1. Stephen Jones Senior Director McGraw-Hill Construction US Construction Activity Outlook and Key Trends

2. Agenda

The Environment -- Macroeconomic Picture

U.S. Construction Market Indicators and Sectors

Total Construction

Key Trends

3. U.S. Macroeconomic Picture

Stimulus Act: American Recovery and Reinvestment Act of 2009

• Enacted on February 17.Cost : $787 billion.

• Goal: Save or create at least 3.5 million jobs by the end of 2010 .

• Approx. $130 billion in construction-related spending, for 2009-2011

• Transportation

• - Highways: $27.5 billion

• -Transit:$8.4 billion

• -Rail:$9.3 billion

• Includes $1.3 billion for Amtrak; $8 billion for high-speed rail

• - Transportation Security Administration:$1 billion to buy,

• install explosive-detection, airport screening equipment.

• Environment

• - EPA clean water and drinking water SRFs:$6 billion

• -Corps of Engineers:$4.6 billion

• -DOE environmental cleanup:$6 billion

• - EPA cleanup, including Superfund,$1.2 billion

4. U.S. Macroeconomic Picture

Stimulus Act, continued

• Energy

• -Electricity grid: $11 billion;Smart-grid investment: $4.5 billion

• - Renewable energy loan guarantees: $6 billion

• - Tax credits for renewable energy projects extended

• Wind energy extended through 2012

• Biomass and geothermal extended though 2013

• Buildings

• - GSAfederal buildings: $5.6 billion

• $750 million to construct/ renovate federal bldgs. and courthouses

• $300 million to construct/ renovate land ports of entry

• $4.5 billion for energy-efficiency upgrades

• -DODrestoration, modernization of facilities: $4.2 billion

• -Veterans Administration :$1.3 billion for hospital upgrades

• -HUD- public housing capital fund: $4 billion

• - redevelopment of abandoned, foreclosed properties: $2 billion

• - community development block grants: $1 billion

5. U.S. Macroeconomic Picture

Stimulus Act, continued

• Schools

• -No specific line item. ($20 billion in House and Senate version.)

• - Renovation funding could come from $39.6 billion in bills

• State Fiscal Stabilization Fund

• Buy American Provisions

• - No stimulus funds can be used on a project

• unless all of the iron, steel, and manufactured goods

• used in the project are produced in the United States.

• - Exceptions Buy American section shall be applied in a manner

• consistent with United States obligations under international agreements.

• Build America Bonds (BABs)

• -To be issued in 2009 and 2010 by state/ localities for capital expenditures

• - States/ localities can receive 35% reimbursement by the federal govt.

• for their interest costs;or, bond investors can receive a 35% tax credit.

• - Use picking up New Jersey Turnpike Authority sold $1.4 billion

• in Build America Bonds during April to support agencys $7 billion

• capital program (10 years).

6. U.S. Macroeconomic Picture

GDP Pattern:

HistoryForecast

2007 2008 2009 2010

+2.0%+1.1%-3.0%+1.5%

What shape will the recovery be?

V orU orL orW?

(Probably U-shaped.)

The U.S. economy has been in recession since Dec. 07. 7. U.S. Macroeconomic Picture Inflation had retreated, but energy prices moving upward again. 8. U.S. Macroeconomic Picture Short-term rates are down; long-term rates lower, but now edging up.

With Dec. 16 action, the federal funds funds rate target now set at 0% to .25%.

Numerous steps taken to improveliquidity over the course of 2008 and 2009.

Also a plusStimulus bill now in place. 9. U.S. Macroeconomic Picture Tighter lending standards are a major constraint for 2008/ 2009.

Numerous instances of tight credit

affecting large projects, such as

Echelon Resort in Las Vegas

Atlantic Yards in Brooklyn

Chicago Spire

World Trade Center Towers 2, 3

Fontainebleau Las Vegas

Yet, some emerging signs

of improvement

Las Vegas Project City Center

Wash. DC 1101 K St.

Boston Russia Wharf project

10. U.S. Macroeconomic Picture

Housing Rescue Plan.

• Proposed February 18. Implemented on March 4.

