AEM P&L Review Cost Analysis

1. AEM P&L ReviewCost Analysis February 25,1992

2. It's okay to use high level assumptions which do not meet Mobil's usual demands for analytical rigor. We need only the extent of detail which will enable us, the P&L Review Team, to make recommendations about whether (and in what form) there should be a follow-up more detailed study. Our approach should be flexible and iterative, if we get new information we can always up-date our assumptions. Guiding Principal For Cost Analysis

3. Approach Understand P&L Process at high level Stage 1. Establish Base Costs Stage 2. • Look for opportunities for efficiency gains • Focus Interviews • Brown Papers • Follow-up Research Stage 3. Estimate Potential $ Value of Opportunities (within a range) Stage 4. Determine Cost / Benefit of Additional Study to Achieve Opportunities Stage 5.

4. Use brown papers to determine what are the key high level activities for the P&L process. Collect data as part of brown paper development Reports generated at each stage Manpower involved Validate results by sharing brown papers with Mobil employees Contributors to the brown papers Senior management Stage 1

5. Identify which activities, in which parts of the organization, probably generate a lot of expense in the P&L process. Add to data collected in brown paper development Ensure have manpower / resource estimates for the activities which generate most of the expense. Estimate “base” costs of the P&L process based on Manpower requirements (# employees, and percent of time spent on P&L) Systems support (if we have time) Validate results with senior management Corporate and divisions Affiliates Stage 2

6. Concentrate on the activities which generate most of the expense in the P&L process. Ignore small costs, for reasons of speed Conduct research and interviews to identify opportunities to improve Mobil's P&L process. Analyze focus interview results Review brown papers Conduct follow-up questioning to get additional insights Stage 3

7. Quantify potential $ value of opportunities using high level assumptions. Extrapolate potential benefits based on what we do know into locations which we have not addressed. Carefully position cost analysis in Mobil. Communicate concept that our approach is a scoping exercise and not a series of specific implementation recommendations. Ensure audience understands: A lower level of accuracy in our costing analyses is okay, given we are “scoping” Next step would be another study to validate results and develop implementation plans Stage 4

8. Determine the appropriate presentation format for final recommendations Formal panels Final presentation(s) Brown paper fair(s) Develop the materials, this should include the following agenda items: Scoping of the issue Recommendation of whether to proceed or not with a follow-on study If to proceed, how? Charter for any subsequent study Resources required $ outcome: potential benefits Identification of related opportunities Pre-present the materials Validate results and incorporate feedback Present final materials Stage 5