Protiviti Capital Projects & Contracts Solution Introduction.

Protiviti Capital Projects & Contracts Solution Introduction

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Table of Contents

Discussion Topics

Protiviti’s Capital Projects and Contracts Practice

Project Experience

Assessing Project Lifecycle Effectiveness

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Typical Capital Project Risk Universe 12

Protiviti Overview 3

Protiviti Solutions Offerings 5

Project Risk Areas 14

Appendix

Solution Leader Biographies 8


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Protiviti Overview

Member firm, SizweNtsalubaGoobodo, with 10 offices in South Africa.

Protiviti (www.protiviti.com) is a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit.

Protiviti is a wholly owned subsidiary of Robert Half International Inc. (NYSE symbol: RHI) Protiviti was launched in May 2002, when RHI reached an employment agreement with Arthur Andersen LLP to hire

approximately 700 professionals from the firm’s U.S. practice. Protiviti's highly trained, results-oriented professionals provide a unique perspective on a wide range of critical business

issues for clients in the Americas, Asia-Pacific, Africa, Europe and the Middle East.

• 6th Largest Business Consulting Firm

• 3,000+ professionals

• 1,000+ clients

• 70+ offices in over 20 countries

Protiviti’s clients include more than 35% of Fortune 1000 and Global 500 companies. We also work with smaller, growing companies, including those looking to go public, as well as with government agencies.

Protiviti is one of the fastest growing consulting firms worldwide. Our revenues have increased from US $15 million in 2002, to US $452.7 million in 2012.


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Protiviti OverviewOur market position

We are the only risk consulting practice not affiliated with an external audit firm. This is a strategic advantage because our organization is the only company that brings the resources, quality and capabilities of the large accounting firms without the regulatory concerns or current market distractions.

What makes us different

In addition to our strong position in the market we bring a unique resource model. We draw on process experts who are identical in skills to the divested consulting arms of the Big 4 firms.

Our Parent Company

Protiviti is a wholly owned subsidiary of Robert Half International, Inc. (RHI), a leader in the professional services industry. RHI was founded in 1948 and has spent years creating a reputation for excellence in finding the resources companies need to achieve success. In it’s founding of Protiviti, RHI has dedicated itself to yet another dimension of client service with Protiviti’s project management skills, industry experience and risk consulting depth.

The Protiviti “Difference”

Protiviti is the leading provider of truly independent risk and business consulting, and internal audit services with over 3,000 professionals in 70 offices worldwide. We offer a full spectrum of internal audit, consulting, technology, and corporate governance services.

Our internal audit and risk consulting services trace their origins to the Big Four professional servicesfirms, and many of our team members have Big Four consulting experience. Our internal audit practice originated in 1989 and we have invested millions of dollars in the development of internal auditing methodology, tools and people, which has prepared us to provide a broad spectrum of services across all industries, including the mining industry. We have made the investments, and our clients are the beneficiaries of our cumulative experiences.

We firmly believe that our singular focus on providing internal audit and risk consulting services provides us with a major advantage in terms of focus, commitment, and the proven ability to effectively partner with our clients.

Protiviti also offers our clients the advantage of independence. Our independence means fewer conflicts with all parties involved, now and in the future.

Boutique:• Responsive client service• Lack of SEC restrictions• Independent from attest &

tax services• Better teaming with

external auditors• Focus on core offerings• Fee flexibility

Big 4:• Methodologies & tools• Experienced professionals• Depth of risk consulting

services• Financial & management

stability• Recognized• Global presence

Protiviti combines the strengths of your Big Four and Boutique alternatives . . . .without compromise


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Protiviti Solution OfferingsProtiviti helps companies around the globe identify, measure, and navigate the risks they face within their industries and throughout their systems and processes using the proven value-add solutions summarized below.

