GEs Operating Rhythm

Davide Franceschi
March 24th, 2015
Imagination at work.
GE proprietary and confidential

Companys profile

GE Outlook

3
GE proprietary and confidential

Creating competitive advantage in the GE Store

O&G
Revenues $18,7B
OP $2,6B
OP @19%

4
GE proprietary and confidential

Purposeful portfolio moves

5
GE proprietary and confidential

6
GE proprietary and confidential

GE consolidated results

7
GE proprietary and confidential

GE Oil & Gas today

From extraction, to transportation, to end use

~45,000 employees

~$19B revenues 14
Downstream
Technology
Solutions
$1.7B

Drilling & Surface

$4.9B
BOPs and risers,
onshore trees,
Artificial lift

Refinery and gas

distribution

Subsea Systems
$3.5B

Turbomachinery
Solutions
$5.4B

Subsea production
systems

LNG, on- and offshore,

pipeline

Measurement & Control

$3.8B
Valves, controls, diagnostics

Delivering customer solutions by

applying
2014 General Electric Company - All rights reserved
systems-level engineering across the value
chain
GE proprietary and confidential

Our technology solutions

Subsea Systems

Drilling risers
Blow-out preventers
Electric submersible pumps
Logging while drilling
& wire line tools
Surface wellheads
& flow control
Logging services
Well Performance Services
Lufkin
Artificial lift: rod lift, gas lift, plunger
lift, progressive cavity pumps,
hydraulic pumping units
Service & repair
Engineered industrial gears
Fluid film bearings

Asset condition monitoring, control sensing

& inspection solutions
Optimization & diagnostic software
Pipeline inspection and integrity services
Control & safety relief valves
Fuel dispensers & payment terminals
Fuel control & retail systems

Subsea trees & wellheads

Subsea power & processing
Controls
Manifolds
Flexible risers
Flow lines
Specialty connectors & pipes

Drilling & Surface

Measurement & Control

Turbomachinery Solutions

~45,000
employees

~$19B

revenues 14

Turbomachinery equipment and services for the

upstream, midstream and LNG segments including:
Gas turbines
Axial & centrifugal compressors
Electric motor driven compressors
Turn-key industrial modular solutions
Turboexpanders & heat exchangers
Contractual & maintenance services
Upgrades & industrial applications
Monitoring & diagnostics

Downstream Technology Solutions

Equipment & services for the refinery & petrochemical,
distributed gas and industrial applications including:
Steam turbines
Reciprocating compressors
Distributed gas solutions small LNG & CNG
Pumps, valves & distribution systems
Blowers & compressors
Maintenance services & remote monitoring & diagnostics

Delivering customer solutions by applying systems-level engineering across the

portfolio

9
GE proprietary and confidential

Where we are now growth of GE Oil & Gas

Orders - $ in billions

~$20
Well Support
Pressure Control
Electrical Submersible
Pumps
Logging Services

~$16

$10
$4

2007

$2
$1
1994

1997

2004

2008

2011

2013

A Turbo
Machinery
company

Developed
a Service
model

Expanded in
Inspection
Technologies

Entered the
Drilling &
Production
segment and
Subsea

Expanded to
sensing and
flow

Ideal partner
for new
challenging
O&G
developments

GE proprietary and confidential

10

Our technology solutions

45,000 employees across the globe

Aberdeen

Subsea
Systems
Comprehensive systems
& expertise
for reliable subsea
production, control and
optimized life-of-field

Houston

Drilling &
Surface
Drilling, completion &
production solutions for
unconventional
resources, deepwater
drilling & EOR
applications

Florence

Houston

Boston

Turbomachinery Downstream
Solutions
Technology
Solutions
Advanced turbomachinery
equipment and services for
the upstream, midstream
and LNG segments

Equipment & services for

refinery, petrochemical,
distributed gas &
industrial
applications

Measurement
& Control
Asset condition
monitoring, control
sensing & inspection
solutions delivering
healthcare for the
industry

