Measuring Performance in a Commercial Enterprise

1. Measuring Performance in a Commercial Enterprise Ken SmithSenior Vice President September 12, 2006

2. Fluor Corporation’s Legacy Fluor is one of the world’s largest, publicly owned engineering, procurement, construction, and maintenance companies. • Founded more than 100 years ago • Executed more than 10,000 projects worldwide • Consistently ranked among the “Top 3” on ENR magazine’s “Design-Build Firms” and “The Top 400 Contractors” lists • One of the world’s safest contractors • Maintains a global presence: • Asia, 55 years • Africa, 41 years • Australia, 37 years • Europe, 59 years • Middle East, 59 years • South America, 61 years Corporate Headquarters – Irvine, Texas

3. Fluor Industries and Clients

4. Worldwide Projects Government Infrastructure Chemicals Government LondonUnderground Ltd. Hanford Management Contract Kodak Xiamen, China Fernald Environmental Restoration Downstream Petrochemicals Mining Phillips S Zorb Texas EQUATE Project Kuwait City, Kuwait Copper Smelter Queensland, Australia

5. Business Group Common Functions • Safety performance and Zero IncidentsSM culture • Operating System Requirements • Drives commonality across all operations globally • Project management • Engineering • Financial metrics and performance measurement • Human Resources • Global management focus • Centralized corporate approach: • Strategic planning • Business Risk Management Framework (BRMF) • Legal • Finance / cash management / SEC reporting • Public relations / government relations • Security / IR / ESH • Board of Directors / stakeholders

6. Safety Performance • Operating in 60countries worldwide; 40,000-employee diverse workforce (with language, educational and cultural differences) • Managing and monitoring 270 million of safe work hours in 2005 • Best in class performance • Management commitment to annual performance improvement • Fluor’s culture drives • Focus on precursors to prevent significant injuries/incidents • Continuous improvement • Rigorous reporting • Incident investigation and lessons learned • Senior management expectations are Zero Incidents and safety excellence

7. Safety – Lost Workday Case Rate

8. Safety – Recordable Incident Rate

9. Commercial Background • 25 years in the EPCM industry • Experience includes three EPCM firms’ cultures to draw upon • Understand the unique differences in Commercial vs. Government client organizations • Recent 3-year President of Fluor’s Manufacturing & Life Sciences group • Commercial Industry differentiators • Commercial industry specialization & market niches • Global sales & execution platform • Flexible procurement requirements • Variety of commercial / contract structures • Individual / flexible client drivers • Business unit autonomy & internal decision making • Flexible Industrial Relations / partnerships with Labor

10. Personal Operating Philosophy • Focus on safety • Clear roles, responsibility, authority and accountability • Customers want to know three things: • How smart? • How much? • How long? • We owe our client to be the lowest cost producer for a given scope • Cradle-to-Grave project execution • Comprehensive risk management • Baseline Centric approach • Human capital management • Financial performance “Bringing certainty to Technology Application, Cost and Schedule”

11. Baseline CentricSM Approach • COST MODEL • Basis of Estimate • Clarifications • Allowances • FOCUSSM • CDR • PURCHASING • Scope Reviews • Buy Sheet Tracking • Bid Pkg. Cost Distribution • SCHEDULING • Quantities • Craft • Equipment / Material BASELINE • COST CONTROL • Changes • ROM Estimates • GENERAL CONDITIONS • Staffing • Reimbursables

12. Baseline Centric Tools • Function • FOCUSsm process • Business Risk Management Framework • Cost • Detail quantity-based control estimates • Prologtm and MaterialManagersm for procurement • FDCost and ProfiToolsm for cost control • FDAS / SAP for accounting • Cost Summary Report for financial performance • Schedule • Primaveratm • EZTrak • MileMarker

13. Baseline Centric Deliverables Establish “A line in the sand early” • Accurate estimate • Detailed quantity takeoffs • Qualifications and clarifications • Allowances and exclusions • FOCUSsm sessions • Constructability reviews / alternative solutions • Value engineering • Manpower scheduling • Business Risk Management Framework • Snapshots during conceptual engineering; change management during detail design

14. Baseline Centric Flowchart

15. Performance Measurement Approaches • Safety • Monitor traditional safety trends • Application of Fluor’s safety alert system • Client feedback • Client satisfaction • Percentage of repeat business • Extensive client review process • Cradle-to-Grave project execution • Earned value management system • Independent project management review teams • Human capital • Turnover / retention • Financial performance • Margins: as sold vs. actual performance • Publicly traded company – stock price

16. Closing Thoughts • Challenge to provide commercial practices in the Government sector • Project execution success is driven by upfront planning and establishing an accurate Baseline • Managing people – We cannot lose sight of protecting the safety of our individual employees If we take care of clients, execute projects effectively, protect our employees, then we’ll achieve financial success