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Stock Exchange Announcement Bovis Lend Lease Investor Day – Update

VIEWS: 28 PAGES: 68

  • pg 1
									19 March 2008



The Manager                                             The Manager
Companies Section                                       Companies Section
Australian Stock Exchange Limited                       New Zealand Stock Exchange Limited

Pages: Sixty-eight (68) pages



Dear Sir

Stock Exchange Announcement

Bovis Lend Lease Investor Day – Update on Operations
With reference to the Investor Day held by Lend Lease Corporation Limited (“Lease Lease”) today to provide
an update on Bovis Lend Lease operations, attached are the following presentations made by Bovis Lend
Lease senior executives:

     Global Business Overview – Mark Menhinnitt, Global CEO
     Our Risk Management Processes – Andrew Council, Global Commercial Director
     Update on Asia Pacific – Sergio Casari, CEO – Asia Pacific
     Update on Australia / Pricing a Commercial Office Project – Tony Costantino, Managing Director –
     Australia.

Yours faithfully
LEND LEASE CORPORATION LIMITED




S J SHARPE
Company Secretary




Lend Lease Corporation Limited      Telephone +612 9236 6111                                             1
ABN 32 000 226 228                  Facsimile +612 9252 2192
Level 4, 30 The Bond                www.lendlease.com
30 Hickson Road
Millers Point NSW 2000
Australia
Bovis Lend Lease Investor Day
March 2008

Overview                        Appropriate
                                  photo
Mark Menhinnitt
Global CEO
Today's Agenda



  1. Mark Menhinnitt (Global CEO)   Welcome
                                    Global Business Overview
                                    Americas & EMEA overview
  2. Andrew Council                 Our Risk Management Processes
  3. Sergio Casari                  Update on Asia Pacific
  4. Tony Costantino                Update on Australia
                                    Pricing a Project (Commercial Office)
  5. Site Tour                      CBA Headquarters at Homebush


                                                                            2
Global Business Overview



                    1   Who We Are

                    2   What We Do

                    3   How We Create Value

                    4   Our Plan For Growth

                    5   Progress to Date

                                              3
1       Who We Are

Global general construction group with leading positions
Region               Headcount     Backlog    Key Sectors
                      Dec 07      GPM HY08
Americas               3,100       A$255.0m     Multi-family
                                     (33%)      Healthcare
                                                Education
Europe                 3,400       A$293.6m     Commercial
                                     (37%)      Retail
                                                Healthcare
                                                Government / Civic
                                                Project management services (CEMEA)
Asia Pacific           2,300       A$237.3m     Commercial
                                     (30%)      Retail
                                                Telecommunications
Total                  ~8,800     A$785.9m                                            4
1   Who We Are

Global Management Team


                                   Mark Menhinnitt
                                     Global CEO
                     Global Team                     Regional CEOs

           Charles Bates                                    Pete Marchetto
                    COO                                     CEO Americas

              Paul Walsh                                   Murray Coleman
                    CFO                                    CEO UK

         Andrew Council                                    Mark Fletcher
       Commercial Director                                 CEO CEMEA

              Chris Lamb                                   Sergio Casari
              Head of HR                                   CEO Asia Pacific

               Brian Long                                  Tony Costantino
        Global Head EH&S                                   MD Australia
                                                                              5
2   What We Do

For customers
       Main Construction Process        Bovis Lend Lease

                                   Our service offerings include
                                     Advice
                                     Management
                                     Execution


                                   … and vary according to geography,
                                     property sector, customer
                                     requirements



                                                                        6
2     What We Do

Across markets
                                       Mix of Realised GPM
                                             (Dec 07)


                                                                           Other                    Office
                                       Fee
 Americas               Asia Pacific                         Risk

                                                                    Healthcare
                                                                     Govt / Civic                    Residential

              Europe                                                        Education      Retail



            Geography                        Risk Type                                  Sector


                                                                                                                   7
3   How We Create Value

For customers
       Project Delivery Process   Value Bovis Lend Lease Brings Customers

                                    Project management
                                    Feasibility
                                    Predictability of cost
                                    Product intellectual property
                                    Value engineering



                                    Certainty of delivery
                                    Cost
                                    Time
                                    Quality

                                                                            8
3     How We Create Value

For Lend Lease
Source of Value      Description
‘In-house’ builder    Creates point of difference from competitors who rely on external construction
                      capabilities
                      Enables single source of accountability for Lend Lease’s investor / fund clients
                      Carries a strong reputation that enhances overall Lend Lease brand
Management talent     Develops people with Lend Lease’s core competencies of complex project
                      management & integrations skills
                      Serves as a source of talent with transportable skills across geographies, sectors &
                      business units
New business          Provides growth opportunities in new geographies & sectors
                      Leverages strong client relationships across the Lend Lease business
Financial             Free cash flow generation supports growth in other businesses
                      Supports Lend Lease’s ROE target
                      Diversifies earnings as majority of work sourced externally
                                                                                                             9
3      How We Create Value