11

2014 General Electric Company

GE proprietary and confidential

Turbomachinery Solutions
6,000+ PEOPLE ACROSS 6 CONTINENTS

CONTRACTUAL &
MAINTENANCE
SERVICES & UPGRADES

OUR PORTFOLIO
DRIVERS

COMPRESSORS
PROJECT

Aeroderivative
Gas Turbines

Heavy Duty
Gas Turbines

MANAGEMENT
Direct Drive
High Speed

Centrifugal & Axial

Integrated

Subsea

Industrial Modules

Onshore

LNG

Offshore

Floating LNG

Pipeline

Adjacent
segments

Waste Heat Recovery

COMPACT CONTROL AIR COOLED HEAT

EXCHANGERS
SYSTEMS

HIGH-TECH
PRODUCTS &
SERVICES

SERVING KEY
SEGMENTS

Turbo
expanders

TURN-KEY SOLUTIONS
Synchronous & Induction
Electric Motors

AN INTEGRATED
BUSINESS

2014 General Electric Company

GE proprietary and confidential

12

Where we are

Aberdeen, UK
Le Creusot,
France
Barcelona, Spain
Hassi R' Mel, Algeria

Edmonton, Canada

Moscow, Russia
Fot, Hungary
Florence, Italy
Massa, Italy
Avenza, Italy
Vibo Valentia, Italy
Talamona, Italy

Houston, USA
Maracaibo, Venezuela

Headquarters
Regional Hubs
Manufacturing Facilities

Port of Spain,
Trinidad

Beijing, China
Abu Dhabi, MENAT
Doha, MENAT

Port Harcourt,
Nigeria

Gurgaon, India
Kuala Lumpur, Malaysia

Recife, Brazil

Rio de Janeiro,
Brazil

Jandakot, Australia

Service Shops

Key Turbomachinery Solutions hubs

13

2014 General Electric Company

GE proprietary and confidential

O&G Operational view

14
GE proprietary and confidential

O&G 2014 results

15
GE proprietary and confidential

GE Op Mechanism

Finance Competency Model

17
GE proprietary and confidential

Vision - CFO Agenda

Finance Vision:
Partners in Building Shareowner Value Through
Integrity, Excellence, and Leadership
Leadership

Development

Business Partners

Drive Initiatives Services,

Globalization, Simplification
VCP, ROIC, Fastwork

Digitization

Providing Real Time Management

Information and Solutions

Controllership

Fundamental

18
GE proprietary and confidential

GEs Operating Rhythm

The annual drumbeat that keeps the Company moving
Linkage of Processes and Meetings Form a Powerful Operating System to accelerate
Business and Cultural Change.

Quarterly Earning Release to communicate externally the performance

19
GE proprietary and confidential

How we oversee risk

20
GE proprietary and confidential

GE Oil & Gas Op Mechanism

Executive summary
Aligned with key O&G and GE HQ events

Designed to be more action-oriented, topical, allow

cross-functional engagement & best practices sharing

Drive & influence behaviors

Solid Predictability is not an option

22
GE proprietary and confidential

Organizational Structure
GE Oil & Gas
CEO

Project
Management
Business P&Ls

Regions
Latam

MENAT

Sub S
Africa

TMS

DTS

D&S

Russia &
CIS

China

APac

Lufkin

SubSea

M&C

ENG

Quality

Finance

IM

HR

Communic.

Marketing

Global
Supply C.

