November 2008 Developing a Cleantech Strategy American Council of Engineering Companies (ACEC) Scott Boutwell C – Level Strategies LLC

Overview My Background Definitions Market Drivers in EPC & Sustainability Cleantech Segments and Related Service Areas Benchmarking: what are other firms doing? Strategy Framework Q&A

My Background

Definitions

Market Drivers in EPC & Sustainability

Cleantech Segments and Related Service Areas

Benchmarking: what are other firms doing?

Strategy Framework

Q&A

“For Those About to Rock….We Salute You”

Scott Boutwell Strategy Consultant in Sustainability & EPC Former EPC executive from URS Corp, Oracle, & the Shaw Group 25+ years in business development & strategy; clients include HP, Chevron, PG&E, Unocal, Lockheed Martin Published on Cleantech.com, Greenbiz, GreenerBuildings, ENN, Celsias, TriplePundit, and SustainableMinds ; plus books on water quality modeling & chemical risk mgt Thought leader in buildings & asset mgt, water, & environmental mgt systems AEC & Cleantech Trends Blog: www.scottboutwell.blogspot.com Complete Profile on LinkedIn: www.linkedin.com/in/scottboutwell (Representative Clients)

Former EPC executive from URS Corp, Oracle, & the Shaw Group

25+ years in business development & strategy; clients include HP, Chevron, PG&E, Unocal, Lockheed Martin

Published on Cleantech.com, Greenbiz, GreenerBuildings, ENN, Celsias, TriplePundit, and SustainableMinds ; plus books on water quality modeling & chemical risk mgt

Thought leader in buildings & asset mgt, water, & environmental mgt systems

AEC & Cleantech Trends Blog: www.scottboutwell.blogspot.com

Complete Profile on LinkedIn: www.linkedin.com/in/scottboutwell

What Level is this Presentation?

What Level is this Presentation? Not really this…..

What Level is this Presentation? … but more of this

Today’s Headlines…. FDA Asked to Rethink Bisphenol A Safety Panel Says FDA Should Reconsider Earlier Conclusion That Plastic Chemical Is Safe Sustainability Reporting Grows Dramatically Among Multinationals By GreenBiz Staff Coca-Cola Continues to Make Strides on Water, Recycling By GreenBiz Staff Baxter Named to Dow Jones Sustainability Index for Tenth Consecutive Year Company Named 2008 Medical Products Industry Leader ENVIRONMENTAL CAPITAL Daily analysis of the business of the environment by The Wall Street Journal. Industry to Congress: Renew the Expiring Clean-Energy Credits

Sustainability Sustainability means “ meeting the needs of the present without compromising the ability of future generations to meet their own needs .” “ Sustainability is not a new market, but a retooling of the business model”

Sustainability and Cleantech Cleantech : used to describe knowledge-based products or services that improve operational performance, productivity , or efficiency while reducing costs, inputs, energy consumption , waste , or pollution .

EPC Market Drivers External Driver Consolidation Outsourcing Scarcity Abundance Global (new construction, envt) and US (security, upgrades, hazwaste). ( Example: 7.5% compound annual growth rate on infrastructure spending from 2005 to 2013) Lack of qualified technical personnel: Aging workforce and fewer engineering graduates Fortune 100 and national governments are increasingly relying on relationship-based E&C firms Successful mergers require compatible corporate cultures, repeatable processes, and integrated multi-discipline toolsets Risk Management Potential impacts on profits, brand, and resources: Health & Safety Regulatory Compliance Bonding & Insurance

Potential impacts on profits, brand, and resources:

Health & Safety

Regulatory Compliance

Bonding & Insurance

EPC Market Drivers…and corresponding sustainability issues… External Driver Consolidation Outsourcing Scarcity Abundance Global (new construction, envt) and US (security, upgrades, hazwaste). ( Example: 7.5% compound annual growth rate on infrastructure spending from 2005 to 2013) Lack of qualified technical personnel: Aging workforce and fewer engineering graduates Fortune 100 and national governments are increasingly relying on relationship-based E&C firms Successful mergers require compatible corporate cultures, repeatable processes, and integrated multi-discipline toolsets Risk Management Potential impacts on profits, brand, and resources: Health & Safety Regulatory Compliance Bonding & Insurance Sustainability Issue Customer satisfaction Ability to provide services Shareholder value Competitive position Service quality Employee satisfaction

