ERCI SSP Backgrounder
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- 1. CONFIDENTIALSite Strategic PlanBackgrounderContact:John Rosengard(415) 982-3100 www.erci.com 2012 Environmental Risk Communications, Inc.
2. IntroductionSite Strategic Plans (SSPs) provide a comprehensive evaluation of strategic alternatives and documents the rationale Public DomainProject for the current strategy selectionTeamSSP components: SiteSpecific Site: Site-specific location, history, andDoc- regulatory situation gy uments Exposure: Identification of risks, receptors Alternatives: Delineation of strategic alternatives Recommendation: Selection of strategic alternative and documentation of rationale behind selection 2012 Environmental Risk Communications, Inc. 2 3. Project Scope Purpose: Defines what is in / out of scope for the strategic review; frames issues needing to be addressed Details: ERCI will solicit input from portfolio manager, key consultants, external (common) counsel, and provide ideas from our portfolio of completed SSPs 2012 Environmental Risk Communications, Inc. 3 4. Current Regulatory / Counterparty Status Purpose: explains the regulatory framework and identifies key risk drivers, including any concerns about counterparties co-funding the co funding remedial work Details: Lead Agency / Status: Indicates lead and secondary agencies for the site and progression through the regulators processes Risk Drivers: Highlights key concerns or desired outcomes of regulators Land Ownership Issues: Provides ownership details regarding land, liability, assets, right of ways, liability assets right-of-ways mineral easements, etc. Counterparties: Reviews practical business concerns around any PRPs sharing in the costs of the work 2012 Environmental Risk Communications, Inc.4 5. Stakeholder Analysis Purpose: Highlights connections between stakeholders and components of the site strategy; enables evaluation of effectiveness of management strategy Details: Lists key stakeholders, ranks their influence and support from 1 (low) to 5 (high), describes key concerns and a current management strategy to address 2012 Environmental Risk Communications, Inc. 5 6. Site Location & Ownership Information Purpose: Provides an in-depth visual representation of site with property borders, facilities, neighboring communities, etc. and key areas of concern regarding the remediation strategy Details: Map or picture of the site with accompanying captions that highlights key areas to reorient the portfolio reviewer or auditor 2012 Environmental Risk Communications, Inc.6 7. General Site Information / Historical Images Purpose: Provides supplementary site data, such as contaminants of concern, ownership, EPA identification codes, and historic images of the site, specifically during years when remediation was apparent Details: Map or pictures of the site indicating its location Property borders Spill S ill areas Completed remediation New or former neighbors Receptors and pathways 2012 Environmental Risk Communications, Inc.7 8. Operating & Remediation Timeline Purpose: Provides a snapshot of the operational and remediation history at the site Details: D il Operating History will include all major activities / incidents during facilitys active operational period, including years when the property was owned, built, leased and/or demolished Remediation History will begin withg the start of the regulatory timetable; includes all major remediation milestones 2012 Environmental Risk Communications, Inc.8 9. Site Conceptual Model Purpose: Provides a visual representation of identified source- pathways, including characterization of degree of risk Details: Geological cross section overlaid with an aerial photo Provide comprehensive characterization of degree of risk to human and ecological receptors; summarize 3rd party exposure, if any 2012 Environmental Risk Communications, Inc. 9 10. Current Risks Purpose: Provides a comprehensive review of known risks, detailing the magnitude, causes and probability of a recognition trigger, and quantification of source and impacts Details: This critical slide requires thorough assessment of site risks Contains a list of sources, including descriptions of the contamination source, its magnitude, potential physical threats associated with it, key risk drivers, and financial impact 2012 Environmental Risk Communications, Inc.10 11. Other Significant Risks Purpose: Highlights significant technical and non-technical risks that exist under current site strategy Details: Includes at least 3-5 per category, with an expected outcome greater than $0.5 million Maintains a clear distinction between technical risks (escalation of planned remedial work due to unforeseen contaminants, remedy failure, etc.) and non-technical risks (litigation, regulatory escalation, new regulatory requirements, etc.) without repeating line items 2012 Environmental Risk Communications, Inc.11 12. End