For shareholders
                                             Key Areas for Management Focus
                                                   New work secured
                               Volumes
                                                   Mix by sector & geography
                         GPM                       Margin by risk type
                               Sold Margin
                                                   Backlog GPM
                               Delivered           Project program
              Cashflow         Margin              Project profit plans
                               Variance
                                                   Overhead productivity
                               Overheads
                                                   Overhead growth rate
Bovis Lend
Lease Value                                        Billings & receipts
                               Cashflow
                                                   Commitments & payments
                               WACC
                                                  Profit consistency
                 PE
                                                  Strategic planning
                               Growth
                                                                               10
4      Our Plan for Growth


Opportunities

    Eliminate major volatility in earnings
    Extract maximum value from our current global ‘footprint’ /
    A$12b+ revenues
    Selective expansion in geographies & services
    Enhanced product development to support Lend Lease in
    targeted sectors




                                                                  Innovation Place, Sydney

                                                                                             11
4    Our Plan for Growth

Priorities & approach




                                                                 3. Expansion
                                                                        New sectors & / or segments
                                                                        New products & / or geographies
                                    2. Operational Excellence
                                           Secure work
                                           Deliver work
           1. Basic Governance
                                           Manage people
                  Leadership
                                           (including Health & Safety)
                  Risk management
                                           Manage business
                    − Pipeline
                    − Delivery
                  Profitability
                                                                                                          12
 5       Progress to Date

Leadership
Global           Head Office moved to Sydney
                 New COO, Commercial, HR & Safety leaders
UK               New leadership in place
                      CEO with significant experience of ‘At Risk’ contracts; COO; Head of Risk; UK South
                      & UK North managers with D&C experience; CFO, senior finance person in North
                      Recruitment of further members of executive team (Heads of HR, Communications,
                      Health & Safety, New Regions)
US               Leadership team strengthened
                     New COO installed
                     New Business Unit management in Southern region
Asia Pacific     New structure to reflect increased volumes in Australia
                 New Australia MD and regional COO


                                                                                                            13
 5       Progress to Date

Risk management
Global       Re-engineering risk management processes across business (Andrew Council to provide detail)
             Realigning all geographies’ policies, Limits of Authority, processes to this
US           Planned West Coast acquisition in 2007 delayed until 2009 at earliest
             All subcontractors with value >US$300,000 fully bonded
             Risk management team strengthened
             Residential QA program introduced and rolled out across the business
UK           New risk / reward profile for UK line of business with minimum margin threshold for risk work
             Lower limits of authority reviewed and issued
             Strict adherence to deal sign-offs
             Improved reporting standards
Australia    Introduced executive risk assurance reviews on higher risk projects




                                                                                                             14
 5    Progress to Date


Profitability
Volumes         Very strong pipeline of new work secured

                Setting priorities by sector & geography

Margins         Minimum margins set by risk type in all geographies

                Rigorous risk management program being put in place to ensure delivered margins increase

Overheads       Now focusing on underlying productivity in addition to profitability ratios

Cashflow        All senior management incentives now tied to cashflow




                                                                                                           15
Project Wins / Backlog Growth



                   New Work Secured                                    Backlog GPM

 A$m                                                   A$m
 400                                                   800

                                                       700
 300
                                                       600

                                                       500
 200
                                                       400
        273       232    265     285     196    387            522      681      625      717     786
 100                                                   300
       Jun 05   Dec 05 Jun 06   Dec 06 Jun 07 Dec 07         Jun 04   Jun 05   Jun 06   Jun 07   Dec 07




                                                                                                          16
Safety




         17
Bovis Lend Lease Americas
December 2007 GPM Analysis
Profitability Diversified by Sector & Geography

             GPM by Sector                                                     GPM by Region
             8%              Commercial / Office
       19%                                                         14%                         East
                  9%         Education
                                                                                     29%       South & Healthcare
                             Government / Civic               2%
                   1%                                        3%                                Mid Atlantic
  2%                         Healthcare
 4%                    12%   Industrial / Technology       11%                                 West
                             Pharmaceutical / R&D                                              Chicago
                    2%                                                                         Multi-site
                             Residential / Senior Living
                   3%                                        11%                               Latin America
                             Retail (includes BP)
                                                                                    21%        Other
       40%                   Transportation                              9%
                             Other


                                     GPM by Service Type
                                           17%

                                                                         GMP
                                     12%                                 BP
                                                                         Lump sum
                                      2%                                 Fee
                                                            69%

