civil government services “bechtel’s view on risk” mining...
TRANSCRIPT
ECRI Sponsors Meeting - Milan, Italy
Wednesday 5 June 2013
“Bechtel’s View on Risk”
Michael Wilkinson
Manager of Risk Management
Bechtel Limited
CIVIL
GOVERNMENT SERVICES
MINING & METALS
OIL, GAS & CHEMICALS
POWER
$B
New Work Awarded Each Year
© Bechtel | 2
$B
Revenue Earned Each Year
© Bechtel | 3
Bechtel - Organisation
Corporate Functions & Services
Engineering
Technology
Procurement
Contracts
Construction
Project Controls
Communications
Legal
Risk Management
Internal Audit
Quality
ES&H
HR
Global Business Units
OG&C
Mining & Metals
Civil
Government Services
Power
© Bechtel | 4
OG&C Downstream
LNG
Offshore
Tanks
Pipeline
© Bechtel | 5
Mining & Metals
Asia Pacific
Latin America
North America/Europe,
Africa, Middle East
© Bechtel | 6
Civil
Aviation
Infrastructure
Rail
© Bechtel | 7
Government Services Defense & Security
Environmental
Nuclear Security & Allied
Governments
US Naval Programs
© Bechtel | 8
Power Communications, Renewables
& Transmissions
Thermal
Nuclear
© Bechtel | 9
Bechtel’s Approach to Risk Management
Industry Diversification
Scope variety and balance
Commercial balance
Geographic Diversification
Quality of Clients
Aggregation/Concentration of Risk
© Bechtel | 10
Commercial Balance
PURE
COST
PLUS
FIXED FEE
&
COST
REIMBURSABLE
FIXED FEE
&
UNIT
RATES
FEE AT
RISK/
TARGET
PRICE
LUMP SUM/
FIXED PRICE
WITH
PROVISIONAL
SUMS
GMP PURE
LUMP SUM/
FIXED PRICE
CONTRACTOR
RISK
CLIENT
CERTAINTY
© Bechtel | 11
Geographic Diversification
© Bechtel | 12
Top US Domestic Contractors
4 4
3
2
7
8
7
5 5
4
3
10 10
7
6 6
5
6 6
8
3
2
4 4
3
4
Rev Company Country Rank Rank Country Company Rev
9,688 Bechtel 1 1 Bechtel 25,005
7,796 Fluor 2 2 Fluor 18,685
7,117 Centex 3 3 Kiewit 8,477
6,246 Turner 4 4 Turner 8,015
5,875 Skanska USA 5 5 KBR 7,072
5,741 KBR 6 6 PCL
Construction 5,608
3,745 Kiewit 7 7 Skanska
USA 5,038
3,230 Bovis Lend
Lease 8 8 Foster Wheeler 4,481
3,055 Washington
Group 9 9 Tutor Perini 4,404
3,018 Shaw Group 10 10 Clark Group 4,277
2002 2011
1 1
2 2
7
3
10
5
7
6
5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: ENR Top 400 Domestic Contractors 2003-2012.
Revenues are based on prior year’s data.
© Bechtel | 13
Top International Contractors
11,520 Skanska 1 1 Hochtief 1 31,871
10,010 Hochtief 2 2 ACS 1 31,148
6,841 Vinci 3 3 Vinci 18,674
6,449 Bouygues 4 4 Strabag 17,289
Technip
5 5 Bechtel 16,700
3,888 KBR 6 6 Saipem 14,110
3,625 Bovis/Lend Lease 7 7 Fluor 13,527
3,544 Strabag 8 8 Bouygues 12,608
3,017 AMEC 9 9 Skanska 12,339
2,991 Bilfinger Berger 10 10 China Comm 9,547
2,920 Bechtel 11
4
5
7
6 6
5
4
3
5
2
1 1
2 2
3
4
6
5
3
4
3 3
2 2
5
6
5 5
6
5
4
7 7
9
7
8
9
10
9
8
10
11 11
9
7 7
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: ENR Top 225 International Contractors 2003-2012. Revenues are based on prior year’s data – 2013 survey not yet complete.
Top 225 International Contractors represents revenue outside of home country.
3
11
5
1
8
9
11
4
3
2
1
2002 2011
Rev Company Country Rank Rank Country Company Rev
11
4,619 Technip
9,313
1 ACS owns a controlling majority stake in Hochtief
16,595
15,169
13,951
12,333
12,057
11,959
10,813 © Bechtel | 14
Geographic Diversification
© Bechtel | 15
Quality of Clients
© Bechtel | 16
Aggregation / Concentration of Risk
© Bechtel | 17
Risk Management – Commercial Deals
Bechtel’s commercial risk management processes are
designed to ensure we do not
enter into bad deals, or
accept unfair or imbalanced contract terms and
conditions.
Everyone at Bechtel manages risk
© Bechtel | 18
Balancing Risk and Reward
© Bechtel | 19
Balancing Risk and Reward
PURE
COST
PLUS
FIXED FEE
&
COST
REIMBURSABLE
FIXED FEE
&
UNIT
RATES
FEE AT
RISK/
TARGET
PRICE
LUMP SUM/
FIXED PRICE
WITH
PROVISIONAL
SUMS
GMP PURE
LUMP SUM/
FIXED PRICE
INCENTIVES
CHANGE
ENTITLEMENTS
ESCALATION
RIGHTS
LDs, PLANT
PERFORMANCE
GUARANTEES
CONTRACTOR
RISK
CLIENT
CERTAINTY
© Bechtel | 20
Risk Management - Execution
Extensive proven
standards,
processes and
procedures
Proactive
management of
claims, workers
compensation
Lessons Learned
Risk registers
Everyone at Bechtel manages risk © Bechtel | 21
Active Risk Manager tool
© Bechtel | 22
The “why”
Vision:
To be the world’s premier engineering, construction, and project
management company.
Integral to the success of our customers and our partners
People will be proud to work at Bechtel
Communities will regard us as responsible – and responsive
Values
Ethics
Excellence
Fair Return
Mutual Respect
Safety
Sustainability
© Bechtel | 23
“Questions?” CIVIL
GOVERNMENT SERVICES
MINING & METALS
OIL, GAS & CHEMICALS
POWER