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FLUOR HSE 2005 ANNUAL REP

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FLUOR HSE 2005 ANNUAL REPORT

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Table of Contents:

3 Chairman and CEO Message

4 Sr. VP of HSE Introduction

5 Rewards & Recognitions

9 Fluor HSE Professional Publications and Presentations

10 HSE Management System

11 Sustainable Development and Corporate Responsibility

21 HSE Performance

24 Client Perspective

25 Client Review Results for HSE

26 People Development

26 HSE in Design

28 Global HSE Initiatives

29 HSE Awareness

31 Executive Management Perspective on HSE

33 Project Achievements

39 2006 Outlook


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CHAIRMAN AND CEO MESSAGE

BY ALAN BOECKMANN

The challenge of protecting the environment for future

generations is everyones business, but success depends on

leaders of industry stepping up and leading the charge. AtFluor, we want to leave the world better than we found it.

As a leading engineering and construction contractor in a range of global

industries with diverse cultures and operations in remote locations, Fluor

strives to set a benchmark for excellence in the protection and development

of health, safety, and environmental assets and endeavors. We recognize that

with leadership comes great responsibility and that future generations are

relying on us to protect and preserve the natural environment. We promote

sustainable development by managing our operations in a responsible way.

Fluor works closely with our clients, suppliers, and contractors to implement and sustain a comprehensive

Health, Safety, and Environmental (HSE) program. Our proven HSE Management System integratesthe highest international standards into each project phase and verifies our consistent and complete

performance. Sustainable development in project execution has increased our clients interest in our

significant HSE achievements. Using a total project approach, our experts strive to meet clients HSE

objectives and to provide safe, cost-effective facilities in harmony with their communities.

Many of Fluors recognized experts in specific health, safety, or environmental disciplines work with public

agencies and professional associations worldwide to develop industry and governmental standards, as well

as industry best practices, to protect people, property, and the earths precious environment and resources.

While Fluor has been supporting emergency relief efforts in the U.S. and around the globe for many

years, 2005 proved to be an unprecedented year for natural disasters. From tsunamis to earthquakes to

hurricanes, Fluor was there to provide support through the Fluor Foundation, as well as individual employee

contributions. When Hurricane Katrina, the worst natural disaster in U.S. history, caused devastation

across the Gulf Coast, Fluor was there, and we continue to be there today repairing lives and rebuilding

communities.

Fluors commitment to maintaining a healthy, safe, and environmentally sound workplace extends to every

employee in our company. Our management teams actions reflect their commitment to our HSE program

and are recognized by our employees worldwide. We expect both organizational and personal accountability

for HSE performance.

Success in sustainable development comes down to commitment, leadership, and perseverance. I am

pleased to present you with Fluors HSE Annual Report, and I am proud of our employees commitment to

HSE excellence.

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HSE INTRODUCTION

BY GARRY FLOWERS, SR. VICE PRESIDENT

A world-class HSE function is reflected in a

companys culture. At Fluor, HSE considerationsare put at the forefront of everything our

employees do whether designing a large-scale

pharmaceutical laboratory or constructing that

facility.

One of the biggest challenges to achieving a world-class HSE

culture is managing change in the organization, the company,

and subcontracting organizations. One of the major changes occurred in 2005 when Fluor

established a new HSE Operating Board charged with enhancing our overall integrated HSE

approach and setting strategic direction for Fluor.

We strive to continually improve our HSE Management System through an annual review

process, based on comments received from design, construction, operations, and maintenance

personnel within Fluor. Employees are encouraged to submit feedback through our award-

winning knowledge management tool.

Our HSE Management System put us in good stead to respond to the unprecedented number

of disasters in 2005, including Hurricanes Katrina, Rita, and Wilma. As part of our overall HSE

program, we are an active member in the Disaster Resource Network, an adjunct of the World

Economic Forum. As a result of our long-standing relationship with the Federal Emergency

Management Agency, we have developed a professional staff that is sensitive and responsive

to disaster environments, and as a construction industry leader, we maintain a variety of skills

required to perform disaster recovery operations. Fluor is one of only three companies to hold

a contract with the agency, and our employees training and experience working in a FEMA

environment is a clear differentiator.

In 2005, our HSE performance continued to lead the industry, although incidence rates

increased fractionally. We encountered more exposure due to 13 percent more hours worked

than in 2004. Of total hours worked, non-U.S. markets accounted for more than 75 percent in

2005. Our lost work day case incidence rate was 0.05, the same as our 2004 rate, while our

total recordable incidence rate was 0.46, which is an increase of 24 percent from 0.37 in 2004.

I am sad to report that despite our excellence in HSE performance, we suffered four employee

and six subcontractor fatalities. To address such incidents, we strengthened processes to

focus on specific preventive actions. In addition the HSE Board is evaluating new methods of

disseminating information in these specific areas of focus.

In 2006, we will continue to embrace change and provide a strong HSE approach for our

clients, our workers, and surrounding communities.

HSE OPERATING BOARD

Vision

To be the preeminent HSE leader,

consistently delivering solutions

to improve the life cycle of our

projects and promote the well-

being of our employees, clients, and

the communities in which we work

and live.

Areas of Responsibility

Work Processes & Procedures

Communications

People Development & Training

Audit & Assessment

Performance & Improvement

Regulatory Compliance


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REWARDS & RECOGNITION

EXTERNAL AWARDS

In 2005, Fluor was recognized for excellence in HSE performance by several external organizations.

Fluor Fernaldwon one of only three Best-in-Class Awards given in the

Waste / Pollution Prevention category from the U.S. Department of Energys

Office of Environmental Management.

The Fernald Closure projectwon an award for innovatively deploying on-

site, used equipment that had been scheduled for demolition to construct a

treatment facility for removing radium from washwater as part of the cleanu

of highly radioactive waste stored in silos.

Fluors IBM Tucsonproject received the Governors Pride in Arizona Award

in the Recycling Category. The award recognizes achievements to promote

recycling on the project and surrounding community.

AMECOwas recognized by the National Safety Council (NSC) and the South Carolina Chamber of Commerce

for achieving an outstanding record of safety excellence. Three distinguished awards were presented by the

NSC:

Million Work Hours Award for surpassing 10 million safe work hours without a lost-time injury

Perfect Record Award for completing 12 consecutive months without incurring an occupational

injury or illness leading to days away from work or a fatality

Green Cross for Safety Excellence Award for achieving a total lost workday case incidence rate of

zero and with no fatalities during the 2004 calendar year

AMECO also received the South Carolina Chamber of Commerce Safety Award for achieving 1,000,000 safe

work hours without a lost-time incident.

Fluor Constructorsreceived four awards:

The Fluor Constructors BP Toledo Refinery Project received an Award of Merit from theNational Maintenance Agreements Policy Committee for 87,692 work hours performed from Januar

1 through December 31, 2004 with zero recordable injuries.

22nd Annual Thomas J. Reynolds Award for Excellence in Construction Safety & Health

2004 from the National Erectors Association Fluor Constructors has won this award for the

past 20 consecutive years. The NEA is a nationwide network of more than 5,000 union contractors,

local union contractor trade associations, industrial-maintenance contractors and industry

suppliers. The safety awards were created in 1982 by the NEA Safety & Health Committee to

recognize outstanding achievement in minimizing the number of worksite accidents.

Safety Award from the Gas Processing Association of Canada (GPAC) Fluor Constructors

Canada received this distinguished award for its combined field-safety and office-safety excellenceFluor Constructors Canadas self-perform operations had no recordable incidents during the

entire year. GPAC is a nonprofit organization formed to promote the interaction and exchange of

technology with those involved in the hydrocarbon-processing industry.

Award of Merit from the National Petrochemical & Refiners Association (NPRA) Fluor

Constructors received this milestone award for having incurred no recordable incidences during

2004 for work at the BP Toledo refinery in Oregon, Ohio. This award is for self-perform and

subcontractor operations. NPRA membership is composed of more than 450 companies, including

virtually all U.S. refiners and petrochemical manufacturers. The Contractor Award for Meritorious

Safety Performance is presented to process-area contractors that have achieved a total recordable

incidence rate of 1.5 or less during the year and worked a minimum of 20,000 hours at the site.

It is with sincere pride

that Fluor Constructors

received these prestigious

awards which are an

acknowledgement of

the dedication and

commitment of our

craft workers and staff,

said FD Construction

Operations leader Ron

Pitts. With ongoing

continuous performanceimprovement, we can look

forward to enhancing the

high standards of health,

safety and environmental

excellence, to which were

all committed.


