Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential 2 nd PMI AGC Energy Forum Cost plus vs. LSTK 12 June 2011

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Cost Plus Projects: Schedules - Shorter Cost - Lowest TIC Profit - Highest NPV Quality – Higher ( no incentive to cut corners) Delivered Plant - Fully Aligned with Owner Requirement (Operability, Maintainability, Reliability) Relationship Builders

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Cost Comparison Models

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Schedule Comparison Model

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential “Horses for Courses” Phase: ConceptFEED Execute Size: Small Large MEGA Schedule: Controlled Furious Complexity: Proven State of the Art Nature : Brown Field Green Field

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Enablers for a successful project Planning and endorsement Sustainable team work Safe working environment Risk and reward sharing Win-win attitude

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential LSTK – Conflicting Objectives Safety Schedule Budget  Paid what budgeted  Best quality for best price  Best applicable technology  Effective O&M cost  Satisfied client  Made a reasonable profit  Minimum amount of claims  Developed trusted relations with the client  Use the project as a successful reference OWNER CONTRACTOR

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Cost Plus – Aligned Objectives  Paid what budgeted  Best quality for best price  Best applicable technology  Effective O&M cost CONTRACTOR Safety Budget Schedule Delighted Owner Incentive Profit Repeat Projects OWNER

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Thank You

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Critical characteristics of cost plus and LSTK compensation model Cost plusLSTK Transparency Flexibility Shared responsibilitySingle accountability Partnership approachStructured authority Adjusting priorities/scope changes and conditions Potential scope compromises Opportunity to use state-of- the-art technologies Proven methods and technologies Fewer risks of disputes/ claimsHigher rate of VOs and claims

Copyright [insert date set by system] by [CH2M HILL entity] Company Confidential Compensation model drives many behaviours:  Scope  Planning and funding approvals  Technology preferences  Procurement -- Ability to attract qualified contractors/subcontractors  Quality  Cost Transparency  Responsibility and liability  Health, safety and environment  Schedule and Change management  Risk Management and Mitigation  Stakeholder Management  Warranites