• Estimated Cost: $75 billion, could help 9 million homeowners

• Parts:-Help renegotiate loan terms for at-risk homeowners

• Creates a $75 billion program to subsidize loan modifications

• Loan servicers receive $1,000 for modifyinga delinquent loan;

• $1,500 for modifyinga non-delinquent loan.

• -Remove limit on refinancing for responsible homeowners.

• Allow Fannie Mae and Freddie Mac to guarantee refinancing

• on mortgages valued at more than 80% of homes value .

Financial Stability Plan

• Proposed February 10.More details on March 23.

• Goal: Buy up toxic bank assets, to help banks resume normal lending

• - Public Private Investment Program

• Low-interest loans, matching funds to get private investors

• to participate

• Also: Mark to Market Rules Eased.Stress test results eased uncertainty.

11. U.S. Macroeconomic Picture Federal budget $455 billion deficit for fiscal 2008, more in 2009 . Not much negative impact on near term appropriations.

Fiscal 2009 Appropriations

Base realignment account gets 18% hike .

Omnibus Bill signed March 11

Federal-aid highway program, down 1%

Mass transit, up 8%

Airport Improve. Grants, flat

Corps of Engineers, down 6%

EPA Water Infrastructure, up 1%

GSA Construction, +144%

GSA renovations, down 4%

12. U.S. Macroeconomic Picture Numerous bond measures passed, but state fiscal health has weakened.

November 2007 Elections

Texas numerous school construction

measures passed.

November 2008 Elections

California voters approved $10 bil.

measure for high-speed rail line,

a $1 billion measure for childrens

hospitals, and Los Angeles voters

approved a $7 billion measure for

school construction.

Numerous states facing large budget

gaps for Fiscal Year 2009, including-

Shortfall $ bil.

California$35.9

Illinois8.0

New York6.4

Florida5.7

New Jersey3.7

Massachusetts3.3

Arizona2.7

Georgia2.3

Pennsylvania2.3

Virginia2.3

Also

20 states have implemented cuts to K-12

education, 6 states proposing cuts

28 states have implemented cuts to public

colleges and universities.

Source: Center on Budget and Policy Priorities

13. U.S. Macroeconomic Picture Material Prices moved higher in early 2008; now easing through 2009.

In early 2008, investors pushed

commodity prices upward.

Slower U.S.,global economies

have reduced demand,

leading to price declines

for metals in particular.

But some concern about

commodity price increases

in near term.

14. U.S. Macroeconomic Picture Other Building Material Prices 15. U.S. Macroeconomic Picture Material Prices Expected to Remain Lower in 2009. 16. U.S. Construction Market Indicators The decline for Total Construction became steeper in 2008. 17. Major U.S. Construction Sectors (Starts) Single Family Housing still falling; Commercial Building heading down; Institutional Bldg. healthy but turning;Public Workswasslipping. 18. U.S. Single Family Housing Construction has fallen sharply.Prices at national level still dropping. Single Family Housing Starts 2006 1.331 million units-18% 2007 .937 million units-30% 2008 .549 million units-41% 19. U.S. Single Family Housing Pluses low mortgage rates, inventories easing. Bottom in sight. Single Family Housing Starts 2009 .375 million units-32%

Mortgage rates now very low.

Steps takento improve funds available for mortgages.

2009 Federal Housing Rescue Plan

Also efforts to limit foreclosures taken at state level.

First-time homebuyers

$8,000 tax credit.

Inventories settling back.

20. U.S. Multifamily Housing Construction relatively stable in 2006, weakened in 2007 and 2008.

Comprised of both apartments

and condominiums.

Helped by push for

downtown redevelopment. Demographics supportive,especially from empty-nesters.

Was attractive investment

target, less so now

due to mounting concern

about over-building of condos

anddiminished credit availability.

Benefits from stimulus bill,

via HUD?

