ATMES Spring Meeting April 26-27, 2012 Myrtle Beach, South Carolina International Projects

Finding the Right Project Delivery Model

Company History | Singapore | Shanghai | Portland, OR | Greenville, SC | Acquisition of | exp. China | C3 Eco Hospitality Design

Project Delivery Conventional Contract (Design / Bid / Build) EPC / Design & Build Management Contract EPCM – Engineering, Procurement & Construction Management (Agency – Not at Risk) EPCM with Guaranteed Maximum Price (GMP) (At Risk) Project Delivery Options / Terminology

Project Delivery Safety Cost Certainty Quality Schedule / Program Delivery Balance of Risk Key Drivers for Choice Project Delivery

Project Delivery – Option 1 Option 1 – Conventional Contract - Design / Bid / Build Sub Contractors Suppliers Client Main Contractor Design Consultant (Full Design) Project Delivery Experience

Project Delivery – Option 1 - Experience Location Shanghai, China Role IP Protection Engineering Review Cost Estimation Procurement General Contractor Project Size Confidential

Project Delivery – Option 1 - Experience Location Xi’an, China Role Site Selection Engineering Management Procurement Construction Management Equipment Installation Project Size FA: 40,000 sqm R&D Test Center

Project Delivery – Option 1 - Experience Location Shanghai, China Role Design & Build Contractor Project Size 350sqm Innovation Center

Project Delivery – Option 1 - Experience Location Zhangjiagang, China Role Site Selection Engineering Procurement Construction Management Equipment Relocation & Installation Project Size 37,000 sqm

Project Delivery – Option 1 - Experience Location Changzhou, China Role Site Selection Engineering Procurement Construction Management Project Size 12,000 sqm

Project Delivery – Option 1 Option 1 – Conventional Contract - Design / Bid / Build Client directly employs consultants Client directly employs the main contractor Main contractor employs subcontractors and suppliers Main contractor has no design responsibility Main contractor has a start and finish date Main contractor provides a lump sum bid Design must be complete before the main contractor tenders

Project Delivery – Option 1 Option 1 – Conventional Contract - Design / Bid / Build Advantages – Fixed lump sum offer (but not cost certainty) – Cost overruns are borne by contractor – Client controls his design Disadvantages – Contractor prices full risk premium – Contractor will mark-up subcontractor/supplier prices – Client must clearly define scope – Changes are expensive for the client – Client at risk for disputes over claims and variations – Safety and quality may be compromised – Schedule is elongated due to tender process for main contractor – Client must provide a full team to manage the contract and main contractor

Project Delivery – Option 2 Option 2 – Design & Build / EPC - (Fixed Price Lump Sum) Sub Contractors Suppliers Client D&B/EPC Contractor Design Consultant (Concept Only) Project Delivery Experience Design Team

Project Delivery – Option 2 - Experience Location Shenyang, China Role Project Management Construction Management Engineering Coordination Procurement Support Project Size FA: 600,000 sqm SA: 2.2 Sak

Project Delivery – Option 2 - Experience Location Suzhou, China Role EHS Management QA/QC Jianli Project Size 10,500 sqm

Project Delivery – Option 2 - Experience Location Shanghai, China Role Project Management Project Size FA: 37,000 sqm X2 Semiconductor Assembly

Project Delivery – Option 2 Option 2 – Design & Build / EPC - (Fixed Price Lump Sum) Client directly employs consultants for concept Client directly employs the main D&B contractor D&B contractor employs design team, subcontractors and suppliers Main contractor has design responsibility Main contractor has a start and finish date Main contractor provides a lump sum bid Concept design must be complete before the main contractor tenders

Project Delivery – Option 2 Option 2 – Design & Build / EPC - (Fixed Price Lump Sum) Advantages – Fixed lump sum offer – One party (contractor) with overall cost and schedule Disadvantages – Contractor prices full risk premium – Contractor will mark-up subcontractor/supplier prices – Risk of scope gaps if Client is not able to clearly define scope – Client has no visibility on design – Changes are expensive for the Client – Client at risk for disputes over claims and variations – Safety and quality may be compromised – Client must provide a full team to manage the contract and main contractor

Project Delivery – Option 3 Option 3 – Management Contract Sub Contractor Suppliers Management Contractor Design Consultant Client Project Delivery Experience

Project Delivery – Option 3 - Experience Location Jining, China Role Engineering Review Procurement Construction Management Jianli Project Size 20,000 sqm