                                                                                                                    19
Bovis Lend Lease Americas

 Type of work undertaken
        95% of work is negotiated with clients
        Guarantee time, price and quality of the work but do
        not take design risk in the United States
        Enter into contracts directly with subcontractors
 Backlog GPM of A$255m
        Driven by healthcare / education, e.g. Columbia University
        Bovis Lend Lease Americas has significant multi-family
        work in hand
              BUT key residential markets are New York, Boston
              and Chicago – markets not overly impacted
              by the sub-prime mortgage crisis
              Business not exposed to home building market                   Carlstadt Borough School District NJ
 Significant opportunity for growth exists in the following market sectors            Elementary & Middle School
        Healthcare
        Multi-sites
        Communities (e.g. Horizon & Lowry projects in Denver)
 Significant opportunity for growth exists in the following regions
        Texas / West Coast / Denver
                                                                                                                    20
Bovis Lend Lease UK / CEMEA
 December 2007 GPM Analysis
 Profitability Diversified by Sector & Service Type


           GPM by Sector                                                 GPM by Service Type

                3% 3%                 Commercial/Office
                           28%        Communications                                       21%
 20%
                                      Education
                                      Government/Civic
                                      Healthcare                  42%
                                      Industrial/Technology
3%                                                                                               11%
                                 1%   Mixed use
 3%                                   Pharmaceutical/R&D
                                 6%
                                      Residential/Senior Living
      8%                              Retail
           6%           15%           Transportation                                    26%
                  4%
                                      Other
                                                                   GMP    BP    Lump sum      Fee



                                                                                                       22
Bovis Lend Lease UK / CEMEA

 UK on track for return to growth over medium term
      Manchester Joint Hospitals – on track
      New business is being written at better margin
      Main focus continues to be commercial and retail, although activity
      in both is softening
      Strong pipeline with major projects for core clients, such as Land
      Securities, Peel, and Lend Lease
             Athletes Village
             Greenwich Peninsula
             Leadenhall, City of London
             Media City, Salford Quays
             Project SLAM, Ministry of Defence
             St David’s 2 Cardiff
             Portsmouth Northern Quarter
 CEMEA – strong performance / growth opportunities
      Good source of low risk, fee for service work
       Strong pipeline
             Barcelona Airport / The Blue City, Oman                        201 Bishopsgate, London
                                                                                                      23
Bovis Lend Lease Investor Day
March 2008

Risk Management Processes

Andrew Council
Global Commercial Director
Risk Management Framework



          1. Define Project Risks    2.     Price Risk or Carve    3. Control with Process
                                            Out of Contract           Discipline




      Key Elements                  Contract Type                 Key Processes
        Design                            Fee work                  Secure work
        Costs                             Risk work                 Deliver work
        Timing                                                      People management
        Quality                                                     Business management




                                                                                             25
1   Define Project Risks

    Delivery Process       Description
    1                      Developing functional briefs and specifications that define
          Brief / Scope
                           the building while also meeting commercial parameters and
                           user requirements

    2                      Translation of the brief/scope requirements into technical
            Design         drawings and specifications that define what needs to be
                           built

    3                      Procuring and constructing the actual building, involving the
           Construct       management and coordination of a diverse set of trades
                           and specialists

    4
                           Conduct operational tests of all systems and obtain
          Commission       authority approvals/certification prior to opening the building
                           for occupancy. This process usually involves the testing of
                           equipment, systems and inter-systems operations
                                                                                             26
1      Define Project Risks

    Typical Risks for Bovis Lend Lease in Delivery Process
    Design process            Functionality / fit for purpose
                              Statutory Compliance

    Construction cost         Subcontract trade cost
                              Market escalation
                              Builders preliminaries and supervision cost
    Time to complete          Cost for late completion
                                   Builder and subcontractor
                                   Client and financial costs
    Quality / functionality   Ensuring the completed product meets the brief
                              Statutory Compliance



                                                                               27
2     Price Risk − Carve Out of Contract

    The service offering allocates project risks between Bovis Lend Lease and
    the client
    Bovis Lend Lease classifies its service offering into ‘fee’ or ‘risk’ services


                    Fee Services                             Risk Services
2        Price Risk - Carve Out of Contract
             Consultancy / Project Manager            Construction Management @ risk
             Construction Management (CM)             Construct only
             Engineering Procurement                  Design & Construct (stage 1)
             Construction Management
                                                      Design & Construct (stage 2)
             (EPCM)



                                                                                       28
      Price Risk − Carve Out of Contract
2
      Service Offering − Fee
           Service Offering   Description                                          Typical Risks Taken        Level of Risk

            Consultancy/      Typically project management work that is                Internal cost of                  –
            Agency (PM)       performed for a fee. No sub-contracting                  management
                              involved.                                                resources



            Construction      Management of the construction activities of a
  Fee
            Management (CM)   project on a fee basis. While risk is taken on the
Services
                              cost of the management, risk is not normally
                              taken on the cost or time for construction.              Internal cost of
                                                                                       management
                                                                                       resources
                                                                                       Cost of establishing
            Engineering       A fee is paid to undertake the engineering               and running site
            Procurement       design and procurement of the trades and                 facilities
            Construction      services required to construct the project.              for management
            Management        A further fee is then paid to manage the                 staff
            (EPCM)            construction activities (similar to CM services          Insurable events
                              above).


