2015 CII Annual Conference August 3-5 Boston, Massachusetts Art MarkmanNoé SáenzStephen Mulva Univ. of Texas / HDOBurns & McDonnellUniv. of Texas / CII Smart Thinking and Team Indicators Implementation Session Assessing the Team, Benchmarking Results

Agenda Safety Moment Establishing Context: Three Questions –Dr. Art Markman Industry Perspective: CII’s Program –Mr. Noé Sáenz Academic Perspective: Findings from –Dr. Stephen Mulva Wrap-Up Questions

SAFETY MOMENT

ESTABLISHING CONTEXT Dr. Art Markman, The University of Texas at Austin / HDO

Three Questions Why? –Illusion of explanatory depth What would I have done in that situation? –Don’t undermine your trust in others What’s the evidence? –Science trumps confirmation bias

INDUSTRY PERSPECTIVE Noé Sáenz, Burns & McDonnell

1.About CII’s Performance Assessment o From Benchmarking to Performance Assessment o Why o What is it?; Who is it for?; How does it work? 2.What’s in it for You, Your Team, Your Company 3.The Future of Project Performance Management Industry Perspective

CII’s Performance Assessment PA Committee’s Mission: To realize CII’s purpose, to measurably improve the delivery of capital projects. General Benchmarking Program (1995-current) Final Assessment / Reporting – at End of Project Detailed Metrics (by Discipline, Sector/Specialty)

Why 10-10? Performance Assessment Program (2014-) Ongoing Assessment / Reporting –by Phase. 10 Team Indicators and 10 Project Indicators Industrial / Infrastructure / Buildings

Previous Process Phase-Gate Process EPC F1F3F2ESUCOPS P FEP So, what is 10-10? Team Assessment Project Results Assessing the Team and Benchmarking Results at each Phase, using 10 Team Indicators and 10 Project Indicators. Benchmarking 10 Team Indicators10 Project Indicators Planning Organization Leadership Control Design Efficiency Human Resources Quality Sustainability Supply Chain Safety Total Project Cost / Capacity Total Project Schedule / Capacity Phase Cost / Capacity Phase Schedule / Capacity Phase Cost Growth Phase Schedule Growth Capacity Efficiency FTE / Total Project Cost FTE / Cost (Includes Complexity) Phase Cost / Phase Schedule

10 Team Indicators 11

10 Project Indicators (Capacity and FTE-Based Metrics)

How it works 5 Surveys; 1 per phase

You can be aware of critical team/project needs by phase. Questionnaires are preparation guides prior to surveying. Team can “speak up” if something is missing/unknown. Honest feedback through anonymous surveys –by phase. Your Company will be able to be proactive vs. reactive. Can provide support/resources where/when needed. What’s in it for You, Your Team, and Your Company?

10-10 Questions/Results Sample Report

10-10 Questions/Results

What’s in the Surveys/System? CII Practices and Best Practices, such as: –Constructability – Research Teams (RT) 3, 29, 34, 283 –Quality Mgmt. – RT10, 31, 36, 130, 172, 254, 257, 264, 307, 308 –Change Management – RT27, 43, 158, 244, 258, 290, 2.Input from CII’s PA and Exec. Committee, Board Advisors, and Performance Assessment Workshop in Newly Developed ‘User-Friendly’ IT/Online System

The Future of Project Performance Management

ACADEMIC PERSPECTIVE Dr. Stephen Mulva, The University of Texas at Austin / CII

Owner Planning Front End Planning Alignment for FEP Planning for Start-up =standard error of mean (90% confidence interval) 7.5% Absolute Difference

Contractor Execution Constructability Project Risk Assessment Change Management =standard error of mean (90% confidence interval)

(Owner) Partnering =standard error of mean (90% confidence interval) 9.1% Absolute Difference

