Saudi Aramco: Public

iktva Program Engagement

© Saudi Arabian Oil Company, 2018

Saudi Aramco: Public

What is iktva?1

iktva Certification2

5 Year iktva Action Plan3

iktva in Procurement4

Saudi Aramco: Public

Supply Chain Evolution

Trade Agencies

• Shipping & Customs Clearance

• Expediting

Service Providers

• Spare Parts Inventory

• Local Service Facility

• Warranty Support

Manufacturers

• Design

• Fabrication

• Manufacturing

• Packaging

Saudi Aramco: Public

Strategic in Nature

Local JobsLocal Content Export Hub

70% 30%Thousands of Jobs

Saudi Aramco: Public

We’ve created an ecosystem for success

Sustainable

Talent PipelineRobust

Supply Chain

Anchor

Projects

Saudi Aramco: Public

iktva is a Win-Win Program

Localized goods and services

Compensation Paid to Saudis

Training & Development

of Saudis

Supplier DevelopmentResearch &

Development

In Relation to RevenueE = Saudi Aramco Spend ($)

The iktva formula

INDEPENDENT

ASSESSMENT

Offering transparency

& confidentiality

Saudi Aramco: Public

What is iktva?1

iktva Certification2

5 Year iktva Action Plan3

iktva in Procurement4

Saudi Aramco: Public

Supplier Training and Support for iktva Certification

www.iktva.sa1

Detailed guidelines for iktva survey2

iktva survey template3

iktvasurveyinfo@Aramco.com

Saudi Aramco: Public

iktva Survey Guidelines -Highlights

Included Excluded

Goods & Services • IK Manufactured Goods &

Services

• IK Operating & Admin

Expenses

• OOK Goods & Services

• Materials/Services from

Agents

• Capital Expenditures

Compensation Saudi Compensation:

• Salary & Bonus

• Housing

• Transportation

• Education Assistance

Training All Costs Associated With Saudi

Training

• Internships

• Scholarships

• Travel and Accommodations

• Course Fees

Training Costs Associated

With Expats

Supplier

Development

All Cost Including Workforce,

Materials, Travel, etc.

Saudi Aramco: Public

iktva Survey Preparation and Submission

Sup

plie

rs3

rdP

arty

Ce

rtif

ier

Prepare Survey and Select Certification

Firm

Submit Survey to Saudi Aramco

Prepare Certification Report

Review Online Tools and Download

Templates

Review and Certify Survey

Provide Management Representation

Letter

Saudi Aramco: Public

iktva Summary*

*This is a sample summary using dummy data for a hypothetical company

Saudi Aramco: Public

What is iktva?1

iktva Certification2

5-Year iktva Action Plan3

iktva in Procurement4

Saudi Aramco: Public

Supplier Training and Support for iktva Action Planswww.iktva.sa1

Guidelines for iktva action plan2

iktva action plan template3

Saudi Aramco: Public

iktva Action Plan Components• Section I: Company Background

• Executive Summary Sheet• IK company history and corporate structure • Company overview and operations

• Section II: Goods & Services• Supply chain overview • Cost structure breakdown and forecast • iktva potential with local suppliers • iktva potential with global suppliers

• Section III: Human Resources • 5-year hiring plan by job function • 5-year training plan by job function• Total workforce, and current Saudization and 5-Year plan• Saudi training budget• iktva opportunities with industry sectors and training facilities

0

5

10

15

20

25

30

35

2018 2019 2020 2021 2022

Sample 5-Year Hiring Plan of Saudis

Sales & GeneralManagement

Engineering support

Business support

HSE

0%

20%

40%

60%

80%

100%

2016ACTUAL

2017 2018 2019 2020 2021

Sample Cost Stack Up

Miscellaneous Cost Materials Cost

Service Cost Labour Cost

Saudi Aramco: Public

iktva Action Plan Components• Section IV: Supplier Development

• 5-year spend budget for supplier development• Development plans for in-Kingdom suppliers• Gap analysis for supply chain and new sources of supply

• Section V: Research & Development Initiatives • 5-year technology roadmap• 5-year R&D budget and key milestones

• Section VI: Exports • Current export volume and 5-year plan

• Section VII: Business & Market Challenges• Availability of local candidates, raw materials and

equipment

• Challenges within Saudi Aramco Procurement• Other barriers to success

• Section VIII: 5-Year IKTVA Plan• Baseline and 5-year iktva targets • iktva Summary Sheet

Saudi Aramco: Public

Action Plan Executive Summary*

Performance KPI Value 2017 Actual 2018 Plan 2019 Plan 2020 Plan 2021 Plan

Goods & Services (A) (USD & iktva Percentage) $XX M & 17.5% $XX M & 21.1% $XX M & 26.4% $XX M & 36.7% $XX M & 43.8%

Saudi Compensation (B) (USD & iktva Percentage) $XX M & 11.4% $XX M & 12.7% $XX M & 14.5% $XX M & 17.7% $XX M & 21.5%

Training & Development (C) (USD & iktva Percentage) $X.XM & 1.8% $XX M & 2.0% $XX M & 2.1% $XX M & 2.5% $XX M & 3.0%

Supplier Development (D) (USD & iktva Percentage) $XX K & 0.1% $XX M & 0.2% $ XXX K & 0.5% $XX K & 0.7% $XX K & 0.8%

IK R&D (r) (USD & iktva Percentage) $XXX K & 0.3% $XX M & 0.4% $X M & 0.7% $XX K & 0.8% $XX K & 0.8%

IKTVA % 31% 37% 44% 58% 70%

Saudization % 45% 50% 55% 62% 70%

Saudi Jobs Created 175 50 75 75 100

Number of Saudis Trained 250 300 375 450 550

Number of IK Suppliers Developed 8 5 10 15 15

Export Sales (USD) - $X M $X M $X M $X M

Future Key Capital Investments Major Assumptions for Action Plan

• Expected value: $XXXMDescription: Over 5 years planned CAPEX $XXXM to expand

capabilities

• Expected value: $XXMDescription: Acquisition of a local steel fabricator

• Forecasting X% average growth YoY on the existing services• Planning to acquire steel fabricator in 2018 • Required steel plate is available IK by 2020• Placing two new rigs sourced IK into service

*This is a sample summary using dummy data for a hypothetical company

Saudi Aramco: Public

What is iktva?1

iktva Certification2

5-Year iktva Action Plan3

iktva in Procurement4

Saudi Aramco: Public

iktva in ProcurementPrequalification & Registration

Bid Evaluation

Preference Policy

Market Share

Distribution

Supplier Performance

Saudi Aramco: Public

iktva in Procurement Process

19

Saudi Aramco: Public

iktva Target Setting ProcessGenerate breakdown of materials, services &

labor

• Create material lists, services & labor requirements using scope of work and modeling/forecasting software

Determine what can be sourced locally

• Determine what can be procured locally (capacity & capability) and if there are limitations

Calculate percentages for categories A-R

• Use material and labor cost to develop iktva percentages for IK materials, services, and labor

Set iktva target

• Using Saudi Aramco & industry information, set iktva targets

Saudi Aramco: Public

Thank you

Saudi Aramco: Public