1. Management Summary 2. Introduction 3. Summary current situation

1. 1. Management Summary • 2. Introduction • 3. Summary current situation • 4. Business Benefits & Opportunities • 5. Business Benefits & Opportunities - Examples • 6. Market & potential new Take-up projects • 7. POSC/Caesar Business plan activities • 8. Risks & Barriers / Key Success Factors • Attachments: • A. Current Situation - details • B. List of Interviews

2. Purpose of study The following points outline the purpose of the POSC/Caesar Business Study: • Describe and make visible the current industry practice through Åsgard & Visund projects • Identify business potentials for P/C implementations • Identify benefit areas in a life cycle perspective • Outline plans for implementation of next take up projects • Identify Barriers, Risks and Key Success Factors for implementation of POSC/Caesar • Spin off: • Raise awareness at management level on potential of P/C based solutions, and focus on P/C as a mean for business improvements

3. Steps of the Study Interviews Visits Main steps of the Business Study are. • Current status. Through a series of interviews at oil companies, major contractors and suppliers we have summarised the current status with regard to information, work methods and the knowledge/acceptance of POSC/Caesar • Potential savings. Coupling the current status and statements from industry representative with data-based fact we could identify major areas for savings • Examples. To support in the decision process for implementing POSC/Caesar based solutions / methods, sample implications of POSC/Caesar take-up are outlined • Proposed take-up projects. Outline plans / examples for projects where POSC/Caesar could contribute to positive results - and where P/C would benefit from further development. • Ideas for POSC/Caesar Project activtities. Workshop 12.9.97 Interviews Telephone follow-up

4. Inputs from the industry • Following companies were visited during the phase when ’current status’ was mapped: • Norsk Hydro, Statoil, Saga • Aker Maritime, Kværner, Umoe • Dresser-Rand, Kongsberg Offshore, Simrad focusing on Åsgard and Visund as samples • Following ’type’ of persons have been giving their contribution: • Technical Directors, Project Directors, Systems Managers, Information Managers, Engineering Managers, Procurement Management, Project Management, Engineering methods manger, Process Design managers, Product managers In total approx. 45 people have been met / contacted and given their contribution - The engagement has been far beyond expected The industry and key user environments have emphasised that the POSC/Caesar development must be driven and controlled by end-user people and not by IT people

5. 1. Management Summary • 2. Introduction • 3. Summary current situation • 4. Business Benefits & Opportunities • 5. Business Benefits & Opportunities - Examples • 6. Market & potential new Take-up projects • 7. POSC/Caesar Business plan activities • 8. Risks & Barriers / Key Success Factors • Attachments: • A. Current Situation - details • B. List of Interviews

6. Summary - Impact of NORSOK Doc./ITRecommendations Only 10-15 % of the Proposals in Documentation and IT are implemented, by Jostein Ravndal, Director of NORSOK • The major impact in cost reductions and effectiveness are due to: • New or more efficient technology • New Contracts and working relations Very little has been done with changing of working methods or documentation and IT • There is a very positive attitude in regard to POSC/Caesar implementation and its consequences, however the Oil Companies have to take the lead and set the scene 1995-97 - New or more advanced technology - New Contracts 1997-98 -POSC/Caesar - New working methods - Documentation and IT

7. Summary - about Information • There is a need for access to quality information earlier in fast track projects • The volume of information seems the same, although handling are reduced significant • The storage of as-is documentation is more at the producers, but there are still complaints about too much DFO and to detailed requirements • The oil companies do not fully use Functional specifications • There are very costly consequences of company requirements of use of systems; production and hand over of electronic information • There are no definitions or systematically follow-up of information costs or revenues The understanding of the importance of information differs very much by the average engineer

8. Quotes from work shop 12.9.97 • Oil Companies have to be lead in P/C development, implementation and training • Onshore, pipes and subsea is not developed enough in P/C to-day • Tagged, standard equipment is the most important first input to P/C for Operation, but not for engineering • P/C is too complex and difficult, no one understands it • P/C has to be controlled by users, not IT people • P/C has to develop a centre for implementation, training and help, specially to the smaller suppliers • Hydro Operation and Umoe Eng. Both reducing 30% • 50% of the time to look for information • Oil companies should focus on competence and product, not hours

9. Quotes from work shop 12.9.97, continue • Key success factors for P/C are • management attention • step wise implementation, not too fast • simplicity • security • user friendly access, differential users need for input and output • low threshold for use • Key barriers • cost, the oil companies must carry the initial costs • lack of understanding P/C • lack of loyalty to defined standards • minimising the need for training and help • lack of competent personnel in the market

