid software implementation o EcoSys certified SAP integration aligns with Marathon’s future plans Case Study: Marathon Marathon Petroleum

Management of Contingency/Drawdown, Forecast, Earned, Expended, Estimates Daily/weekly time-phasing Daily integration with P6 for progress Daily integration with time & attendance/contractor billing Functionality Highlights Case Study: Marathon

Preserve daily history of earned value (S Curve data) Define complex transformation rules in EcoSys (i.e. Craft ABC + Vendor 123  Indirect) Implemented all Marathon TA KPIs Extensive performance reporting: direct/indirect, vendor, unit, craft, work order, phase Integrate Changes/Growth into Performance Baselines Functionality Highlights Case Study: Marathon

Any Questions? Thank you!

Produced by: Christen Bergerud EcoSys