Project Delivery – Option 3 - Experience Location Yangzhou, China Role Engineering Review Procurement Support Construction Management Project Size 7,500 sqm

Project Delivery – Option 3 - Experience Location Shanghai, China Role IP Protection Engineering Review Cost Estimation Procurement General Contractor Project Size Confidential

Project Delivery – Option 3 Option 3 – Management Contract Client directly employs consultants Client directly employs the management contractor Management contractor employs subcontractors and suppliers Management contractor has no design responsibility Management contractor provides a detailed schedule Management contractor provides a fixed fee for Indirects (staff, general conditions / preliminaries) together with mark-up % on packages Design and construction can be overlapped to reduce the schedule

Project Delivery – Option 3 Option 3 – Management Contract Advantages – Client controls the design – Fixed fee on Contractors indirect (staff, GC’s, mark-up) Disadvantages – Contractor prices risk premium on subcontractors performance – No incentive for contractor to keep costs down as he is paid a mark-up on subcontract packages – Client is responsible for scope gaps – Client is responsible for design deficiencies – Client is responsible for variations / claims etc. – No cost certainty until all packages are bought out – Changes are expensive for the Client

Project Delivery – Option 4 Option 4 – EPCM (Agency) Client Sub Contractors Suppliers EPCM Contractor Project Delivery Experience

Project Delivery – Option 4 - Experience Location Wuhan, China Role Site Selection Engineering Procurement Construction Equipment Installation Contractor Project Size 4,500 sqm (Phase 1) 350,000 sqm (Phase 2)

Project Delivery – Option 4 - Experience Location Meizhou, China Role Engineering Construction Management Equipment Relocation Equipment Installation Contractor Project Size 17,000 sqm

Project Delivery – Option 4 Option 4 – EPCM (Agency) Client directly employs consultant for Concept / Basic Design Client directly employs the Engineering / Construction Manager Client employs subcontractors and suppliers EPCM contractor has design responsibility EPCM contractor prepares a detailed schedule Design and construction can be overlapped to reduce the program

Project Delivery – Option 4 Option 4 – EPCM (Agency) Advantages – Client is engaged in the design at concept and detailed phases – Maximum overlap between engineering design, procurement & construction – Ability to make scope changes without penalty – Client may supplement his team resources through EPCM contractor – Client can control fee budget on EPCM contractors personnel – GC’s are pass through cost to client – EPCM contractor is responsible for schedule – Procurement is open book – Cost of risk is borne by client (no premium by contractor) – Client can control “design to budget” (note 1) – Non-adversarial team approach Disadvantages – No cost certainty until all packages are bought out (but see note 1) – Client has risk on subcontractor performance – Client retains risk for disputes, variations and claims

Project Delivery – Option 5 Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price EPCM Contractor Technical Consultant (Concept) Client Suppliers Sub Contractors Project Delivery Experience

Project Delivery – Option 5 - Experience Location Changshu, China Role Engineering Construction Management MEP Contractor Project Size 10,000 sqm

Project Delivery – Option 5 - Experience Location Chongqing, China Rayong, Thailand Role Construction Management EPCM Project Size 11,000 sqm 10,000 sqm

Project Delivery – Option 5 Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price Client directly employs consultant for Concept / Basic Design Client directly employs the Engineering / Construction Manager Client employs subcontractors and suppliers EPCM contractor has design responsibility EPCM contractor prepares a detailed schedule EPCM contractor provides a fixed fee for staff, overheads and profit Design and construction can be overlapped to reduce the program Client agrees GMP with EPCM contractor at an agreed point during design / procurement phase EPCM contractor takes responsibility for cost overrun on agreed formula Client and contractor agree split on savings to agreed formula

Project Delivery – Option 5 Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price Advantages – Client is engaged in the design at concept and detailed phase – Maximum overlap between engineering design, procurement & construction – GC’s are normally subject to mark-up or fixed lump sum – EPCM contractor is responsible for schedule Disadvantages – No cost certainty until GMP is agreed – Risk of not being able to agree GMP – Client must fully define scope prior to agreement of GMP – Contractor will build risk premium into GMP – Post GMP changes may be expensive – Client at risk for disputes over claims and variations post GMP

Project Delivery Options

Century 3 Inc. One Century Place, Greer, S.C USA Phone: 1 (864) I Fax: 1 (864)