Produced by:

The Predictable Future

Ron Babich, Vice PresidentHard Dollar Corporation

Hard Dollar Corporate Objectives

Slide 2

• Leading PCM solution

• 100% customer success

• The “Southwest Airlines” of software employers

• Fast Growing

HD CUSTOMERS BY INDUSTRY

“Future Man” Predicts…No offense

Future Man but do you have all your marbles?

Uni

Planning/Design Estimating Scheduling Progress Finance

4

Unified Visibility - Control

The Reality…Now

Direct Causes of Failure • Errors or oversights in the planning and preparation phase

Indirect Causes of Technical Failure • Inadequate execution of operation and maintenance

http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

Planning/Design •Numerous Take Off Systems

•Spreadsheet Output

•Lack of Change Support in Real Time

6

Unified Visibility - Control

Estimate

• Centralized History

• Lack of Detail

• Integration to Schedule

• “Norms” Data

• Dependency on Spreadsheet

7

Unified Visibility - Control

Schedule

• % Complete – Lack of Quantity Information

• Disconnected from Progress and Estimating Tools

• CPI not included

• Scheduled work varies from how the work was estimated

8

Unified Visibility - Control

Progress

• Disconnect from Finance

• Level of Detail not Matched with Plan and Reported in Finance

• Discipline of Collection

• % Complete Guess vs. Actual Quantities

9

Unified Visibility - Control

Finance

• Manual Reconciliation to Estimate Origin

• Level of Detail not Matched with Plan

• Cash Flow Calculations

• Resource Ties

• Accrued Earned Calculations

10

Unified Visibility - Control

• Is it possible to manage the unplanned?

• Use historical data for agile planning?

• Use ‘What if?’ scenarios on the fly?

The Future is…Predictable?

The Future Lies in History

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Where did the Number come from?

13Proprietary & Confidential

Common Failures by Stages

Setting goals• Unclear description of STO goals

Planning• Procedures not easy to follow or up-to-date• Tools are incorrectly specified• Improper technical skills requirements• Unclear or incomplete work orders

http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

Common Failures by Stages

Execution• Inadequate failure diagnosis • Failures not detected during testing or inspection• Bad on-site load measurement • Inadequate quality control of executed work • Delayed installation of component • Installation of wrong or damaged components • Ignored maintenance

http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

Common Failures by Stages

Reporting• Bad cause description

Data Analyses• Inadequate utilization of company internal data

• Inadequate exchange of reliability data between operating companies

Improvements• No improvements suggested at all

• Insufficient quality on suggestions http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

Global spending in 2011 on oil & gas STO services

will total $13.17bn.

Predicting the Present

Source: visiongain

$676 Million+ at Risk

Audited Spreadsheet Errors

• Audits done shows that nearly 90% of the spreadsheets contained serious errors

• The average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2%

Source http://www.strategy-at-risk.com/2009/03/03/the-risk-of-spreadsheet-errors/

This Formula Has Legs

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E = 1 – (1 – e) n

Dilution in the Culture

“Evidence shows that most downstream and midstream operators…leave 3% to 5% of potential cost-reduction savings on the table annually because addressing them requires a change in organizational behavior and business culture.”

Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn.November 2010 edition of OIL & GAS FINANCIAL JOURNAL

Is Software Used to Schedule the Project?

Case Study on STO on 44 Projects

Case Study on STO

Is Pre-task Planning a Regular Part of Project Planning?

Where do the Workers Come From?

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Duration of Project

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Industry Experts Know…

• An acceptable range of error for a detailed work order scope is of about 10%

• When work orders are "guesstimated" without any detail, the degree of error is very high. The error range could span from 25% up to 60% and more.

Cascading KPIs

“How can we get by with one less water hauling truck this week?” or…

Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn.November 2010 edition of OIL & GAS FINANCIAL JOURNAL

…“How can we provide enough information about a maintenance need to ensure the instrumentation technician arrives onsite with the correct parts and tools?””

Characteristics of Credible Cost Planning

Clear Identification of Task

Broad Participation in Preparation

Availability of Valid Data

Standardized Structure For Estimate

Provision for ProgramUncertainties

Recognition of Inflation

Recognition of Excluded Costs

Independent Review Of Estimates

• Layout project needs with the Cost Breakdown Schedule (CBS)

• Create task templates, norms, standardized coding, and work packages

1. Plan

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Plan

Rate Storage

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Store Re-UsableUpdated Rates

Store Re-UsableUpdated Rates

Assembly Storage

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StandardizeCrew Make Up

And otherAssembly Like

Resources

StandardizeCrew Make Up

And otherAssembly Like

Resources

Norms Database Storage

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Build Best Practice

History to Draw

Durations

Build Best Practice

History to Draw

Durations

Planning

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Allow for Flexibility in

Scope

Allow for Flexibility in

Scope

• Create cost and resource loaded schedules

• Dynamically link with Oracle’s Primavera (P6) or Microsoft Project

2. Schedule

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Plan Schedule

Estimating

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Scheduling

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What If Scenarios, Changes, Resource-

ProductivityConsequences

What If Scenarios, Changes, Resource-

ProductivityConsequences

• Track the actual data vs. projected data

• Use actual performance factors to drive accurate forecasts

• Cost visibility from start to finish

• Automated change tracking

• Team collaboration and updates

3. Execute

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Plan Schedule Execute

• Analyze trends and get alerts to successfully resolve issues

• Access web-based HD Projectfacts for instant reports

• Save full historical data for future use

4. Complete & Analyze

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Plan Schedule Execute Complete & Analyze

Spreadsheet Virus

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A Formula for Bad PI / Pie

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• Audits done shows that nearly 90% of the spreadsheets contained serious errors

• Even experienced users succeed in only finding 54% on average

• Results show that 94% of spreadsheets have errors and that the average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2%

Source: http://www.strategy-at-risk.com/2009/03/03/the-risk-of-spreadsheet-errors/

A Small Error

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A Small Error

Slide 41

Avoiding Mistakes

Slide 42

Produced by:

Ron Babich, Vice PresidentHard Dollar Corporation

Ron.Babich@HardDollar.com