                                                                                                                     +       29
       Price Risk − Carve Out of Contract
2
       Service Offering − Risk
           Service Offering    Description                                                Typical Risks Taken       Level of Risk

           Construction        A fee is paid to undertake the procurement of services
           management at       and trades required for the construction of the project.
                                                                                                                          –
           risk (CM@risk)      Once a high percentage of the total trade cost has            Cost to complete
                               been procured, risk is then taken on delivering the           Time to complete
                               project for the agreed cost
                                                                                             Quality
                               A detailed design is completed by the client. A lump          Insurable events
           Construct only      sum price is then agreed for the construction of the
                               project. Risk is taken to deliver the project for the
                               agreed price
  Risk                         A fee is paid to manage the design and to undertake
Services   Design and          the procurement of trades and services. Once this
           construct 2 stage   process has advanced sufficiently either a lump sum or        Risk on managing design
           (D&C 2 stage)       a guaranteed maximum price (GMP) is agreed to                 process to meet cost and
                               complete work                                                 quality requirements
                               A preliminary design brief is completed for the project       Cost to complete
           Design and          by the client. A lump sum or guaranteed maximum               Time to complete
           construct 1 stage   price is then agreed for the completion of both the
                                                                                             Quality
           (D&C 1 stage)       design and construction of the project. Risk is taken to
                               complete the project for the agreed price and schedule.       Insurable events


                                                                                                                         +     30
             Price Risk − Carve Out of Contract
    2
             Scope of Service Offer
                               Fee Work                            Risk Work
                                                              Construct
                        PM      CM        EPCM    CM@risk       Only      D&C 2 Stage   D&C 1 Stage
1

        Brief / Scope                                                      Phase 1
                                                                           Fee work
2


          Design
                                                   Phase 1
3                                                  Fee work


         Construct                                                         Phase 2
                                                                           Risk work
4
                                                  Phase 2
                                                  Risk work
        Commission


                                                                                                      31
         Price Risk − Carve Out of Contract
2
         Service Offer by Business Unit − Dec 2007

Global                              By Geography
                                    Fee / Risk Split             Main Types of Work


                         Asia                                    Design & Construction
                                          42           58        Project Management
                         Pacific
    Fee
                                                                 EPCM / CM


    37
                                                                 Construction Management at Risk
                         Americas    19            81
                59                                               Construction Management
               63


               Risk
                                                                 Design & Construction
                         Europe            53               47   Construction Management
                                                                 Project Management




                                                                                                   32
3   Control with Process Discipline

Key Risk Management Process



             Secure Work                     Deliver Work



                            Manage People

                           Manage Business



                                                            33
3    Control with Process Discipline

Secure Work
Conversion Process

                                                  Pipeline Report
                                                                    Submit
        Pipeline     Project Go /    Conversion      Commitment                   Execute    Construction
                                                                    Proposal to
        Report       No Go           Process         Review                       Contract   Authorisation
                                                                    Client




                           Business Tools
                               Limits of Authority
                               Global Minimum Project Standards
                               Regional Operations & Procedures
                               Business Pipeline Report
                               Health and Safety Global Minimum Requirements
                                                                                                             34
3     Control with Process Discipline

                  APAC Global Pipeline Report - Jan 2008
                  Executed: Feb 07, 2008 - 22:39 PM by APAC\smim441
                                                                                                       Project Descriptors                                                                                      Contract / Commmercial Information


                                                                                                                                                                                                                      Contract Schedule Negotiated or
    Office        Construction Sector   SBU              Project Name       Project Location     Project Description                    Client Name   Client Category   In current Forecast BLL Contract Value (M)    Duration (Months) Competitive       Contract Type




                                                                                                                                                                      LY
    QLD           Health                ANZ - QLD RBU    Project 1          Brisbane CBD         450 bed tertiary hospital              Client A      Government        As Sale                               400.0                  47 Competitive       D&C - Single stage




                                                                                                                                                                    N
    NSW           Health                ANZ - NSW RBU    Project 2          Sydney metro         Major hospital upgrade - new build     Client B      PFI/SPV           As backup                             300.0                  42 Competitive       D&C - Single stage




                                                                                                                                                      EO
                                                                                                 and refurb, including associated
                                                                                                 infrastructure.
    Singp         Retail                Unknown          Project 3          Singapore            Mixed use retail, commercial & hotel   Client C      Lend Lease Retail Not in Forecast                       200.0                  35 Negotiated Bid    D&C - Two stage