10. Quotes from interviews • It seems odd that the Main Contractors get big turn key jobs, but are not allowed to use their own systems • It is extremely costly with client required systems since the use of systems are so closely linked with working methods • It will help for the efficiency if P/C is to become a standard, but the real break through will be to use P/C applications • P/C has not used NORSOK coding manual when building up the class library • All the savings from NORSOK activities has gone to the Oil companies • P/C interface with SAP has to be developed • A P/C pilot has to be implemented within 1 year, a full implementation within 3 years • Information surveys are needed for better project control

11. Quotes from interviews • The NORSOK process was essential for all the changes that have been implemented lately • There are too much undone within Documentation & IT • We must now focus on the proposals in NORSOK: • Further development and implementation of FUNCTIONAL SPECIFICATIONS • Implementation of POSC/CAESAR • Further work of simplifying TRACEBILITY • Change WORKING METHODS • Further work on ORGANISATION with focus on less interfaces and project phases • Investigate why CLASS METHOLOGY did not work in Njord By Tor Olav Kristoffersen, Project Director in Aker Maritime Now we have to work purposely towards the objectives agreed upon in the NORSOK process in order to reach stepwise changes

12. Status Åsgard A 90% of design info is online for Topside Company required systems: no formats available at start no training planned none transfer links made Stord receives 3D model, Bellelli can only handle paper Hitachi is not required to deliver supplier info before as-built Opportunities Design info available for all when needed, no distribution Design info electronic from different systems: Aker Eng., Aker MT and from 16 Subsea contractors, in to 1 database Global network with common format data Requires new contract formats Design documentation - Main Contractor • Remodelling from Calma to PDMS costs 7.5 mil NOK • Earlier Stord measured mistakes from engineering in thousands, today ( with fast tracks) it is in hundreds

13. Status Åsgard A 3 Main reasons for requirement of info: Need info for own design Quality check- Contract req. User manuals-Contract req. 6 suppliers of 50 is able to transfer info electronically Supplier doc. goes back/from too many times Detail follow -up Personal attitudes Opportunities With a P/C model and standard equipment: Info available when needed Easier with only spot checks Suppliers own responsibility P/C training and help centre Standard formats and automatic conformer Critical review of requested DFO Supplier documentation - Main Contractor • The Suppliers should have more responsibility for their own product and documentation • Expanded scope lead to more creativity and better products • THE SUPPLIERS ARE EXPERTS ON THEIR OWN PRODUCTS

14. Why Change • A standard is needed to solve the flow and sharing of information through a life time and across the different organisations and systems, and enables us not to depend on one particular software system • Fast track projects presume parallel work and available information • New contracts formats and suppliers and contractors autonomy demand open information between the different organisation/parties • To facilitate standardisation a common and open data format is needed • A P/C model enables us to transfer experience to build more secure and with better quality

15. 1. Management Summary • 2. Introduction • 3. Summary current situation • 4. Business Benefits & Opportunities • 5. Business Benefits & Opportunities - Examples • 6. Market & potential new Take-up projects • 7. POSC/Caesar Business plan activities • 8. Risks & Barriers / Key Success Factors • Attachments: • A. Current Situation - details • B. List of Interviews

16. Information Logistics Concept & Design Suppliers Suppliers Materials Management Suppliers Fabrication/ Construction Suppliers Drilling/ Well Management Operations/ Maintenance Commissioning Suppliers Suppliers Suppliers The vision - POSC/Caesar based solutions Set Up/ Initialising Project Control Development • Oil Co LCI • Store all information • Available for active use - one owner / many users • Experience transfer Operations Business Unit Management • Operations • Plant • Reservoir Management Operations Development

17. Life Cycle Information Vision statement The introduction of an Life Cycle Information warehouse and associated working methods shall: • Be the toolbox for the Norwegian new industry Life Cycle approach through a life time of an installation by supporting improved methods for • Concept phase • Project start-up and execution including commissioning and hand-over to operation • Operation phase and modification projects • Supporting industry development for standardisation of Information Management

18. Step changes needed The Vision Full INFO - SHARING Productivity Stnd Eq. DB How to find the best development strategy Infor Exchange Continuous Improvement - not enough To day Current Time Short term Long term

19. 1. Management Summary • 2. Introduction • 3. Summary current situation • 4. Business Benefits & Opportunities • 5. Business Benefits & Opportunities - Examples • 6. Market potential & new Take-up projects • 7. POSC/Caesar Business plan activities • 8. Risks & Barriers / Key Success Factors • Attachments: • A. Current Situation - details • B. List of Interviews