• May 5 HUD announced guide-lines for $980 million directed atcommunity devel. block grants

Multifamily Housing 2006 516,000 units-3% 2007 452,000 units-12% 2008 308,000 units-32% 2009205,000 units-33% 21. U.S. Multifamily Housing Multifamily Housing Top 10 Metros -- ranked by new dwelling units Year 2007,%ch 07/06 1. New York-15%2. Chicago-31% 3. Houston+53%4. Washington DC-0-5. Los Angeles-25%6. Seattle+18%7. Atlanta-3%8. Miami-51%9. Orlando-8% 10.Dallas-Ft.Worth -26% 12.Las Vegas+4% Year 2008,%ch 08/07 1. New York-2% 2. Dallas-Ft.Worth -1% 3. Washington DC-23% 4. Houston-37% 5. Atlanta-31% 6. Los Angeles-40% 7. Seattle-45% 8. Chicago-58% 9. Phoenix-42% 10. Austin TX-31% 11. Miami-58%17. Las Vegas-58% 22. U.S. Commercial Bldgs. -- Stores Construction in 2007 at all-time high; now in sharp retreat. . Store Construction 2006 308 msf-1% 2007 314 msf+2% 2008206 msf-34% 2009130 msf-37%

Derived demand from housing

market definitely going up;

now true going down.

Substantial building from five major players:

Wal-Mart, Home Depot, Lowes

Target, Kohls

Impact of slowing retail sales

reduced store openings,

store closings, etc.

Lifestyle centers losing

store chains

23. U.S. Commercial Bldgs.-- Warehouses Construction peaked in 2007; now heading down.

Slow economy now havingImpact on construction.

Vacancy rates now moving up.

2009Q1 reported at 11.5%, after bottoming at 9.5% in 2006 Q3.

Some larger regional facilitiesstill being built by majorretailers.

Continued need for updated facilities to handle improvedinventory managementpractices, but may have to waituntil after 2009.

Warehouses 2006221 msf-1% 2007 254 msf+15% 2008188 msf-26% 2009123 msf-35% 24. U.S. Commercial Bldgs.-- Hotels Construction soared 2006-2007, mild retreat in 2008, plunge in 2009. Hotels 2006 81 msf+67% 2007 86 msf+6% 200881 msf-6% 200942 msf-48%

In 2005:hotel/casino projects, and convention center- related hotels.

In 2006-2008:

broader expansion,more Las Vegas projects, convention center hotels, condo hotels

Industry financials decelerating:

Revenue Per Available Room

(Smith Travel Research)

2005+8.5%

2006+7.5%

2007+5.8%

2008-1.9%

25. Large Projects U.S. Commercial Bldgs.-- Hotels 26. U.S. Commercial Bldgs. -- Hotels Hotel Construction Top 10 Metros -- ranked by new square feet Year 2007,%ch 07/06 1. Las Vegas-64% 2. New York+45% 3. Washington DC +193% 4. Orlando FL+308% 5. Chicago+30% 6. Los Angeles+22% 7. Dallas-Ft.Worth-11% 8. Miami+15% 9. San Antonio+187% 10. Atlanta+50%Year 2008,%ch 08/07 1. New York+16%2. Las Vegas-40% 3. Orlando+6%4. Dallas-Ft.Worth+28%5. Washington DC-15%6. Phoenix+47%7. Houston+68%8. Miami+10%9. San Antonio+9% 10.Atlantic City NJ +493% 27. U.S. Commercial Bldgs. -- Offices Construction upturn was measured this time Office construction 2006 208 msf+25% 2007 219 msf+5% 2008164 msf-25% 2009120 msf-27%

Market fundamentals wererelatively healthy, but now turning.

Office employment drives vacancy rates:

suburban in2009 Q1up to 17.1%;

downtown in 2009 Q1up to 12.3%

In 2006 and 2007: several major

high-rise projects reached

groundbreaking, including:

• Goldman Sachs headquarters

• Freedom Tower

• 11 Times Square

Early 2008: more NYCWTC

Towers 2, 3, 4

28. U.S. Commercial Bldgs. -- Offices Large Projects 29. U.S. Commercial Bldgs. -- Offices Office Construction Top 10 Metros -- ranked by new square feet Year 2007,%ch 07/06 1. Phoenix+17% 2. Washington DC-19% 3. Miami+32% 4. Atlanta+40% 5. Chicago+29% 6. Dallas-Ft. Worth-21% 7. Houston+14% 8. New York-36% 9. Seattle-4% 10. Orlando FL+43%Year 2008,%ch 08/07 1. New York+83%2. Washington DC-2% 3. Houston+40%4. Dallas-Ft.Worth-23%5. Atlanta-39%6. Seattle-7%7. Phoenix-53%8. Boston+52%9. Baltimore+56% 10.Chicago-61% 30. U.S. Commercial Bldgs. -- Offices Office Building Factors

Overbuilding is less than in past cycles.