                                                                                                                                 T IV
                                                                                                                                                      & Comm
    VIC/SA        Commercial office     ANZ - Comm       Project 4                               115,000 NLA Campus Style New Build Client D          Corporate -       As backup                              40.0                  28 Negotiated Bid    D&C - Two stage
                                                                                                                                                      Domestic




                                                                                                                               RA
    Singp         Retail                Unknown          Project 5          Singapore            Surburban retail shopping complex      Client E      Lend Lease Retail As Sale                               150.0                  30 Negotiated Bid    D&C - Two stage
                                                                                                                                                      & Comm




                                                                                                       ST
    QLD           Government            ANZ - QLD RBU    Project 6          Brisbane CBD         Civic Building                         Client F      Corporate -       As backup                              60.0                  29 Competitive       D&C - Two stage
                                                                                                                                                      Domestic




                                                                                                    LU
    Singp         Industrial            Unknown          Project 7          Singapore            Industrial plant                       Client G      Corporate -       As Sale                               500.0                  48 Competitive       EPCM
                                                                                                                                                      Multinational




                                                                                     E         – IL                                                                               APAC Pipeline - Contract Type (GPM)



             Contract Type                                      Category
                                                                          M PLNo Projects            Contract Value ($m)
                                                                                                                                                                                                   1%
                                                                                                                                                                                                                                        D&C (Two Stage)




                                                                     SA
                                                                                                                                                                                          11%


             Design & Construct                                   Risk            95                       15,560
             D&C (Single Stage)                                   Risk            22                       1,500
                                                                                                                                                                                                                                        D&C (Single Stage)
                                                                                                                                                                          11%


             EPCM                                                 Fee             18                       1,718
             Construction Mgmt                                    Risk            12                       1,600                                                                                                                        EPCM


             Proj/Prog Mgmt                                       Fee              9                         32                                                         11%


                                                                                                                                                                                                                             66%        Construction Mgmt




                                                                                                                                                                                                                                        Proj/Prog Mgmt




ILLUSTRATIVE
                                                                                                                                                                                                                                                                               35
3   Control with Process Discipline

Deliver Work


                                                Project Report

               Construction       Procurement   Construction   Contract         Commission   Completion
               Authorisation                                   Administration




                          Business Tools
                               Limits of Authority
                               Global Minimum Project Standards
                               Regional Operations & Procedures
                               Projects in Delivery Reporting
                               Health and Safety Global Minimum Requirements
                                                                                                          36
3          Control with Process Discipline

    Projects in Delivery Report
    Template Version 1.50

    Region                  APAC
    Period                  Jan-08
    Currency                AUD




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           Number                       Project Name


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     Over Performing Projects



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      316407         Project A



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       415821               Project B


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     Stable Projects



                                                                  MP
      315042                Project E




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       915663               Project D

       1212121              Project F

     Watch Projects
      714279                Project I

     Underperforming Projects
      314704         Project H




                                                                                                   37
3   Control with Process Discipline

Other Processes


                  Secure Work                                   Deliver Work



                                     Manage People

                            Match to workload in quality & quantity

                                   Manage Business

                            Business Plan – Finance Reporting
                            Risk Matrix Reporting
                            Audit Reporting

                                                                               38
Bovis Lend Lease Investor Day
March 2008

Bovis Lend Lease Asia Pacific
Business Overview
Sergio Casari
CEO − Asia Pacific
   Business Overview


                                                                                  JAPAN
                                                                                Tokyo                          2,300 people in 8 countries
                                     CHINA                              Osaka
                                                        Beijing
                                                                                                               Backlog GPM of A$237.3m (Dec 07)
                                             Shanghai       TAIWAN
                                                                                                               Operating in Australia since 1951 and
                                                            Taipei
            INDIA

                    THAILAND                                                                                   Asia since 1973
Bangalore


                                                                                                               Australia’s largest commercial and
                      Kuala Lumpur   MALAYSIA
                    SINGAPORE                                                                                  industrial contractor − A$1.6b secured
                                                                                                               projects (HIA Reed 2006/07)
                                                                                                               Over 80% of business from repeat
                                                                                                               clients
                                                                  AUSTRALIA                                    Key sector focuses in commercial,
                                                                                                    Brisbane

                                              Perth                                                            retail, healthcare and pharmaceutical
                                                                                               Sydney
                                                                                             ACT
                                                                                        Melbourne
                                                                                                                                                        40
Our Value Proposition


We deliver projects of outstanding
quality and value by

  Integrating design and construction
  Applying front end project management capabilities
  Working hand in hand with our clients
  Benefiting from early supply chain engagement                       Xilinx, Singapore