• Enterprise Performance Management• Finance Process Optimization• Financial Reporting Remediation & Compliance • IFRS• Financial Controls & Sarbanes Oxley

Compliance• M&A Services • Enterprise Risk Management

Finance & Accounting Excellence

Finance & Accounting Excellence

• Risk Strategy & Management• Compliance

Risk & ComplianceRisk & Compliance Business Performance Improvement

Business Performance Improvement

• Supply Chain• Capital Projects & Contracts• Loss Prevention• Revenue Risk • Enterprise Business Intelligence• AP Recovery Services

• Business Continuity• IT Governance & Risk Management• IT Process Improvement• Security & Privacy Management• Application Controls Effectiveness• Enterprise Information Management• E-Discovery

Information Technology Effectiveness & Control

Information Technology Effectiveness & Control

• Audit Committee Advisory• IT Audit Services• Internal Audit Co-sourcing• Internal Audit Full Outsourcing• Internal Audit Quality Assurance reviews• Internal Audit Technology / Tool implementation• Internal Audit Transformation• Start-up & Development Advice• High Value Auditing• Data Mining & Analytics• Financial Controls & Sarbanes-Oxley

Compliance• J-SOX Compliance

Internal Audit & Financial Controls

Internal Audit & Financial Controls

• Corporate Restructuring & Recovery• Financial Investigations• Fraud Risk Management• Litigation Consulting• M&A Services

Litigation, Restructuring & Investigative Services

Litigation, Restructuring & Investigative Services


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About Protiviti’s Capital Projects & Contracts Practice

Our Capital Projects & Contracts (CP&C) team of finance, accounting, engineering, procurement, construction, and technology experts help organizations better align business processes, people and technology to maximize capital project performance. Our experienced professionals use proven methodologies to assist companies in identifying, measuring and mitigating the risks inherent in capital project activities. We help companies gain control of their capital projects, processes, and risks.

Our CP&C team brings a diverse blend of project management and construction experience, along with the in-depth knowledge and “hands-on” experience gained through numerous projects, both from a consulting and auditing perspective.

Our approach inserts Protiviti specialists into strategic areas within the project to provide the expertise critical to the team, providing you with leading knowledge for all areas of your business.

Protiviti’s CP&C practice includes leaders with both direct experience (as employees of construction and operating companies) and indirect experience (as management consultants to owners/operators) in multiple industries.

We also have several specialized consultants who have managed capital project programs at leading operating companies as part of their Project Controls Group (PCG) and Program Management Office (PMO).


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Project ExperienceBelow is a summary of recently completed projects:

Business Performance Improvement

Capital Projects Budgeting & Forecasting Assistance

Review project budget and forecast for accuracy and appropriateness of estimates, and effectively communicate capital expenditure forecasts

Project Controls Design and Implementation

Design and Implementation of a Project Controls Group and all inclusive processes to effectively manage multiple capital project simultaneously

Project Management Office (PMO) Design, Implementation and Execution

Design, Implementation, and Execution of a PMO to manage multiple capital projects while assisting clients with key hires and long term solutions to manage ongoing projects

Vendor Audits Review vendor contracts and audit charges to ensure vendor adherence to contact terms and sustainable project funding

Contract Risk Assessments Analyze vendor contracts to identify key clauses and language relating to project risk

Working Capital Optimization & Cost Reduction

Robust analysis of effectiveness of working capital performance (payables, receivables, inventory) and underlying value drivers to identify and implement immediate and sustainable savings

Spend Assessment & Strategic Sourcing

Spend categorization and analysis across all 3rd party spend, supplier/market analysis, sourcing strategy determination, implementation, and savings tracking

Warehousing / Inventory ImprovementIncluding warehouse layout / design, inventory planning and replenishment, inventory reduction, E&O analysis, inventory performance monitoring

Procure-to-Pay Transformation Including Procurement Transactions Management, Contract Lifecycle Management, AP Settlement, P-cards

Procurement Process Improvement Review the purchase requisition invoice and A/P process to improve efficiencies and enhance internal controls


