PIP: PIP: Working in Harmony Working in Harmony to Change Industryto Change Industry

www.pip.orgwww.pip.org

Steve FrankeSteve Franke

Shell Chemical CompanyShell Chemical Company

Process Industry Process Industry PracticesPractices2000 CII Annual Conference2000 CII Annual Conference

Nashville, TennesseeNashville, Tennessee

ObjectivesObjectives

• Broaden understanding of PIP initiative.Broaden understanding of PIP initiative.

• Raise awareness of PIP “value proposition.” Raise awareness of PIP “value proposition.”

• Validate PIP harmonization process. Validate PIP harmonization process.

• Publicize spin-off opportunities for Publicize spin-off opportunities for harmonization process.harmonization process.

• Relate PIP readiness and electronic Relate PIP readiness and electronic availability.availability.

• Advocate use of PIP “best practices.” Advocate use of PIP “best practices.”

A Ladder Is A Ladder?A Ladder Is A Ladder?

VisionVision

• PIP is “universal language” in U.S. process PIP is “universal language” in U.S. process industry for EPC industry practices. industry for EPC industry practices.

• PIPs are widely recognized and available PIPs are widely recognized and available electronically.electronically.

• PIPs are up to date, of high quality, and PIPs are up to date, of high quality, and can be used “essentially as is.”can be used “essentially as is.”

• A preponderance of owner and contractor A preponderance of owner and contractor companies voluntarily adopt and use PIPs.companies voluntarily adopt and use PIPs.

MissionMission• Increase EPC work process value globally.Increase EPC work process value globally.

• Enhance compliance with safety, health, and Enhance compliance with safety, health, and environmental objectives. environmental objectives.

• Have PIP represent preponderance of industry.Have PIP represent preponderance of industry.

• Create and use EPC “industry practices” Create and use EPC “industry practices” (PIPs).(PIPs).

• Establish IT collaborative and distribution Establish IT collaborative and distribution

tools to facilitate PIP development and usage.tools to facilitate PIP development and usage.

PIP Member ConsortiumPIP Member Consortium

•Chartered in 1993 and affiliated Chartered in 1993 and affiliated with CII.with CII.

•33 U.S. process industry 33 U.S. process industry companies (24 owners; nine EPC companies (24 owners; nine EPC contractors)contractors)

PIP Member ConsortiumPIP Member Consortium

CategoryCategory 20002000 2002 goal2002 goal

OwnersOwners 50+%50+% 70-75%70-75%

EPC ContractorsEPC Contractors 70+%70+% 75-80%75-80%

PIP Members’ PIP Members’ U.S. U.S. Market Share Market Share (Revenue)(Revenue)

PIP Value Proposition PIP Value Proposition ObjectiveObjective

Perform an engineering-Perform an engineering-

style estimate in order to style estimate in order to

quantify the value of PIP.quantify the value of PIP.

Value Proposition Study Value Proposition Study ApproachApproach

•Base estimate on actual EPC project.Base estimate on actual EPC project.

•Use study team of experienced Use study team of experienced owner, contractor, and supplier owner, contractor, and supplier members.members.

•Estimate standardization impact.Estimate standardization impact.

•Focus on work process impact (before Focus on work process impact (before and after).and after).

PIP: Where Is the Value?PIP: Where Is the Value?

• More efficient communication with EPC. More efficient communication with EPC.

• Reduced specifications conflicts and errors; Reduced specifications conflicts and errors; less rework and redesign.less rework and redesign.

• Reduced inspection and testing.Reduced inspection and testing.

• Improved automation and productivity of Improved automation and productivity of engineering, construction, fabrication. engineering, construction, fabrication.

• Reduced standards maintenance and Reduced standards maintenance and training. training.

• Reduced materials and equipment Reduced materials and equipment inventories.inventories.

