Rapid Deployment Project Management Business Perspective Product Plan

Rapid Deployment Project Management Business Perspective Product Plan – Capacity Planning Market and Product Trends R&D Projects Capital Project Planning Jan 8, 2014 Design Engineering - Facilities Design Engineering Long Lead Design Engineering Process Procurement and Contracting Launch Project Startup-Operations. Closeout R&D Process Development Project Definition Funding Approvals Construction Prepared by Greg Scott PMP 1

Rapid Deployment Project Management Overview • Characterized by need to get new product to Market. • Very Capital Intensive Business, Typical Projects $10 MM -$100 MM, with 6 -18 months duration. • Parallel Activities R&D, Engineering, Manufacturing Facility. • Critical Decision Points Throughout • Process and Product development up to start-up Jan 8, 2014 Prepared by Greg Scott PMP 2

Rapid Deployment Project Management Major Players in Program • Marketing: Identifies Product and Market Parameters. • Management: Determines Cost/Benefit and alignment to Corp Strategy. Funding. • R&D: Determines feasibility, Initiates Development, Builds and operates prototype • Corp Engineering: Develops project plan, initiates engineering efforts, Construction Plans, Procurement, Etc. • Mfg Facility: Integrated throughout for impacts, logistics, operator training. QC Jan 8, 2014 Prepared by Greg Scott PMP 3

Rapid Deployment Project Management Success • First to Market, Superior product, Gain Market Share • Establish foothold for new family of products. • Major Cost improvements on existing products Jan 8, 2014 Prepared by Greg Scott PMP 4

Rapid Deployment Project Management Risks • Shorter than expected product life cycle. Insufficient ROI • Unforeseen Market Conditions, changes scope during execution. • Must assume parameters at many stages to size utilities, long lead equipment, facility • High cost, schedule and process risk as prototype facility is scaled up to full production configuration • May enter into operation without optimized process conditions established Jan 8, 2014 Prepared by Greg Scott PMP 5

Rapid Deployment Project Management Project Appropriation Package • Defines high level requirements • Business case, assumptions, ROI • Schedule, In House Staffing • Roles & Responsibilities- Stakeholders • Cost Estimates for • Design Engineering • Specialty Item Procurement • Construction • Start-up, training, operating spares • Risks, High Contingency Factors Jan 8, 2014 Prepared by Greg Scott PMP 6

Rapid Deployment Project Management Design Phase • Contract Design Engineering Resource • Establish major design criteria for: • Facility Footprint • Capacities (Power, water, process materials) • Modularize Design • Process Equipment • Logistics for product • Utilities, support facilities • Identify critical long lead items and or specialty process equipment • Identify factors not finalized dependent on R&D efforts. Jan 8, 2014 Prepared by Greg Scott PMP 7

Rapid Deployment Project Management Procurement and Construction Phase • Generally have a Prime Contractor established • Usually a cost+ contract • Contractor participates at times in design phase • Identify project items suited for: • Design-Build Contract • Design-Bid: Fixed Price, Guaranteed Max price, Other • Procurement: • Items specified and procured by Company • Items specified by Company, procured by Prime • Process unique components, 1 st article validation • Drawing and Specifications release schedule • Interim estimating milestones Jan 8, 2014 Prepared by Greg Scott PMP 8

Rapid Deployment Project Management Project Controls • Define Go-No Go Gateway control points: • What must be completed (all stakeholders) • What decisions needed (all stakeholders) • Cost Check-Points • Cost Control – do not rely on expenditures only • Closely Track value of Commitments: • Purchase Orders and Contracts • Design phase releases with estimates • Design and Construction % complete with costs: • Validate actual payments with previous estimates • Consume Contingency • Consume as needed for defined risk items • Early recognition for total actual estimate vs. . Approved • Cash Flow Requirements for funding Jan 8, 2014 Prepared by Greg Scott PMP 9