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Randall CoxworthDirector, Los Angeles Office

Professional Experience

Randall is a Director in Protiviti’s Los Angeles office. Prior to joining Protiviti, he spent eight years in a large general contracting firm managing construction projects, environmental services and disaster recovery projects in the Southwest region of the U.S.. He specializes in project risk identification , earned value management and contract control assessments as well as process performance reviews to the construction, healthcare / higher education, multi-tenant housing, commercial property, hospitality, consumer products & retail industries. He has been particularly involved in providing risk consulting and internal audit services within technical areas of organizations including engineering, construction, and environmental risk management.

Randall worked in the commercial insurance claims field as a property adjuster prior to working in the construction industry for ten years. Randall also served in the United States Marine Corps for six years before being honorably discharged as a Sergeant.

Principal Areas of Practice

Randall provides clients with the following range of risk consulting services:

• Capital Projects & Construction (CP&C) Services: Worked with project owners to better manage the risks of feasibility and planning, resource allocation and commitment, contractor selection, contract management, earned value management and commission and turnover. Assisted contractors to better manage strategy and business development, project selection, estimation and bidding, project risk management, procurement selection and materials management, project delivery, & financial control.

• Environmental Services: Assisted clients in defining appropriate strategies to manage their interfaces with environmental regulatory issues and in improving their environmental risk management.

• Disaster Preparedness & Planning Services: Worked with clients to provide disaster preparedness plans to mitigate and execute business interruption contingencies based on geographical needs with appropriate disaster threat assessments.

• Business Interruption Services: Worked with clients to develop advanced business continuity plans in order to minimize financial impact for unexpected events.

• Property Claims Management & Assessment: Managed property and business claims process to ensure proper cost and time efficiencies while mitigating the claim impact.

Contact InformationDirect: +1 213.327.1324Mobile: +1 619.400.7579eFax: +1 213.327.1380Email: [email protected]

Areas of Expertise• Capital Projects & Contracts Services• Contract Management• Contract Cost Recovery Services• Internal Audit Services• Environmental Services• Disaster Preparedness & Planning• Property Claims Management &

Assessment

Industry Expertise• Mining• Industrial Products• Healthcare• Manufacturing & Distribution• Financial Services & Real Estate• Commercial and Multi-Tenant Real Estate

Education• M.B.A., University of Southern California• B.A., Political Science and Philosophy,

Northeastern Illinois University

Professional Memberships& Certifications• Project Management Institute (PMI)• National Association of Construction

Auditors (NACA) - Certified Construction Auditor (CCA)

• Risk and Insurance Management Society (RIMS)


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Cody PutnamAssociate Director, Houston


Cody is an Associate Director in the Houston office of Protiviti and a member of Protiviti’s Business Performance Improvement Consulting practice. Since joining Protiviti, Cody has helped many upstream and midstream energy companies manage various aspects of common capital project risk primarily in onshore developments, including the Eagle Ford, Marcellus, Haynesville, Fayetteville, Permian and Bossier plays. Cody has experience working with a multitude of Accounting systems in a project accounting capacity, as well as several drilling data management systems, such as Wellcore and WellView.

Cody graduated from Texas A&M University with a degree in Finance and is a Certified Internal Auditor, Certified Construction Auditor, and is Certified in Control Self-Assessment.

Recent Projects

Leading Global Resources Company

Protiviti performed multiple engagements for this leading global resources company to assist with their expansion into several shale plays in the United States, in which the company was spending US$2.5 billion annually. Supporting the Operations and Accounting groups, Cody was the lead Project Manager for these projects, which included overseeing a team helping with forecasting and planning capital spending in the new plays, establishing KPIs and management reports for monitoring project spending, performing project accounting activities as well as data mining and analytics, conducting materials management reviews, auditing vendor contract compliance, and addressing joint venture process issues.

