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

ATMES Spring Meeting April 26-27, 2012 Myrtle Beach, South Carolina International Projects . Finding the Right Project Delivery Model. Company History. | Acquisition of | exp. China. | Portland, OR. | Singapore. 1977. 2003. 2004. 2009. 2010. 2012. | Shanghai.

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

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

  2. Finding the Right Project • Delivery Model

  3. Company History |Acquisition of | exp. China |Portland, OR |Singapore 1977 2003 2004 2009 2010 2012 |Shanghai |C3 Eco Hospitality Design |Greenville, SC

  4. Project Delivery Project Delivery Options / Terminology • 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)

  5. Project Delivery Key Drivers for Choice Project Delivery • Safety • Cost Certainty • Quality • Schedule / Program Delivery • Balance of Risk

  6. Project Delivery – Option 1 Option 1 – Conventional Contract - Design / Bid / Build Client Project Delivery Experience Main Contractor Design Consultant (Full Design) Sub Contractors Suppliers

  7. 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

  8. 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

  9. Project Delivery – Option 2 Option 2 – Design & Build / EPC - (Fixed Price Lump Sum) Client Project Delivery Experience Design Consultant (Concept Only) D&B/EPC Contractor Design Team Sub Contractors Suppliers

  10. 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

  11. 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

  12. Project Delivery – Option 3 Option 3 – Management Contract Project Delivery Experience Client Management Contractor Design Consultant Sub Contractor Suppliers

  13. 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

  14. 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

  15. Project Delivery – Option 4 Option 4 – EPCM (Agency) Client Project Delivery Experience EPCM Contractor Sub Contractors Suppliers

  16. 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

  17. 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

  18. Project Delivery – Option 5 Option 5 - EPCM (At Risk) - With Guaranteed Maximum Price Project Delivery Experience Client Technical Consultant (Concept) EPCM Contractor Sub Contractors Suppliers

  19. 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

  20. 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

  21. Project Delivery Options

  22. 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

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