32 nd National Energy & Environmental Conference September 19, 2005

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

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) Identify Reasons for Deficiencies Define the Metrics (Root Cause for Gaps) Develop Data Collection Develop Action Plan Methodology (Select Practices to Narrow Gaps) Integrate Best Practices into Collect Data Project Delivery Processes Identify Performance & Institutionalize as Part of Practice Use Gaps 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 • Charts – Charts graphically display metrics, but the chart itself is not a metric. • Schedules – Schedules can be used to produce metrics, but the schedule itself is not a metric. • Goals, Objectives, Strategies, Plans, etc., although these can be measured, they are not metrics, but rather they can be stated in terms of metrics. • Snapshots or one-time status measures as displayed in pie charts. Comparisons of status over time can be a metric. 1Adapted from AFSC - 1990

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

10. Measuring Performance

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

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

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

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

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

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

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 ComparisonIndividual Projects – Performance

21. Formats for ComparisonIndividual Projects – Performance

22. Formats for ComparisonIndividual Projects – Practice Use

23. Contractor Domestic Large Projects Formats for ComparisonData Mining

24. Quantifying Value of Best Practices

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

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

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

28. 0.4 0.3 0.2 Better 0.1 Performance 0 -0.1 -0.2 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Low High Practice Use Value of Best PracticesTheoretical Relationship

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

30. Accessing the Online System

31. Project Central

32. Project Central

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

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

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

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. What gets measured - gets improved Questions?

39. Backups

40. Cost Performance Metrics

41. Schedule Performance Metrics

42. Safety Performance Metrics

43. Change Performance Metric Rework Performance Metric

44. Productivity Metrics