20. Status Split of engineering work: Engineers use 15-25% of their time to look for and gather data. (Fortune 500 Analysis 1989-84, Eng & Manufacturing companies) Rest split 20 % of time on planning & control, 60 % is productive work (assumption / estimation) Time spent on data transfer for instrument index: ~2000 man-hrs. for one mechanical package only (Major Contractor) Opportunities , , -> indicate 5 - 12% reduction in engineering man-hours through P/C , ,  -> indicate up to 16% additional reduction in engineering man-hours through P/C  -> conservative estimate for total project: 1 month reduced execution time  -> estimate‘Central Engineering Team’ reducing execution time by 1 month Rough / conservative estimates from general findings and industry quotes: 15-28% reduction of Eng. man-hours 1-2 month cut in proj. execution time Increase in Engineering productivity Quotes/estimates on ‘effects of POSC/Caesar’ from industry: • 50 % reduction of time spent on searching for information. Workshop 12/9/97 • Engineering productivity increase 30%. Workshop 12/9/97 • Engineering productivity increase 30%. Major mech. package supplier • Execution time reduced by 30% = 2.5 months for one project. Maj.mech.package supplier • Earlier start of engineering if common data is available. Major supplier + Major contractor

21. Status Number of revisions of information / documentation still too high Previous up to 60 % errors in design information - standardisation has improved quality Parts of engineering can be automated if correct information format > takes away a number of sources of quality problems Opportunities One source of information - one owner >> significant less problems since everybody could be using the same information Information available for purpose - e.g. engineering >> fabrication ; focus on what / when needed Speed of information readiness will improve quality - always collecting the right / last version Configuration management will give opportunities to manage quality Improvements in Quality Quotes/estimates on ‘effects of POSC/Caesar’ from industry: • 30 % reduction in QA / QC man-hours - major supplier • Less surplus - major project 50 mill NOK - today ; should be avoided if correct information available through one source

22. Status Long term alliances between engineering <> systems suppliers has given increased standardisation Early involvement in field concept development has proven to give increased standardisation Sub-sea is an example of major saving through standardisation, however, still major opportunities in standardising major items NORNE >> Åsgard - few opportunities to re-use documentation / information Opportunities Up to 50 % standardisation of components should be possible Documentation / Information production could be reduced by 50 % > reduction in engineering Integration of process design info and control systems design > significant reduction in man-hours Improvements in Standardisation Installation Modules Systems Components Details Standardisation opportunity Quotes: • Standardisation not focused - the client pays anyway, however standardisation has proven to reduce errors • Interface mngnt must be strong - more time to value adding engineering • Reduction of information management - 60 % possible

23. Status Åsgard A 6 suppliers out of 50 are able to transfer info electronic - however document based 2.500 supplier doc’s are requested, earlier 6-7.000 Opportunities One database with all supplier information re-use for each call off re-use across projects Standardisation of equipment Main Contractor’s view on Supplier Information • Main Contractor request the same documentation from project to project

24. Status 20 out of 50 purchase orders are frame agreements Only Statoil FA are used, none from Aker Maritime Frame agreement info is not available when call-off’s Contact with suppliers have to go through Company representative. in Statoil basis Every Call-off’s request documentation from supplier, often the same even within the same project Opportunities Re-use of documentation within one project and between projects Documentation / product data ready to use as a standard component at start of engineering - several months ahead Based on one common industry format - production & maintenance of information will become far cheaper Standardisation of equipment, where use of Functional specifications is a key element Frame Agreements Åsgard A The Oil Co basis organisation has little knowledge, experience and working methods to handle supplier information - and insufficient knowledge about project execution requirements

25. Procurement by Frame agreement or Purchase order Sample from Åsgard A & B , Compressor packages • Major improvements in use of frame agreement from Åsgard A • to Åsg B • Both start-up time and execution time can be shortened by use • of frame agreements • >POSC/Caesar based solutions - will play a central role for • extending the benefits

26. Compressor package, number of documents to Main Contractor There is a major opportunity to reduce documentation flow between the parties

27. Fram Increase Engineering productivity: Estimated 580k - 1,22M man-hours required for engineering Potential savings: 87 000- 340 000 man-hours Reduced execution time: 1 - 2 months Quality Reduced QA/QC admin Ready to use and correct information gives less rework Operations Reduction of up to 30 % of engineering time / year Grane Increase Engineering productivity: Estimated 1,2 M man-hours required for engineering Potential savings: 180 000 - 336 000 man-hours Reduced execution time: 1 - 2 months Quality Reduced QA/QC admin Ready to use and correct information gives less rework Operations Reduction of up to 30 % of engineering time / year Potential P/C effects on new projects Based on opportunities listed in previous sections, and POSC/Caesar based solutions are implemented