1. 1 K&L Gates Allocating Risk in Today’s Marketplace December 13, 2007 Session E14

2. 2 Anchorage Boston New York Dallas Harrisburg Miami Orange County Palo Alto San Francisco Spokane/ Coeur d’Alene Taipei Beijing Hong Kong Seattle Portland Los Angeles Pittsburgh Washington, D.C. Newark London Berlin

4. 4 MODERATOR Brian R. Davidson – K&L Gates  Partner, with K&L Gates since 1994.  Represents domestic and foreign corporations in international (ICC, UNCITRAL and AD HOC) arbitration proceedings, and federal and state court proceedings.  Involved in several multi-million dollar industrial projects, including steel, offshore oil and gas, and power facilities.

5. 5 PANELIST Eileen G. Akerson – KBR, Inc.  Joined KBR’s Law Department in 1999; previously a lawyer with Spriggs & Hollingsworth in Washington D.C.  Current VP, Legal and Chief Counsel of KBR’s Energy & Chemicals Division.  Responsible for managing the legal functions for KBR’s Energy & Chemicals Division.

6. 6 PANELIST Bart Turner – KBR, Inc.  Director of KBR’s Legal Department.  Manages KBR’s lawyers located in the Americas offices and provides counsel to KBR on a variety of legal issues related to KBR’s activities around the globe.  Involved in the development, acquisition and execution of several multi-billion dollar international projects for the development of oil and gas facilities.  Counseled KBR on a variety of multi-million dollar claims.

7. 7 PANELIST R. Suzen Shaw – Microsoft Corporation  Senior Risk Manager for Microsoft’s Worldwide Operations.  This position places her on the core team for every construction project undertaken globally by Microsoft.  25 years experience in the risk management and commercial insurance industry, including risk consulting, brokerage, safety and loss control, underwriting, claims adjusting and operational risk management.

8. 8 OVERVIEW This session focuses on two primary questions: 1.How have current market forces impacted the construction industry? 2.Given the current market conditions, how can owners and contractors minimize and allocate risk on any given project?

9. 9 THE CONSTRUCTION MARKET  Has demand for large scale (non- residential) construction projects increased over the past decade?  Does demand for construction services vary depending upon the industry being analyzed?  Data Centers  Oil & Gas  Transportation  Manufacturing  Power Plants  Other

10. 10 THE CONSTRUCTION MARKET  Does demand for construction services vary depending on whether the project is domestic or international?  What other variables impact the construction marketplace?  Demand for Materials  Demand for Labor  Contractors Acquisitions and Consolidation

11. 11 ALLOCATION OF RISK  Step 1: Owners and contractors identify risk  What procedures do owners and contractors use to identify risk?  Outline the role of: o sales department o management o in-house lawyers o outside lawyers o risk managers o others

12. 12 ALLOCATION OF RISK  Step 2: Once risks are identified, how do contractors and owners minimize and allocate risk given current marketplace conditions? Bidding / Contracting  Owners - maximize the number of bidders.  Contractors - decide whether or not to bid.  Lenders Requirements.

13. 13 ALLOCATION OF RISK Securities for Payment  Letters of Credit  Guarantees  Credit Analysis / Payment Risks  Up-front Payments

14. 14 ALLOCATION OF RISK Contract Structures  Lump Sum Contract  Cost Plus Incentives  Open-book Estimates  Reimbursable EPC  Conversion from lump sum to reimbursable pricing structures  Price escalations clauses  Mixed hybrid lump sum / reimbursable

15. 15 ALLOCATION OF RISK Contract Provisions  Limitation of Liability Clauses  Termination for Convenience and Default Clauses  Liquidated Damages  Waiver of Consequential Damages  Indemnity Clauses  Different Site Condition Clause  Change Orders

16. 16 ALLOCATION OF RISK Insurance/Bonding  How can owners and contractors use third-parties to protect themselves against potential future risks?  Bonds o Bid Bonds o Payment Bonds o Performance Bonds

17. 17 ALLOCATION OF RISK  Insurance Products o CGL o Builder’s Risk o Property o Professional Liability o Default (“Subguard”) o Efficacy o Force Majeure o Professional Protective  Letters of Credit in Lieu of Bonds / Retainage

18. 18 ALLOCATION OF RISK Owner / Contractor Relationships  “Partnering” Concepts  Public Private Partnerships (P3s)  Alliancing Agreements (Australia)

19. 19 LESSONS LEARNED  Market trend favors contractors for large non-residential construction projects.  Contractors should take advantage of market forces and carefully review all options to allocate risk to owner or third-parties.

20. 20 K&L Gates Allocating Risk in Today’s Marketplace December 13, 2007 Session E14