State Vision Purpose: Describes the long-term or future site appearance, to be achieved upon completion of remediation; can define uses, zoning, ownership Details: Remediation ESV: Overall description of end state vision for the site with description of physical end state, reflecting reasonable expectations of how the site will appear at completion and the timing of land conversiond h fl d How Do We Get There?: the short version of the major goals and deadlines for completing remediation and redeveloping the site 2012 Environmental Risk Communications, Inc.12 13. Evolution of Spending Forecasts Graphed withCumulative Actuals Purpose: Concurrently identifies cumulative spending with then-year lifecycle forecasts for closing a site Details: E l i Dil Evolution of estimates fi shows when the lifecycle cost forecast improved or worsened and provides a content to current budgeting and lifecycle forecasting With proper backup, explains how key metrics (target soil volume, duration of OM&M) impacted scope scope, schedule and budget 2012 Environmental Risk Communications, Inc.13 14. Alternative Strategy Analysis Purpose: To identify and document the variables to create a project strategy Details: B Dil Based on an understanding dddi of project completion criteria, ERCI facilitates creation of a range of creative and workable variables; a strategy is created by combining variables in a path (left to right) through each of the major project criteria 2012 Environmental Risk Communications, Inc.14 15. Summary of Alternatives Purpose: Snapshot of the range of strategic alternatives and key elements Details: ERCI typically encourages Dili ll the creation of three robust strategies; differences between strategies represent meaningful financial and/or strategic tradeoffs Strategies should be based on actionable decisions, not different degrees of uncertainty in things gy g outside of site control - minor variations in the timing of actions do not represent different strategies Descriptions focus on decisions to be made, in addition to any remediation systems design criteria 2012 Environmental Risk Communications, Inc.15 16. Summary of Financial Results: Simplified Purpose: Provides a summary of the financial implications of each strategic alternative under review Details: Extracted from the Dil E df h Summary worksheet of a Defender file; uses comparable lifecycle costs across cases 1, 2 and 3 to optimize capital stewardship Maintains reserve case in parallel for GAAP audit defense 2012 Environmental Risk Communications, Inc.16 17. Strategic Alternative Comparison NPV ($ millions) Purpose: Comparison of technical, non-technical, and aggregate risk across site strategies Details: Extracted from a Defender D il E dfD f d file with assistance from ERCI (requires a complete and current Defender file to generate) Expected value created, along with key statistics (p10, p50, p90) for multiple strategic alternatives 2012 Environmental Risk Communications, Inc.17 18. Costs for Preferred Strategy NPV ($ millions) Purpose: Identifies the sources of financial uncertainty for a single strategic alternative Details: Extracted from a Defender D il E dfD f d file with assistance from ERCI (requires a complete and current Defender file to generate) Provides a defensible and reproducible basis for bracketing a project forecast Helps project team design better metrics and appropriate incentives for key consultants and contractors Informs regulators about the sources and ranges of risk in selecting (or changing) a remedial strategy 2012 Environmental Risk Communications, Inc.18 19. SWOT Analysis of Preferred Strategy Purpose: Identifies strengths, weaknesses, opportunities, and threats of a given strategy; key takeaways explain any resulting improvements or pivotal assumptions Details: SWOT analysis on preferred strategy provides 1-5 bullets for each section; the number of strengths and weaknesses outlined should correspond to the size of the liability and the phase of the work 2012 Environmental Risk Communications, Inc.19 20. Decision Sequence Purpose: Outlines decision sequencing including when decisions need to be reached, points of no return, and financial implications of results Details: Focuses on 2-4 major decision areas and documents reserve recognition triggers, key decision points, potential outcomes, and financial consequences of each; differentiates decisions from uncertainties, all on the backdrop of a timeline; indicates the preferred path with a highlighted arrow 2012 Environmental Risk Communications, Inc. 20 21. Path Forward Purpose: Provides a comprehensive review of current reserve, any future reserve increases (watch list ), list), and recommends a time frame for Peer Reviews Details: Displays current vs. recommended reserve and recommends any changes; identifies triggers for recognizing future reserve increases, with any known cost information 2012 Environmental Risk Communications