DECISION MATRIX;document.xls WM-NA-HES-MS-431 Revision 130 April 1999

CPI DECISION MATRIX

POTENTIAL/ACTUAL CONSEQUENCES PROBABILITY RATING

ENVIRONMENTAL IMPACT BUSINESS RISK A B C D E

I > $150,000 1 1 2 2 3

II Critical 1 1 2 3 4

III Significant 2 2 3 3 4

IV Marginal < $1,000 3 4 4 4 4

PROBABILITY RATING

A Frequent 1 Alert

B 2 High

C Occasional 3 Medium

D Remote 4 Low

E Probability of occurrence is virtually zero.

STEP 1:

STEP 2: Consider the probability rating based upon the descriptions provided above.

STEP 3:

STEP 4: Enter the IMPORTANCE RATING into the IMPORTANCE RATING field of the CPI Database

STEP 5: Complete all necessary actions to address the CPI according to the ACTIVITY MATRIX.

SIGNIFICANCE LEVEL

DESCRIPTIVE WORD

HEALTH & SAFETY IMPACT

TOTAL FINANCIAL

IMPACT

Catastrophic/ Strategic

Fatal or Permanent Disabling Injury or Illness

Presents potential harm or adversely effects the general public and has the potential for widespread public concern of Halliburton operations. Can have serious economic liability on operation.

Potential failure effects safe operation, non-compliance with government regulations, violation of company policy, wide spread customer dissatisfaction

Severe Illness or Injury;

including Lost Time Injury

and Recordable

Vehicle Accident

Any incident that presents limited harm to the environment at our facility and requires specialized expertise or resources for correction

Potential incident that adversely affects job, HES ability to provide satisfactory solution, significantly reduces customer satisfaction and requires specialized expertise or resources for resolution.

$25,000 to $150,000

Minor Injury or Illness

Any incident that presents limited harm to the environment and requires general expertise and resources for correction

Potential failure causes customer dissatisfaction with moderate delay and/or extra work with general expertise and resources for resolution.

$1,000 to $25,000

No Injury or Illness

Any incident that represents limited harm to the environment but requires minor corrective action.

Potential failure causes only slight customer concern and inconvenience, and can be resolved quickly with little additional expertise and resource.

IMPORTANCE RATINGLevel

Description

Code Action

RequiredWill usually occur during the execution of the activity or operation.

Reasonably Probable

Likely to be a common occurrence during the execution of activity or operation.Likely to occur sporadically during the execution of activity or operationNot likely to occur during the execution of activity or operation, but probable.

Extremely Improbable

After receiving a CPI, consider the Potential/Actual Impact in terms of Health and Safety Impact, Environmental Impact, Business Risk and Financial Impact. This will identify the SIGNIFICANCE LEVEL of the CPI.

Follow the Significance Level (identified in STEP 1) across the line until it intersects with the Probability Rating (identified in STEP 2). This is your IMPORTANCE RATING.

HALLIBURTONHALLIBURTON

ACTION MATRIX;document.xls WM-NAHES-431 Revision 130 April 1999

ACTIVITY

COPQ Cost-Benefit Analysis Elevating and Sharing

1 Yes Yes

2 Yes Yes

3 5 Why Analysis Yes 4 What's

4 None Individual None None No

IMPORTANCE RATING

Long-term/ Short Term Solution

Root Cause (C/P Only)

Team vs. Individual Response

Pre-Implementation Review

Solution Implementation Effectiveness Review

Full Blown Action Plan

TapRoot Investigation

Root Cause Team and Process Team

Service Quality Team, Leadership Team, and FBM

Functional Management

A must person be assigned to monitor

implementation. CPI to remain open until the effectiveness of

action items is validated.

Yes, Mandatory adoption by all

locations, as directed by FBM

Functional Manager

Solution Clearly Documented

Use of Quality Tools (Ishikawa,

TOC, etc)

Root Cause Team or Process Team

Service Quality Team and

Leadership Team

Follow-up review after specified time. CPI remains open

until the effectiveness of action items can be

validated

Yes, communicate throughout FBM

for review and possible adoption

of practice

Long-term Action Optional when

Closed for Trend Analysis

Can be Team or Individual

Applicable Local Functional Manager

As indicated by general trend analysis

Optional sharing with all locations

in NWA

Close for Trending Only

Review with originator to

ensure clarity of intent

COPQ Worksheet is not required

HALLIBURTONHALLIBURTON

SOLUTION & ROOT CAUSE;document.xls WM-NAHES-431 Revision 130 April 1999

ACTIVITY ACTIVITY DESCRIPTION ACTIVITY ACTIVITY DESCRIPTION

ALERT: TapRoot

LOW: NONE

No formal Root Cause Analysis is required.