Legal

Biz Dev

Functions

23
GE proprietary and confidential

From tendering to execution

Sales
Force

C- suite

Project
Directors

Financial
Planning

Biz Objectives

Opportunities

Project Mgmt

Biz Model

Orders

Customers

Portfolio Analysis

Orders

Revenues

Projects

Planning

Revenues

Op Profit, rate %

Bids

Risk Management

Op Profit, rate %

CFOA

FEEDs

Stakeholders

CFOA

Business
Model

Project
Management

Financial Plan
& Analysis

Dynamic loops between Project Directors & FP&A

24

23/03/2015

GE proprietary and confidential

24

Turbomachinery Project Organization

Global
Service

Supply
Chain

TM - OTR

TM - QUA

ENG

PROJ. QUALITY
MANAGER

PROJECT
ENGINEER

PROJECT
MANAGER

PROJECT
PLANNER

INSTALLATION
MANAGER

WARRANTY
MANAGER

SOU Fullfillment
Cells
DESIGN ENGINEERS
*

MFG Fullfillment
Cells

SITE TEAM
*

Operations
Finance
25
GE proprietary and confidential

26
GE proprietary and confidential

Portfolio Orientation & Implementation

Targets
Sourcing

Manufacturing

Engineering

Projects

Operating rhythm

$/%

$/%

$/%

$/%

$/%

$/%

Projects

$/%

TGT
PM & Funct. Measured on Same
Target
Shared Team Accountability

Merge Project & Financial Rhythms

to drive all functions on a common
goal
27

23/03/2015

GE proprietary and confidential

27

Project Execution Phases... Key Processes

ITO/OTR Hand-off
Project Contract Activation
Project Plan Creation
Project Budget Baseline
Customer Kick Off Meeting
Pre-inspection Meeting

Engineering
Project Design Reviews
Project Documentation Mngt . (VDR)
Sourcing
Material Procurement Management
Supplier Deviation Request Mngt .
Manufacturing
Manufacturing Plan Reviews
NC Mngt . during production phase

Shipping Meeting
Packing & Shipment
Transportation/Handling Process

Events directly involving Customers

28
GE proprietary and confidential

Installation & Warranty Phases... Key Processes

Site
Start

Mechanical
Completion

RFR
RFR
RFR
Oil Flushing Loop Checks Green Light

Warranty
Expiration

COD

Installation Contract
Site Survey &
Pre-Installation
Meeting

Site Survey
Pre-installation meeting

Erection

Pre-Commissioning
& Commissioning

Planning and Monitoring

Red Flag Review
Technical Briefing
Technical Package for Installation
Management of NC detected at site

Start-Up

Warranty

Warranty Claim Mngt

Hand-Off from TM to CSA

Events directly involving Customers

29
GE proprietary and confidential

Project Control & Risk Milestones Approach

Customer Milestones
Internal Reviews
Risk Reviews

PrePO

Launch

Execution

Shipment

Installation

Warranty

Project Control Review

Project Control Reviews Monthly

Schedule, budget, quality and any other aspect related to project
Issue & risk management

Project Risk Reviews - @ Milestones

Identify/Capture main Prj Risks for each milestone
Probability

Risk Check-List, Risk Priority Number

Action/Mitigation Plan & Risk Register Update

High
Low

Low
1
9
9
3
3
1
1

Impact
High
3
9
27
81
9
27
3
9

Red
Yellow
Green
Gray
30

GE proprietary and confidential

Project Budget unique baseline

Commercial Ops Team

Keep As Bid cost estimation

constantly aligned

Freeze As Bid versions

Order booking As Sold

Budgetformally communicate

As Sold Budget to Hand-Off (RAC)

playersshare and analyze

Input As Sold Budget into BOM

structure

As Sold true-up meeting with

Finance/PM

Finance Team
As Bid
Budget

As Sold
Budget

Hand-Off
(RAC)

Project
Budget

Support AE to update cost estimate

Superviseupdate financial plan

Analyze and check Order Plan

consistency

Attend Hand-Offcontribute!

