1. 32 nd National Energy & Environmental Conference September 19, 2005 Benchmarking the Engineering & Construction Industry

2. Benchmarking Defined Benchmarking is the systematic process of measuring one’s performance against recognized leaders for the purpose of determining best practices that lead to superior performance when adapted and utilized. - CII, 1995

3. Determine What to Benchmark (Critical Success Factors) Define the Metrics Develop Data Collection Methodology Collect Data Identify Performance & Practice Use Gaps Identify Reasons for Deficiencies (Root Cause for Gaps) Develop Action Plan (Select Practices to Narrow Gaps) Integrate Best Practices into Project Delivery Processes Institutionalize as Part of Continuous Improvement Program Benchmarking Roadmap Adapted from Robert C. Camp

4. Essential Elements of Benchmarking Process (structured/systematic) Best practice oriented Part of a continuous improvement process Understanding what is important to your organization (critical success factors) Measurement, comparison, gap analysis against leaders Adapting practices to your organization

5. Metric A quantifiable, simple, and understandable measure that can be used to compare and improve performance.

6. Attributes of a Good Metric Quantifiable – objectively or subjectively Simple, unambiguous, and understandable Reliable and consistent Verifiable Timely Cost-effective Meaningful to users Drives the appropriate action NYSOT 2003 and AFSC 1990

7. Principles of Metrics Provides value to stakeholders Focused on continuous improvement Establishes objective targets Are ones we have the ability to influence Should be kept to the critical few

8. What Metrics are NOT 1.Charts – Charts graphically display metrics, but the chart itself is not a metric. 2.Schedules – Schedules can be used to produce metrics, but the schedule itself is not a metric. 3.Goals, Objectives, Strategies, Plans, etc., although these can be measured, they are not metrics, but rather they can be stated in terms of metrics. 4.Snapshots or one-time status measures as displayed in pie charts. Comparisons of status over time can be a metric. 1 Adapted from AFSC - 1990

9. Improve Efficiency Of A Business Unit Improve Performance Of A Single Project Or A Group Of Projects Improve Efficiency Of Overall Project System Improve Selected Performance Metrics (e.g. Productivity) Benchmarking Levels of Use

10. Measuring Performance

11. Cost Performance Planned vs. Actual? Total Installed Cost? TIC/SF? Soft Cost/Hard Cost? Total Installed Cost Process Equip. Cost?

12. Schedule Performance Planned vs. Actual? Days,Weeks? Duration SF ? Phase Duration Total Duration ?

13. Safety Performance TRIR? Total Recordables? DART Rate? EMR? Fatality Rate?

14. Change Performance Scope Changes? Development Changes? Cost Impacts? Schedule Impacts? Cost of Changes Total Installed Cost ?

15. Rework Performance Dollar Cost? Rework Cost Construction Cost ? Schedule Impact? Productivity Impact?

16. Productivity Performance Cy/Hr? Tons/Hr? Directs vs. Indirects? Engineering or Construction?

17. Measuring Practice Use

18. Best Practice Use Pre-Project Planning Constructability Change Management Team Building Zero Accident Techniques Planning for Startup Materials Management Automation/Integration Tech Quality Management Alignment Risk Assessment Design for Maintainability Quantitative or Qualitative?

19. Formats for Comparison

20. Formats for Comparison Individual Projects – Performance

22. Formats for Comparison Individual Projects – Practice Use

23. Contractor Domestic Large Projects Formats for Comparison Data Mining

24. Quantifying Value of Best Practices

25. Performance Metric (Scale Metric Dependent) Better Practice Use Metric 0 1 2 3 4 5 6 7 8 9 10 What is the relationship? Is it significant? How good is the fit?

26. How to analyze the relationship? Performance Metric (Scale Metric Dependent) Better Practice Use Metric 0 1 2 3 4 5 6 7 8 9 10 Better

27. Performance Metric (Scale Metric Dependent) Better Practice Use Metric 0 1 2 3 4 5 6 7 8 9 10 Low Use High Use How to analyze the relationship? Better

28. Value of Best Practices Theoretical Relationship High 0.4 0.3 0.2 0.1 0 -0.1 -0.2 4th Quartile2nd Quartile1st Quartile Practice Use Performance Better 3rd Quartile Low

29. Improvement Potential Performance Metric (Scale Metric Dependent) Better Practice Use Metric 0 1 2 3 4 5 6 7 8 9 10 Low Use High Use Average Performance Improvement

30. Accessing the Online System

31. Project Central

33. CII Benchmarking Database A Total Of 1420 Projects of which 194 are Small; 10 Years in Development! 177 616 531 96 0 50 100 150 200 250 300 350 400 450 500 550 600 650 DomesticInternational Project Location Number of Projects Owner Contractor

34. Current CII Benchmarking Systems Available Large Project Small Project Pharmaceutical Productivity

35. Small or Large? Large or Small Projects? TIC $100K-$5M Duration ≤ 14 mo. Site Wk-Hrs ≤ 100K Full-time PM resources not required Small Project Questionnaire TIC  $5M Duration  14 mo. Site Wk-Hrs  100K Full-time PM resources required Large Project Questionnaire

36. Summary Best Practices can improve performance. Benchmarking helps you to: –quantify performance and practice use. –establish improvement goals. –achieve “best in class performance.”

37. Availability Free to member companies. $7500 for non-member access* *Limit of 10 projects per year

38. Questions?

39. Backups

40. Cost Growth Actual Total Project Cost - Initial Predicted Project Cost Initial Predicted Project Cost Cost Performance Metrics Delta Cost Growth | Cost Growth | Budget Factor Actual Total Project Cost Initial Predicted Project Cost + Approved Changes Delta Budget Factor | 1- Budget Factor | Phase Cost Growth Actual Phase Cost - Initial Predicted Phase Cost Initial Predicted Phase Cost Phase Cost Factor Actual Phase Cost Actual Total Project Cost

41. Schedule Performance Metrics Schedule Growth Actual Total Proj Duration - Initial Predicted Proj Duration Initial Predicted Proj Duration Delta Schedule Growth | Schedule Growth | Schedule Factor Actual Total Proj Duration Initial Predicted Proj Duration + Approved Changes Delta Schedule Factor | 1- Schedule Factor | Phase Schedule Growth Actual Phase Duration - Initial Predicted Phase Duration Initial Predicted Phase Duration Phase Schedule Factor Actual Phase Duration Actual Total Proj Duration

42. Safety Performance Metrics TRIR Total Number of Recordable Cases x 200,000 Total Site Work-Hours DART Total Number of DART Cases x 200,000 Total Site Work-Hours

43. Change Performance Metric Change Cost Factor Total Cost of Changes Actual Total Project Cost Rework Performance Metric Total Field Rework Factor Total Direct Cost of Field Rework Actual Construction Phase Cost

44. Productivity Metrics Construction ProductivityEngineering Productivity Concrete Structural Steel Piping Instrumentation Equipment Electrical Insulation Concrete Structural Steel Piping Instrumentation Equipment Electrical Examples Work-hours / Qty InstalledDesign-hours / IFC Quantity