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Fluor Australiaearned Western Australia WorkSafe Plans highest honor, the

Platinum Award. The honor, bestowed by the West Australian government, is in

recognition of the excellent management of safety and health in the workplace, as

well as Fluors contribution to the reduction of work-related injury and disease in

Western Australia. The Platinum Award went to the Perth office and an Operations

& Maintenance (O&M) site in the Pilbara CMM, located in Karratha.

Another Fluor O&M team working at Fluor Australia Karratha Engineering

serviceswas presented with the prestigious Gold Award for its contribution to the

WorkSafe Plan.

The WorkSafe Plan is an occupational safety and health (OSH) management system

assessment methodology developed and promoted by Western Australias safety regulatory authority,

Western Australia WorkSafe. Each key element of the plan indicates well-developed OSH management

systems, a high level of implementation, and evidence of ongoing OSH improvement and OSH system

maintenance activities.

Fluor United Kingdomearned two Royal Society for the Prevention of Accidents (RoSPA) awards

based on a detailed summary of the implementation of Fluors HSE Management System, incident

statistics, and HSE training.

RoSPA Presidents Award (for the fourteenth year!)

RoSPA Construction Engineering Industry Sector Award

Fluor UKalso received the British Safety Council National Safety (BSC) Award, for the 18th

consecutive year. The BSC award was based on Fluors HSE policy, organization, staff competence,

planning, and incident statistics.

INTERNAL AWARDS

Fluor made a bold commitment to safety excellence with the introduction of our ZERO AccidentsSM

recognition and reward program in 1994, which established stringent standards for safety worldwide.

Fluors program was based on the Construction Industry Institute Task Forces recommendations forachieving zero injuries, which had identified highimpact zero incidents techniques used to achieve safety

excellence.

In 2004, Fluor upgraded the ZERO AccidentsSMprogram by incorporating health and environmental facets

and renaming it the ZERO IncidentsSMprogram.

Because Fluor takes great pride in its accomplishments in this area and in being an industry leader, the

company continues to recognize and promote outstanding HSE performance. In 2005, the program was

upgraded again to include Four and Five Star awards.

The ZERO Incidents program stringent criteria are updated annually to reflect the companys performance

goals. The five criteria in 2005 included the recordable rate plus four additional criteria as follows.

PROJECTS OFFICES

Additional CriteriaAward Recordable Rate Award Recordable Rate

H 0.57 0.75 H 0.15 0.20 4 No Lost Time Injuries or Illnesses

4 No Environmental Citations or other RegulatoryAgency Citations

4 Successful completion of the Award VerificationAudit and/or Corporate HSE Audit

4 Implementation of the 12 High-Impact ZeroIncident Techniques

HH 0.38 0.56 HH 0.10 0.14

HHH 0.19 0.37 HHH 0.06 0.09

HHHH 0.01 0.18 HHHH 0.01 0.05

HHHHH 0.00 HHHHH 0.00


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The following projects achieved zero incidents in 2005 and earned the prestigious ZERO Incidents

program Five-Star Award.

Project Location Safe Hours

Integrated Isocyanates Project Shanghai, China 15,000,000

ICA Fluor Offshore Yards Mataredona, Veracruz andEl Empalme, Mexico

6,000,000

Procter & Gamble Cabyao Plant Laguna, Philippines 6,000,000

KOC Effluent Water Disposal Plants Ahmadi, Kuwait 5,000,000

AFCAP II Program Kirkuk, Iraq 3,500,000

Fluor Daniel India Private Limited New Delhi, India 3,500,000

Kuwait Oil Company Rebuilding of GC-15 and the Upgrade of BS-131 Ahmadi, Kuwait 3,000,000

Civel Mechanical Maintenance Dampier, Western Australia 1,250,000

Fluor SA Espana, Madrid and Asturias offices Madrid, Spain 1,000,000

IE30 Bulk Clean Manufacturing Facility Kinsale, Ireland 1,000,000

Katrina Relief Project Louisiana 1,000,000

Kharafi National Construction Activities for BS-131 Phase 2 Ahmadi, Kuwait 1,000,000

NOx Reduction Project Baytown, Texas 1,000,000

Sakhalin-1 EPC-1 Chayvo, Sakhalin Region Russia 1,000,000Chuck Lenzie Generating Station Las Vegas, Nevada 750,000

Hazelwood Power Station Morwell Victoria, Australia 750,000

Merk MK-431 & SAS Project Barceloneta, Puerto Rico 750,000

TXU Energy Monticello SES Tatum, Texas 750,000

Corning Taichung Project Taichung, Taiwan 500,000

Fluor San Jose Hitachi IBM San Jose, California 500,000

Fluor United Goninan Maintenance Alliance, Bluescope Steel Warrawong, Australia 500,000

FMS@Georgia Power Plant Bowen Cartersville, Georgia 500,000

Progress Energy, FGD Project Roxboro, North Carolina 500,000

Revisie 2005 @ Levensduurverlenging Project BS12 The Netherlands 500,000

The Kennecott Smelter Project Magna, Utah 500,000

Victory Complex O&M Baghdad, Iraq 500,000

BP Toledo Clean Fuels Oregon, Ohio 250,000

Cetac II - Task Order 6 - Manas Air Base Baghdad, Iraq 250,000

Fluor / 3 M D-10 Project Decatur, Alabama 250,000

Fluor Trinidad Operations, Port of Spain Trinidad & Tobago, West Indies 250,000

Genesis - New Cell Room Project, Inoes Chlor Ltd. Runcorn Cheshire, England 250,000

Karratha Engineering Services, 7 Mile Dampier Karratha , Western Australia 250,000

Kennecott Smelter Project Magna, Utah 250,000

KPNC Project Engineering Services, Mina Abdulla Ahmadi , Kuwait 250,000

Lyondell Chemie Nederland SBET, Botlek Maasvlakte Rotterdam,The Netherlands

250,000

Merck VMF Project Durham, Raleigh, N. Carolina 250,000Chevron Phillips Maintenance Guayama, Puerto Rico 100,000

DuPont-Chambers Works Deepwater, New Jersey 100,000

Fluor Daniel Consultants BV Bergen Op Zoom, The Netherlands 100,000

GSK Dartford Project Dartford, Kent, United Kingdom 100,000

Immobilization Consolidation Project 3M Wroclaw, Poland 100,000

Luna Energy Facility Deming, New Mexico 100,000

Tyndall AFB Tyndall AFB, Florida 100,000

Waterschap Hollandse Delta SBET Dokhaven, Rotterdam,The Netherlands

100,000

Wyeth QC Lab Sanford Sanford, North Carolina 100,000

Zumbro River Contractors Rochester, Minnesota 100,000


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The following projects or office earned Million Plus Safe Work Hour achievement awards,

meaning they had no lost workday cases.

Project Location Safe Hours

Greenville S.C. Office Greenville, South Carolina 30,000,000

Sakhaln-1, EPC-1 Project Chayvo, Sakhalin Region, Russia 7,000,000

Connect Project for London Underground

Limited

London, England 6,000,000

ICA Fluor IH Offshore Yards Mataredona, Veracruz and

El Empalme, Mexico

5,000,000

AFCAP II Program Kirkuk, Iraq 4,500,000

Chuck Lenzie Generating Station Las Vegas, Nevada 2,000,000

K Basin Closure Richland, Washington 2,000,000

Plutonium Finishing Plant Closure Richland, Washington 2,000,000

Sulfide Leach Project Antofagasta, Chile 2,000,000

Waste Storage and Disposal Richland, Washington 2,000,000Corning Taichung Taichung, Taiwan 1,000,000

Deactivation & Decommissioning Project Richland, Washington 1,000,000

San Jose Hitachi (formerly IBM) San Jose, California 1,000,000

Genesis New Cell Room Project, Ineos Chlor Ltd Runcorn, Cheshire, England 1,000,000

ICA Fluor Paleocanal Chicontepec Poza Rica, Veracruz Mexico 1,000,000

ICA Fluor Terminal LNG Altamira, Mexico 1,000,000

NEC US Embassy Kingston, Jamaica 1,000,000

NOx Reduction Project Baytown, Texas 1,000,000

Progress Energy FGD Project New Hill, North Carolina 1,000,000

Soil & Water Remediation / GroundwaterVadose Zone Richland, Washington 1,000,000

Fluor Hanford Projects Drive Environmental

Stewardship With Technical Achievements

Four Hanford projects received awards, ranging from improved

worker safety to reduction in costs. The Plutonium Finishing Plant

Closure Project earned the 2004 Fluor Hanford Environmental

Stewardship Award. The Waste Receiving and Processing Facility

was presented a Technical Innovation Award. Two projects of

Fluors Closure Services and Infrastructure organizations received

Environmental Recognition Awards.