Global Diversified Oil and Gas Production Company

Protiviti was engaged by this company to perform an assessment of its capital expenditure processes for one of its production units as a result of a large capital spending overrun. This company was spending US$1.5 billion in this delivery unit annually and was the Operator in a significant joint venture. Cody was the lead Project Manager for the assessment, which focused primarily on capital management and project control. The results of the assessment identified that the company did not have effective business processes, enabling technology, or trained resources to manage the financial and administrative aspects of developing and maintaining the assets within the unit. Protiviti recommended several organization and process related improvements and Cody was responsible for leading a PMO to help implement several of these for the company.

Contact InformationDirect: +1 713.314.5024Mobile: +1 281.960.2463Email: [email protected]

Areas of Expertise• O&G Development / Construction• Forecasting and Planning• Project Accounting / Finance• Contract Management• Procurement / Materials Management• Internal Controls• Enterprise Risk Management• Data Mining / Analytics

Industry Experience• Oil and Gas• Utilities• Manufacturing

Education• BBA – Finance

Texas A&M University• Certified Internal Auditor• Certified Construction Auditor• Certified in Control Self - Assessment• Six Sigma Green Belt (in progress)

Memberships• Institute of Internal Auditors, Member• National Association of Construction

Auditors, Member• American Society for Quality, Member


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Contact Information

Direct: +1 713.314.5031Mobile: +1 713.302.4202Fax: +1 713.314.5351Email: [email protected]

Areas of Expertise

•Capital Projects & Contracts Services•Quality, Environmental, Health & Safety Services•Internal Audit Services

Industry Expertise

•Energy•Industrial Products•Healthcare & Life Sciences•Higher Education•Government•Consumer Products & Services•Technology, Media & Communications •Real Estate

Education

•MBA, MS in Env. Management, University of Houston•BS in Civil / Mechanical Engineering Technology, University of Houston

Professional Memberships & Certifications

•Project Management Professional (PMP)•Certified Construction Auditor (CCA)•Certified Internal Auditor (CIA)•Certified in Risk Mgmt. Assurance (CRMA)•Certified Professional EH&S Auditor (CPEA)•Responsible Care Certified Auditor (RCCA)•Board of EH&S Auditor Certification (BEAC)•Institute of Internal Auditors (IIA)•National Assoc. of Construction Auditors (NACA)•Project Management Institute (PMI)


Paul is a Director in Protiviti’s Houston office. Prior to joining Protiviti in 2002 as a founder, he spent three years in a large public accounting and consulting firm managing and executing risk consulting and internal audit engagements. He specializes in risk identification and control assessments as well as process performance reviews and consulting services to the healthcare, higher education, energy, industrial products, government, consumer products & services, technology, media & communications , and real estate industries. He has been particularly involved in providing risk consulting and internal audit services within technical areas of organizations including engineering, procurement and construction as well as quality, environmental, health and safety risk management. Paul is one of the global leaders for Protiviti’s Capital Projects & Contracts (CP&C) practice and the global leader of Protiviti’s Quality, Environmental, Health and Safety (QEH&S) practice.

Paul also worked for over nine years in the Engineering, Procurement, Construction and Maintenance (EPCM) industry with a leading EPCM contractor. He specialized in providing technical services for areas such as Project Management, Quality Management, Project Engineering, Noise Control Engineering, Process Systems Engineering, Environmental Engineering and Engineering Design. Paul also served on the company’s EH&S Committee as well as the Lessons Learned Action Team. He provided leadership and oversight of the company’s annual EH&S Conference as well as their Home Office Safety Program.

Principal Areas of Practice

Paul provides clients with the following range of audit and consulting services:

Capital Projects & Contracts (CP&C) Services: We help organizations better align business processes, people and technology to maximize contract compliance and enhance cost and schedule control. We use our proven methodology to assist companies in identifying, measuring and mitigating the risks inherent in contract activities. We help companies gain control of their contracts, processes and risks.

