1. Not for Distribution Outside of MBP1 April 11, 2012

2. Fiscal Management of a Project  Purpose of Training  Vocabulary  Types of Projects  Three Key Elements  How Projects are Priced  Performance Indicators Not for Distribution Outside of MBP2

3. Purpose of Training  To increase team member awareness of what makes a project financially successful for MBP.  To provide working definitions of terms normally encountered when discussing management of a project.  To discuss how projects are priced.  To discuss tips and indicators that can be monitored during a project to help make decisions to improve its performance. Not for Distribution Outside of MBP3

4. Vocabulary  Project  Task  Scope  Budget  Schedule  Direct Labor  Multiplier  Scope creep Not for Distribution Outside of MBP4

5. Types of Projects  MBP Office vs. Client Site Driven by where work is performed Generally, MBP Site needs higher rates  Fixed Fee vs. T&M vs. T&M Not-To-Exceed Fixed Fee = Lump Sum; Payment for the deliverable not the hours T&M = Time and Materials T&M Not-To-Exceed; Favors client more than MBP Not for Distribution Outside of MBP5

6. Types of Projects  Fixed Fee Used with clearly defined and manageable scope Increased risk for MBP relative to T&M More difficult to manage with longer term projects ○ Increased potential for scope creep Increased potential reward for MBP relative to T&M ○ Efficiency ○ Labor Mix Examples: Cost Estimate, Constructibility Review, Cx, Monthly QA services Not for Distribution Outside of MBP6

7. Types of Projects  T&M Profit is limited by rates Cost Plus is a subset of T&M Least risk for MBP Used with less defined scope Used with level of effort tasks Should still have defined budget Examples: CM, CPM Scheduling Not for Distribution Outside of MBP7

8. Types of Projects  T&M Not-To-Exceed Worst type of contract for MBP Caps revenues but not expenses Needs clearly defined and manageable scope Requires good communication with client Examples: Claims, CM where client has strictly limited funding Not for Distribution Outside of MBP8

9. Three Key Elements  Scope  Schedule  Budget Not for Distribution Outside of MBP9

10. Three Key Elements  Scope – the services that MBP will perform Defined in contract – refer to contract often Can be hard to manage Scope creep ○ Client requests ○ Internal MBP scope creep Needs to be closely monitored Promptly ask for change orders when scope changes Different types of projects have different issues ○ Fixed Fee – direct impact on profitability of project ○ T&M – scope creep may increase profitability ○ T&M Not-To-Exceed – characteristics of both Not for Distribution Outside of MBP10

11. Three Key Elements  Schedule – when MBP’s services are delivered Defined in contract – refer to contract often Deliverable driven vs. level of effort Can greatly impact project profitability Different types of projects have different issues ○ Fixed Fee – hard and soft deadlines for deliverables; reduced schedule may mean greater efficiency/profit ○ T&M – usually level of effort or “pacing”; extended schedule may mean greater revenue/profit; reduced schedule may mean lower profit ○ T&M Not-To-Exceed – characteristics of both Not for Distribution Outside of MBP11

12. Three Key Elements  Budget – how MBP is paid May be defined in contract or may need additional information ○ T&M vs. Fixed Fee (similar to schedule of values) MBP’s accounting based on hours and direct rates Generally managed by hours Hours available can change based on labor mix Impact of non-labor expenses Different types of projects have different issues ○ Fixed Fee – efficiencies; labor mix; challenges of long term projects ○ T&M – need to monitor client’s budgets along with MBP’s ○ T&M Not-To-Exceed – characteristics of both Not for Distribution Outside of MBP12

13. How Projects are Priced  MBP Rate Build-up Direct Labor rate x multiplier to get billable rate Estimated hours for scope for each position Estimated non-labor costs Compare build-up to market based analysis – is the value of our services greater?  Market Based Rates dictated by client ○ Determine if MBP can provide services for those rates Overall budget available ○ Develop scope using MBP build-up information Based on past experience/competitive information Not for Distribution Outside of MBP13

14. Performance Indicators  Scope No one easy indicator for scope – must compare contract requirements to services performed Small changes can add up quickly  Schedule Formal schedule tracking Milestones  Budget Hours expended vs. hours budgeted Amount of work left vs. amount of hours left Target direct labor multiplier vs. actual direct labor multiplier Target non-labor expenses vs. actual non-labor expenses Gross profit (does not consider indirects) Not for Distribution Outside of MBP14

15. QUESTIONS??? Not for Distribution Outside of MBP15