Managing Your Energy Portfolio In A Greener World January 18 &19, 2007

2 Construction Contracting : Market Outlook Multiple Prime Approach –Big Stone II Project

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4 Multiple Prime Approach Big Stone II Project Project Background Contracting Decision Reasons For Multiple Prime Challenges Ahead

5 Project Background 630 MW Pulverized Coal – Super Critical Unit Bag House For Particulate And Hg Control SCR for NO x Control Wet Scrubber For SO 2 Control (New and Existing Unit) Zero Discharge For Water management $1.6 Billion Entire Project Cost (2011)

6 Big Stone II Co-owners

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8 Contracting Decision Traditional Multiple Contracts Approach Recent Projects: Weston 4 (WPS) King (XCEL) Cross Unit 3 (Santee Cooper)

9 Traditional Multiple Contracts Approach Pros: More Owner Involvement / Control of design and schedule Selection of Best Preferred or Optimized Equipment and Designs Opportunity for Lowest Cost Early Scope Definition Less Critical E, Ep, or EpCM Contractor Can Be Incentivized and Share in Project Risks Utilization of Local Contractors More Likely Cons: More Risk for Owner Higher Potential for Scope and Performance Gaps Delayed Price Certainty Point More Owner Staff Required

10 Reasons BSP II Owners Decided On Multiple More Owner Involvement More Opportunity To Optimize Plant Believe We Will Have More Interested Bidders Potential Cost Reduction Less Upfront Work

11 Challenges Ahead For Project Small Utility –Importance of the competency and relation with project engineer & construction manager Risk Mitigation –Tight Insurance market –Complications of shared site with different owners of existing units

12 Challenges Ahead For Project Competitive Bidding In Current Markets Attraction And Retention Of Craft Labor Managing & Coordinating Large Number Of Contracts

13 Did we make the right decision?

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