Our real mission is environmental cleanup, said Fluor Hanfords

President & CEO Ron Gallagher. I am very proud to assist in

presenting these awards that recognize the efforts and innovation

of our projects and employees. These awards highlight daily

work practices that demonstrate environmental compliance and

stewardship.

The Silver Cross Award is

bestowed upon employees

who have performed life-

saving actions. It is the highest

recognition the company can

give a member of the Fluor

team. In 2005, Fluors four

Silver Cross recipients aided

others who experienced life-

threatening situations ranging

from a heart attack to a potential

fall or suspension hazard. They

included a citizen of China and

an employee who was named

Firefighter of the Year in his

community.


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FLUOR HSE PROFESSIONAL PUBLICATIONS AND PRESENTATIONS

In 2005, Fluor employees worldwide logged more than 60 papers and presentations regarding health, safety

and environmental topics by authors who are experts in various industries and businesses. Papers stem

from new or unique ideas, which are presented to or published by a local or national society or conference.

Fluor employees are encouraged to stay abreast of emerging and current technologies and share their

knowledge outside the company. Fluors Professional Publications & Presentations Program (P4) promotesemployees depth of expertise through the industrys trade media and professional conferences. By

promoting this expertise, employees contribute significantly to Fluors ongoing efforts to differentiate the

company from our competition.

P4s purpose is to champion, encourage, guide, track, and recognize all technical publications and

presentations by Fluor employees. Employees develop and present technical papers to local, national, and

international audiences and also publish them in leading trade magazines. P4 provides a unique forum

for Fluor to demonstrate its depth of expertise and creates opportunities to collaborate with our clients to

document joint achievements, thereby extending client relationships well beyond the time frame of a project

The following list shows a few examples of Fluor employees HSE-related professional publications and

presentations in 2005. (Only Fluor authors for each paper are named on this list.)

An Evaluation of Cost Effective Fireproofing for Process Structures by Sourabh Marakhwar and Srivalsan K.G.

Annual VPP Self-Evaluation: By the Numbers by Richard O Zimmerman and Jack Griffith

Bringing Fluors Safety Culture to Iraq by Phil Watson

Building a Strong Culture for Health and Safety by Nancy Kralik

CO2 Capture and Transport Technologies by John Barrie

Construction Safety in Sub-Arctic Conditions by Pat Caughey

Construction Hazard Recognition and Control by Miles Jaeger and Mark Hermanson

Disaster Response in APEC - A Unique Opportunity by Bob Prieto

Effective Environmental Compliance Strategy for the Cleanup of K Basins at Hanford Site, Washington by Thiruchitr Ambalam and

David J Watson

Evolution of DOE Safety Basis Documentation from Production to Closure at Fernald by Tulanda Brown

Electromagnetic Radiation and Human Health by Cy Hardiman and Ali Zamanian

Experience with NOx Continuous Emission Monitoring Systems, A Rational Approach by Vince Griffin and Murali Nannegari

Fitness for Service and its Role in Mechanical Integrity: An Essential of PSM by Trevor Seipp, Shiju George and Alister Chieng

Fuels Specification - Legislation and Industry Challenges by Irena Widziszowska

Fundamentals of Construction Safety and Health by Tony ODea

Hanford ALARA Center Showcases ALARA Techniques by Larry Waggoner

Hazard Controls and ALARA Protective Measures at DOE Sites by Mark Hermanson, Larry Waggoner and Miles Jaeger

Impacts of Safety and Quality in Environmental Restoration at Hanford by Steven S. Prevette

Integration of HSE Issues in the Engineering and Construction Industry by Nancy Kralik

Managing Project Health, Safety & Environmental by Guido Simons

Process Hazard Analysis by Hans Gebel

Safety & Productivity: A Case for the Link by Bob Prieto

Safety Studies to Measure Exothermic Reactions of Spent Plutonium Decontamination Chemicals Using Wet and Dry

Decontamination Methods by Michael J Minette, George W. Jackson and Andrea Hopkins

The Partnering Against Corruption Initiative by Lee Tashjian

The Impact of Environmental Legislation on Transportation Fuels and CostsHas the paradigm shifted? by Claus-Peter Haelsig

Turning a Borrow Pit into a Wetland Mitigation Site: An Example of Opportunistic Environmental Management by Daniel Freeman

Visionary Leaders at Work: Expanding the Fight Against Corruption by Alan Boeckmann


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HSE MANAGEMENT SYSTEM

Fluors HSE Management System (described in company practice 000-653-8000) was originally

implemented in January 2004. At the end of 2005, revisions were made, reflecting our continual

improvement process.

The system provides an integrated tool for demonstrating the companys commitment to continuallyimprove HSE performance, and it establishes a framework for how HSE aspects of Fluor projects will

be addressed. Fluors corporate culture, supported by this HSE Management System, gives priority

to HSE considerations for our employees and our stakeholders and is fundamental for achieving

profitability. The structure of the HSE Management System incorporates several levels of control

documents as indicated in the following diagram.

Some of the enhancements made to the HSE system during 2005 include:

HSE Engineering Glossary and Reference document developed to provide non-HSE

professionals with a quick reference to HSE terminology and to provide guidance to HSE

professionals as they plan, budget, and execute projects.

Stakeholder added to the HSE policy to better identify the comprehensive group the policy

serves.

Fluors HSE Operating Board responsibilities introduced and defined.

References to the HSE Operating Board updated to reflect the new organizational structure.

Forms removed as attachments and hyperlinked to the practices and procedures.

Practices and procedures made more robust in the areas of environmental awareness,

contractor selection and alignment, and HSE engineering.

Practices and procedures revised to provide better clarification in the areas of substance

abuse, emergency contact personnel, training, pre-task planning, incident reporting, and

health management in the field.

HSE COMMUNITY OF

KNOWLEDGE ONLINE

Revised HSE Management System

available to employees

Enhanced home page to reflect

organizational changes and Management

System

Fluor named a 2005 North American Most

Admired Knowledge Enterprise winner


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As stated by Alan Boeckmann, Fluors Chairman and CEO, in this years

message, sustainable development in project execution has increased our

clients interest in our significant HSE achievements. Fluor incorporates

sustainable development and corporate responsibility in a myriad of aspects

of engineering, procurement, construction, operations, and maintenance,ranging from community service and philanthropy to conservation to training

of nationals.

DALLAS HEADQUARTERS LEEDTMAPPLICATION

In May 2005, Fluor announced that our corporate headquarters would move to the Dallas/Ft. Worth

area. The move reflects the companys strategy to reduce operating costs, enhance efficiency, and

become more customer focused.

Fluor is seeking Leadership in Energy & Environmental Design (LEEDTM) certification from the U.S.

Green Building Council (USGBC) for our new corporate headquarters. LEED is a green building

rating system designed to guide and distinguish high-performance commercial and institutional

projects, with a focus on office buildings. Fluor is submitting its application for certification to the

USGBC in the Spring of 2006 and anticipates certification award in late 2006, pending USGBC final

review.

Supported by an inside-out-outside-in approach to the building design, the workspaces are

efficient and infused with technology and furniture supporting Fluors global focus. A dynamic and

light-filled 55-foot high atrium with cantilevered balconies and wood-clad dining room seems to

float 40 feet in the air.

The natural site, use of regional materials and low volatile organic compound

products, and a high percentage of recycled materials used for construction

of the headquarters building demonstrate Fluors commitment to sustainable

design. The lighting and mechanical design emphasize reduced energyconsumption. Fluors corporate headquarters is designed to achieve LEED

certification for both the building and the interiors.


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SCORE!

Fluors outreach tool SCORE! (Supplier and Contractor Online Registry E-version) continued its success

by registering twice as many suppliers in 2005, as compared to 2004. The database of perspective

suppliers proved to be a major resource in achieving Fluors ambitious goals for using local suppliers

in the aftermath of Hurricane Katrina (see 2005 Project Achievements FEMA Individual Assistance

Project) by allowing easy access through the web-based application. During 2005, the functionality ofthe tool was enhanced by adding the capability to notify registered suppliers regarding opportunities on

projects within Fluor. This tool has been very helpful in diversifying our supplier base as shown in the

following graphic.

BLACK ENGINEER OF THE YEAR AWARD

Fluor project manager Tulanda Brown earned a professional achievement

award as the Black Engineer of the Year for her work at the Department of

Energy (DOE) Fernald site in Ohio where she was responsible for HSE initiatives.