IMPORTANCE RATING

IMPORTANCE RATING

LONG TERM/ SHORT TERM

SOLUTION

ALERT: FULL BLOWN ACTION

PLAN

A complete action plan listing action items, expected completion dates, and responsibilities must be clearly documented.

ROOT CAUSE (C/P)

A complete TapRoot Investigation including identifying causal factors must be completed. Incident Investigation Worksheet is to be completed.

HIGH: CLEARLY DOCUMENTED

SOLUTION

The LONG TERM SOLUTION must specifically detail the actions taken to respond to the CPI .

HIGH: USE OF QUALITY TOOLS

Appropriate Quality Tools such as Theory of Constraints, Ishikawa Diagram, or others, should be used to determine the root cause and all contributing factors. Incident Investigation Worksheet is also to be completed.

MEDIUM: LONG-TERM

ACTION OPTIONAL

WHEN CLOSED FOR TREND ANALYSIS

If the CPI is going to be closed for trending purposes only, then detail in the LONG TERM SOLUTION is optional. If the CPI is not be closed for Trending Purposes, the LONG TERM solution should provide a clear understanding of the actions taken to resolve.

MEDIUM: 5 WHY's

The Root Cause should be identified by questioning the chain of events using the 5 WHY approach. Incident Investigation Worksheet is to be completed.

LOW: CLOSE FOR TRENDING

ONLY

There is no need to document a LONG TERM SOLUTION.

HALLIBURTONHALLIBURTON

TEAM & PRE IMPL REVIEW;document.xls WM-NAHES-431 Revision 130 April 1999

ACTIVITY ACTIVITY DESCRIPTION ACTIVITY ACTIVITY DESCRIPTION

ALERT: YES

HIGH: YES

MEDIUM: Yes

No team is needed for response.

LOW: Yes

IMPORTANCE RATING

IMPORTANCE RATING

TEAM v. INDIVIDUAL RESPONSES

ALERT: ROOT CAUSE TEAM AND PROCESS REVIEW TEAM

A Root Cause Analysis Team must be convened to conduct TapRoot Investigation. A Process Review Team must be convened to review the findings and recommendations of the TapRoot investigation prior to implementation.

PRE-IMPLEMENTATION

REVIEW

The Solutions associated with an Alert CPI must be reviewed prior to the implementation by the local Service Quality Team, the local Leadership Team and the FBM Functional Manager.

HIGH: EITHER ROOT CAUSE

TEAM OR PROCESS

REVIEW TEAM

Either a Root Cause Analysis Team or a Process Review Team is to be convened to identify the appropriate course of action.

The Solutions associated with a High Importance Level CPI must be reviewed prior to the implementation by the local Service Quality Team and the local Leadership Team.

MEDIUM: TEAM OR INDIVIDUAL

It is up to the decretion of the Responder to determine if a Team is necessary to respond to the issue.

The Solutions associated with a Medium Importance Level CPI must be reviewed by the local department/functional manager.

LOW: INDIVIDUAL

TEAM

Low Importance Level CPI's should be reviewed with the originator prior to closure to ensure that the intent of the CPI is clearly understood. This will ensure that the actions are appropriate.

HALLIBURTONHALLIBURTON

REVIEW & COPQ;document.xls WM-NAHES-431 Revision 130 April 1999

ACTIVITY ACTIVITY DESCRIPTION ACTIVITY ACTIVITY DESCRIPTION

ALERT: YES

HIGH: YES HIGH: YES

MEDIUM: YES

LOW: NONE

There is no effectiveness review.

LOW: NO

IMPORTANCE RATING

IMPORTANCE RATING

SOLUTION IMPLEMENT

ATION EFFECTIVENESS REVIEW

ALERT: MANDATORY

It is mandatory that a person will be specifically designated to monitor implementation. The last action item will be to review the effectiveness of implementation, including quantification and validation of costs and savings. The CPI will remain open until after the review.

COPQ/ SAVINGS

Full COPQ and future savings documentation is to be captured on the COPQ Worksheet, attached to the database records. Actual savings will be documented and updated in the database as part of the Solution Implementation Effectiveness Review.

The team will specify timeframe for review to be conducted. The timeframe must allow action items to be completed, and potential recurrences to arise. The last action item will be to review, including quantification and validation of costs and savings. The CPI remains open until after the review is completed.

Full COPQ and future savings documentation is to be captured on the COPQ Worksheet, attached to the database records. Actual savings will be documented and updated in the database as part of the Solution Implementation Effectiveness Review.

MEDIUM: GENERAL

TREND ANALYSIS

The effectiveness of the solution implementation will be gauged through trend analysis. Analysis indicating a recurring trend may lead to the initiation of new CPI's of a higher importance level.

Full COPQ and future savings documentation is to be captured on the COPQ Worksheet, attached to the database records.