  Leveraging international procurement and best practices
  Leading in Safety and in Sustainability
  Attracting and retaining the best people

                                                            ANZ, 833 Collins Street, VIC
                                                                                          41
We are fully aligned with our clients’ objectives and provide
an end to end property delivery solution
                                                       Traditional Contracting

      Feasibility             Design
         and                   and           Procurement       Construction      Completion       Asset and
       Capital               authority       and contracts      (some design        and            Facility
                                                                development)
      Structuring            approvals        negotiation                         handover       Management



                          Bovis Lend Lease Integrated Project Management
                                    Design & Construction Model



                    Project Management                            Design & Construction
                       Product creation / innovation                Supply chain engagement
                       Design / sustainability                      Constructability solutions
                       Value engineering                            Schedule / delivery driven
                       Cost plan driven design                      Safety management
                       Risk management                              Non adversarial approach
                       Life cycle / operability                     Quality assurance                         42
Our Service Offering
Design & Construction


    Product and value driven solution

    Design, procurement and construction occur concurrently,
    driving shorter delivery programmes
                                                                                    30 The Bond, NSW
    Pre-planning focus to minimise on-site risks

    Integration of tenants and user needs

    Cost and quality certainty




                                                               420 George Street / Mid City Centre, NSW   43
Our Service Offering
EPCM* / Construction Management


   Maximum flexibility in
         design development
         procurement
         construction
   to accommodate client requirements

   Full alignment with client interests             Lonza Mammalian Cell Culture Plant 2, Singapore

   Single point of responsibility

   Open-book procurement



* Engineering Procurement Construction Management

                                                                 Sydney International Airport, NSW 44
Our Services Offering
Project Management / Consulting


  Full alignment of interests
  Engaging and managing consultants and contractors on behalf
  of the client
  Monitoring and control of construction outcomes to ensure
  achievement of pre-agreed outcomes                                    Port Botany, NSW

  Acting as the client’s agent to define needs, target and
  outcomes
  Using construction expertise to add value to the client’s
  products




                                                                Petronas Towers, Malaysia   45
Bovis Lend Lease Asia Pacific delivered 30% of
Global Backlog GPM December 2007



  Source of core competencies                     Asia Pacific
                                                     30%

  Provides senior management talent

  Generates cash

  De-risks integrated projects
                                      Remainder
                                        70%
  Creates portfolio balance




                                                                 46
Asia Pacific Realised GPM by Service Type
December 2007

Asia Pacific                               Australia
                                                                Construction
                                                                Management
                                                                   16%
               EPCM
               10%
                       Construction                                       Multisites
                       Management                                          13%
                          11%
                                                  D&C                     Project
                                                  68%                   Management
                          Multisites
 D&C                       10%                                              3%
 62%
                          Consulting &
                      Project Management
                               7%
                                           Asia
                                                                               EPCM
                                                                                37%

                                                        PM/CM
                                                         52%


                                                                           D&C
                                                                           11%         47
Asia Pacific Backlog GPM by Sectors
December 2007


                                Other
                                 7%
         Transport/Aviation             Commercial/Office
               7%                           19%


                                                                 Commonwealth Bank, NSW
             Retail
             17%




                                                Healthcare
                                                  34%        Australian Taxation Office, ACT
    Pharmaceutical/Industrial
            16%




                                                                   Sealed Air Qingpu, China    48
Key Asia Pacific Current Projects


Key Projects                            Location        Value     FY2007   FY2008   FY2009   FY2010
Royal Children’s Hospital             Melbourne, Vic   A$1,064m

ANZ, 833 Collins Street               Melbourne, Vic   A$377m

Top Ryde Retail                       Sydney, NSW      A$470m

Brisbane International Airport        Brisbane, QLD    A$292m

Mulwala Redevelopment Project         Regional NSW     A$264m

420 George Street/Mid City Centre     Sydney, NSW      A$260m

Robina Retail Town Centre             Robina, QLD      A$180m
Abbott Nutritionals Infant Facility     Singapore      A$310m
Somerset Retail Project                 Singapore      A$155m

Genentech Microbial Facility            Singapore      A$160m

                                                                                                      49
Strategy Overview

  Australia    Balance of “Private / Public” portfolio
               Continue to lead and innovate in Safety &
               Sustainability
  Singapore    Continue to focus on Pharma / Industrial
  Pharma       Support / deliver Lend Lease’s developments                 Royal Children’s Hospital, VIC

  Thailand /   Retain presence to deliver projects for Multi-national
  Malaysia     Corporations (MNCs)
  China /      Balanced “D&C / EPCM / PM” service portfolio
  Taiwan       Focus on Project Management for MNCs
  India        Focus on Project Management for MNCs                         Somerset Project, Singapore
               Work with local partners
               Introduce Safety and Sustainability
                                                                                       TBC
  Japan        Continue to specialise in Telecommunications
               Focus on PM services for local and MNC clients
                                                                        BPB / Saint Gobain Factory, India 50
Bovis Lend Lease Investor Day
March 2008

