1. www.fultonhogan.com State of Play: Collaborative Contracting NZ-AU 12 July 2013 Peter Kessler COO Construction, Fulton Hogan Australia

2. Capital Works: Recent Procurement Models PICR Contracts Competitive Alliances Waterview NZ, Regional Rail Link, Gateway WA QLD Main Roads, Melbourne Water <2008 Key Features Positives Negatives Future Enhancements  Limited Constructability input from Contractor  Generally poor tracking tools on varied work  Too many issues bank up to contract completion  Focus on getting the job done  Relatively short tender period  Fastest delivery start up  Client retains flexibility to change design/scope  Client accepts more risk and in return attracts lower industry margins  Cost Reimbursable  Construct Only  Generally referenced back to Contract (AS or Bespoke)  Typically 20% Contractor share of TCE Underun  TCE gets adjusted for material variations to scope  Typically 30% Non Price Attributes adjustment (common)  KPI regime funded by Client + or -2% of margin  Some flexibility on KRA/KPI regime  Only lose margin  Specimen Design  Design Initiative promoted  Pain / Gain operates on agreed KRA/KPI’s  Non Price Attributes adjustment (uncommon)  Trend to blended Contractor/Designer margin  NOP’s can only lose their margins  Original principle that excellent performance should return >BAU profits  Becoming expensive to bid  Low TOC’s rewarded (examples where no net R&O)  KRA Pool tends not to incentivise  Client can end up paying extra for Holden Commodore  Reduced margin by extending site overheads into corporate overheads  Occasionally short tender periods  Capable of fast delivery start up  2 nd place getter stipend for release of design  Experts embedded in client team to chaperone complex projects  External R&O Adjustment, External Escalation Adjustment, KRA Pool increased, in exchange for Contractor accepting margin threshold  Mandate Start up constructability workshops  Standardise traffic management allowances  Reform wet weather provisions State of Play: Collaborative Contracting

3. www.fultonhogan.com State of Play: Collaborative Contracting 12 July 2013 Peter Kessler COO Construction, Fulton Hogan Australia