Cost of Poor quality Worksheet not required, single amount to be placed in database field.

HALLIBURTONHALLIBURTON

CBA & SHARING;document.xls WM-NAHES-431 Revision 130 April 1999

ACTIVITY ACTIVITY DESCRIPTION ACTIVITY ACTIVITY DESCRIPTION

ALERT: YES ALERT: YES

HIGH: YES

A full Cost-Benefit Analysis is required.

HIGH: YES

LOW: NO

No Cost-Benefit Analysis is required.

LOW: NO

No sharing is required.

IMPORTANCE RATING

IMPORTANCE RATING

COST BENEFIT

ANALYSIS

A CVA Analysis is required. Go to website at http://halworld.halnet.com/hes/hesmba/HESMBA_bustools.asp for a copy of the tool

ELEVATING AND

SHARING

Implementation of solution is mandatory by all locations as directed by the FBM functional manager.

The solution is to be communicated throughout the FBM for possible implementation.

MEDIUM: 4 WHAT'S

A "4 What Analysis" is to be conducted answering the questions: What will is cost? What are the risks? What does it take to implement?

MEDIUM: OPTIONAL

Optional communication throughout the NWA for implementation in applicable locations.

HALLIBURTONHALLIBURTON

ESTIMATED COPQ & SAVINGS;document.xls WM-NAHES-431 Revision 130 April 1999

Cost of Poor Quality Worksheet

ESTIMATED

Description of Cost Factor Labor Hours

Job Adjustments to Account 800201 (547)LOST REVENUE FACTORS

Lost Revenue During Resolution Period

Lost Revenue from Future Work not awarded

Lost Revenue from Delayed Work

Total Lost Revenue $0

Lost Profit (Total Lost Revenue times .30) $0 ADDITIONAL COSTS

Direct Personnel Lost Time $0

Direct Equipment Lost Time $0

Hotshot Personnel Time $0

Hotshot Equipment Time $0

Hours Spent on Process Review/Incident Investigation $0

Onsite Equipment Repair Hours $0

Road Call Personnel Time $0

Road Call Equipment Time $0

Maintenance Parts Cost

Injury Lost Work Days (in Hours) $0

Company Incurred Medical Bills

Increase in State Workers Compensation Premiums

Lost time to attain medical attention $0

Lost Time to Resolve Environmental Spill $0

Materials cost to Resolve Environmental Spill

Hours Spent on Resolution with Customer $0

Excess Rental Equipment Charges $0

Subcontractor Charges $0

Third party costs paid $0

CPI Overhead Costs $ 50.00

TOTAL ADDITIONAL COSTS $50

TOTAL COST COPQ $50 SAVINGS

ANNUALIZED COST OF IMPLEMENTATION

ANNUALIZED SAVINGS $0

NET ANNUALIZED SAVINGS ($50)

Pre-Implementation Review Sign-off Comments:

Pre-Implementation Sign-Off

Pre-Implementation Estimated COPQ and Savings: This section to be completed prior to implementing Solution Action Plans. Enter the COPQ and Savings Amounts into the ESTIMATED fields of the CPI Database.

Number of People

Opportunity Cost per Hour

Total Estimated Cost

Lost Revenue due to lack of available of resources (labor and equipment)

NUMBER OF ANNUAL OCCURRENCES FROM SAME ROOT CAUSE

HALLIBURTONHALLIBURTON

ACTUAL COPQ & SAVINGS;document.xls WM-NAHES-431 Revision 130 April 1999

Description of Cost Factor Labor Hours

Job Adjustments to Account 800201 (547)LOST REVENUE FACTORS

Lost Revenue During Resolution Period

Lost Revenue from Future Work not awarded

Lost Revenue from Delayed Work

00

Total Lost Revenue $0

Lost Profit (Total Lost Revenue times .30) 0ADDITIONAL COSTS

Direct Personnel Lost Time $0

Direct Equipment Lost Time $0

Hotshot Personnel Time $0

Hotshot Equipment Time $0

Hours Spent on Process Review/Incident Investigation $0

Onsite Equipment Repair Hours $0

Road Call Personnel Time $0

Road Call Equipment Time $0

Maintenance Parts Cost

Injury Lost Work Days (in Hours) $0

Company Incurred Medical Bills

Increase in State Workers Compensation Premiums

Lost time to attain medical attention $0

Lost Time to Resolve Environmental Spill $0

Materials cost to Resolve Environmental Spill

Hours Spent on Resolution with Customer $0

Excess Rental Equipment Charges $0

Subcontractor Charges $0

Third party costs paid $0

CPI Overhead Costs $ 50.00

0

0

0

0

0

0

TOTAL ADDITIONAL COSTS $50

TOTAL COST COPQ $50 SAVINGS

ANNUALIZED COST OF IMPLEMENTATION

ANNUALIZED SAVINGS $0

NET ANNUALIZED SAVINGS ($50)

Solution Implementation Effectiveness Review

Post-Implementation Actual COPQ and Savings: This section to be completed during the Solution Implementation Effectiveness Review. Enter the actual documented COPQ and Savings Amounts into the ACTUAL fields of the CPI Database.