Potential impacts on profits, brand, and resources:

Health & Safety

Regulatory Compliance

Bonding & Insurance

Sustainability Market Drivers (for EPC clients) Aligned to client’s strategy New business lines Higher profitability Brand Management Optimizing use of Assets Managing Risks Providing Long Term shareholder value

New business lines

Higher profitability

Brand Management

Optimizing use of Assets

Managing Risks

Providing Long Term shareholder value

Sustainability Market Drivers (for EPC clients) Measures to create sustainability Reduce Emissions Manage past liabilities Materials safety Waste reduction Energy reduction Resource management (land, water) Create social value with employees, clients, shareholders, NGOs

Reduce Emissions

Manage past liabilities

Materials safety

Waste reduction

Energy reduction

Resource management (land, water)

Create social value with employees, clients, shareholders, NGOs

Sustainability Market Drivers (for EPC clients) Goals sought by clients Improve Products and Services Improve Return on Physical Assets Optimize Operational execution Optimize Value Chain & Shareholder Impacts Enhance Strategy Development & Leadership

Improve Products and Services

Improve Return on Physical Assets

Optimize Operational execution

Optimize Value Chain & Shareholder Impacts

Enhance Strategy Development & Leadership

Sustainability Market Drivers (for EPC clients) Examples of Goals Operations Eliminate operational waste and improve efficiencies within the company’s facilities. Reduce waste streams in packaging, process / assembly, and transportation Supply Chain Maximize profitability throughout the supply chain while reducing product waste and reducing transportation costs Eliminating product waste via collaboration with partners in the supply chain. Identify new ways to better forecast sales and match product to demand. New Business Opportunities New product & solution launches; re-formulating old brands for newer markets Identify & prioritize ‘green’ acquisition targets to pursue

Operations

Eliminate operational waste and improve efficiencies within the company’s facilities.

Reduce waste streams in packaging, process / assembly, and transportation

Supply Chain

Maximize profitability throughout the supply chain while reducing product waste and reducing transportation costs

Eliminating product waste via collaboration with partners in the supply chain.

Identify new ways to better forecast sales and match product to demand.

New Business Opportunities

New product & solution launches; re-formulating old brands for newer markets

Identify & prioritize ‘green’ acquisition targets to pursue

CleanTech Market Taxonomy (from: www.greentechmedia.com)

Follow the money….

EPC Services Climate Management Corporate GHG Footprinting Climate Risk Assessment and Management Climate Change Strategy Development Regulatory and Voluntary Market Entry Strategies Carbon Market Analysis and Forecasting Project Due Diligence and Development Climate Policy Analysis and Design Life Cycle Assessment & Modeling CSR Reporting

Corporate GHG Footprinting

Climate Risk Assessment and Management

Climate Change Strategy Development

Regulatory and Voluntary Market Entry Strategies

Carbon Market Analysis and Forecasting

Project Due Diligence and Development

Climate Policy Analysis and Design

Life Cycle Assessment & Modeling

CSR Reporting

EPC Services Environmental Mgt. Air, Water, & Soil Remediation Activated Carbon and Resin Filters Metal/Sox/NOx, Carbon Removal Water and Wastewater Treatment Ultra-purification Food and Beverage Production Recycling and Waste Treatment Solids and Liquids Recycling Hazardous & radioactive materials Management

Air, Water, & Soil Remediation

Activated Carbon and Resin Filters

Metal/Sox/NOx, Carbon Removal

Water and Wastewater Treatment

Ultra-purification

Food and Beverage Production

Recycling and Waste Treatment

Solids and Liquids Recycling

Hazardous & radioactive materials Management

EPC Services Energy Mgt . Energy generation Renewable resources (e.g., solar, wind) Fuel cells Microturbines Biofuels Energy infrastructure Advanced metering networks Advanced transmission technologies

Energy generation

Renewable resources (e.g., solar, wind)

Fuel cells

Microturbines

Biofuels

Energy infrastructure

Advanced metering networks

Advanced transmission technologies

Design, Construct, Build, & Operate Lifecycle Opportunities to Leverage Cleantech Sustainability “Attributes” Energy Efficiency Health & Safety Resource Mgt Analysis Pre Project Pilot Study Design/Re-design Document updates & delivery Engineering Design Preventive Maintenance Operation Condition Based Maintenance Procurement Commissioning Check Start Improvements Feedback Go live

Sustainability “Attributes”

Energy Efficiency

Health & Safety

Resource Mgt

Benchmarking What are other EPC firms doing in sustainability & cleantech?