Bovis Lend Lease Australian
Business Overview
Tony Costantino
Managing Director − Australia
The Australian Construction Market



     Strong growth in non residential construction market
     over the last 2 years

     Continued strong level of activity in the short to medium
     term
                                                                  University of NSW, NSW
     Significant government spend on health and social
     infrastructure

     Water shortage has necessitated upgrading of water
     networks across the country

     Increase in opportunities to assist owners seeking to
     ‘green’ their portfolios

                                                                 Preparatory Schools, QLD
                                                                                            52
Strategy Overview


    We are a creator of product
        Leverage project management and in-house design
        capability (Lend Lease design)
        R&D investment on new initiatives

    Continued focus on Commercial and Retail

    Diversification into Government sectors including
    Healthcare and Water                                            The Gauge, VIC

    Deliver vertically integrated solutions to Lend Lease
    e.g. Victoria Harbour

    Attract and retain the best people

                                                            Liverpool Hospital, NSW
                                                                                      53
Commercial


                                                              Backlog GPM           Commercial
Creators of leading property and workspace solutions                                  17%
                                                              Australia

Clients
Investa, Macquarie Office Trust, GPT, Colonial, Challenger,
NAB, ANZ, Freehills, Santos, Ericsson, Fortius, Lend Lease
Development, Telstra, Tenix

Current projects in delivery
   Victoria Harbour, Melbourne
         ANZ, 833 Collins Street
         The Gauge, Lend Lease
         Myer Melbourne
   420 George Street, Sydney
   Commonwealth Bank Campus, Sydney


                                                                            ANZ, 833 Collins Street, VIC   54
Retail


                                                        Backlog GPM
Specialist retail project management                    Australia

Clients                                                                       Retail
QIC, The GPT Group, APPF, Fortius, Lend Lease Retail,                         16%
The Beville Group, Delfin Lend Lease

Current projects in delivery

   Top Ryde City
   420 George St / Mid City Centre
   Robina Town Centre
   Charlestown Square
   Erina Fair Big W


                                                                      Top Ryde City, NSW   55
Healthcare & Medical Research


D&C solutions that maximise Whole of Life (WOL) value         Backlog GPM
                                                              Australia
for major hospitals and medical research facilities

Clients
State Governments, Private health operators, Universities &
Institutes

Current projects in delivery
   Royal Children’s Hospital, VIC                                               Health
                                                                                 37%
   Liverpool Hospital, NSW
   Gold Coast Hospital, QLD (Stage 1 appointment)
   Royal North Shore Research & Education Facility, NSW
   University of New South Wales Lowy Children’s Cancer
   Institute, NSW



                                                                            Royal Children’s Hospital, VIC   56
Water & Industrial


                                                         Backlog GPM
Specialist delivery of water, wastewater, pipeline       Australia
and industrial infrastructures

                                                     Water / Industrial
Clients                                                   11%
Sydney Water Corporation, Department of Defence

Current projects in delivery & preferred position
   Networks Alliance (Sydney Water)
   Water Delivery Alliance (Sydney Water)
   Mulwala Redevelopment (Dept of Defence)




                                                                          Networks Alliance, Sydney Water, NSW
                                                                                                                 57
MultiSites


                                               Backlog GPM
Project management, design, procurement and    Australia
construction management services at a state                  Multisites
and national level                                             6%

Clients
CBA, Telstra, ANZ, NAB, McDonald’s, Suncorp,
Queensland Government
Sectors
Financial, Retail, Commercial, Insurance,
Telecommunications, Education
Current Projects
Wide range of projects nationwide



                                                                          58
Bovis Lend Lease Investor Day
March 2008

Pricing a Project

Tony Costantino
Managing Director − Australia
How to Price a ‘Commercial High-Rise Office Building’


 Sample Illustration:
 Project ‘Tenant Square’
 Location: Sydney CBD
 Contract Type: 2 Stage Design & Construct
 Project Value: $250m
 Schedule:
 Overall Duration = 36 months
     − Design Period = 10 months
     − Construction Period = 26 months
                                                        60
Conversion Process

Sample illustration of Tenant Square – A$250m Commercial Office Tower

                                                       Fee Phase of Project = 10 Months
                                                                                                                            Prepare
         Client & Project                                                                              Update Market
                                 Develop           Develop         Prepare           Refine Design                          Schedule,
         Opportunity                                                                                    Pricing From
                                 Design Brief      Design          Budget Price      & Cost Plan                            Contract &
         Secured                                                                                       Subcontractors
                                                                                                                            GMP




                                                                  Agree Price,
                                                                 Time & Design
                                                                    Solution