She developed an innovative approach to safety documentation that is now

supported by both the DOE and the Defense Nuclear Facilities Safety Board as a

new standard for remedial activities and site closure for DOE nuclear sites. Ms.

Brown transferred to Fluors Government Group last year and is now assigned to

Fluor Hanfords regulatory compliance organization.

ANTI-CORRUPTION

Fluor believes that global business has a responsibility to create a brighter future for the nations of

the world. Corruption is especially damaging to the engineering and construction sector because that

sector makes such a critical contribution to international development. Corruption is also damaging

to citizens of countries where it is practiced because foreign investment tends to be directed to other

countries where business is predictable and operates within the rule of law.

The single most important change in the fight against corruption over the past few years has been the

globalization of American-style, anti-corruption standards. As part of the World Economic Forum,

Alan Boeckmann chaired a multinational task force charged with establishing benchmark Business

Principles. To date, more than 80 companies have signed these anti-corruption principles that

Breakout of SCORE! Diversity Supplier Registrants at Years End

15%

17%

36%1%

5%

10%

6%

7%

3%Women Owned Business

Enterprise

Minority Owned Business

Enterprise

Small Business

Disabled Owned Business/NISHHub Zone (SBA)

Small Disadvantaged

Business (SBA)

8(a) Program (SBA)

Veteran-Owned Business

Tribally-Owned Business

Service-Disabled Veteran

Owned Business


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address ethical conduct regarding bribes, facilitation payments, political contributions and gifts,

charitable contributions, and sponsorships. Signatory companies are required to commit to two

ideas: 1) a zero-tolerance policy toward bribery and corruption and 2) a broad-based, anti-

corruption program implemented to guide the behavior of its employees.

GREEN PURCHASING

Green purchasing attempts to identify impacts on the environment and to maximize resource

efficiency. Fluor addresses the impacts of our operations by reducing wastes, emissions, and

discharges, and by meeting the needs of the present without depleting future generations

resources. In keeping with this commitment, Fluor has established HSE principles that

emphasize green purchasing. The Fluor HSE principle for Sustainable Development states that

procurement activities shall address green processes. Green purchasing is an important

tenant of these green processes.

As a global company, Fluor is working to educate our employees about green purchasing and to

develop policies and programs that comply with requirements and offer green-purchasing options

to clients for the execution of their projects. Now, more than ever, contractors are focusing

on more than just technical decisions. Every technical decision has some degree of social,economic, and environmental implications that must be recognized and balanced.

WASTE MINIMIZATION

In addition to green purchasing, Fluor looks for opportunities to minimize waste. For example,

renovation of Fluors Greenville office complex resulted in approximately 6,500 square yards

(5,435 square meters) of 22-year-old carpet slated for disposal in a landfill. This volume of old

carpet raised obvious environmental concerns, so recycle opportunities were investigated. With

the support of suppliers, Milliken and Bonitz Flooring Group, Fluor identified a local charity eager

to accept the donation of used carpet. AID Upstate, a local nonprofit agency serving more than

750 people living with HIV/AIDS in the communities surrounding Greenville, used the excess

carpet in its renovation of an assisted living facility, an office annex, and a building to be used asa thrift store.

The U.S. Office of the Federal

Environmental Executive

defines green purchasing

as the acquisition of

recycled content products,environmentally preferable

products and services,

biobased products, energy-

and water-efficient products,

alternate fuel vehicles,

products using renewable

energy, and alternatives

to hazardous or toxic

chemicals.


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SUSTAINABILITY AT THE CONSTRUCTION SITE

There are innumerable opportunities to develop sustainability in construction. As Dave Stayshich, o

of Fluors Construction Technology Managers states, It makes too much sense to leave it alone!

In the long run, sustainability benefits everyone. For sustainability, the question is when will overa

company savings be realized as a result of implementing sustainability principles?On many of its projects, Fluor uses the 3Rs of resource conservation that apply to construction

operations as described in the Sustainable Building Technical Manual published by Public

Technology, Inc.:

Reduce reduce waste production by increasing labor efficiency / productivity through a

waste management program (e.g., reusable formwork)

Reuse reuse leftover materials that are in satisfactory condition (e.g., wood), and

Recycle recycle as much waste material that cannot be reused (e.g., sheetrock, siding,

steel, insulation)

Examples of steps that Fluor may implement to advance construction waste management are: Assessment of probable waste streams prior to construction

Direct involvement of local recyclers

Work with subcontractors on specific measures; reduction, recycling, reverse distribution

Provision of waste management measures in contracts

Emphasis of a clean site: continuous cleanup, end-of-day wrap-up

Provision of training for everyone on the jobsite

Publication of results

Rewards for good results

Other methods that Fluor employs to make projects sustainable are to train local craft workers, use

eco-labeled products, use fly ash in concrete, and return unused materials to suppliers.

CONSERVATION

The Lone Star Infrastructure team, led by Fluor, is involved in several environmental projects. Crew

building State Highway (SH) 130 outside Georgetown, Texas are creating more than just a new road

They are making sure that bats have a home.

Bat habitat construction, along with tree relocation and a fish-recovery program, are examples of th

broad environmental outreach the SH 130 project has implemented. Bat houses were installed on t

SH 130 bridges over the San Gabriel River in Georgetown. These houses can hold between 3,000 a

5,000 Mexican free-tail bats. Up to 70 percent of the bats diet consists of corn and cotton pests su

as moths and beetles. Georgetown is pleased to welcome the animals because bats consume insec

and offer a better alternative to pest control than using insecticides that are harmful to people and

the environment.


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TRAINING

Through our work in designing and building some of the worlds most complex industrial projects,

Fluor has an extensive history of providing craft training in locations globally to meet client needs. The

company continues to be actively engaged in providing training for local residents, thereby obtaining

a local skilled workforce while providing career and economic growth for the local population. Four

cases highlight the diversity of training programs and the personnel affected.

Iraq Fluor trained Iraqi Ministry and City Municipality employees throughout Iraq. Each

person received a total of four weeks of instruction. More than 83,000 individuals were

trained in 2005 on basic safety, including fall protection, personal protective equipment,

trenching and excavation, confined space entry, danger tag and lock-out, hazard

communication, equipment operations, and rigging safety.

Louisiana In an effort to support the economic recovery of Hurricane Katrina victims and

accelerate the rebuilding process in the region, Fluor created several craft training centers

and funded the training of the first 1,000 citizens whose homes and/or jobs were lost by

the catastrophic storm. In total, the company

trained thousands of individuals in centers in and

around the areas where concentrated rebuildingof hurricane-damaged infrastructure occurred.

Providing local jobs is a focus of our efforts,

said Alan Boeckmann. We are pleased to

fund the cost of training for the first 1,000 who

were affected by Hurricane Katrina. Through

teamwork and ingenuity, America will turn this

tragedy into a new beginning for the entire

region.

Fluors work for the Federal Emergency

Management Agency (FEMA) of providing temporary housing units for individuals displaced

by the storm required a significant number of craft personnel. Prior to the hurricane, the

craft labor market was already stressed due to outages, shutdowns, and turnarounds that

occur this time of year across the U.S. Fluors rapid response in creating craft training

centers to educate individuals in virtually every civil craft (electricians, pipe fitters, welders,

equipment operators and riggers) accelerated the recovery progress in the Gulf region. Many

of these workers became employed by Fluor, our Louisiana-based subcontractors, or other

construction companies to install temporary housing units and perform other related work.

Individuals who were interested in training or craft employment opportunities with Fluor were

encouraged to register through the companys Job2Help program, a web site created through

a Fluor and Monster.com teaming effort.

Kazakhstan Fluor, in partnership with Parsons, is constructing a major oil and gas facility

for Tengiz Chevroil. During 2005, the partnership trained approximately 25,000 Kazakh

citizens in a broad range of topics, including office safety, confined space entry, protection

from hydrogen sulfide, welding safety, permit to work, environmental compliance, and

electrical safety. Total instruction hours exceeded 350,000 hours.

IndonesiaFluors Behavioral Based HSE Program (BBHP) was implemented in Indonesia in

late 2005 at an oil drilling field situated in a jungle environment spanning approximately 217

miles (350 kilometers). BBHPs objective is to increase safe work behaviors and influence the

HSE culture through effective implementation of formal and informal safe work observation

processes. The programs goal is to support the zero incident policy and to minimize injury,

incidents, and loss.


