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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). - PowerPoint PPT Presentation
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listen. think. deliver.
CMAA Water SummitCMAA Water SummitService Provider Executives ForumService Provider Executives Forum
July 19, 2010Richard D. FoxChairman & Chief Executive OfficerCamp Dresser & McKee Inc.
listen. think. deliver.
Infr
astr
uctu
reIn
vest
men
t ($
billi
ons)
Water Water ResourceWastewater
Underfunded Investment Is Clear But No Obvious Way
Forward
“More for Less”
(Nee
ded)
(Nee
ded)
(Nee
ded)
(Act
ual)
(Act
ual)
(Act
ual)
listen. think. deliver.
OpportunitiesOpportunities
Improving the Delivery of Assets
Better policies / regulations More sustainable infrastructure Technology advancement Raising the Value of Water
listen. think. deliver.
Productivity of US construction versus Productivity of US construction versus productivity gain in non-farm industriesproductivity gain in non-farm industries
Source: US Department of Labor
1964 70 75 80 85 90 95 00
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Why?Why?
MasterPlan
InvestmentPhase Design Bid Construct
Design-Bid-Build (D-B-B)
Commission Operate/Maintain
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Service Provider OpportunityService Provider Opportunity
MasterPlan
InvestmentPhase Design Bid Construct
Design-Bid-Build (D-B-B)
Commission Operate/Maintain
Lev
el o
f Inv
estm
ent
1 – 5 years 7 – 9 years 20 – 30 years
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Seizing the OpportunitySeizing 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
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Owner ComfortOwner Comfort
Rehab Consistency Aesthetics/
Noise/Odor
High levels ofdesign control
Traditional design build
≠
EPCM
Procure 65 % Design Negotiate Construct/Commission
– – –
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TransparencyTransparency
Procure Design / Construct / Commission
D-BCompetitive Price / 10% Design Escalation
Change Orders
D-B-B Criteria/Price MarketCompetitivePrice
ChangeOrders Criteria/Price
Construction Manager
Select Designer Design Bid Construct Commission
EPCM
Procure 65 % Design Negotiate Construct/Commission
Target Price
Criteria/Design
Firm Price
Sub-bids
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Risk TransferRisk Transfer
General Liability Insurance0.1% - 0.2%
Errors/Omissions Professional Liability 0.1% - 0.3%
Worker Injury Workman’s Compensation 0.1% -
3.0% Contractor Payment Bonds 0.5% - 1.0%
Contractor Performance-Schedule Liquidated Damages 0% -
10% -Overall Contractual Transfer0% - 7%
Force Majuere Contract Exclusion 0% - 0%
Facilities Performance Contract Transfer (warranty) 0% - 3%
Limits on Liability Contractual Terms Erratic/Exorbitant
Consequentials Contractual TermsErratic/Exorbitant
RISKS MEANS/METHODS PRICING
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4-D Design4-D Design
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Orlando DB CenterOrlando DB Center
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SummarySummary
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
