Breakout Session # 604, Changing Role of the Contract Manager David Bechler, PE, MBA, PMP

2. Joint VenturesThe Contracts Professional as Business Manager and Consultant Breakout Session # 604, Changing Role of the Contract Manager David Bechler, PE, MBA, PMP Contracts / Business Manager CH2M HILL, Inc., NE Transportation Business Group April 26, 2005 11:00 am – 12:00 pm NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

3. Presentation Outline “Try not to become a person of success, but rather to become a person of value.” (Albert Einstein) • New Challenges & Roles • CH2M HILL’s contracts initiative program • Joint Venture Formation • Issues and guidance • Value added role of contracts professional NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

4. Presentation Outline • Contract Professional as Consultant • Facilitating Agreement • Transitioning to Business Manager Role • Consulting vs. managing • JV member relationship considerations NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

5. Presentation Outline “Ideas won't keep, something must be done about them" (Alfred North Whitehead) • Contract Professional as Business Manager • JV operational considerations • Reporting relationships • Typical duties NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

6. New Challenges & Roles • CH2M HILL Contracts Initiative Program • Unique to Transportation Business Group • Emphasis on Transformational Activities • Positioned contracts professional to assume new roles NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

7. Joint Venture Formation • Joint Venture Formation, Structure, and Management • An area lacking consistency and leadership • Opportunity for adding value NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

8. Joint Venture Formation • Issues and Guidance • JVs have additional cost and complexity • JVs require special consideration prior to formation • JVs are not a typical project for most firms • A critical first question: “Should my project be a JV, and if so what type of JV?” NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

9. "The important thing is not to stop questioning. Curiosity has its own reason for existing.“ (Albert Einstein) • Explore First …. Answer Last! • Motivations • Alternatives to forming JV • Client limitations • How well do you know your partner • Ownership & Control • Project specifics • Co-habitation and/or staff co-mingling NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

10. Joint Venture Formation • Adding Value • Identify concerns • Develop solutions to formation issues • Perform due diligence on JV members • Select appropriate entity type • Engage stakeholders for review & approval NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

11. Contract Professional as Consultant • Facilitating Agreement (during positioning and proposal phase) • Educate the client on value of JV • Establish appropriate content and use of teaming agreements • Establish appropriate JV communication standards NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

12. Facilitating Agreement • JV Entity Formation must occur: • Before submitting a binding proposal • Before executing documents in the JV name • Before representing the JV as an operating unit NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

13. Contract Professional as Consultant “There is no one-size-fits-all approach to JV entity type or the JV agreement” • Facilitating Agreement • Internal management consultant • JV ‘Knowledge Expert’ resource • Identify and resolve all internal & external roadblocks to agreement • Integrate interests of all parties • Coordinate reviews and facilitate resolution of differences NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

14. Facilitating Agreement – Common Elements (1) Definition of Roles and Responsibilities • Management Committee ( or “Board”) • Executive dispute resolution panel • Managing Partner • Fiscal Agent / Tax Matters Partner • Project Manager(s) / Deputy PMs • JV Business Manager NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

15. Facilitating Agreement – Common Elements (cont) (2) Decision Making Authority (3) Signature Authority (4) Dispute Resolution Guidelines and Procedures (5) Indemnification, Insurance & Liability NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

16. Facilitating Agreement – Common Elements (cont) (6) Capitalization & Shared Costs (7) Cash & Cash Flow Mgt, P&L distributions (8) Accounting, cost control, financial tracking and reporting (9) GAAP & SOX compliance NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

17. Facilitating Agreement – Common Elements (cont) (10) Contracting / Subcontracting authority, practices and policies (11) Special rights and obligations (12) Records management and entity dissolution NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

18. Transition to Business Manager • Internal management consultant • Actively review and advise on JV operational issues • Identify and assess potential liability concerns • Identify and assess potential profitability concerns NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

19. Internal management consultant • Actively monitor and advise on JV operational issues • Subcontracting practices • Cash management practices • Financial statements & mgt reports • Shared costs & capitalization distributions • Improper member activity – liability concerns NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

20. Transition to Business Manager • Relationship Considerations • Business manager role best aligned with fiscal agent role • Separate Managing Partner Role from Fiscal Agent Role • Personal bias and perception of control • Relationship issue as well as business issue • Separation of duties is Key Must represent the interests of all parties in an objective unbiased manner. NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

21. Contract Professional as Business Manager • JV Operational Considerations • JV management requires attention to: • Contracting practices & joint risk mitigation • Cash management • Financial tracking, analysis and reporting • Capitalization, shared costs & work distribution • Separation of JV activities from parent firm activities • Adherence to tenants of JV agreement • Business manager focuses on administration of the “business” • Allows project manager to focus on project delivery NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

22. JV Operational Considerations • Separation of duties pays dividends in: • Maintaining good JV partner relationships • Preventing JV admin. issues from undermining client confidence • Allows managing partner to focus on member and the client relationships NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

23. Contract Professional as Business Manager • Reporting Relationships • JV management is controlled by a Board of Directors or Management Committee • Project Manager(s) reports to BOD • Focus is on project delivery issues • Scope, Schedule, Cost & Quality issues • Business Manager reports to BOD • Serves as resource to PM and deputy PMs NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

24. Contract Professional as Business Manager • Typical Duties • Establish JV practices, policies and procedures • Subcontracting • Cash management • Financial tracking and reporting NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

25. Contract Professional as Business Manager • Typical Duties (cont.) • Supervise & Manage Administrative Activities • Cash flow, cash accounts, payables and receivables • Subcontracting and procurement • Project (JV) office expenditures, leases and agreements • Business registration, licenses and permits NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

26. Contract Professional as Business Manager • Typical Duties (cont.) • Assess, advise and report • Track financials, prepare & present reports to BOD • Recommend capital contributions, cost and profit distributions • Track contingencies and work distribution • Advise on needed corrective actions • Facilitate tax reporting and payment NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

27. Contract Professional as Business Manager • Typical Duties (cont.) • Provide counsel and advice • Client contract issues • Risk mitigation • Liability & claims issues • Project and JV closeout NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

28. Contract Professional as Business Manager and Consultant • Summary • This role requires: • Broad range of general management and contract management skills • Ability to exercise discretion and balance competing interests • Ability to provide objective unbiased advice without sacrificing interests of parent firm • Willingness and ability to provide cross-functional leadership NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”

29. Joint VenturesThe Contracts Professional as Business Manager and Consultant Breakout Session # 604, Changing Role of the Contract Manager David Bechler, PE, MBA, PMP, Contracts Manager, CH2M HILL, Inc., NE Transportation Business Group April 26, 2005 11:00 am – 12:00 pm NCMA World Congress 2005 “Prime Time: Contract Management at the Core of the Enterprise”