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A formal safe work observation process is a major factor in successfully implementing the

BBHP. For the roll-out in Indonesia, initial training and information sessions involved more than

40 individuals. These individuals included clients, HSE compliance staff, key site management,

and other site personnel.

Ongoing BBHP training was positioned to align with the site contractor processes, with BBHPtraining systematically cascading down through the workforce. An initial questionnaire

provided valuable insights into the existing site culture and a baseline designed to track HSE

culture development over the longer term. Substantial work was done for the

initial BBHP roll-out, including creating an original design team and subsequent

steering committee to oversee ongoing program maintenance.

Challenges to the BBHP roll-out included language barriers, cultural

differences, different levels of acceptable safety standards, workforce

development challenges, logistical issues (e.g., site size, terrain, and weather

conditions), and other local demographics. However, daily implementation

challenges to the BBHP have not prevented the emergence of valuable quality

data as a result of effective safe work observations. The data analysis processresulted in the identification and targeting of key areas of work behaviors

for further action. The flexible nature of the BBHP allows for ongoing site

adjustments, as necessary.

As the program roll-out emerges from its infancy into a more mature stage,

individual focus and commitment to safety issues and the effective use of the

key BBHP tools, such as safe work observations, will have the greatest impact

on the outcome. The BBHP will continue to be systematically implemented and adjustments

made according to site requirements.

FLUOR FOUNDATION

The Fluor Foundation, established in 1952, is the companys philanthropic organization. Its purpose is to

respond to the needs, challenges, and opportunities of our society by providing financial assistance to

various nonprofit organizations and educational institutions. Fluor Corporation and the Fluor Foundation

annually contribute $4 million to $5 million to global programs and organizations.

One of the Foundations four areas of giving is health and human services that focus on providing

financial support to groups that provide community services in the areas of food, shelter, family

assistance, emergency relief, and youth services. The Foundation can respond to disaster relief through

a number of mechanisms including corporate contributions, employee giving, and Fluor employee

community service. In 2005, the Fluor Foundation and employee contributions totaled more than

$675,000 for disaster relief worldwide.

Three other areas that the Foundation addresses are:

Education Related, focusing on educational organizations and programs, universities and

schools

Cultural, providing support to visual and performing arts, museums, art education programs,

symphonies, community art festivals, arts funds/councils and public television/radio

Public/Civic Affairs, providing support to community and economic development organizations,

organizations promoting volunteerism, and some public-policy organizations


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EMPLOYEE DONATIONS TO COMMUNITIES

Each year, employees contribute to local community organizations by volunteering their time and talent

to raise money. In North American locations, Fluor supports the United Way and provides the Make-

A-Difference Program in which Fluor matches 50 cents for every dollar donated by employees to the

United Way, as well as other health and human services organizations. In 2005, employees at more

than 40 Fluor offices and project sites pledged more than $2 million to the United Way and other human

services agencies throughout the U.S. and Canada. This amount increased to more than $3 million with

the Make-A-Difference Program match. These contributions support 200 local United Way organization

and more than 400 other human service agencies.

DISASTER RELIEF, RECOVERY, AND RECONSTRUCTION

Fluor has an international workforce of more than 35,000 employees and a network of offices in more

than 25 countries across six continents. The global reach, industry expertise, and broad capabilities

support Fluors ability to quickly respond to disaster relief, recovery, and reconstruction throughout the

regions of the world.

Fluor maintains a leadership role in the development of the Disaster

Resource Network (DRN), an adjunct of the World Economic Forum

(WEF), and is an active member of the organization. The DRN isa global network of companies in the engineering, construction,

logistics, and transportation sectors committed to helping

humanitarian organizations disaster relief efforts. Through annual

membership in the WEF, we help to sustain the activities of the DRN to

identify and deliver human, material, and financial help to relief areas.

The DRNs mission is to leverage the resources of the international

business community to mitigate the human suffering associated with

disasters. It acts as a bridge between businesses and humanitarian

organizations making it easier for businesses to offer talent or in-kind

donations during the emergency response phase of disaster relief.

Fluor is working with member companies of the DRN to develop a mechanism to talk with governmentsat the national level to create systems that will help communities prepare for disaster or mitigate the

effect of a disaster. Fluor strongly supports the development of employees skills that will benefit

their local community in the recovery from local disasters such as floods, earthquakes, hurricanes and

tornados, fires or explosions. Daily experience in safely working in hazardous environments such as

chemical plants and refineries, nuclear facilities, and military installation refurbishment prepares us to

help recovery efforts in hazardous environments.

Fluor has worked with FEMA since 1997 to provide emergency and disaster response services across

the United States. As a result, the company has developed a professional staff that is sensitive and

responsive to disaster environments. Technical specialists are not only experts in their field, but also

have FEMA training, enabling them to quickly and effectively respond to emergency situations. Fluor is

one of only three companies to hold a contract with the agency, and and our employees have extensivetraining and experience working in a FEMA emergency environment.

Specific Fluor disaster response actions in 2005 included the following examples.

TSUNAMI RELIEF FUND

On Sunday, December 26, 2004, a magnitude 9.0 earthquake rocked the ocean floor off the east coast

of Indonesia, creating a massive tidal wave that caused the loss of nearly 150,000 lives and severe

damage across southern Asia and eastern Africa. People all over the world rushed to help survivors

and provide relief in affected countries, including Indonesia, Sri Lanka, India, Thailand, Maldives,

Malaysia, Myanmar, and Bangladesh, as well as Somalia, Kenya, Tanzania, and the Seychelles.


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The Fluor Foundation made an initial contribution of $100,000 to the American Red Cross International

Response Fund in December. In addition, Fluor Corporation donated $10,000 to the Disaster Resource

Network. In January 2005, Fluor employees from offices and projects around the globe contributed

$176,747 to help ease the suffering of those hit by the tsunami in southern Asia and eastern Africa.

Employees were invited to contribute to relief agencies of their choice around the globe.

HURRICANE KATRINA

Hurricane Katrina was the third major hurricane and

first Category 5 hurricane of the record-breaking 2005

Atlantic hurricane season, hitting the southern U.S. coast

on Auguest 29, 2005. The storm surge from Katrina

caused catastrophic damage along the coastlines of

Louisiana, Mississippi, and Alabama. Levees separating

Lake Pontchartrain from New Orleans were breached

by the surge, ultimately flooding about 80 percent of the

city. Katrina is estimated to be reponsible for $75 billion

in damages, making it the costliest hurricane in United

States history; the storm killed at least 1,383 people.

In the wake of Hurricane Katrina, the Fluor Foundation donated $100,000 and invited employees and

retirees around the world to contribute to relief efforts. By September 30, those individual donations

exceeded $329,000. The Fluor Foundation provided a 50 percent match to United Way of America

Hurricane Katrina Response Fund and the American Red Cross. In addition, the company provided

personnel to the World Economic Forums Disaster Relief Network. ICA and ICA Fluor in Mexico

together pledged $100,000, and individual projects and offices around the world joined to raise funds, as

well as collected donations of clothing and food. Employees in the United States also donated the value

of Time Off With Pay/Vacation/Paid Time Off through December 21. These donations were matched by

the Foundation on a 50 percent basis, and the employee and Foundation contributions were designated

to the United Way.

SOUTH ASIA EARTHQUAKE

The Kashmir earthquake (also known as the Northern Pakistan earthquake or South Asia earthquake)

occurred on October 8, 2005 with the epicenter in the Pakistan-administered region of the disputed

territory of Kashmir in South Asia. It registered 7.6 magnitude on the Richter scale. The Pakistani

governments official death toll was more than 87,000.

Employees in the Camberley, U.K., office raised about $1,000 in contributions. Fluor Foundation

contributed $15,000 to Save the Children, designated for earthquake relief.

COMMUNITY SERVICE

Support for schoolsEmployees at Fluors Santiago, Chile, office were in the middle of their campaign to collect

school supplies, tennis shoes, and jackets for 150 children at Escuela Basica No. 478 when

they noticed the lack of books in the school library and the state of disrepair of the pre-school

bathrooms.

As soon as their backpacks were distributed, they started a collection of books for the

library and volunteered to repair the bathrooms. Employees working on three projects in

Peru collectively distributed nearly 3,000 backpacks, and in Ilo, they conducted much needed

renovation of the school.

The combined efforts of

Fluor employees in 26

locations who participated

in the companys Building

Futures Project touched

the lives of more than

10,000 children around the

world.


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- 20

At the Ford Island project in Hawaii, after delivering 50 backpacks and supplies to children in a low-

income community, Fluor volunteers were inspired to begin planning the installation of a playground for

the children.