Rapid Deployment Project Management Comments • Suitable if completion timing is critical • Has many characteristics as in Agile • Organizational Impact • Requires a culture of action, commitment • Qualified Staffing needed to minimize risk • Organization needs to commit to contingency funding • Requires qualified team of Designers, Builders • Partnership to achieve results, communication • leverage experience to maximize value Jan 8, 2014 Prepared by Greg Scott PMP 10

Project Example #1 $100 M New Site Process Facility Jan 8, 2014 Prepared by Greg Scott PMP 11

Project Example #1 $100 M New Site Process Facility Project Structure Corp Engineering R&D Project Engineering Construction Manager Design Engineers (Catalytic Engineering) Procurement (in House) Jan 8, 2014 Plant Operations Prime Contractor (Daniel Const) Direct Contracts (Admin. Bld: design-build) (Storage Siles: design Build) Prepared by Greg Scott PMP 12

Project Example #1 $100 M New Site Process Facility • Project Challenges: • 15 Month Ground break to start-up • Green Field site environmental challenges • Historic archeological site clearance • All utilities, logistical support included • Unique Project Contract • Cost Plus with Incentive Fee • Prime paid 0 -100% of monthly earned fee • Performance criteria rated monthly • Project Outcome: • Project cancelled 9 months after ground break • Market demand disappeared Jan 8, 2014 Prepared by Greg Scott PMP 13

Project Example #1 Site Today Jan 8, 2014 Prepared by Greg Scott PMP 14

Project Example #2 $7 M Worship Facility Jan 8, 2014 Prepared by Greg Scott PMP 15

Project Example #2 $7 M New Worship Facility Project Structure Building Committee Architect Project Manager General Contractor Sub Contractors Soils Engineer Hazardous Mat’l Inspection Hazardous Mat’l Remediation AV Contract Pews, Phone/Data, Other misc Jan 8, 2014 Prepared by Greg Scott PMP 16

Project Example #2 $7 M New Worship Facility • Project Execution More Traditional: • Scope, Budget, Quality more important • Traditional Architect design phases • Funding and Design • Preliminary Budget Approved • Architect Selected – Competitive Evaluation • Contractor participation • Selected based on GMP Bid, reputation, referals • Included pre-construction design participation Jan 8, 2014 Prepared by Greg Scott PMP 17

Project Example #2 $7 M New Worship Facility – Outcome • Design Development through permitting • Benchmark estimates at stages by GC • Value Engineering to improve costs • After best efforts, preliminary budget inadequate • Funding re-approved from $6 M to $7 M • Construction inflation over two years • Scope Changes from original assumptions • GMP Value set prior to construction start • Results • Opened on Schedule • Overcame several permitting challenges • Realized a 3% favorable change order impact • Facility met and/or exceed expectations • Operational Quality, durability realized over time Jan 8, 2014 Prepared by Greg Scott PMP 18

Comments on Major Contract Types • Fixed Price Bid • Requires high % complete design • Caution on selecting qualified contractors • Best when overall schedule (Concept to Completion) not most critical constraint • Design-Build (Single Prime or Design plus Prime) • Most be suitable for fast paced requirements • Owners tend to have limited in house skills • Cost control by owners more difficult • Design- Guaranteed max Price • Common in Architect- General Contractor type projects • Best with GC assisting in design phase constructability • GMP built from first construction permit set. • Pricing basis details must be visible to owner Jan 8, 2014 Prepared by Greg Scott PMP 19

References Major Contract Types • American Institute of Architects (AIA) • http: //buildingadvisor. com/welcome-to-the-building-advisor/projectmanagement/contracts/industry-standard-construction-contracts/#jumper 1 • American Society of Civil Engineers (ASCE) • http: //www. asce. org/contractdocuments/ • International Federation of Consulting Engineers (FIDIC) • http: //fidic. org/node/747 Many other specialty disciplines in addition to government agencies will have their specific versions of contracts Jan 8, 2014 Prepared by Greg Scott PMP 20