ATMES Spring Meeting April 26-27, 2012 Myrtle Beach, South Carolina International Projects.

ATMES Spring MeetingApril 26-27, 2012

Myrtle Beach, South Carolina

International Projects

Finding the Right ProjectDelivery Model

Company History

| Singapore

| Shanghai

| Portland, OR

| Greenville, SC

| Acquisition of | exp. China

1977 2003 20092004 20122010

| C3 Eco Hospitality Design

Project Delivery

• Conventional Contract (Design / Bid / Build)• EPC / Design & Build• Management Contract• EPCM – Engineering, Procurement & Construction

Management (Agency – Not at Risk)• EPCM with Guaranteed Maximum Price (GMP) (At Risk)

Project Delivery Options / Terminology

Project Delivery

• Safety• Cost Certainty• Quality• Schedule / Program Delivery• Balance of Risk

Key Drivers for Choice Project Delivery

Project Delivery – Option 1

Option 1 – Conventional Contract - Design / Bid / Build

SubContractors

Suppliers

Client

Main Contractor

DesignConsultant

(Full Design)

Project Delivery Experience

Project Delivery – Option 1

Option 1 – Conventional Contract - Design / Bid / Build

• Client directly employs consultants• Client directly employs the main contractor• Main contractor employs subcontractors and suppliers• Main contractor has no design responsibility• Main contractor has a start and finish date• Main contractor provides a lump sum bid• Design must be complete before the main contractor tenders

Project Delivery – Option 1

Option 1 – Conventional Contract - Design / Bid / Build• Advantages

– Fixed lump sum offer (but not cost certainty)– Cost overruns are borne by contractor– Client controls his design

• Disadvantages

– Contractor prices full risk premium– Contractor will mark-up subcontractor/supplier prices– Client must clearly define scope– Changes are expensive for the client– Client at risk for disputes over claims and variations– Safety and quality may be compromised– Schedule is elongated due to tender process for main contractor– Client must provide a full team to manage the contract and main

contractor

Project Delivery – Option 2

Option 2 – Design & Build / EPC - (Fixed Price Lump Sum)

SubContractors

Suppliers

Client

D&B/EPC Contractor

DesignConsultant

(Concept Only)

Project Delivery Experience

DesignTeam

Project Delivery – Option 2

Option 2 – Design & Build / EPC - (Fixed Price Lump Sum)

• Client directly employs consultants for concept • Client directly employs the main D&B contractor• D&B contractor employs design team, subcontractors and suppliers• Main contractor has design responsibility• Main contractor has a start and finish date• Main contractor provides a lump sum bid• Concept design must be complete before the main contractor tenders

Project Delivery – Option 2

Option 2 – Design & Build / EPC - (Fixed Price Lump Sum)• Advantages

– Fixed lump sum offer– One party (contractor) with overall cost and schedule

• Disadvantages

– Contractor prices full risk premium– Contractor will mark-up subcontractor/supplier prices– Risk of scope gaps if Client is not able to clearly define scope– Client has no visibility on design– Changes are expensive for the Client– Client at risk for disputes over claims and variations– Safety and quality may be compromised– Client must provide a full team to manage the contract and main

contractor

Project Delivery – Option 3

Option 3 – Management Contract

SubContractor

Suppliers

Management Contractor

DesignConsultant

Client

Project Delivery Experience

Project Delivery – Option 3

Option 3 – Management Contract

• Client directly employs consultants• Client directly employs the management contractor• Management contractor employs subcontractors and suppliers• Management contractor has no design responsibility• Management contractor provides a detailed schedule• Management contractor provides a fixed fee for Indirects (staff,

general conditions / preliminaries) together with mark-up % on packages

• Design and construction can be overlapped to reduce the schedule

Project Delivery – Option 3

Option 3 – Management Contract• Advantages

– Client controls the design– Fixed fee on Contractors indirect (staff, GC’s, mark-up)

• Disadvantages

– Contractor prices risk premium on subcontractors performance– No incentive for contractor to keep costs down as he is paid a

mark-up on subcontract packages– Client is responsible for scope gaps– Client is responsible for design deficiencies– Client is responsible for variations / claims etc.– No cost certainty until all packages are bought out– Changes are expensive for the Client

Project Delivery – Option 4

Option 4 – EPCM (Agency)

Client

SubContractors

Suppliers

EPCM Contractor

Project Delivery Experience

Project Delivery – Option 4

Option 4 – EPCM (Agency)

• Client directly employs consultant for Concept / Basic Design• Client directly employs the Engineering / Construction Manager• Client employs subcontractors and suppliers• EPCM contractor has design responsibility• EPCM contractor prepares a detailed schedule• Design and construction can be overlapped to reduce the program

Project Delivery – Option 4

Option 4 – EPCM (Agency)• Advantages– Client is engaged in the design at concept and detailed phases– Maximum overlap between engineering design, procurement &

construction– Ability to make scope changes without penalty– Client may supplement his team resources through EPCM

contractor– Client can control fee budget on EPCM contractors personnel– GC’s are pass through cost to client– EPCM contractor is responsible for schedule– Procurement is open book– Cost of risk is borne by client (no premium by contractor)– Client can control “design to budget” (note 1)– Non-adversarial team approach

• Disadvantages– No cost certainty until all packages are bought out (but see note 1)– Client has risk on subcontractor performance– Client retains risk for disputes, variations and claims

Project Delivery – Option 5

Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price

EPCM Contractor

TechnicalConsultant(Concept)

Client

SuppliersSub

Contractors

Project Delivery Experience

Project Delivery – Option 5

Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price

• Client directly employs consultant for Concept / Basic Design• Client directly employs the Engineering / Construction Manager• Client employs subcontractors and suppliers• EPCM contractor has design responsibility• EPCM contractor prepares a detailed schedule• EPCM contractor provides a fixed fee for staff, overheads and profit• Design and construction can be overlapped to reduce the program• Client agrees GMP with EPCM contractor at an agreed point during

design / procurement phase• EPCM contractor takes responsibility for cost overrun on agreed formula• Client and contractor agree split on savings to agreed formula

Project Delivery – Option 5

Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price• Advantages

– Client is engaged in the design at concept and detailed phase– Maximum overlap between engineering design, procurement &

construction– GC’s are normally subject to mark-up or fixed lump sum– EPCM contractor is responsible for schedule

• Disadvantages

– No cost certainty until GMP is agreed– Risk of not being able to agree GMP– Client must fully define scope prior to agreement of GMP– Contractor will build risk premium into GMP– Post GMP changes may be expensive– Client at risk for disputes over claims and variations post GMP

Project Delivery Options

Experience

Opti

on 1

: Des

ign/

Bid

/Bui

ld

Opti

on 2

: Des

ign

& B

uild

/ E

PC

Opti

on 2

: Des

ign

& B

uild

/ E

PC

Opti

on 4

– E

PCM

(Age

ncy)

Opti

on 5

- EP

CM (A

t R

isk)

Site

Sel

ecti

on

Equi

pmen

t R

eloc

ation

Equi

pmen

t In

stal

lati

on

IP P

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InvistaApplied MaterialsFaureciaMillikenNorplexBMWPGISanDiskEatonLearInvistaEvergreen SolarCarlisleFaureciaSealyHilite

Century 3 Inc.One Century Place, Greer, S.C. 29651 USA

Phone: 1 (864) 879-0123 I Fax: 1 (864)848-2505

www.century3inc.com