For the Fluor offices that decided to collect school supplies or other personal items for disadvantaged

children, Fluor donated more than 7,000 backpacks, and ICA Fluor an additional 250. Employees alsodonated supplies to fill the backpacks.

COMMUNITY AWARDS

Aliso Viejo, California: Spirit of Volunteerism Award

In April, the Fluor Community Involvement Team at Fluors Aliso Viejo office was recognized as an

outstanding corporate volunteer team at the Orange County Spirit of Volunteerism Awards by the

Volunteer Center Orange County.

Greenville, South Carolina:2005 South Carolina Governors Volunteer Award

In April, Fluors Greenville office was presented with the South Carolina Governors Workplace Volunteer

Award. This award is given to a corporation, business, or trade association that has demonstrated

commitment to the community by supporting volunteer activities. One company is selected from a number

of nominated companies and is recognized by the governor of South Carolina at a ceremony at the State

Capitol in Columbia.

Hanford, Richland, Washington: ESD123 Award (Educational Service District 123)

Sponsored by the Southeastern Washington Association of School Administrators,

school districts recognize someone from their community each year who has given

to education. Fluors Hanford office and Bob Fluor, Vice President of Global Public

Affairs, have been recognized for their outstanding contributions to students andcommunities across the region.

The Educational Service District 123 covers 23 school districts throughout the

area from Richland to North East Oregon and the Idaho border. The Hanford office

supports seven of those districts.

Houston, Texas: Firefighter of the Year Assistant Chief Shayne Carter, Cat Spring Volunteer Fire Department

Shayne Carter, Health, Safety & Environmental Manager at Fluors Houston

office, and a fellow volunteer were recognized for exceptional achievements by the

100 Club. The 100 Club is a nonprofit organization that benefits law enforcement

and firefighters in a 14-county area in and around Houston. Last summer, both

men were called into action after a cement truck rolled over on a narrow road

trapping the driver inside the cab. After 90 minutes of grueling work, the driver was

removed. Both volunteer firefighters have more than enough tenure to retire, but

they continue to serve their community in an unselfish and valuable manner.


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- 22

HSE PERFORMANCE

Fluor is proud of another year of outstanding HSE performance. The companys

HSE performance goals were aggressive in 2005, but collectively, Fluor employees

rose to the challenge.

Fluors commitment to protecting our greatest asset our employees began five decades

ago. Today, Fluors strong world-class HSE culture is sustained by unwavering dedication and

personal commitment that begins with the CEO and is shared by every employee. This diligent

commitment is evident on Fluors diverse and complex projects, which are often faced with

geographical, social, cultural, economic, political, and environmental challenges.

Exposure hours increased from 239,384,806 in 2004 to 269,717,990 in 2005,

representing an increase of 13 percent. International markets accounted for more

than 204 million, or 76 percent of work hours in 2005.

Fluor ended the year with restricted workday case incidence rate of 0.15, a lost

workday case rate of 0.05, and a total recordable case incidence rate of 0.46 per

200,000 hours worked.

Fluor employees continue to put forth extraordinary effort to maintain the strong health, safety,

and environmental culture and performance. In 2006, Fluor will strive to improve upon our HSE

progress in 2005.

OFFICE OPERATIONS

Fluors office exposure hours increased slightly from 21,680,105 in 2004 to 22,154,183 in 2005.

International offices represented 53 percent of the hours.

In 2005, Fluor showed improvements in the safety performance rates for office operations:

2004 2005

Total recordable case incidence rate 0.06 0.05

Restricted workday case incidence rate 0.01 0.00

Fluor offices experienced one lost workday case in 2005, for over 22 million worldwide exposure

hours, resulting in a rate of 0.01 per 200,000 hours worked.

FIELD OPERATIONS

Field operations ended 2005 with positive momentum. Collectively, Fluor projects met

the companys goals for restricted and recordable case incidence rates, 0.18 and 0.75

respectively.

Worldwide field operations reduced lost workday cases from 20 in 2004 to 16 in

2005. This improvement is a result of a decline in U.S. lost workday cases, from 10

in 2004 to 6 in 2005. The U.S. achieved a lost workday case rate of 0.03 and non-U.S.

field operations had a rate of 0.05, which was a decrease from 0.07 in 2004. This is a

remarkable achievement considering that there was a 31 percent increase in exposure

hours in 2005 for non-U.S. field operations.

Exposure hours for field projects worldwide increased by 23 percent, from 58,705,097

in 2004 to 72,298,410 in 2005. Activity in Fluors U.S. markets increased by 16 percent,

from 30 million in 2004 to 35 million in 2005. Non-U.S. hours increased from 28 million

in 2004 to 37 million in 2005, an increase of 31 percent.

Some 337 projects and offices

performed the entire year

without experiencing a lost

workday case. Additionally,

265 projects and offices ended

the year without experiencing

a single recordable case.

.46

.05

Lost Workday Case

(with days away)per 200,000 hours worked

Total Recordable Casesper 200,000 hours worked

00 01 02 03

.05.06.06.08.01

.99.87

.64.50 .37

04

00 01 02 03 04 05

05

* Fluor & Subcontractors Worldwide

*

*


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- 23 -

SUBCONTRACTOR FIELD OPERATIONS

Exposure hours for Fluors subcontractor field operations increased from 158,999,604 hours

in 2004 to 167,128,431 in 2005.

Non-U.S. markets accounted for more than 149 million or 89 percent of the subcontractor

exposure hours.

More than 2,100 contractor and subcontractor companies ended the year without

experiencing a lost workday case. More than 2,060 subcontractor companies at Fluor sites

achieved ZERO INCIDENTS and did not experience a single recordable incident in 2005

FLUORS PROJECT SAFETY ALERT SYSTEM

Fluors Project Safety Alert System quantifies the safety status of each project so that outstanding

performance can be recognized and additional focus can be placed on those projects where

improvement is needed. The Project Safety Alert System identifies projects with a total recordable

case incidence rate exceeding the Fluor goal for the reporting period. Categories include:

1) Blue - World-Class: Managing safety at an incidence rate of zero

2) Green - Warning: Managing safety at or below the goal

3) Red - Alert Status: Managing safety above the goal

world-class

warning

alert

95%

3%1%

Fluor projects, offices,

and contractors

(total of 2,480 in 2005)


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CLIENT PERSPECTIVE ON HSE

ROBERT STINSON, PROJECT MANAGER FOR CORNING FOR DESIGN AND CONSTRUCTION OF A

GLASS SUBSTRATE MANUFACTURING FACILITY IN TAICHUNG, TAIWAN, PROVIDES INSIGHT ON

CONTRACTOR HSE PERFORMANCE AND CAPABILITIES ON A LARGE INTERNATIONAL PROJECT.

On a scale of one to 10, with 10 being the most important, how critical to Corning is a contractorsHSE capability? Can you explain why?

Theres no question about it. The HSE capability of a contractor like Fluor is an

absolute 10 in importance to Corning. Our people and safety are the highest

priorities for us and we will never compromise on that.

I write monthly reports which focus on four areas safety, schedule, quality,

and cost. The priorities change from month to month, with one exception. Safety

is always at the top of the list. A poor safety performance can override any

accomplishments you might have on a project.

So the ability of a company like Fluor to enforce and uphold the highest possible

safety standards is an absolute necessity if they are going to do business withus.

Have you seen a shift in importance of HSE performance over time? If so, whats driving the

shift and do you think it will continue?

Yes, theres been a shift. I think its driven by a Western influence, coupled with a growing universal

care for people. Said another way, the value for individuals has taken its rightful place as a top priority.

I think HSE is particularly critical when a project is outside of North America, like the Taichung project.

Fluor is the contractor for the Corning Taichung project. Can you cite some examples where the

Fluor HSE function has made a difference for the project in areas such as whole lifecycle costs,

field performance, subcontractor management and the like?

The fact that the Taichung project is in Asia is an important consideration. The lifecycle cost to enforcesafety in Asia is more expensive. Corning and Fluor really have to manage safety ourselves here. Weve

trained more people and, because of our stringent safety requirements, weve kept only the people

who maintain the highest safety standards. At the same time, safety has improved the workmanship.

High safety standards actually help maintain our timeline with fewer setbacks due to haste and

carelessness. So, it has an overall positive effect and improves the project quality.

Can health and safety performance add to the profitability and value of a project?

No matter how you look at it, health and safety are costs to a project. Theyre not meant to save you

money. When contractors ask us what the budget is for safety, we tell them there are no budget

constraints.