But cutbacks in office employment now affecting market fundamentals more severely.

Forecast 31. U.S. Manufacturing Buildings Plant construction in sq. ft. sliding;surge in dollars reversing. Surge of ethanol plants in 2006-2007 Huge refinery additions in 2008 Manufacturing Buildings 200683msf+4% 200790msf+8% 2008 74msf-17% 200960msf-19% Manufacturing Buildings 2006$13.5 bil.+33% 2007$19.9 bil .+47% 2008 $30.2 bil.+51% 2009$18.2 bil.-39% 32. U.S. Manufacturing Buildings Large Projects 33. U.S. Institutional Buildings Public Buildings had strong 2007-2008; should stay close in 2009. 2008 Detention Facilities-48% Armories/Military+36% Courthouses-6% Police/Fire Stations+14%Post Offices-1% Total Public2006 +2% 2007 +49% 2008 -4% 2009-2%

GSA Stimulus List

New federal construction, including ports of entry, courthouses.

Examples:

$223 million to consolidate St. Elizabeth Campus in Wash. DC

$199 million for Nogales AZ Land Port of Entry

$116 million for U.S. courthouse in Austin TX.

Full and partial building modernization. Examples:

$226 million for Commerce Dept. headquarters in Wash. DC

$121 million for 50 United Nations Plaza in San Francisco CA

Green building limited scope projects

34. U.S. Institutional -- Educational Bldgs. School construction still strong, but losing some momentum .

Numerous states in recent years

have passed school construction

bond measures, especially

California and Texas .

Major universities increased

capital spending plans but,

nowunder re-evaluation.

Educational Buildings 2006 230 msf+5% 2007 220 msf-4% 2008 223 msf+1% 2009191 msf-14% 2007 2008Primary, Jr. Highs-7%-5% High Schools-7%+10% Colleges/Univ.+11%+2% Libraries-5%-14% Laboratories+11%-19% Museums-26%+15% Comm. Colleges-0-+8% Vocational Schools-44%+40% 35. U.S. Institutional Educational Bldgs. Large Projects 36. Educational Buildings Top 10 States -- ranked by sq. ft. of new starts U.S. Institutional -- Educational Bldgs. Year 2007,%ch 07/06 1. Texas+8% 2. Florida-15% 3. Georgia+46% 4. California-27% 5.Pennsylvania-24% 6. Ohio-32% 7. North Carolina-7% 8. New York+26% 9. Illinois-16% 10. Arizona-7%Year 2008,%ch 08/07 1. Texas+24% 2. California+22%3. Georgia-6%4. Florida-29% 5. Pennsylvania+17%6. Ohio+3% 7. North Carolina+10% 8. South Carolina +72%9. Alabama+49% 10. Illinois-15% 37. U.S. Institutional -- Educational Bldgs. School renovation work already strong But, no specific line item in final stimulus package; funding could come from State Fiscal Stabilization Fund. 38. U.S. Institutional -- Healthcare Buildings Healthcare facilities reached new high in 2008.

Ongoing need to replace

aging facilities

Hospital vs. outpatientclinic dynamic

Growth of the elderly

population

Veterans Administration

hospital work will help

to ease slowdown.