                                                         Risk Phase of Project = 26 Months


                                        Finalise                           Commission                          Building
                  Commence                              Complete                             Tenant
                                        Detailed                           Building                            Complete &
                  Construction                          Construction                         Fit-Out
                                        Design                             Services                            Handover



                                                                                                                                         61
Project Pricing – Bovis Lend Lease Organisation Chart


                                                                                      Client




                                               Senior Cost                      Project Director
                                                Planner




                    Project Manager                     Project Manager                                                      Construction
                       Structure                        Building Services                                                     Manager




            Design               BLL Cost    Building Services               Cost                        Commercial                 Site                     Senior Site
          Consultants            Planner        Consultant                  Planner                       Manager                 Manager                     Engineer



                                                                                                                                                                  Site
                                                                                               Foreman      Foreman    Foreman        Site          Site        Engineer
                                                                                                                                    Engineer      Engineer
 Project Resourcing
    Bovis Lend Lease Project Management Team = 10 people                                      BLL       Subcontractor SubcontractorSubcontractor Subcontractor Subcontractor
                                                                                           Construction
   Bovis Lend Lease Construction Team = 40 people                                           Workers

   Design Consultants = 60 – 80 people
   Subcontract Workforce = Peak of 350 people on site


                                                                                                                                                                               62
Design & Cost Planning


  Bovis Lend Lease Project Managers will manage the creation of the design solution including the
  preparation of the Design Brief
  Design drawings are produced by a consultant team in accordance with the Design Brief
  The design is reviewed internally by Bovis Lend Lease and then with the client & ‘signed off’ at regular
  intervals
  The Cost Planner ‘measures’ the drawings to produce an overall cost plan, using the drawings and
  specifications. They will measure items, including
    Excavation                                     Building finishes
    Concrete structure                                   Ceilings
    Roof                                                 Carpet
                                                         Doors
    Façade
                                                         Lobby finishes
    Mechanical, Electrical & Hydraulic Services

 The Cost Planner then prepares an indicative estimate for the cost to design and construct the building using
 pricing information that we have from Bovis Lend Lease market data & subcontractor budget price input
                                                                                                                 63
Design Development − Value Engineering


Client budget =
If indicative Cost Plan prepared =                         based on the current design development drawings,
                                                           then the design needs to be value engineered




 Example solutions:
    Change facade material = facade cost reduced by A$100 / m2
    Increase building efficiency = increase the % of net lettable area to increase potential rent / client revenue
    Cost =

                                                                                                                     64
Subcontractor Pricing


  The design documentation is issued to Bovis Lend Lease supply chain & subcontract market for pricing
  The project team prepares the GMP based on market pricing from subcontractors for typically 60 – 80% of
  subcontract trade value
  Lump sum prices are sought from subcontractors to mitigate escalation risks
  The remaining price is prepared by Bovis Lend Lease based upon existing market information, design
  consultant pricing and pricing of required contingency
  The design and construction price for a high-rise commercial project typically includes


       Subcontractor trade cost, escalation, contingency
       Builders preliminaries & supervision costs
       Project management, cost planning, design consultant & margins




                                                                                                            65
Benchmarks

 The GMP is prepared and reviewed at levels within Bovis Lend Lease as required by the Limits of
 Authority
 Elements of the pricing are benchmarked against similar projects undertaken as well as being reviewed
 from first principles

                                    Building Efficiency                         Builder Preliminaries & Supervision Costs

                               Floorplate Analysis - Efficiencies

                        90%                                                        20
                                                                                   18
                        80%
                                                                                   16
                        70%
   Efficiency / Ratio




                                                                                   14
                        60%
                                                                                   12
                        50%
                                                                                   10
                        40%
                                                                                   8
                        30%
                                                                                   6
                        20%                                                        4
                        10%                                                        2
                        0%
                              Project A          Project B          Project C           Project A   Project B   Project C
                                             Building / Option

                                                                                                                            66
The Schedule

   Production rates that are used to determine construction activity durations and delay allowances are benchmarked against
   existing projects
   The time to design and construct the tower is documented in detail. A summary of an overall project schedule for Tenant
   Square is shown below

                           Quarters:   1st   2nd   3rd   4th     5th      6th   7th   8th   9th   10th    11th       12th      13th
                                                         Award Head Contract
                                                                                                   Structure Complete
 Concept Design
                                                                                                                 Building Watertight
 Design Development                                                                                                             Practical
                                                                                                                                Completion
 Planning Approvals (DA)
 GMP Preparation

 Enabling Works
 Detailed Design & Documentation
 Civil Works
 Basement & Podium Structure

 Tower Structure
 Façade
 Base Building Services & Finishes
 Office Fit-out & Commissioning

ILLUSTRATIVE                                                                                                                                 67

								
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