Capital Project Predictability - CII Owners N=310 (31.8%) Avg. Cost Growth = -10.2% Avg. Schedule Growth = 29.1% N=310 (31.8%) Avg. Cost Growth = -10.2% Avg. Schedule Growth = 29.1% N=239 (24.5%) Avg. Cost Growth = 16.2% Avg. Schedule Growth = 32.0% N=239 (24.5%) Avg. Cost Growth = 16.2% Avg. Schedule Growth = 32.0% N=102 (10.5%) Avg. Cost Growth = 12.3% Avg. Schedule Growth = -9.8% N=102 (10.5%) Avg. Cost Growth = 12.3% Avg. Schedule Growth = -9.8% N=271 (27.8%) Avg. Cost Growth = -12.7% Avg. Schedule Growth = -8.2% N=271 (27.8%) Avg. Cost Growth = -12.7% Avg. Schedule Growth = -8.2% N=53 (5.4%) Avg. Cost Growth = -0.47% Avg. Schedule Growth = 0.24% N=53 (5.4%) Avg. Cost Growth = -0.47% Avg. Schedule Growth = 0.24% 69.7% Projects Not Shown

NPV Impact of Practices PracticesExpected NPVGain/LossImprovement CII Owners’ Average$ 6.45 BillionN/A Contract Method Lump Sum$ 6.81 Billion$ 360 Million5.5% Cost Reimbursable$ 5.50 Billion- $ 950 Million-14.8% Working Relationship Work w/ CII Contractor$ 6.80 Billion$ 350 Million5.3% Work w/ Non-CII Contractor$ 4.61 Billion- $ 1,840 Million-28.5% PDRI <=200$ 6.48 Billion$30 Million0.5% >200$ 6.10 Billion- $360 Million-5.6% Planning for Startup High Use$ 6.45 Billion$ 0 Million0.0% Low Use$ 6.23 Billion- $220 Million-3.4% 7.0% 33.8%

CII Working Relationship The goal of the analysis is to assess whether projects that have CII members as owners and contractors have better performance (10-10 team measures) Each box and whisker plot shows: 25 Group of projects that had CII members as both owners and contractors Group of projects in which either the owner or contractor were not a CII member versus The number in white within the boxes indicate the group average

Team Measures by Working Relationship 26 The number in white within the boxes indicate the group average for projects with more than two respondents. The percentage in black indicates the difference between the two averages. The percentage in light gray indicates the difference for projects with only one response.

Team Measures by Working Relationship 27 The number in white within the boxes indicate the group average for projects with more than two respondents. The percentage in black indicates the difference between the two averages. The percentage in light gray indicates the difference for projects with only one response.

Team Measures by Working Relationship 28 The number in white within the boxes indicate the group average for projects with more than two respondents. The percentage in black indicates the difference between the two averages. The percentage in light gray indicates the difference for projects with only one response. Safety

The Logic of (33.1% Better Management*) 29 MANAGEMENT (CII) Practices (10-10) Measures MATERIALS METHODS MANPOWER MINUTES MONEY (The 5 M’s) Supply Chain Mechanization Productivity Performance GOAL: OPTIMIZE *Least Squares Method

30 CII Company Portfolio Analysis

Scores are the average of the 135 projects in each chart 31 CII Company Portfolio Analysis (Construction)

Arrangement of Phases 0.00%0.31%0.32%0.55%0.72%0.96%0.92%0.99%Heavy Light 0.78% 0.00%0.23% 0.24% 0.26%0.40%0.56%0.72% 0.78% 0.92%0.99% Overall Duration Phase Heavy (D=0.32%) Light (D=0.24%) Front-End Planning Design/ Engineering Procurement Construction Start-UP Heavy (D=0.41%) Light (D=0.34%) Heavy (D=0.45%) Light (D=0.46%) Heavy (D=0.41%) Light (D=0.52%) Heavy (D=0.07%) Light (D=0.21%)

WRAP UP Dr. Art Markman, The University of Texas at Austin

Smart Change Identify Goals Create Good Plans Manage Obstacles Structure the Environment Engage People

To affect other people’s behavior, understand the shared culture that creates a mutual dependency, and allows neighbors and colleagues to have a profound positive influence on the behavior of other members of their community.

QUESTIONS