Quality, Environmental, Health & Safety (QEH&S) Services: We assess quality, environmental, health & safety risks, evaluate control design and operating effectiveness, and provide definitive options to improve risk mitigation, process efficiency, and company profitability. We provide clients with a comprehensive approach to QEH&S risk management. Our QEH&S Risk Management Process is an integrated approach for carrying out risk management activities to enable senior management to minimize the potential impact of QEH&S risks in achieving company objectives.

Internal Audit (IA) Services: We work with Internal Audit departments to provide the value-added risk management capabilities needed to support their business strategies and continuously improve operational performance, especially in the areas of QEH&S and CP&C services.

Paul D. Pettit Jr.Director, Houston Office


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AppendixSupplemental Information


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Engineering

Engineering Delays

Over/Under-funded Cash Payment & Cancellation Fee Accounts

Uncontrolled Engineer Designs / Design Changes

Critical Equipment Purchases & Testing Procedures

Failure to Deliver Critical Equipment

Divulgence of Confidential Information

Contract Management

Lack of a Formal Bidding Process

Inconsistent Contract Terms and Conditions

Non-Standard Contracts May Not Adequately Limit Liabilities or Costs

Improper Tracking of Contracts and Contract Change Orders

Untimely and Insufficient Review of Change Orders

Segregation of Duties Conflicts to Procure Equipment and Services

Noncompliance with Contract Performance Requirements

Noncompliance with Contract Reporting Requirements

Project Management

Inconsistent Communication Protocol Between Project Groups

Delegation of Authority Structure

Poor Risk Management

Poor Communication Management

Compliance

Noncompliance to regulations by Owner or Contractors

Resources

Availability of Construction Labor

Availability of Operating Labor

Lack of Adequate Facilities

Compliance with Labor Laws

Specialty Operator Licenses

Productivity of Contractor Labor

Removal of Key Contractor Personnel from Project

Project Accounting

Capitalization of Project Costs

Inaccurate Accruals

Cash Flow Management

Tax Incentives

Tax Compliance

Invoice Review

Travel Expenditures

Procurement

Unauthorized Purchase Orders

Unqualified or Inappropriate Suppliers

Key Supplier and Equipment Due Dates

Shipment Issues / Damage to Equipment

Improper Storage / Logistics Management

Price Volatility of Services and Equipment

Reporting

Contractors Untimely or Inaccurate Reporting

Inaccurate Project Schedule

Inaccurate Project Reporting for Cost and Schedule Impact

Insufficient Detail of Project Data

Inaccurate Initial Cost Estimates

Environment Health & Safety

Inadequate Contractor Insurance

Lack of Site Access Control

Adherence to EH&S Requirements

Impact on Safety of Current Operations

Construction

Permits

Severe Weather

Poor Construction Sequencing

Engineering or Installation Issues

Community Relations Issues

Unforeseen Site Conditions

Typical Capital Project Risk Universe


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Assessing Project Lifecycle Effectiveness