Healthcare Facilities 2006 110msf+1% 2007 103msf-6% 2008111msf+8% 200991msf-18% 2007 2008Clinics/Nursing Homes+1%-6% Hospitals-16%+29% 39. U.S. Institutional Healthcare Buildings Large Projects 40. U.S. Institutional Healthcare Bldgs. Healthcare Buildings Top 10 States -- ranked by sq. ft. of new starts Year 2007,%ch 07/06 1. California+36% 2. Texas-39% 3. Florida-13% 4. Ohio+8% 5. Illinois-0- 6. Michigan+2% 7. Indiana-14% 8. Pennsylvania-27% 9. Arizona+11% 10. Minnesota+55% Year 2008,%ch 08/07 1. Texas+62% 2. Illinois+110%3. Ohio+31%4. California-34% 5. Florida-24%6. Virginia+133% 7. Maryland+125% 8. Tennessee+78%9. New York+81% 10. Wisconsin+40% 41. U.S. Institutional Buildings Amusement/Recreational and Churches still declining. Amusement & Rec . 2008Convention Centers+11%Sports Arenas+50% Theaters-32%Other (inc. theme parks )-14% Total Amuse. & Rec.2006 +8% 2007 -9% 2008 -10% 2009-17% Religious Buildings 200634msf-6% 200731msf-10% 200827msf-12% 200926 msf-3% 42. Airport terminal work in sq. ft. expected to decline further, Renovation work should help dollars move upward. U.S. Institutional Buildings Airport Terminals 2006 $2.0 bil.+23% 2007 $1.8 bil .-9% 2008 $1.4 bil.-22% 2009$1.6 bil.+12% Airport Terminals 2006 3.1 msf-28% 2007 2.2 msf-28% 2008 2.0 msf-8% 20091.9msf-5% 43. Highways and bridges slipped back in 2008; Gets substantial funding in 2009 from stimulus bill. U.S. Public Works -- Highways & Bridges

Fiscal 2008 appropriations

federal-aid highway program up 5%,

including added funding for bridge

maintenance.Fiscal 2009: status quo.

Congress supplied $8 billion to

Highway Trust Fund in Sept.

Large boost in 2009 coming

from stimulus bill -- $27.5 billion.

Half of stimulus funding must be

designated by June 30.

Remaining half must be designated

by March 2010.

Use or lose it.

This year and next debate over new

transportation bill to replace

SAFETEA-LU.

Highways, Bridges 2006 $51.0 billion+15% 2007 $53.6 billion+5% 2008 $52.7 billion-2% 2009$60.8 billion+15% 44. . U.S. Public Works Mass Transit Mass transit work has also been on upward track, set to grow further.

Federal funding will rise under stimulus bill.

New York City area in recent years

has seen start of major projects,

including:

- East River Tunnel to connect

to Grand Central Terminal

- Second Avenue subway line

-No. 7 subway line extension

-Now start of $8.7 billion

rail tunnel connecting

New Jersey and Manhattan

High-speed rail in California

includes planned line from

Sacramento to southern CA.

Mass Transit Starts 2006 $2.3 billion-26% 2007 $3.7 billion+64% 2008 $3.8 billion+3% 2009$4.8 billion+25% 45. U.S. Public Works -- Environmental Environmental public works slowed in 2008. In 2009 large boost coming from stimulus bill. Environmental Public Works 2006 $33.3 billion+6% 2007 $37.2 billion+12% 2008 $38.0 billion+2% 2009$41.3 billion+9%

Projects generally take longer to reach construction start stage compared to transportation work.

Various gap analyses point

to aging infrastructure, and how

current funding is coming up short.

46. U.S. Electric Utilities New electric utility starts soared in 2008. Electric Utilities 2006 $17.7 billion +125% 2007 $16.8 billion -5% 2008 $27.7 billion+65% 2009$18.0 billion -35%

Energy Bills--tax incentives for oil and gas production, electric utilities, transmission lines, etc.

Extended with financial rescue package.

Capacity utilization had climbed to 87% for full year 2007; has since retreated to 83% (late 08).

Stimulus bill should provide boost --

incentives for alternative sources of

electricity generation.Also, push for smart grid.

47. U.S. Total Construction Starts for 2009 Billions of Dollars 2005 2006 2007 20082009 Total Construction 670.3 689.6 639.1 552.0 457.7 +13% +3% -7% -14% -17% Single Family Housing 315.5 272.4 201.2 122.4 84.7 +12% -14% -26% -39% -31% Multifamily Housing68.6 69.8 61.839.4 26.7 +36% +2% -12% -36% -32% Commercial Bldgs. 72.2 93.0 100.784.6 60.3 +7% +29%+8% -16% -29% Institutional Bldgs.100.1 110.8 117.4 128.8 118.7+12% +11% +6% +10% -8% Manufacturing Bldgs. 10.1 13.5 19.9 30.2 18.3 +26% +33% +47%+51% -39% Public Works 96.0 112.4 121.4 118.9 131.0 +9% +17% +8% -2% +10% Electric Utilities7.9 17.7 16.827.7 18.0 +6% +125% -5% +65% -35% 48. Single Family Housing, by Region 49. Single Family Housing, by Region 50. Nonresidential Building, by Region 51. Nonresidential Building, by Region 52. Points of Perspective U.S. Construction 53. Points of Perspective U.S. Construction 54. Agenda

Economic Outlook

• The Environment -- Macroeconomic Picture

• U.S. Construction Market Indicators and Sectors

• Total Construction

Key Trends

55. Using Trends to Capitalize on Opportunities

Strategic Planning in Allocation of Resources

Positioning for Long-Term Success

Leveraging Key Intelligence

56.

