CII RT 211: Effective Use of the Global Engineering Workforce Moderator Karl E. Seil Stone & Webster, A Shaw Group Co. CII Annual Conference 2005 IMPLEMENTATION SESSION

CII Research Team 211 Members Robert J. Beaker - General Motors Corporation (co-chair) Karl E. Seil - Stone & Webster, A Shaw Group Co. (co-chair) Hector Brouwer de Koning - Black & Veatch Dennis Chastain - Mustang Engineers & Constructors, L.P. Chuan ‘Victor’ Chen - Pennsylvania State University Gregory Gould - Burns & McDonnell John Hackney - Nova Chemicals Corporation Lona Hankins - ConocoPhillips Robert E. Houghtaling - DuPont Engineering George Joseph - Pennsylvania State University Aivars E. Krumins - ABB Lummus Global John I. Messner - Pennsylvania State University James B. Mynaugh - Rohm and Haas Company Batuk Patel - The Dow Chemical Co. Matthew J. Petrizzo - Washington Group International Reinhard Pratt - AMEC, Inc. Gerald A. Schacht - Abbott Laboratories Bruce A. Strupp – Perot Systems H. Randolph Thomas - Pennsylvania State University Todd White - Anheuser-Busch, Inc.

Panel Members Todd White Engineering Manager Anheuser-Busch, Inc. St. Louis, MO Aivars Krumins V.P. – Engineering / Procurement ABB Lummus Global Houston, TX Marcel Prunaiche Managing Director Washington Group International Romanian Operations Center Bucharest, Romania Pooran Tripathi Managing Director, Stone & Webster, Rolta Ltd. (SWRL) Mumbai, India Local Remote Lona Hankins Project Team Leader ConocoPhillips. Belle Chasse, LA Dr. John Messner Assistant Professor, Arch. Engr. Penn State University

A Global Virtual Engineering Team (GVET) is a group of geographically dispersed engineers that needs to overcome: Space and Time issues, Function and Organizational barriers, and National, and Cultural differences Definition

Brief RT 211 Chronology Kickoff Meeting – March 2004 Survey – April – June, 2004 –Total number of survey responses: Owner and 28 EPC individuals submitted surveys –Companies: Owners and 20 EPC companies In-Depth Interviews (21 total) – June – August, 2004 –Domestic: 17 managers –Foreign office interviews: 4 managers Detailed Case Study – July - August 2004 –5 projects within one CII company GVET Planner Development – August 2004 – March 2005 –2 Focus Group Meetings to Validate Framework

1. Determine driving factors for GVET. 2. Determine current status of GVETs, tools, and work processes. 3. Define criteria for successful GVET adoption and lessons learned from past experiences. Develop a planning tool for global engineering work force establishment and maintenance. Objectives

GVET Planner Demo

Panel Members Todd White Engineering Manager Anheuser-Busch, Inc. St. Louis, MO Aivars Krumins V.P. – Engineering / Procurement ABB Lummus Global Houston, TX Marcel Prunaiche Managing Director Washington Group International Romanian Operations Center Bucharest, Romania Pooran Tripathi Managing Director, Stone & Webster, Rolta Ltd. (SWRL) Mumbai, India Local Remote Lona Hankins Project Team Leader ConocoPhillips. Belle Chasse, LA Dr. John Messner Assistant Professor, Arch. Engr. Penn State University

Drivers of GVET Drivers OwnerEPC Total Rank Need to reduce engineering service cost 111 Competition 722 Global customers or local customers 633 Locate services close to the project location 274 Reduce the engineering schedule 465 Expand detailing work for same cost 586

Success & Failure Factors Success FactorsFailure Factors Clear & frequent communication, periodic face-to-face meetings (16) Lack poor communication, lack of face-to-face meetings (19) Good communication tools & IT compatibility (15) Lack of understanding of local work practices, cultural differences, and/or language issues (14) Standard work processes and communication procedures (11) Lack of management involvement & experienced leadership (9) Clearly defined scope & expectations (10) Changes (goal, scope), slow response to change (8) Clearly defined roles & responsibilities (9) Incompatible or poor technology, including hardware and software (7)

Impact of GVET on Project OwnerEPCMajority Opinion Engineering Cost50.0 %46.1 % More than 10% reduction Construction Cost71.4 %79.1 %No impact Engineering Time57.1 %40.0 %No impact Overall Project Delivery Time 57.1 %60.0 %No impact Engineering Quality57.1 %72.0 %No impact Construction Quality64.2 %79.1 %No impact Typical Impact on:

OWNEREPC more than 10% increase 0-10% increase Same 0-10% reduction more than 10% reduction more than 10% increase 0-10% increase Same 0-10% reduction more than 10% reduction ENGINEERING COST CONSTRUCTION COST ENGINEERING TIME OVERALL PROJECT DELIVERY TIME ENGINEERING QUALITY CONSTRUCTION QUALITY For projects performed by your company with Global Virtual Engineering Teams, what is the typical impact on: Impact of GVET

Panel Discussion / Q & A Todd White Engineering Manager Anheuser-Busch, Inc. St. Louis, MO Aivars Krumins V.P. – Engineering / Procurement ABB Lummus Global Houston, TX Marcel Prunaiche Managing Director Washington Group International Romanian Operations Center Bucharest, Romania Pooran Tripathi Managing Director, Stone & Webster, Rolta Ltd. (SWRL) Mumbai, India Local Remote Lona Hankins Project Team Leader ConocoPhillips. Belle Chasse, LA Dr. John Messner Assistant Professor, Arch. Engr. Penn State University

Experience of Survey Participants Greater than 5 years of personal experience with global virtual engineering teams: Owner: 15.7% EPC: 55.5% Greater than 5 years of company experience with global virtual engineering teams: Owner: 52.6% EPC: 62.9% Companies with more than US$100 million size projects executed with global engineering teams: Owner: 47.3% EPC: 55.5% Owner: 57.8% use global VT on many projects EPC: 66.6% use global VT on many projects Plans to increase implementation of global virtual teaming: Owner: 68.7% EPC: 92.5%

Team Dynamics / Commitment 74% of EPC respondents have permanent domestic & overseas engineering design offices participating in global virtual teaming. How does global VT impact the “team” feeling for individuals who are geographically isolated from the majority of the group? Owner  73.3% responded as ‘feel LESS like an integrated team’ EPC  68.0% responded as ‘feel LESS like an integrated team’ Team members have less trust: Owner  57.1% EPC  61.5% Does a Global VT increase the time spent by your project management team on the project? Owner  42.8% responded ‘yes’ Range: 25%, 20%, 15+%, 15%, 10%, 3-5% EPC  77.7% responded ‘yes’ Range: 75%, 40%, 20%, 15%, 10%, 5%, 2%

Technology Result OWNEREPC ResponsesPercentageResponsesPercentage % % FTP531.2%1659.2% Video-Conferencing1168.7%2177.7% Web-Conferencing1062.5%1555.5% Virtual Private Networking425.0%1659.2% Project Specific Websites1062.5%2281.4% Applications for Simultaneous Remote Collaboration 531.2%1762.9% Common Repositories for Project Information %2074.0% Knowledge Management Systems, e.g.: lesson learned databases 637.5%1866.6%