1. Jim Feeney, RAM Study Senior Consultant Gary Fuller, RAM Study Senior Consultant HSB Solomon Associates LLC, Dallas, TX Reliability and Maintenance Excellence – What It Takes to Compete in a Global Marketplace Lloyds Register Safety Driven Performance October 10, 2013

2. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 2 Confidentiality Statement This presentation is confidential and intended for the sole use of the client to whom it is addressed. The information and methodologies outlined herein are proprietary and their expression in this document is copyrighted, with all rights reserved to HSB Solomon Associates LLC (Solomon). Copying or distributing this material without permission is strictly prohibited. M³ – Measure. Manage. Maximize. ®, Comparative Performance Analysis™, CPA™, NCM³ ®, Q1 Day 1™, EII ®, CEI™, CWB™, Solomon Profile ® II, etc. are registered and proprietary trademarks of Solomon. The absence of any indication as such does not constitute a waiver of any and all intellectual property rights that Solomon has established.

3. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 3 Introduction The Reliability and Maintenance (RAM) profession has experienced more progress in the past 5 years than at anytime in the past half-century as industrial facilities are awakening to the benefits of reliability and embracing the concept of failure-free operation

4. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 4 Introduction Practices that were once characterized as best practices have become commonplace and no longer differentiate performance, including…  Planning  Scheduling  Preventive Maintenance  Computerized Maintenance Management Systems, etc.

5. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 5 Introduction Best performers in the 21st century ensure competitiveness by employing all of the strategies in their RAM toolkit  Computerized Maintenance Management System that meets the needs of the end users  Highly trained and knowledgeable workforce  Optimized material supply chain  Statistical analysis of failure data, etc.

6. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 6 Introduction However there are a select number of practices that enable them to excel in a global marketplace, including…  Comprehensive RAM strategic plan  Equipment criticality analysis  Reliable design of equipment and systems  Life-cycle procurement considerations But most of all, a culture that embraces failure-free operation

7. Proprietary and Confidential © 2012 HSB Solomon Associates LLC www.SolomonOnline.com 7 International Study of Plant Reliability & Maintenance Effectiveness (RAM Study) Study was established in 1996 Main focus is Chemicals and Refining Over 1,000 sites and 8,000 process units in the database

8. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 8 RAM Effectiveness Index (RAM EI) *RAM Effectiveness Index Solomon uses RAM Effectiveness Index (RAM EI) as the primary measure of overall RAM performance RAM EI is the sum of A (Value of lost production due to RAM causes) + B (Maintenance Cost) A+B

9. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 9 RAM Effectiveness Index Histogram of Performance

10. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 10 Reliability & Maintenance Culture Behaviors are driven by the local culture There are two distinct cultures in the reliability and maintenance community  Traditional Culture – failures are inevitable Focus on being good at reacting  Progressive Culture – failure-free operation is the objective Focus on failure elimination 10

11. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 11 Traditional Culture: Firefighting Problem happens (again) Personnel respond quickly, symptoms fixed People involved receive praise and rewards Reactive work culture reinforced

12. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 12 Performance Data Analysis Improvement Actions Defined Improvement Actions Completed Reliability Improves … Failures Eliminated Time Delay Progressive Culture: Failure Elimination

13. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 13 Traditional Versus Progressive Top Performers Eliminate Surprises

14. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 14 Strategic Plan – Traditional Focus on meeting short-term financial objectives Characterized by…  Reluctance to invest in long-term success  Unrealistically short return on investment  Treatment of symptoms versus root causes (e.g., buy another pump rather than solve the root cause of pump failures)

15. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 15 Strategic Plan – Progressive Focus on meeting long-term success of the business Characterized by…  Willingness to invest in long-term success (i.e., 5 years or longer)  Investment in asset reliability  Treatment of root causes to prevent a recurrence of a problem or a failure

16. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 16 Critical Equipment – Traditional Treat all equipment failures the same Characterized by…  Failure to rank equipment criticality  Distraction caused by the many, non-critical trivial  Dysfunctional work prioritization process  Squeaky wheel gets the grease syndrome

17. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 17 Critical Equipment – Progressive Focus on critical equipment Characterized by…  A robust and disciplined work prioritization process  Use of reliability-centered maintenance concepts  Understanding of failure modes and effects before failure

18. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 18 Strategic Plan/Critical Equipment Better Performers Have a Comprehensive Multi-Year RAM Strategic Plan and Identify Critical Equipment First Quartile RAM EI

19. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 19 Capital Projects – Traditional Focus on coming in on time and on budget…  Low purchase price (equipment) and low construction cost decisions (failure to design for maintainability)  Project is complete when physical construction is done with project team being released to their next project  Leave operations and maintenance to figure out how to make it work

20. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 20 Capital Projects – Progressive Reliability focus from concept to startup Characteristics include…  Reliability (availability) target being documented and utilized to drive Engineering concept & design  RAM personnel being an integral part of the project team  Project team being invested in and committed to successful production through sustainable operation at design rates

21. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 21 Procurement – Traditional Low purchase price focus at the cost of reliable operation Characterized by…  Purchasing decisions made in a vacuum  Belief in “Saving a Buck” wins the day  Introducing a new manufacturer’s products and equipment without understanding the true cost and long-term impact

22. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 22 Procurement – Progressive Focus on life-cycle cost Characterized by…  A holistic understanding of the impact of equipment failure  RAM personnel approving vendor/supplier lists  A commitment to sustainable operation with corresponding criteria for procurement decisions

23. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 23 Organization – Traditional Focus on chain of command and organizational protocols Characterized by…  An absence of employee empowerment  Unmanageable craft ratios (i.e., craft to supervisor and planner)  Problem of too busy reacting—no time to think ahead  Low employee morale and satisfaction

24. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 24 Organization – Progressive Focus on eliminating non-value-added work Characterized by…  Employee empowerment  Troubleshooting/feedback from all levels of the organization  Appropriate and publicized response to feedback

25. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 25 Summary You are not a world-class refinery/chemical plant if  Maintenance costs are above 1.4% of PRV  Mechanical availability is below 96.7% Poor performers typically  Attempt to shortcut the improvement process  Primarily focus on cost reduction World-class performers  Have basic work management and reliability processes  Also have a progressive culture, organization, and strategy Organizations that embrace failure-free operation will be the most competitive in a global marketplace

26. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 26 Thank You! Questions?

27. Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com 27 Jim Feeney, RAM Study Senior Consultant Jim.Feeney@SolomonOnline.com +1.972.739.1730 HSB Solomon Associates LLC Dallas, TX Contact Information Gary Fuller, RAM Study Senior Consultant Gary.Fuller@SolomonOnline.com +1.972.739.1816 HSB Solomon Associates LLC Dallas, TX