1. Measuring Performance in a Commercial Enterprise Ken Smith Senior Vice President September 12, 2006

2. Fluor Corporation’s Legacy u Founded more than 100 years ago u Executed more than 10,000 projects worldwide u Consistently ranked among the “Top 3” on ENR magazine’s “Design-Build Firms” and “The Top 400 Contractors” lists u One of the world’s safest contractors u Maintains a global presence: Fluor is one of the world’s largest, publicly owned engineering, procurement, construction, and maintenance companies. - Asia, 55 years - Africa, 41 years - Australia, 37 years - Europe, 59 years - Middle East, 59 years - South America, 61 years Corporate Headquarters – Irvine, Texas

3. Fluor Industries and Clients

4. Worldwide Projects Petrochemicals Downstream Government Fernald Environmental Restoration Phillips S Zorb Texas EQUATE Project Kuwait City, Kuwait Kodak Xiamen, China Chemicals Copper Smelter Queensland, Australia Mining Infrastructure London Underground Ltd. Government Hanford Management Contract

5. Business Group Common Functions u Safety performance and Zero Incidents SM culture u Operating System Requirements –Drives commonality across all operations globally u Project management u Engineering u Financial metrics and performance measurement u Human Resources –Global management focus u Centralized corporate approach: –Strategic planning –Business Risk Management Framework (BRMF) –Legal –Finance / cash management / SEC reporting –Public relations / government relations –Security / IR / ESH –Board of Directors / stakeholders

6. Safety Performance u Operating in 60 countries worldwide; 40,000-employee diverse workforce (with language, educational and cultural differences) u Managing and monitoring 270 million of safe work hours in 2005 u Best in class performance –Management commitment to annual performance improvement u Fluor’s culture drives –Focus on precursors to prevent significant injuries/incidents –Continuous improvement –Rigorous reporting –Incident investigation and lessons learned u Senior management expectations are Zero Incidents and safety excellence

7. Safety – Lost Workday Case Rate

8. Safety – Recordable Incident Rate

9. Commercial Background u 25 years in the EPCM industry u Experience includes three EPCM firms’ cultures to draw upon u Understand the unique differences in Commercial vs. Government client organizations u Recent 3-year President of Fluor’s Manufacturing & Life Sciences group u Commercial Industry differentiators –Commercial industry specialization & market niches –Global sales & execution platform –Flexible procurement requirements –Variety of commercial / contract structures –Individual / flexible client drivers –Business unit autonomy & internal decision making –Flexible Industrial Relations / partnerships with Labor

10. Personal Operating Philosophy u Focus on safety u Clear roles, responsibility, authority and accountability u Customers want to know three things: –How smart? –How much? –How long? u We owe our client to be the lowest cost producer for a given scope u Cradle-to-Grave project execution –Comprehensive risk management –Baseline Centric approach u Human capital management u Financial performance “Bringing certainty to Technology Application, Cost and Schedule”

11. Baseline Centric SM Approach COST MODEL Basis of Estimate Clarifications Allowances FOCUS SM CDR PURCHASING Scope Reviews Buy Sheet Tracking Bid Pkg. Cost Distribution SCHEDULING Quantities Craft Equipment / Material COST CONTROL Changes ROM Estimates GENERAL CONDITIONS Staffing Reimbursables BASELINE

12. Baseline Centric Tools u Function –FOCUS sm process –Business Risk Management Framework u Cost –Detail quantity-based control estimates –Prolog tm and MaterialManager sm for procurement –FDCost and ProfiTool sm for cost control –FDAS / SAP for accounting –Cost Summary Report for financial performance u Schedule –Primavera tm –EZTrak –MileMarker

13. Baseline Centric Deliverables Establish “A line in the sand early” u Accurate estimate –Detailed quantity takeoffs –Qualifications and clarifications –Allowances and exclusions u FOCUS sm sessions u Constructability reviews / alternative solutions u Value engineering u Manpower scheduling u Business Risk Management Framework u Snapshots during conceptual engineering; change management during detail design

14. Baseline Centric Flowchart

15. u Safety –Monitor traditional safety trends –Application of Fluor’s safety alert system –Client feedback u Client satisfaction –Percentage of repeat business –Extensive client review process u Cradle-to-Grave project execution –Earned value management system –Independent project management review teams u Human capital –Turnover / retention u Financial performance –Margins: as sold vs. actual performance –Publicly traded company – stock price Performance Measurement Approaches

16. Closing Thoughts u Challenge to provide commercial practices in the Government sector u Project execution success is driven by upfront planning and establishing an accurate Baseline u Managing people – We cannot lose sight of protecting the safety of our individual employees If we take care of clients, execute projects effectively, protect our employees, then we’ll achieve financial success