Number of People

Opportunity Cost per Hour

Total Estimated Cost

Lost Revenue due to lack of available of resources (labor and equipment)

NUMBER OF ANNUAL OCCURRENCES FROM SAME ROOT CAUSE

Solution Implementation Effectiveness Review Sign-Off

HALLIBURTONHALLIBURTON

INCIDENT FORM;document.xls WM-NAHES-431 Revision 130 April 1999

This form is to be completed with all Corrective and Preventative CPI's.

INCIDENT INVESTIGATION FORMList the names of HES Employee(s) and or Contractors Involved: A. B.C. D.E. F.List all equipment numbers for units directly involved:A. B.C. D.E. F.

Environmental Conditions such as weather, light, time of day:

List the events preceding the incident:A. Event:

B. Preceding Event #1:

C. Preceding Event #2:

D. Preceding Event #3:

DOT HoursDOT Hours Since last day off DOT Hours on 15 hour clockDescribe fatigue level

PROCESS REVIEW TEAM MEMBERS:A. B.C. D.E. F.G. H.I. J.COMMENTS

HALLIBURTONHALLIBURTON

ISHIKAWA DIAGRAM;document.xls WM-NAHES-431 Revision 130 April 1999

This form is to be used with all Corrective and Preventative CPI's with a High Importance Level.

Ishikawa Diagram

Instructions

4. Review each symptom, and ask why it occurs, list these more basic causes below each symptom.5. Test for root cause by looking for causes that appear repeatedly within or across major causal factor areas.

1. Into the Incident box, insert a sentence or statement describing the incident which took place. Be sure that all participants in the root cause team agree with this statement.

2. Coming off the fishbone, list the major causal factors which could have caused the incident. The most common of PROCESSES, PEOPLE, EQUIPMENT, AND ENVIRONMENT have been listed. This categories may be changed as necessary to fit the situation.

3. List the specifics symptoms associated with each causal factor which contributed to the incident. Answer the question "What happened inside each of the causal factors which caused the incident. If a item could fit under multiple causal factors, list it as many times as necessary

TIP: During the incident investigation, draw the diagram on a white board or flip chart. Then copy the data to this form so that it can be stored with the CPI record in the database for future reference.

Management Systems(Causal Factor)

People(Causal Factor)

Incident

Equipment(Causal Factor)

Environmental(Causal Factor)

HALLIBURTONHALLIBURTON

5 WHY;document.xls WM-NAHES-431 Revision 130 April 1999

This form is to be completed with all Medium Importance Level Corrective or Preventative CPI's

5 WHY ANALYSISList the incident that occurred:

Why 1: Why did this incident occur?

Why 2:

Why 3:

Why 4:

Why 5:

Instructions:1. Write a statement to identify the incident that took place.2. Ask why this situation happened?3. Based upon the answer provide for the previous why, ask why the contributing factors were in place.4. Continue to ask "WHY" until you have asked this question at least 5 times.5. Test your root cause by talking through the incident with the root cause removed.

Example:Incident: Why 1 Unit was not properly washed out after the end of the job

Why 2

Why 3

Why 4

Why 5

Root Cause

RCM Unit was cemented up. As a result was lost 2 jobs waiting for the equipment to be fixed and a job adjustment.

(Why was unit not properly washed after job?) The employees operating this unit not familiar with the equipment.(Why were employees not familiar with equipment?) Slightly different equipment was being brought in from other locations to cover the demand of work. Employees were not familiar with the differences.

(Why were employees not familiar with the differences?) They were not provided training on the different equipment.

(Why were employees not trained on unfamiliar equipment?) Area was trying to catch all the work and did not take the time to train.

We were in such a hurry to catch the next job, that we did not properly train employees on the equipment.

HALLIBURTONHALLIBURTON

COST BENEFIT ANALYSIS

COST BENEFITEquipment Costs Labor SavingsSoftware Costs HSE SavingsTraining Costs Additional RevenueTraining Facilitation Costs Quality SavingsLabor Costs Material SavingsMaterial Costs Maintenance Part SavingsLost Revenue

TOTAL COST $ - TOTAL BENEFIT $ -

NET BENEFIT $ -

NOTE: All dollar amounts are to be calculated on an annual basis. Additional Cost and Benfit factors can be filled in as dictated by the situation.

HALLIBURTONHALLIBURTON