PIP Value Proposition PIP Value Proposition Study ResultsStudy Results

Value PotentialValue Potential

6.7 percent6.7 percent

(Greater than $1.3 billion annually (Greater than $1.3 billion annually

for U.S. process industry)for U.S. process industry)

HarmonizingHarmonizing

AdoptingAdopting

PIP

Pra

ctic

es

Co

mp

any A

En

gin

eering

Stan

dard

s

Co

mp

any B

En

gin

eering

Stan

dard

s

Co

mp

any C

En

gin

eering

Stan

dard

s

CII ResearchCII Research PIP HarmonizationPIP Harmonization

Data CollectionData Collection Literature and Literature and Existing Company Existing Company Case StudiesCase Studies StandardsStandards

Data AnalysisData Analysis Define CausalDefine Causal Define Similarities Define Similarities RelationshipsRelationships and Differencesand Differences

Model DevelopmentModel Development Rigorous —Rigorous —Align Similarities StatisticalAlign Similarities Statisticaland Harmonize Differencesand Harmonize Differences

Model TestModel Test Industry SurveyIndustry Survey Industry “Experts” Industry “Experts” ReviewReview

Model ApplicationModel Application CII Best PracticeCII Best Practice PIP Industry PracticePIP Industry Practice

Research vs. Research vs. HarmonizationHarmonization

Creation CostsCreation Costs Creation Creation Time Time ($M/guide)($M/guide)(months/guide)(months/guide)

StandardsStandardsDevelopmentDevelopment 500-700500-700 30-4230-42 OrganizationsOrganizations

PIPPIP 370-500370-500 22-3022-30

Standards and Practices:Standards and Practices:Typical Costs and TimingTypical Costs and Timing

OrganizationsOrganizations

00

100100

200200

300300

400400

500500

600600

‘‘9595 ‘‘9696 ‘‘9797 ‘‘9898 ‘‘9999 ‘‘0000 ‘‘0101

Nu

mb

er

of

Pra

cti

ces

Nu

mb

er

of

Pra

cti

ces

Through June 2000Through June 2000

CRITICAL MASSCRITICAL MASS

Practices PublishedPractices Published

EXPECTED EXPECTED TOTALTOTAL

estimatesestimates

Practices by DisciplinePractices by Discipline

2636

1118

54

87

1737 35

85

169

225

1029

0

50

100

150

200

250

C/S/A C&I ELEC MACH PC PI PE VESS

Published

Planned

Nu

mb

er

of

Pra

cti

ces

Nu

mb

er

of

Pra

cti

ces

0

20

40

60

80

100

120

140

1212

1998$31MM

4747

1999$496MM

5656

2000$120MM

115115

2001$436MM

PIP

sPIP Usage:PIP Usage:

Sample Owner CompanySample Owner Company

PIP Impact:PIP Impact:Collaborative and Joint Collaborative and Joint

EffortsEffortsAPIAPI •• Pump InstallationPump Installation

•• WeldingWelding ••Mechanical SealsMechanical Seals

ASMEASME •• Pump Data SheetsPump Data Sheets ••Specialty Vessels/BinsSpecialty Vessels/Bins

ISAISA •• P&IDs P&IDs (Process & (Process & Instrumentation Instrumentation

Diagrams)Diagrams)

PIP Impact: Industry PIP Impact: Industry “Voice”“Voice”

•Successfully petitioned exceptions Successfully petitioned exceptions for industrial equipment platforms for industrial equipment platforms from international group.from international group.

• Led Owner Operator Forum-Led Owner Operator Forum-FIATECH alignment.FIATECH alignment.

•Actively interfacing with other Actively interfacing with other industry groups. industry groups.

PIP Impact: Future PIP Impact: Future PotentialPotential

• Harmonize EPC industry practices for Harmonize EPC industry practices for related industries. related industries.

• Provide input to industry on standards Provide input to industry on standards and code development.and code development.

• Guide technology development and Guide technology development and application.application.

• Help globalization of EPC industry Help globalization of EPC industry practices.practices.

• Other HARMONIZATION opportunities?Other HARMONIZATION opportunities?

To Learn More About PIPTo Learn More About PIP

• Visit Product Display in Conference Visit Product Display in Conference Center.Center.

– Meet PIP representatives. Meet PIP representatives.

– See demo of PIP Web site.See demo of PIP Web site.

– See sample PIPs.See sample PIPs.

– Get “Overview” and “Value Proposition” Get “Overview” and “Value Proposition” papers.papers.

• Visit PIP Web site Visit PIP Web site (www.pip.org)(www.pip.org)..

• Attend PIP workshop at CPI Conference.Attend PIP workshop at CPI Conference.

PIP & HarmonizationPIP & Harmonization

““Over 330 Best Over 330 Best Practices and Still Practices and Still

Growing”Growing”

www.pip.orgwww.pip.org