Provide dummy template for BOM

costing recast

Validate and upload in Oracle

31
GE proprietary and confidential

Project finance rhythm

BCE

BCE

BCE

Calendar

11

Month 1
3

10

11

12

15

16

17

18

19

22

23

24

25

26

29

30

31

KPIs weekly pacing ... Operations

+ Finance

21

Month 2
3

As Sold As Delivered

10

11

12

15

16

17

18

19

22

23

24

25

26

29

30

31

Backlog review + B&B/ TO GO +

Prodty

Project reviews

QMI

31

Month 3
3

10

11

12

15

16

17

18

19

22

23

24

25

26

29

30

31

BCE ( Project Margin review)

32

GE proprietary and confidential

Project margin review process

Highlights
Rigorous process to track/
review project costs for long
term contracts

Drive productivity initiatives

and project margin expansion

Scalable and digitized process

Formal reviews with key
stakeholders Finance to lead

33
GE proprietary and confidential

Project budget loop back

Project Budget

Project Reviews

COST CONTROL SEZ. 100

PROPOSAL # :

PLANT :

CUSTOMER :

AL JUBAIL

END USER :
Sez100

SCOPE of SUPPLY :

B1) MATERIALS (EXTERNAL SUPPLY)

Sez

Item

Description

100

0010 Outer casing assembling accessories

100

0050 Outer casing

100

0100 Suction Head flange

100

0101 Discharge Head flange

100

0310 Rotor

Sub-item

Description

Q.ty

Unit Cost
(Euros)

Total Cost
(Euros)
-

7,000.00

7,000.00

100

0310 Rotor

0020

Impeller

12,000.00

12,000.00

100

0310 Rotor

0030

Impeller

5,000.00

5,000.00

0040

Impeller

0050

Impeller

100

0310 Rotor

100

0310 Rotor

0010

Shaft

3,500.00

14,000.00

100

0310 Rotor

0090

Impeller

100

0310 Rotor

OTH

Completion parts

18,000.00

18,000.00

21,000.00

21,000.00

4,000.00

4,000.00

100

0310 Rotor

100

0310 Rotor

100

0310 Rotor

0060

Impeller

0070

Impeller

0080

Impeller

100

0221 Diaphragms set

0010

Inner Casing

100

0221 Diaphragms set

0020

Inner Casing

100

0221 Diaphragms set

0030

Inlet Diaphragm

100

0221 Diaphragms set

0040

Inlet Diaphragm

100

0221 Diaphragms set

0050

Interph./Disch. Diaphragm

100

0221 Diaphragms set

0060

Models

100

0221 Diaphragms set

0070

Intermediate Diaphragm

5,000.00

5,000.00

4,500.00

18,000.00

1,500.00

1,500.00

100

0221 Diaphragms set

0080

Intermediate Diaphragm

100

0221 Diaphragms set

0090

Intermediate Diaphragm

100

0221 Diaphragms set

0100

Intermediate Diaphragm

100

0221 Diaphragms set

0110

Intermediate Diaphragm

100

0221 Diaphragms set

0120

Intermediate Diaphragm

OTH

Other

100

0221 Diaphragms set

100

0160 Suction end cover

100

0161 Discharge end cover

Unique baseline for

measurement
Built on BOMcommon
ITO/OTR language
Shortened process
available @ Hand-off

Earlier visibility to
protect/enhance margin
Monthly rhythm
calendar & dashboards
Leakages RCA WF
basedfunctions
involvement

OTR

ITO

Finance

Operations

Feedback to ITO
Leverage on lessons learned
Enable cost estimation
improvementSource Books
+ Configuration Mgmt
On Line & Oracle based tools

60

Sourcebooks
40

20

0
Q1 '08

Q2 '08

Q3 '08

Q4 '08

Q1 '09

34
GE proprietary and confidential

Attributes of good performance metrics

Simple Understandable
Forward Looking

Provide Operational Explanations

Provide Accountability
Focus Efforts In the Right Places

Broadly applicable across businesses

Accurate Timely
Cost effective

Difficult to manipulate

35
GE proprietary and confidential

Q& A