Dr. Robert M. Patty, MBA, PE Performance Improvement Facilitator / Consultant 832-717-7027 rmpatty@sb

2. Lean Operations for FEL and EPC Shorten Cycle Time, Eliminate Error, Improve Quality, Reduce Cost Dr. Robert M. Patty, MBA, PE Performance Improvement Facilitator / Consultant 832-717-7027 rmpatty@sbcglobal.net Former KBR Sr. Project Manager Lean-Constructability Program Manager & Consultant Lean EPC Facilitator

3. Overview • Define leanfacility delivery service • including lean construction • Benefits and examples  • Business case • Implementation • Getting started • Key take away • Differential success • i.e. benefits using lean • Requires differential sponsorship • by executives

4. The 20,000 ft View of Lean • Extract & align vision – top priorities • Of Client / EPC / Supplier executives • Engage employees • Of Clients / EPC / Supply chain • Extend – ultrahigh safety & quality focus • With principles and emergent change tools • To achieve downward spiraling cost & time • Different – the way the team works together • To improve performance for Clients • With mutual stakeholder benefit

5. Traditional Project DesignBasis Project Proposal Detailed Design Bid Procurement, Fabrication & Delivery Construction Start Up ERA OS MC MC ERA OS Lean Project Delivery Project Criteria System Criteria Component Criteria Detailed Design WRLP Construction Procurement, Fabrication & Delivery Planning Construction Start Up Traditional vs. Lean Project Delivery • Assessment of initial impact on pilot projects • Major oil company, senior project managers • & value improving practices team

6. Why – What Happens • TIC - logistics & operations savings • ~4.5% to 15% • used in balance with other VIPs • Raising task completions as planned • from 20 to 80% • Example on Mega PreFEED project • Increased national content 28% • Avoided scope growth 2.5% • Schedule-assurance avoided revenue loss 41% • Saved CAPEX 0.5% • Reduced OPEX 0.5% /year

7. Core Performance Enhancing Strategies • Enhance • Voice-of-the-customer in decisions • Workface level productivity • Engage an emergent change tool set • Extract & manage by standards • Task-level • Manager-performer aligned • Sequence standards • For flow optimization & reliability

8. FEL Work Package ITP – Q/A Requirements Eng. Work Package Safety Requirements Manuf. Work Package Field Work Package Construction Equipment All work should be planned in work packages developed from standards Scaffold Builds Planned Value - Manhours Timesheet Cost Code System Designation Material Status IFC Drawings Activity ID & dates 3D snap shots of work FIWP Field Installation Work Package

9. Leadership Strategies • Transparent-status • Execution control boards • Balanced scorecards • Better fitness for outcomes • Aligned commitment • Task level operational excellence • More robust response to • Near misses • Performance breeches • Creative voices

10. Management by Lean Work-task-level Standards Front End Planning Standards EPC Planning Standards Detailed Engineer, Procure, Construct Phase PreFEED- Appraise FEED - Select & Define Phase • If any standard does not cause • the right things to happen • consistently and reliably • it is not considered lean • It must be improved until it does • the standard itself and/or • the standard’s deployment policy • workface progress visibility & control Design Basis Project Critical Chain Schedule 4 to 6 Week moving work-task package execution plan

11. Engineering Workface Sampling

12. Urgency Justifies Executive Sponsorship • Alignment of work-process excellence • clients, EPC departments & supply chain • Remove comfort zone • If it doesn’t get worse • We will be ok • If it gets worse • We are victims of circumstance, still ok • Executive demand-to-improve • Render traditional cost & schedule • ‘Not-good enough’ • Figure out how to apply lean here

13. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Non Contributory, Waiting& Non Value Added Work Direct Value Added Work 35.8% 25.2% Contributory Work 39.0%

14. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Non Contributory, Waiting& Non Value Added Work 25.2% Effective Setup 13.5% Dismantle, 1.9% Direct Value Added Work 35.8% Fabrication & PreAssembly, 5.8% Excavating & Backfilling, 2.8% Final Assembly 11.4% Contributory Work 39.0% Placing, 0.4%

15. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Safety Work, 3.8% Rigging & Flagging, 1.3% Non Contributory, Waiting& Non Value Added Work 25.2% Inspection & Testing; 0.5% Material and Equipment Loading, Unloading & Storage, 1.6% Clean Up, 3.2% Maintenance & Repair, 1.0% Personal Time, 1.3% Contributory Work 39.0% Move Self, 8.9% Move Tools & Materials 14.8% Locating & Positioning 2.2% Direct Value Added Work 35.8% Holding Materials or Equipment, 0.4%

16. Results of Workface Sampling Chemical Plant Construction, Jan 14-24, 2008 Contributory Work 39.0% Idle - Crew Balance; 6.2% Idle - Interference; 2.6% Idle - Talk; 0.4% Idle - Over Manning; 2.5% Non-Contributory, Non-Value Added Work & Waiting 25.2% Idle - Late Start or Early Quit; 3.2% Idle - Discretionary; 3.2% Idle - Institutionalized Standby; 4.2% Ineffective Work; 1.5% Direct Value Added Work 35.8% Rework; 1.5%

17. Situation-at-a-Glance Direct Tension Indicating Washer LeJeune®Bolt • Metallurgy of twist-off end • Limits bolt size • ≤ 1.125” Diameter max • Friction–dependent tension indication • Dirt or rust • Causes premature twist-off • Cannot be removed once installed • Ergonomic • Non-impact • Single side/operator installation • Operator must stop • to check washer compression • Inspector • must use feeler gage • Not ergonomic • 2 operators • Impact tool required

18. Implementation • Visual Red Squirt Material • occurs upon advent of Proper Tension • Is just what installer needs to know • Altered metallurgy • So serrated end does not twist off Results • Installer tightens • without stopping • Inspection is Visual • or with feeler gage • Non-impacting wrench • used from one side • No size limits • reduces number of bolts • Friction independent • rust & dirt irrelevant • Easily removed • and reinstalled if needed

19. Executive Sponsorship of Chief Improvement Officer • Differentiation now & future dominance • individuals professionally • project teams & companies • is achievable by real executive commitment • of time, resources • and intellect to learn and implement Call or send email for primer of new handbook Patty, Robert M; Denton, Michael A; Lean Operations for Front-end-loading, Engineering, Procurement, and Construction: Shorten Cycle Time, Eliminate Error, Improve Quality, Reduce Cost, Universal-Publishers, 500+ pgs, being typeset for 2009.