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CMAA Water Summit Service Provider Executives Forum

CMAA Water Summit Service Provider Executives Forum. July 19, 2010 Richard D. Fox Chairman & Chief Executive Officer Camp Dresser & McKee Inc. Underfunded Investment Is Clear But No Obvious Way Forward. “More for Less”. Infrastructure Investment ($ billions). (Needed). (Needed).

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CMAA Water Summit Service Provider Executives Forum

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  1. CMAA Water SummitService Provider Executives Forum July 19, 2010 Richard D. Fox Chairman & Chief Executive Officer Camp Dresser & McKee Inc.

  2. Underfunded Investment Is Clear But No Obvious Way Forward “More for Less” Infrastructure Investment ($ billions) (Needed) (Needed) (Needed) (Actual) (Actual) (Actual) Water Resource Water Wastewater

  3. Opportunities • Better policies / regulations • More sustainable infrastructure • Technology advancement • Raising the Value of Water • Improving the Delivery of Assets

  4. Productivity of US construction versus productivity gain in non-farm industries 1964 70 75 80 85 90 95 00 Source: US Department of Labor

  5. Why? Design-Bid-Build (D-B-B) Master Plan Investment Phase Design Bid Construct Commission Operate/ Maintain

  6. Service Provider Opportunity Level of Investment 1 – 5 years 7 – 9 years 20 – 30 years Design-Bid-Build (D-B-B) Master Plan Investment Phase Design Bid Construct Commission Operate/ Maintain

  7. Seizing the Opportunity • Gain Productivity: • Eliminate interfaces • Lower LOE • Reduce re-work • Reduce schedule • Reduce change orders • Improve Owner Comfort: • Visualization • Transparency • Rationale Risk Transfer: • Procurement process • Knowledgeable advisor • Co-sponsored risk register Collaborative 4-D Design

  8. ≠ Traditional design build Owner Comfort • Rehab • Consistency • Aesthetics/Noise/Odor High levels ofdesign control – – – EPCM 65 % Design Negotiate Construct/Commission Procure

  9. Select Designer Design Bid Construct Commission Transparency Competitive Price Change Orders Market Criteria/Price Criteria/Price D-B-B Construction Manager Competitive Price / 10% Design Escalation D-B Procure Design / Construct / Commission Change Orders Criteria/Design EPCM Sub-bids 65 % Design Negotiate Construct/Commission Procure Target Price Firm Price

  10. Risk Transfer RISKS MEANS/METHODS PRICING • Errors/Omissions Professional Liability 0.1% - 0.3% • General Liability Insurance 0.1% - 0.2% • Worker Injury Workman’s Compensation 0.1% - 3.0% • Contractor Payment Bonds 0.5% - 1.0% • Contractor Performance-ScheduleLiquidated Damages 0% - 10%-Overall Contractual Transfer 0% - 7% • Force Majuere Contract Exclusion 0% - 0% • Facilities Performance Contract Transfer (warranty) 0% - 3% • Limits on Liability Contractual Terms Erratic/Exorbitant • Consequentials Contractual Terms Erratic/Exorbitant

  11. 4-D Design

  12. Orlando DB Center

  13. Summary • Global forces demand “More For Less” • Productivity of traditional delivery • Design Control = Modified D/B or EPCM • Transparency • A real, client specific issue • Discuss it / manage it • Risk Transfer • Rationale – Fair Pricing • Full – Exorbitant Pricing/No Responsible players

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