Global Marketplace

Sustainability/Green Building

Renovation

Renewable Energy

Workforce

Climate Change

Water Efficiency

Public-Private Partnerships

Technology/BIM

FutureTrendsDriving Industry Change

Interoperability

New Materials

Pre-fabrication & Modularization

Waste Management

Productivity

Transportation Infrastructure

Integrated Project Delivery

Innovation

Health and Wellness

MAJOR TRENDS TRACKED BY MCGRAW-HILL 57. Global Construction:$5.6 trillion * Source: IHS Global Insight, April 2009 *Numbers in 2005 USD$Trend 58. Largest Construction Markets by Value * in $US Billions Source: IHS Global Insight, October 2008 *Numbers in 2002 USD$, based on 2007 market 59. Dubai Today: The Bubble has Burst

Global Financial Crisis Has Reached UAE

• Tighter lending standards

• Property values spiraling 30-50%

• Developers citing significant profit losses

• Layoffs due to cancelled or halted projects

• Expats fleeing

• Shifting focus to infrastructure projects for 2010

Abu Dhabi & Rest of RegionHolding Steady

• Per survey at Arabian World Construction Summit 2009, 2/3 of construction companies will shift to Abu Dhabi, Qatar and Saudi Arabia in 2009

60. India Market: Poised for Growth

May 2009 National Elections Results welcomed by Indian businesses

• Overwhelming victory for centrist partycontinued economic liberalization

• Outlined priorities: combating global slowdown, economic growth

• Policy reforms expected: project finance, government program management

• 2009 GDP growth projected: >6%

Indian Financial Institutions hold steady in global downturn

• Historically conservative lending has kept banks afloat

• Foreign investment, slowed in H2-2008, expected to rebound

Construction a key growth sector

• Urban development a priority area

• Residential, hospitality and retail sectors showing signs of recovery

• Steady growth expected in SEZs (Special Economic Zones), hospitality and education projects

• $514B budgeted to meet infrastructure needs (2007 2012) *

*Conversion Rate: $1 = INR 40 61. China: Construction Opportunities Persist

Export-Driven Economy Hit Hard by Global Crisis

• Manufacturing sector declining due to slowed global trade

• 24 million unemployed

• Increased costs for raw materials

Government Action Expected to Buoy Market

• $586B stimulus package announced

• Interest Rate cuts

• Urbanization Leading to growing Consumer class; Retail sales up 21% in 2008

Current 5 Year Plan for Infrastructure

• $350B budgeted for transportation up to 2010

• Major infrastructure sectors focus on ports, railways and roads

China Construction Regions of Focus for 2009-2010

• Hong Kong and Macau

• Singapore and Algeria

62. Silver Lining in the Down Economy = 2008 = 2013 Europe South America Asia Sub- Saharan Africa 36% 73% Percentage of Firms Largely Dedicated to Green(on over 60% of projects) from 2008-2013 Doubling 29% 56% Trend Sustainability/Green Building: 63. Market Size $ (billions) 2005 2008 2013 In the U.S.: Increasing MarketOpportunity Total Non-Res Residential Total Residential Total Non-Res Residential Non-Res Triple Double Triple Five Fold 64. How is Green Building Affected by the Down Market? Less Affected No Difference More Affected According toU.S. Green Building Council Members 65. Green: Part of the CorporateMission & Growth Strategy Not Involved Only Regulatory Involvement Some GreenActions Green Is an Opportunity Value-Based Commitment to Sustainability Is Green a Part of Your Companys Growth Strategy? 2009 50% Shift in Dedication to Green 2009Preliminary expanding decreasing 66. Corporate Sustainability Practices

Corporate Leaders:

