Benchmarkingat Saudi Aramco

Presented By:

Ken Ostrowski

2

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

3

Introduction to Saudi Aramco

• 100% owned by Saudi Arabian Government

• No. 1 oil company 13th straight year (Petroleum Intelligence Weekly)

• Project types being planned and executed:• Oil & gas• Infrastructure• Pipelines• Power generation• Communications• Grass roots and modernization

• Large capital program

4

Saudi Aramco Project Workload

• Averaging 140 active projects per year over past 5 years

• Project size over past 10 years ranges from $2 million to $2 billion

• Maintenance-type projects less than $2 million

• Project expenditures average $2-$3 billion per year

• Approximately 700 engineers involved in planning and executing projects

Saudi Aramco Corporate Structure

PRESIDENT &CHIEF EXECUTIVE OFFICER

CORPORATE PLANNINGCORPORATE PLANNING

EXPLORATION & PRODUCING

MANAGEMENT SERVICESMANAGEMENT SERVICES

LAWLAW

GASOPERATIONS

REFINING &MARKETING

ENGINEERING & OPERATIONS

SERVICES

INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

INDUSTRIALRELATIONS

AND AFFAIRSFINANCE

6

ProjectPerformanceOptimization

Division

BestPractices

ValueEngineering

Benchmarking,Development

& Training

7

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

8

Benchmarking in Saudi Aramco

BenchmarkingResearch &

Development

Implementation

Integration

Integration

VALUEVALUE

9

Internal (comparing one project with

another)

Internal (comparing projects over time)

External (company

vs. industry)

Benchmarking the company relative to the industry (CII and IPA)

Review of the efficiency of the Project System

Evaluation of individual projects

Three Levels of Benchmarking Analysis

10

• Review our “Master Scheduling System” for Project Proposal finish and funding date

• Review project type and scope

• Review for duplication of project scopes

• Assess project value

• Exclude projects that are non-capital or “one off” projects

• Projects benchmarked at completion use similar criteria

Criteria for Selecting Projects

11

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

12

Saudi Aramco’s Benchmarking

• Benchmarking study showed that Saudi Aramco had many areas of project planning and execution performance that could be improved

• Management set objectives to improve project performance:• Reduce project durations• Reduce project costs• “Formal” program to increase use of best practices

13

• Assess Front End Definition of a project

• Evaluate competitiveness of the project for cost, schedule,

quality and safety

• Identifies potential risks and methods to mitigate risk

• Compare the completed project with the industry

• Develop trends and areas for improvements• Review project performance data• Set new targets based upon improvements over historical

performance

Benchmarking Benefits

14

• Continue with definition activities and strive to achieve “Best Practical” Front End Definition at Authorization

• Obtain Stake-holder buy in

• Produce a level III integrated project schedule

• Produce a project execution plans that includes an integrated execution schedule

• Show same commitment for smaller projects as large

• Develop contingency value reflecting project risk

• Maintain continuity during projects

What Have We Learned AboutOur Project Processes?

15

• Reduce gap between preliminary engineering completion and detailed design start (bidding cycle)

• Adopt a “scope freeze” policy after funding

• Establish contingency plans for material deliveries

• Detailed schedule planning is needed, including hot-tap tie-ins, shutdown and start-up planning

• Develop resources for selected Value Practices

• Improve historical cost and schedule databases

What Have We Learned AboutOur Project Processes?

16

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

17

Benchmarking Enhancements

• Move toward a “program” vs. ad hoc benchmarking activity• More comprehensive use of CII/IPA/Internal

benchmarking tools• More active interaction with CII and IPA

• Better understanding of CII benchmarking and metrics capabilities• How can we maximize the use of CII benchmarking?• Can we use CII benchmarking to assess

competitiveness of projects prior to funding?

• Develop historic benchmarking database

18

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

19

Benchmarking and Value Improvement Accomplishments

• 2002• 15 projects benchmarked• 137 best practices workshops on 63 Major Projects• 26 value engineering studies

$100+ Million in life cycle cost avoidance• 637 personnel trained in benchmarking, best practices and

value engineering

• Past 3 Years• Cost performance: Project costs have decreased by more

than 10% over the past three years

• Schedule Performance: Project cycle times have improved by

almost 25% over the past three years

20

Agenda

• Overview of Saudi Aramco

• Benchmarking in Saudi Aramco

• Benefits and Lessons Learned

• Benchmarking Enhancements

• Related Accomplishments

• Conclusion

21

Conclusion

• Benchmarking is the key driver of Saudi Aramco’s project value improvement effort

• Improvement in project performance metrics are being realized

Thank You

23

Benchmarking in Saudi Aramco

BenchmarkingResearch &

Development

Implementation

Integration

Integration

VALUEVALUE

Thank You