But safety pays off in many other ways. I mentioned earlier that I write a monthly report that alwaysincludes our schedule. Its really important for us to hit our timelines, and having good health and

safety performance keeps us on track with our schedule.

How about environmental performance? Can it make a difference in the profitability and value

of a project?

Good environmental performance is in line with Cornings values. We live and work in the communities

surrounding our facilities. So do many of our customers. So, even though it does have associated

costs, its very important.


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CLIENT REVIEW RESULTS FOR HSE

In 2005, as a part of Fluors Client Review program, 156 clients provided feedback on Fluors HSE

Performance. Overall results of all reviews conducted resulted in a total HSE Customer Confidence

Index of 74. The following breakdown shows the types and percentage of the 156 clients who

participated in the review process, listed first according to Fluors business organization and thenby the clients position in their companies.

by Business Group:

Energy and Chemicals

Operations & Maintenance

AMECO

Government

33%

28%

27%

12%

by Client Functions:

Senior Management

Project Management

Project Controls/Finance

Engineering

Construction

Plant/Site Management

Process

Procurement

Business / Finance Management

MaintenanceOperations

Other

4%

23%

3%

10%

11%

4%

1%

3%

1%

25%10%

5%

Client Responses:

1. Does Fluor Conform to Your HSE

Requirements? (134 valid responses)

49%Always Conforms

49%Usually Conforms

1%Sometimes Conforms

2. Have You Noticed Any Improvement in

Fluors HSE Performance? (156 valid

responses)

10%Improved Significantly

31%Improved

58%Stayed the Same

1%Declined

3. How Does Fluor Compare to Our

Competitors

in HSE Performance? (156 valid responses)

40%Above Competitors

44%Slightly Above Competitors16%Same As Competitors

4. How Important Is HSE Performance to You

(the client)? (151 valid responses)

75%Extremely Important

16%More Than Somewhat Important

9%Somewhat Important

The Client Review

process provides a formal,

yet flexible, framework

for engaging both Fluor

and client personnel in a

structured conversation. The

process allows the clientto communicate his or her

issues and concerns, and

encourages collaborative

feedback. This process

promotes an open dialogue

in a neutral environment,

avoiding the interrogative

approach used in most

traditional satisfaction

surveys.

Lynn Kelly,

Fluor Global Services

2005 HSE PERFORMANCE

INDICATOR SUMMARY

Performance Indicator Index*

Health, Safety & Environmental 74

* 71 100 = High;

41 70 = Moderate;

1 40 = Low


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PEOPLE DEVELOPMENT

Focused career development is critical to maintaining the superiority of our

peoples skills, knowledge, and experience and is a critical component of the Fluor

HSE business strategy. A robust development process benefits Fluor, clients,

and employees and allows Fluor to provide a highly skilled workforce for complex

projects.

In 2005, the corporate HSE group issued its Global Functional Track (GFT) for

use in career planning. The HSE GFT is a set of documents that provides the

framework and tools for understanding potential career paths and the required

skills, behaviors, and knowledge required for those positions within the HSE discipline. The GFT

addresses all HSE career paths, including HSE engineering and HSE construction management.

In late 2005, the corporate HSE group finalized planning for its first Functional Development Forum

(FDF). The HSE FDF is charged with identifying and developing individuals who have the desire and

capability to become recognized experts in HSE and to ensure the continued development, recognition,

and retention of seasoned Fluor HSE professionals. The FDF will designate protges and their

mentors and sponsors and will also capture individual development plans in an online database. The

FDF will be implemented in 2006.

HSE IN DESIGN

Fluor places special emphasis on developing engineering designs that fully consider and mitigate

inherent risks associated with projects that could have the potential to cause harm to people or

the environment. Appropriate, cost-effective HSE features are incorporated into project designs to

minimize the potential for hazardous events or environmental impacts.

HSE design criteria are incorporated into the engineering design of each project component, including

processing equipment, supporting infrastructure, and ancillary facilities. Fluor requires that the

HSE philosophy developed and applied to the basic engineering phase of a project also be applied

consistently through the detailed engineering and construction phases

of the project.

Fluors formalized techniques for HSE reviews provide the mechanism

for documented evaluation and verification of a safe, compliant, and

environmentally responsible facility or project design. HSE in design

revolves around the following concepts:

Consistency in engineering to achieve a low-risk

design

Design that follows standards

Adherence to regulations and codes

Design that minimizes engineering oversights and

errors leading to changes

Satisfactory resolution of all risk mitigation issues

HSE in design according to a plan

While HSE plays a pivotal role in all projects, what follows

are a few of the best examples from 2005.


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WETLANDS CREATION

Plans to create a wetland mitigation site in support of State Highway 130 (SH 130) in Williamson

County, Texas represent a true win-win mutual benefit to the environment and to the community. The

project proposes to create a wetland mitigation site from an area excavated to provide construction

materials. The impacts resulting from the construction of SH 130 include effects to surface waters andother wetlands. The creation of this mitigation site is part of the compensatory mitigation requirement

established by the U.S. Army Corps of Engineers (USACE) individual permit for the project.

The plans for the creation of this wetland mitigation site, adjacent to the

San Gabriel River, require approval of the USACE prior to initiation of

construction of the mitigation site. Coordination has also been initiated

with local government bodies to explore possible passive recreational

uses by the public and long-term maintenance arrangements.

Creating a wetland mitigation site provides an opportunity to plan for

various features to realize the maximum value of the area, including

planting of vegetation that encourages wildlife use by creating diverse

habitat types on the site. The vegetation species will provide both coverand food sources for animals that are attracted to a wetland habitat. The

animals provide a source of passive recreation for people who want to

observe mammals, birds, and fish in a natural setting. With the City of

Georgetown and public school nearby, this mitigation site will provide

educational opportunities as the wetland and the surrounding woodlands

mature. In addition, the school may develop opportunities for enhancement of the habitat in and

around the wetland as part of educational programs.

Interpretive features can be installed to facilitate the publics understanding of the benefits and

functions of wetlands and riparian habitats. Furthermore, the design of the site will allow the wetland

to function as a water quality feature by filtering storm water that runs from the north end of the

site through a series of grassy swales into the wetland itself before entering the San Gabriel Riveron the south side of the site. Because this site was a large borrow source, it will be able to detain a

significant amount of flood water by acting as a detention basin in the lower pond.

CO2EMISSION REDUCTION ENGINEERING

Because of skyrocketing oil and gas prices, many of our

clients are turning towards coal (and other solid fuel)

utilization projects. With this trend, carbon capture,

or reducing carbon dioxide (CO2) emission into the

atmosphere, has become a more important goal for

many major energy companies. Fluor has been active

in developing CO2recovery processes for many years,and in 2005 engineering work in this area substantially

increased. Fluor worked with numerous client companies

and technology providers in the development and

application of both post-combustion and pre-combustion

CO2removal systems. Recovered CO

2from these systems

will be beneficially used in applications such as enhanced crude oil production or will be permanently

sequestered from the atmosphere in deep underground formations.


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In 2005, Fluor developed engineering enhancements to significantly lower process energy and

chemical requirements for the Econamine FG PlusSMtechnology. This proprietary Fluor process

offers a proven and cost-effective option for the removal of CO2in low pressure, oxygen-containing

flue gas streams from boilers, combustion turbines, and other combustion equipment. The

performance of this process is successfully demonstrated by the more than 24 plants licensed to

date.

Fluor also is working with several clients to evaluate pre-combustion CO2recovery for newly

proposed integrated gasification combined cycle (IGCC) power plants. Because the product syngas

fuel in an IGCC plant is totally contained under moderate pressure prior to combustion, CO2can

be readily removed. Shifted syngas in which carbon monoxide and water contained in the

syngas have been chemically converted to CO2and hydrogenpresents an attractive opportunity

for increased CO2recovery and further reduced green house gas emissions. Finally, Fluors novel

CO2LDSepSMprocess, which can cryogenically recover sulfur and liquid carbon dioxide from high-

pressure synthesis gas, potentially represents the future of carbon recovery technologies.

PATENTS

Fluor engineers typically apply for 10 to 12 new patents per year. Many of the inventions submittedinclude important HSE benefits. For example, Fluor engineers have devised and patented several

mechanical improvements to the delayed coking process to increase operator safety. (Delayed

coking is used extensively in the petroleum refining industry.) In 2005, these engineers received yet

another patent for an innovative shielding device to enhance operator protection from the very high

pressure water jets used to remove petroleum coke from the processing drums.