• Over one-third of companies (36%) are positioning themselves around green and sustainability, up from only 18% in 2007

• Nearly all firms (95%) are undertaking at least some sustainability practices

Source:The Greening of Corporate America SmartMarket Report , McGraw-Hill Construction, 2007; Bernstein, Harvey. Presentation. Construction Industry Trends. McGraw-Hill Companies Offices, New York, NY, May 2009. (based on 2009 market research data conducted by McGraw-Hill Construction in 2009) 67. Market is Growing Despite Declining New Building Construction $244 Billion = Commercial &InstitutionalMarket = Green Market Source:Commercial & InstitutionalMarket Size: McGraw-Hill Construction, as of June 3, 2009. MHC Housing Starts data is similar to the Census Bureau, except that MHC defines single family housing as detached housing only.MHC includes townhomes in its multifamily data. GreenMarket Size: Commercial & Institutional Green Building: Green Trends Driving Market Change, McGraw-Hill Construction, 2008 $182 Billion $3 Billion $29 Billion $196 Billion 68. Rapid Growth ofLEED in Specs 69.

Decreased Operating Costs:8-9%

Increased Building Values:7.5%

Improvement in ROI:6.6%

Increased Occupancy:3.5%

Rent Rise:3.0%

Perceived Business Benefits Increasing 13.6% 10.9% 9.9% 6.4% 6.1% 2005 2008 70. Before 2006 2006 to 2008 Increasing StateGovernment Influence Before 2006 Enacted 2006-2008 2005 57 2008 156 Number of Local Governments 71. State & LocalLegislative Trends

Trends

Requiring green building certificationof both public and private buildings

Mandatory reporting of energy use/ Energy Star rating

Legislation

California AB32 Global Warming Solutions Act of 2006

• Monitoring & reduction greenhouse gases

Washington DC The Clean & Affordable Energy Act 2008

• Mandates Energy Star benchmarking and reporting

72. Green Wins in Stimulus:Renovation Gets a Boost in Green

Much of Public Building $$ toGreen RenovationProjects

• GSA$4.5 billion

• DOD$4.2 billion

• VA$1 billion

Tax breaksfor Residential Energy Efficiency expanded & extended

Stimulus in Action:

• Minnesota uses $148.6 million to renovate schools and public facilities

• Philadelphia Housing Authority will use the $90 million in stimulus funds to completely renovate and provide energy upgrades for 300 houses and apartments

Trend Renovation 73. Big Focus on Renewable Energy

Investment in Renewable Energy & Conservation

• "Smart-Grid" activities$11B

• Energy efficiency grants$6.3B

• Renewable energy loan guarantees$6B

Incentives:Manufacture ofGreen Energy Products

Stimulus Boosts Solar Marketplace:

• NJ to add 120 MW solar power to brown fields and undeveloped properties

• 1 Block Off the Grid, the solar group purchasing programis expanding

Trend Renewable Energy 74. Increases from Stimulus,Especially Green Jobs

Stimulus Bill Labor Specifics

• $3.95 billion training and employment services

• $500 million for job training in energy efficiency(out of above $$)

• $250 million toward creation of Job Corps Centers

Stimulus Package Funding Creating Opportunities for Green Jobs

• Federal Facilities Retrofit: Energy Efficiency

• Renewable Energy: SmartGrid Investment Green Jobs

Stimulus in Action:

• In Michigan, green jobs currently make up 3% private-sector jobs

• • Expected to double over next two years from Stimulus package and new energy-efficient legislation

Trend Workforce: 75. Transforming Construction

Increased frequency of natural disasters

Rising water level

***************

Increase in tracking carbon footprints

• Emergence of carbon credit exchanges(Chicago, Northeast, West)

• EPA programs like Climate Leaders

• Tracking and reporting carbon-footprint in GreenSource case studies

USGBCs LEED 2009:Emphasizing credits impacting climate change

Trend Climate Change: 76. Water Efficiency

Penetration of water-efficient practicesdramatically increasing over the next five years

Water use reductionimportant in todays green building marketplace

• Becomes even more important over the next five years

Owners highly committed to water-efficient practices and methods

Trend 77. Water Efficiency Involvement Growing Dramatically

Government & Education Buildings:Sectors with heaviest use of water-efficient technologies

