1. The Energy Roundtable Managing Risk on Large Capital Construction Projects By Dale R. Kern P.E. Deloitte Financial Advisory Services LLP Calgary, September 26, 2006

2. Copyright © 2006 Deloitte Development LLC. All rights reserved.1 Agenda Isn’t Deloitte an Accounting Firm? Construction is a Risky Business Case Example Third Party Participation to Mitigate Risk

3. Copyright © 2006 Deloitte Development LLC. All rights reserved.2 Isn’t Deloitte an Accounting Firm? Professional services Firm Over 1000 Construction Industry Clients Construction Advisory Services Involved in Thousands of Projects Deloitte

4. Copyright © 2006 Deloitte Development LLC. All rights reserved.3 Capital Construction Projects are a Risky Business Labour Availability Availability of Skilled Professionals Escalation Contract Disputes Weather Accidents Global Market Place Etc.

5. Copyright © 2006 Deloitte Development LLC. All rights reserved.4 Global Market Risks Foreign Governments Culture and Communications Labour Uncertainties Transportation Quality Contracting/Legal

6. Copyright © 2006 Deloitte Development LLC. All rights reserved.5 Global Case Example

7. Copyright © 2006 Deloitte Development LLC. All rights reserved.6 Global Case Example Design Not Understood Initial Fabricator Did Not Honor Agreement New Fabricator Selected, Steel Moved Unforeseen Shipping Consequences Quality Control Problems

8. Copyright © 2006 Deloitte Development LLC. All rights reserved.7 Doesn’t My EPC Contract Mitigate My Risks?

9. Copyright © 2006 Deloitte Development LLC. All rights reserved.8 FORMAL RISK ASSESSMENTS Identify Risks Quantify Potential Impacts Determine Probability of Occurring Decide on Mitigation

10. Copyright © 2006 Deloitte Development LLC. All rights reserved.9 Third Party Participation, One Way to Reduce Risks No Other Role In The Project Construction Industry Background Background in Your Business Willing to Stand Up to Project Team

11. Copyright © 2006 Deloitte Development LLC. All rights reserved.10 Activities for Third Party Participation Formal Risk Reviews Schedule Reviews Budget Reviews Monte Carlo Analysis 100% 75% 50% Percent Likelihood Completion Date 25% Jan Feb Mar Apr May Jun The Probability of the Project being Completed by April 1 st is 75%

12. Copyright © 2006 Deloitte Development LLC. All rights reserved.11 Why Third Party Reviews Work Independence From Project Team Keeps Everyone True to the Task Can Ask Dumb Questions Different Point of View From Our Experience, It Works!