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Paul G Williams 19 June 2013 Houston, TX THE IMPACT MEGA PROJECTS HAVE ON IN-PLANT PROJECT EXECUTION

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Owners in todays chemical and hydrocarbon process industries have aggressive expansion plans Incorporates additional yearly capital spending and several mega-scale expansions Resurgence driven by low energy costs contributes to over 50% of production cost for most facilities INDUSTRY PERSPECTIVE

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Major expansions, new facilities and increased maintenance are draining available engineering, construction and fabrication resources Mega projects draw resources from small in-plant projects and plant based technical/operational organizations Large projects also suffer from lack of skilled resources from project management level to craft worker BACKGROUND

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Problem deepens when project drivers are defined by business goals to achieve completion date during high price cycles Forces organizations to implement execution strategies without understanding complications that would occur (compared to conventional execution) Example: the fast track execution Requires level of organizational maturity and rigid and detailed planning from early project phase to completion BACKGROUND

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Plant based project resources must plan and manage projects out of range of their experience level Concepts are similar Volume of data & complex interfaces is overwhelming Traditional decision-making processes /communication lines not structured to address managements need for decision-making details required on mega projects PROJECT IMPACT

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Plant based practice of going to local alliance contractors does not always work Typically focus on small, in-plant, project workload and do an excellent job When overstretched, they struggle to execute quality deliverables in a timely manner Pricing is also an issue PROJECT IMPACT

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Resources experienced in planning /executing complex projects tend to cost 12% to 17% more per man hour than plant-based counterparts Large-sized projects warrant experienced team members Typically comes with high price Needs to be planned for accordingly REALITY

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Good time to become a Project Manager (PM) from a demand standpoint OPPORTUNITY

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Unfavorable time to become a PM from a guidance standpoint Minimal mentorship Thrown into a plant-based PM role soon after being hired No time for honing skills through execution of various day-to-day roles /responsibilities Expected to manage with 1 - 3 years experience rather than 1015 year maturation process that once existed Can be excellent plant-based project PMs, but with limited battle wounds and lessons learned, may have difficulty being successful on major projects PITFALLS

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Owners sometimes hire Project Management Contractors (PMC) as Owner representatives Not always a successful tactic They believe this addresses lack of owner personnel in key project positions PMCs are usually EPC contractors who are unfamiliar with Owner role TRENDS

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Effectively executing mega-scale project in a plant- based environment can be achieved As in any project, planning is key Knowing what skills are available Identifying gaps that exist Understanding what drives our projects Identifying how success is measured These plans will NOT look similar to those of 10 years ago! ADDRESSING THE ISSUE

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Innovative methodologies need to be developed to allow execution of projects in resource-constrained environments Innovative contract strategies are required to capture best available resources Pricing realities need to be built into baselines Realistic schedules are necessary to communicate achievable results Validated cost estimates are required to assure cost expectations are able to be met Resource plans need to be better defined (but may not match traditional organization charts) ADDRESSING THE ISSUE

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CONTACT INFORMATION Stephen L. Cabano Pathfinder, LLC slcabano@pathfinderinc.com www.pathfinderinc.com Corporate Office 11 Allison Drive Cherry Hill, NJ 08003 P: (856) 424 7100 F: (856) 424 6414 Gulf-Coast Office 16225 Park Ten Place Suite 500 Houston, TX 77084 P: (281) 292 5655 F: (281) 419 9977 Calgary Cherry Hill Houston Mexico City