Another excellent example of HSE benefits through engineering invention is a pending Fluor patent

for a novel non-destructive testing (NDT) system for thermoplastic pipe joint welds. Industry use

of high density polyethylene pipe and other plastics to handle corrosive or otherwise hazardous

materials continues to increase. The NDT system developed by the Fluor engineers uses ultrasonic

energy to detect internal flaws in piping joints. Prior to this system, external visual inspection

was the only way to evaluate piping integrity. Being able to detect and correct internal weld flawssignificantly reduces the risk of pipe failure. This, in turn, reduces the chances that operating

personnel could be injured or the environment damaged by release of hazardous materials caused

by a pipe failure. This system has already been used to inspect pipe joints in a large capacity acid

pipeline after a weld failure caused an environmental release. More than one-quarter of the pipeline

welds were found to be internally flawed and were repaired prior to restarting the pipeline.

GLOBAL HSE INITIATIVES

AVIAN FLU RESPONSE

Fluor formed an Avian Flu Task Force in 2005 to address the threat of a potential pandemic caused

by the avian flu virus H5N1. The Task Force assists offices and projects globally to be prepared in

the event that the avian flu virus mutates and develops the ability to be transmitted from human to

human.

As migratory birds spread the avian flu virus into different countries, many global issues are

expected to arise. The Task Force monitors and evaluates the evolving situation and develops

appropriate plans and actions that will be beneficial to both the company and our employees.

Fluor relies on a number of organizations such as the World Health Organization (WHO), U.S. Center

for Disease Control, and International SOS for continuous updates. Organizations such as WHO

are working with national governments to devise a global response to the threat of an avian flu

pandemic.

Availability of Fluor HSE

information was enhanced

in 2005 by adding the HSE

Management System to

Projects OnLineSM(POL),

Fluors robust, Internet-

based project collaboration

and document management

tool. Fluor uses POL to

engage the entire project

team (including clients,

home office and jobsite

employees, contractors,fabricators, and suppliers)

in communication and

collaboration regardless of

the team members locations

worldwide. Consequently,

both Fluor and non-Fluor

project team members now

have instantaneous access to

the same HSE procedures and

tools.


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WORLD WATCH

Because Fluor is a global company, it is important to impart HSE and security information

to our employees and subcontractors. This information is provided through a number of

resources.

Fluor makes available an electronic service called World Watchto our employees,

with the goal of providing HSE and security information to business travelers around

the world. The data available through the site are wide-ranging from translations for

medications and illnesses in a variety of languages to safety precautions in hotels.

In addition, Fluor subscribes to a web-based database called GlobeSmartthat provides

employees with diverse information, such as cultural aspects of various countries.

In 2005, a work group composed of HSE, Security, and Travel representatives evaluated and

implemented several features to make World Watchmore available to employees through links at

key locations throughout Fluors Intranet.

AIRLINE INSIDER

Fluor added Airline Insider to World Watch in 2005. Airline

Insider provides up-to-date information on commercial airline

companies globally. Whether a safety rating or a maintenance

program for a particular airline, the data are available for

evaluation by individuals or teams within Fluor.

HSE AWARENESS

HSE awareness among all Fluor employees is encouraged with various communication tools, suchas newsletters, alerts, Knowledge OnLine, News Online, and Fluors Intranet site. In addition, Fluor

holds annual contests and events to highlight HSE activities, thereby increasing awareness and

elevating the companys HSE culture.

KIDS HSE POSTER CONTEST

This contest has continued to gain popularity since its inception in 1997.

In 2005, the contest drew more than 200 entries from around the globe.

The goal of the contest is to motivate Fluor employees and their children

to take pride and ownership of the HSE program by using their creative

abilities.

Participants were offered cash incentives and honorable mention

certificates. Winning participants also had their entries displayed

via Fluors Intranet site, News Online, and Knowledge OnLine for

worldwide recognition.


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FRIENDLY ENGINEERING CONTEST

Fluor holds an annual engineering challenge for employees, called

a Friendly Competition in which contenders are given a specific

project and a list of materials compiled strictly from office supplies

and are asked to pre-engineer the respective task. One week is

allowed for teams to pre-engineer the project and once this phase is

complete, the teams are given one hour to construct their designs.

Many aspects such as safety, costs, and production time are taken

into account before the winning team is announced.

Football World Cup was the project for 2005. Teams were instructed

to construct a device using common office supplies to propel a ball into

a goal. A team in Fluors Haarlem office in The Netherlands won the

competition after an impressive three-and-a-half minute construction

and completion using only two erasers, a paper clip, two thumb tacks,

and an elastic band. This creative game emphasizes Fluors strategic

commitment to cost and schedule focused on fast-track projects.

2005 HSE SLOGAN LOGO

This global competition promotes HSE visibility among all Fluor employees. The winning entry must

encourage a safe and sustainable environment. The incentive to participate includes company-

wide recognition via News Online, a cash incentive, a commemorative plaque, and the winners

slogan displayed on hardhats on projects around the world.

After the management carefully reviewed more than 200 entries, the slogan 2005 Keep

Alive was announced the winner. Fluors ongoing employee involvement will continue to

shape and enhance our exceptional HSE culture.

HSE WEEK 2005

Fluor kicked off the companys first annual HSE Week on April 18, 2005. CEO Alan Boeckmannpromoted this endeavor by impelling the Executive Management Team to engage projects and

offices around the globe to participate in activities such as:

Planting Trees

Kick Off and Revitalization of Current Recycling Programs

Personal Protective Equipment (PPE) Demonstrations

Special Training

Health Fairs and Screenings

Lunch & Learns

Incentive GiveawaysThe theme for HSE Week 2005, which concluded on Earth Day, was Protecting Our

Children and Our Future.

Global participation during HSE Week 2005 was extremely gratifying, said Garry

Flowers, Senior Vice-president of HSE, Security & Industrial Relations. Employees

demonstrated that they have taken strong steps to fold in the value of health and the

environment with Fluors strong safety culture. With the help of many enthusiastic and

willing volunteers, the first annual HSE week was a resounding success and sets a great

precedent for HSE Weeks to come.


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EXECUTIVE MANAGEMENT PERSPECTIVE ON HSE

JIM HEAVNER IS RESPONSIBLE FOR FLUORS UPSTREAM

BUSINESS LINE WITHIN THE ENERGY & CHEMICALS GROUP.

Youve been a major proponent of integrating Fluors HSEexpertise into the projects of your business. Why does this

make good business sense?

Todays oil and gas markets are often found in remote areas

of the world where environmental sensitivities are extremely

high. Its critical that Fluor and our clients are perceived as

culturally sensitive and good environmental citizens. So the more

we integrate environmental, cultural, and safety perspectives into everything we do, including our

designs, the better we serve our clients and our business.

Can you give a couple of examples of projects where HSE has made a difference for you and

your clients?

One that comes to mind immediately is the Tengiz Chevroil project in Kazakhstan. For that matter,

HSE is critical on virtually every project in Kazakhstan given the environmental sensitivities there.

HSE is also of critical importance on the RasGas joint venture project between Qatar Petroleum and

ExxonMobil. On projects like these, its imperative that our clients feel comfortable and confident

that weve looked holistically at environmental, cultural, safety and health issues as they pertain to

our work.

Why is Fluors HSE function a competitive advantage for the company?

First off, I believe Fluor has a first-rate HSE competence in both the design phases and in the field

and its getting stronger and stronger. Thats important because, in todays world, just merely

having the HSE function is not going to distinguish you from the pack. The more HSE resources

you have, the better your case is on the competitive scale and the higher your chances of winningthe work. If you delve into our HSE function and see the talent we have, youll come to the same

conclusion that our HSE function is a real competitive advantage.

Have expectations for HSE capabilities changed over the past five years? How is Fluor

responding to the changes?

Lets go back further than five years. Ten years ago, there were only a handful of sophisticated

players who could distinguish between HSE that was integrated into projects early and the standard

job site safety program. Five years ago, most of the clients and competitors in our business were

zeroing in on HSE, although some were more sophisticated than others.

Today, the best of the best understand that HSE requires a holistic approach to be successful.

By that I mean they consider and understand all the environmental, cultural, safety and healthimplications of what they are doing.

Sometimes this is easier said than done, because we often dont know what we dont know. Let me

give you an example.

We were involved in a project in an area where a particular mushroom was coveted by the local

citizens. The mushrooms were so good our expats began consuming them in large quantities, which

had a serious impact on availability. As strange as it may seem, the locals developed an animosity


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toward our expats over this mushroom issue, and it was affecting our relations within the community.

Only after we understood the sensitivities were we able to promote harmony and develop the type of

relationship with the local community that enabled us to efficiently and effectiv

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