Strategies to Overcome Shortages of Crafts and Maximize Field Productivity

1. Strategies to Overcome Shortages of Crafts and Maximize Field Productivity Bobby Singh President Project Assurance, Houston, Texas

2. Presentation Focus Strategies to Overcome Craft Shortages Industry’s Challenge to Overcome Craft Shortages Recent Turnaround Experiences Some of Our Management Weaknesses Solutions to Overcome Craft Shortages Improving Craft Productivity

3. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Contractor Alignment and Team Building Sessions are conducted after the turnaround completion. Achieving World-Class Turnarounds 10

4. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Turnaround scheduling staff are frustrated due to the planning software’s limitation to schedule only 1,000,000 activities. Achieving World-Class Turnarounds 9

5. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Reengineering is considered to be as-built drawings after operations and process engineering groups have made 10,000 MINORscope improvements. Achieving World-Class Turnarounds 8

6. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Expedited and long-lead materials are found under contractors’ trailers after the turnaround completion. Achieving World-Class Turnarounds 7

7. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Sole criteria for selecting qualified contractors is the number of their memberships to golf clubs, burlesque bars and invitations to hunting and fishing trips. Achieving World-Class Turnarounds 6

8. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Planning, Cost, Inspection and Safety staff are laid off to save turnaround costs and improve company profits. Achieving World-Class Turnarounds 5

9. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds WBS, PSM and HAZOP are perceived as the new Cable TV Channels on the information super-highway. Achieving World-Class Turnarounds 4

10. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Company’s turnaround vision, executive mission statement and performance goals are written by professional speech writers. Achieving World-Class Turnarounds 3

11. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds Progress status, schedule updates and cost forecasts are performed by local psychics, astrologers and tarot card readers. Achieving World-Class Turnarounds 2

12. TOP TEN LISTWhen a Company is NOT Managing World-Class Projects and Turnarounds When a Manager says, “I have not read Bobby Singh’s latest book World-Class Turnaround Management.” Achieving World-Class Turnarounds 1

13. Strategies to Overcome Craft Shortages Industry Challenge Cost and schedule performance of most Capital Projects and Plant Turnarounds is being severely impacted by : • Shortages of qualified crafts • Experienced supervision

14. Industry Challenge Poor performance on capital projects and turnarounds is further compounded by: Poor field productivity Low actual tool time New regulatory requirements Integration with large capital projects Strategies to Overcome Craft Shortages

15. On a typical construction the actual tool time on a 10-hour work shift Is less than 4 hours Not an Encouraging Productivity Statistics Productivity – Tool Time Strategies to Overcome Craft Shortages

16. How many of you folks have their Projects and Turnarounds results adversely impacted by Craft shortages and poor productivity? Strategies to Overcome Craft Shortages

17. Some of Canada’s large tar sand projects have experienced cost overruns of over Billion Dollars due to craft shortages and poor field productivity. Past Performance Results Strategies to Overcome Craft Shortages

18. Ethylene Turnaround in Houston Area Planned crafts during turnaround: 2000 Actual maximum number of crafts 1200 * Turnaround scheduling started 24 months before the turnaround ** 2 large mechanical contractors were selected for execution Past Performance Results Strategies to Overcome Craft Shortages

19. Large Turnaround in Lake Charles Planned welders / pipe fitters crafts 124 Actual welders provided by contractor 31 * Other mechanical contractor was added to supplement primary contractors ** Contractors started planning 18 months before the turnaround Past Performance Results Strategies to Overcome Craft Shortages

20. Ethylene Turnaround in Lake Charles Planned welders / pipe fitters crafts 112 Actual crafts provided by contractor 115 * Multiple contractors were selected to execute turnaround work scope ** Craft requirements and contracting strategy were developed 18 months before the turnaround Past Performance Results Strategies to Overcome Craft Shortages

21. During some recent large turnarounds and capital projects, the problems resulting from shortage of qualified crafts and poor productivity was so bad, that to help finish the work, the companies had to rely on: Highly Experienced, Motivated and Productive Crafts !!! Overcoming Craft Shortage Challenge Strategies to Overcome Craft Shortages

22. Contracted Foreign Crafts from: Philippines India Croatia Strategies to Overcome Craft Shortages

23. Welcome to the new realities of executing plant Projects and Turnarounds in the 21st Century Foreign Pools of Contracted Labor Strategies to Overcome Craft Shortages

24. Strategies to Overcome Craft Shortages Turnaround Management BenchmarkingKey Performance Areas Leaders = Industry Average = 100 Laggards = 80 % 60 40 20 Strategic Planning Work Scope Management Contracting Strategy Productivity Improvement Manpower Planning

25. Strategies to Overcome Craft Shortages We Must Accept Our Weaknesses • Owners’ planning resources and expertise are limited and shrinking • Most companies do not perform front-end planning to identify craft needs and develop craft procurement strategies • Companies spend most efforts reacting and fighting fires than up-front strategic planning

26. We Must Accept Our Weaknesses Manpower plans and solutions are developed without participation of contractors and consultants We hope and sometimes pray for highest results without mitigating the potential problems and implementing innovative approaches Past poor results have been tolerated without any consequences Strategies to Overcome Craft Shortages

27. We have met the enemy and the enemy is us. Strategies to Overcome Craft Shortages

28. Start the planning early – 18 to 30 months before the turnaround Start integrated planning with capital projects 24-36 months before turnaround date Strategic Planning – Recognize the challenges early and identify innovative solutions Steps Towards the Ultimate Solution Strategies to Overcome Craft Shortages

29. Identify 80% + Turnaround Work Scope 15-18 months before the turnaround date Identify preliminary craft requirements 15-18 months before the turnaround Develop contracting strategies that reflect new market conditions – select contractors 12-15 months before the turnaround Steps Towards the Ultimate Solution Strategies to Overcome Craft Shortages

30. Select multiple high performance contractors Do not overstretch contractors beyond their core strengths and capabilities Develop contractor contingency planning to quickly act in case primary contractors could not perform Jointly develop craft procurement plans Smart Solutions Strategies to Overcome Craft Shortages

31. Select specialty contractors for complex work Utilize fixed-fee and incentive contracting to create win-win and high-performance work environment Implement Productivity Improvement Plan in consultation with contractors and consultants Smart Solutions Strategies to Overcome Craft Shortages

32. More emphasis on pre-fabrication Modularization construction Contractor alliances tied to performance baseline Splitting the turnaround into smaller and manageable work scope Reliance on contracted pools of foreign labor Emerging New Trends Strategies to Overcome Craft Shortages

33. Implement Productivity Improvement Plans Establish realistic budgets Programs to seek only qualified crafts Efficient work / safety permits systems No smoking projects and turnarounds Enforce discipline during breaks and quitting time Productivity Improvement Ideas Strategies to Overcome Craft Shortages

34. Extensive planning and true look-ahead schedules for next 2-4 shifts Minimize changes to execution plans Have efficient safety meetings Eliminate wait time due to materials and equipment delays Productivity Improvement Ideas Strategies to Overcome Craft Shortages

35. Sadly, there is noMagic Wand to overcome this problem. Ultimate solutions is to take several small but smart steps: Set higher expectations Start craft planning early Seek qualified staff and contractors Synergistic and efficient work environment Conclusion Strategies to Overcome Craft Shortages

36. If all the above does not work, then call: Project Assurance. Questions and Answers Session ! Conclusion Strategies to Overcome Craft Shortages