7 Supplier Engagement models

Outsourcing DBOM Limited Partnership Traditional Limited Partnership

Supplier Engagement Models

Engaging Alliance Delivery Partner Date 14.06.12

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Summary of each of the 7 Models (1)

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Outsourcing:

Lump sum fixed price whereby work is given to the market to develop, design and deliver with option to extend to maintain and/or operate (usually GRIP 2 or 3) •

Traditional:

Lump sum fixed price whereby NR manages the design development contract, the detailed design and construction contracts separately •

Engaging:

Contractor(s) brought in at GRIP 4 (or earlier) on reimbursable basis until risk and scope is defined enough to enable a target cost or lump sum fixed price to be agreed •

Delivery Partner:

Market partner is integrated into NR programme management team at GRIP 3 (or earlier) in order to bolster skills and is targeted with operating below opex target as well as incentivised (but capped) on all let contracts on pain/gain basis Date 14.06.12

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Summary of each of the 7 Models (2)

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Alliance:

Contractor(s) brought in at GRIP 4 (or earlier) on reimbursable basis until risk and scope is defined enough to enable a target cost to be agreed. NR staff are integrated into each contractor’s delivery organisation on ‘best man for the job’ basis. Development, design and construction risk/opportunity is shared across the alliance. All staff seconded into alliance are incentivised solely by the performance of the alliance/programme. An Alliance can be expanded into a Programme Alliance whereby some form of framework is established which enables joint performance targets between separate parties •

Limited Partnership:

This follows a similar approach to alliancing but usually involves integration of multiple parties into a single legal entity. All staff seconded into the partnership are incentivised solely by the performance of that entity within its terms of reference •

DBOM Limited Partnership:

This is an expansion of a limited partnership where the entity would also maintain and/or operate the built asset over a fixed period of time to an agreed budget, where all parties within the partnership share equitably the risk & opportunity. DBOM Alliance can also operate in a similar way outside of a legal entity Date 14.06.12

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Selecting the Best Supplier Engagement Model for each Project

•DBOM LIMITED PARTNERSHIP •OUTSOURCING •LIMITED PARTNERSHIP •ENGAGING •DELIVERY PARTNER •ALLIANCE •TRADITIONAL Move by lowering risk and/or raising value by packaging with other projects

BUSINESS RISK

Date 14.06.12

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