Pre-Feasibility / Feasibility

Pre-Feasibility / Feasibility &

Planning

Resource Allocation & Commitment

Execution

Contractor Selection

Contract Management

Post-Completion

Commission & Turnover

Maintenance

Feasibility • Market Analysis • Portfolio Analysis • Site Selection and

Acquisition • Environmental

Review • Assumptions & Risk • Financial Analysis

Planning • Development Plan,

Schedule & Budget • Risk Assessment • Plant Configuration • Design

Specifications• Topographical

Studies• Taxes and Permits • Third Party

Permitting

Prioritize Projects • Risk Strategy • Strategic Fit• Selection

Capital Availability• Deal Structuring• Financing• Funding and Cash

Flow • Monitor Use of

Capital

Deal Approval • Portfolio Risk• Risk Committee • Deal Authorization

Owner Agreements • Owner Procedures • Third Party Services • Supply Chain

Logistics• Utilities & Permitting

Contractor Award • Plant Bid

Package • Scope

Clarification • Capability & Risk

Assessment • Negotiate Bid

Evaluation• Award

Notification Contracting• Terms and

Conditions • Permitting • Standstill Costs • Liquidated

Damages • Performance

Guarantees • Contractor

Schedule & Incentives

• Insurance and Bonding

• Review and Approvals

• Notice to Proceed

Contractor • Contract

Administration • Change Order

Authorization • Progress Billings • Claim Prevention • Work Oversight and

Inspection • Quality Assessment • Risk and Issue

Management• Status & Regulatory

Reporting

Project Financing • Letters of Credit • Contingency

Reserves• Project Draws • Covenant

Compliance• Change Order

Funding

Operations • Performance &

Guarantee Testing• Compliance &

Emissions Testing • Start-up Plan &

Responsibilities • Inspections • Operations Transfer

Close-out • Certificate of

Completion • Liquidated Damages • Warranty & Claims • Release of Liens • Contractual Terms

Post Audit• Contractor Audit • Post Financial

Analysis • Lessons Learned

Work Orders• Tracking • Suppliers/Sub-

contractors• Procurement of capital

Goods, Materials & Suppliers

Scheduling • Scheduling • Project Management • Service Delivery • Tools & Equipment • Fleet/Fixed Assets

Billing/Invoicing • Bill Rates • Travel & Expenses • Processing &

Collections

Warranty• Claims • Supplier/Subcontractor

Performance


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Pre-Feasibility / Feasibility and Planning

Resource Allocation and Commitment

Sub Processes Process Risks / Considerations

• Feasibility• Planning

• A business case was not documented or approved for the project• The processes to perform a scoping study, pre-feasibility and feasibility analysis may not

have been followed and documented. • There may not be documented processes for site selection/acquisition , environmental

analysis and financial analysis or the processes and analysis were not followed or performed.

• The budget may not be adequate to complete the project or the project plan may not address all identifiable risks.


• Prioritize Projects• Capital Availability• Deal Approval• Owner

Agreements

• The capital expenditure may not be approved through proper corporate channels • Resources may not be available to complete the project• Competitive bids may not have been solicited and evaluated based on defined criteria to

select an Engineering, Procurement, Construction Management (EPCM) firm or other vendors.

• Controls are not in place to monitor cash flow and use of capital through-out the project• Status reporting and forecasting methodologies are not in place to assist management

monitor project status


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Contractor Selection

Contract Management


• Contractor Award• Contracting

• The vendor selection process is inadequate or not followed (competitive bids are not solicited and adequately evaluated prior to awarding contracts to vendors).

• Contract terms and conditions are not advantageous to manage project costs or to allow management to monitor the vendors.

• Contractors may not be properly incentivized to complete quality work on time and on budget due to contract terms and conditions

• The scope of work is not adequate, clearly defined, or lends itself to change orders and project overruns.

• Contractors may not have the resources or expertise required to complete the project according to time and budget restraints


• Contractor• Project Financing

• Change orders may not be properly reviewed and approved to identify changes to contract scope, terms, labor rates, and other modifications

• Change orders may include tasks that are included in the scope of the original contract• Contracts may not be accessible and stored in a central location• Invoices may not be properly reviewed prior to payment to verify compliance with contract

terms and conditions • Management may not review the quality and adequate completion of work prior to approval

of progress billings• Contingency may be improperly allocated


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Commission and Turnover

Maintenance


• Operations• Close-out• Post Audit

• Purchase orders may not be properly closed-out as work is completed.• Costs may not be properly allocated as capital project costs or operating costs.• Completed work is not properly reviewed by management or the EPCM firm for acceptable

quality prior to acceptance and release of contingency


• Work Orders• Scheduling• Billing / Invoicing • Warranty

• Inefficiencies may exist in the supply chain (procurement and sourcing of goods and services)

• Management may not allocate sufficient resources to adequately manage the project


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Protiviti Capital Projects & Contracts Solution Introduction.

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