2008 Use: - A/E Firms = 35%- Owners = 30% 2013 Use: - A/E Firms = 51% - Owners = 50% 78. Water Efficiency RapidlyGrowing in Importance

Becoming one of themost importantaspects of a green building

Correlation betweensaving water and saving energy

79. Perceived Business Benefits from Water Efficiency in Buildings

Reduction Water Use:15%

Decreased Energy Use:10-11%

Reduction Operating Costs:11-12%

Currently 80. Public-Private Partnerships

Very Few PPPs to date

• Every State has its own PPP contract and requirement

• Political environmentnot favorable

Market Opportunity is immense

• More brownfield potential than any other emerging PPP market

• Well publicized infrastructure investment needs

From a demandstandpoint, there isnt a bigger marketplace on the planet, regardlessof growth in Asia or elsewhere. Manju Chandrasekhar Vice President Halcrow ConsultingBusiness Group Trend 81. Experience Leads to Positive Opinion of PPPs! None gave PPPs an unfavorable rating 82. As Experience Increases, so Does Interest in Future PPPs Large percentage of ambivalent officials suggests opportunity Interest in PPPs Officials withPPP Experience Officials without PPP Experience 83. Financial Crisis:Changing the Types of PPPs Pursued

Before the Crisis

Tolled Concessions or Monetizations

Long concession terms

High ratio of Debt to Equity (80/20)

During the Crisis

Availability Concessions

Shorter concession terms

Lower ratio of Debt to Equity (60/40)

After the Crisis

Higher Debt/Equity ratioswill return

Asset monetization likely to increase due to underfunded local/state government pensions

84. Traditional Information Exchange Interoperable Exchange Source: International Alliance for Interoperability, 2007 Trend Interoperability/BIM Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Building Information Model (BIM) 85. Making the Case: Shift to Digital Design Effort Time Traditional Design Digital Design Digital Design shifts the bulk of project work to theDesign phase to help coordinate building systems and the project and manage project costs Source: International Alliance for Interoperability, 2007 Litigation Phase of Design Changes Cost Ability to cost control Design Design Devel Const Docs Construction 86. BIM Enables Exchange/Access forAll Relevant Information BIM Environmental Data Design Data Financial Data Specification Data Owner / Occupier Data Legal Data Sustainers Data Geospatial Data Source:buildingSMART alliance 87. Adoption of BIM Increasing Over 2009 Architects Engineers Contractors Owners 88. Measuring BIM ROI: Factors Considered

Top 4 most important factors:

• Improved project outcomes

• Better communication through 3-D visualization

• Positive impact of winning projects

• Higher productivity of personnel

89. New Materials: Smarter, Greener

Biomimicry Example

HOK partnered with the Biomimicry Guild to enhance sustainable design.

Designed skin cells for buildings, which absorb sunlight, water and CO 2to produce oxygen and collect water.

New project in India mimics root structures of indigenous trees and plants to help anchor houses along steep mountain slope.

Trend 90. Prefabrication & Modularization

Benefits for the construction industry

• Increase productivity

• Enhance on-site safety

• Reduce construction time

• Reduced labor costs

• Enhance durability and quality

• Reduce environmental impact

Prefabrication and modularization - off-site preconstruction or manufacturing of a component or complete system that is transported to the job site. Trend 91. Prefab & Modularization: Building Texas Refineries in Maine!!

In 2007, Cianbro Co. converted an old paper mill in Brewer, ME into a modular facility

This $60m project reinvented the company, protects local trades and skilled labor

Maine-based company can now capitalize on the active energy infrastructure market

4 modules, part of $7B refinery, were shipped by barge to TX in March 2009

CEO Peter Vigue now looking to grow green energy and interstate connectivity to boost ME economy

92. Prefabrication Examples

SG Blocks

• Code-engineered cargo shipping containers and site-ready modularized blocks

• New Applications:Home in a Box & Hurricane-resistant temporary structures

• Reuse = Sustainability

Dubais Dynamic Tower(formerly called DaVinci Tower)

• Worlds first prefabricated skyscraper

• 90% to be built as modules in a factory

• Minimize on-site labor costs, risk & time

93. Stephen Jones Senior Director McGraw-Hill Construction US Construction Activity Outlook and Key Trends