Case Study: ENR Top 50 Firm Focus on Key Markets of Strength Strong brand in building design Positioned for steady growth Changing Customer Demands Loss of Sales Opportunities Concern with long term growth and talent acquisition & retention Identify critical sustainability trends in core markets Strategy to partner with thought leading customers Built customer advocacy and advisory groups Leveraged key wins to build a ‘referenceable’ base Strategy to ‘eat your own dog food’ Strategy to leverage & incorporate other market changers’, like BIM Background & Challenges Initiatives

Strong brand in building design

Positioned for steady growth

Changing Customer Demands

Loss of Sales Opportunities

Concern with long term growth and talent acquisition & retention

Identify critical sustainability trends in core markets

Strategy to partner with thought leading customers

Built customer advocacy and advisory groups

Leveraged key wins to build a ‘referenceable’ base

Strategy to ‘eat your own dog food’

Strategy to leverage & incorporate other market changers’, like BIM

Case Study: ENR Top 20 Firm Initiatives in the Water Business Unit Strong brand in water treatment & conveyance “ Extremely Siloed” business groups Conducting some sustainability projects currently, but: How to take credit? Where are these projects, and how can they be shared? Strategy to provide more planning services Increases collaboration Opportunity to provide higher value services Identify sustainability ‘metrics’ or ‘attributes’ in each project Energy efficiency in water pumping & membrane use Work with clients in advance of RfPs to include sustainability criteria Example: ‘social’ criteria for customer service levels in a water utility Background & Challenges Initiatives

Strong brand in water treatment & conveyance

“ Extremely Siloed” business groups

Conducting some sustainability projects currently, but:

How to take credit?

Where are these projects, and how can they be shared?

Strategy to provide more planning services

Increases collaboration

Opportunity to provide higher value services

Identify sustainability ‘metrics’ or ‘attributes’ in each project

Energy efficiency in water pumping & membrane use

Work with clients in advance of RfPs to include sustainability criteria

Example: ‘social’ criteria for customer service levels in a water utility

Case Study: ENR Top 10 Firm Leveraging Knowledge Management 11,000 employees on 6 continents Civil engineering consulting Over 120 years old Late 90’s ~ 3,000 employees in US Rapid growth through overseas M&A Project-oriented ~ silos are part of the business model Utilized both ‘ Communities of Practice - CoP’ and “ Practice Area Networks - PAN ’ Processes not codified Groups were not global Leverage CoP for collaboration on new practices, methods, technologies Leverage PAN as specific communities evolve and growth / client needs evolve Focus on business value Professional management Proactive workshop schedule, along with company portal Practice Networks go global Develop alliances with outside vendors / partners Background & Challenges Initiatives

11,000 employees on 6 continents

Civil engineering consulting

Over 120 years old

Late 90’s ~ 3,000 employees in US

Rapid growth through overseas M&A

Project-oriented ~ silos are part of the business model

Utilized both ‘ Communities of Practice - CoP’ and “ Practice Area Networks - PAN ’

Processes not codified

Groups were not global

Leverage CoP for collaboration on new practices, methods, technologies

Leverage PAN as specific communities evolve and growth / client needs evolve

Focus on business value

Professional management

Proactive workshop schedule, along with company portal

Practice Networks go global

Develop alliances with outside vendors / partners

Case Study: ENR Top 10 Firm Develop an Alliance Strategy Identify emerging technology needs Client feedback Practitioners’ networks Align with Specific Market Strategy (i.e. water, plant, civil, transportation) Identify sources of innovation Through clients, NGOs, others Through practitioners / GBUs Establish responsibility to research and evaluate new technologies Solutions / Services Client Companies (or groups) Start Ups / Early Stage Tech Firms Established Tech (i.e. Siemens, JCI, Nalco) NGO Academia Background & Challenges Potential Partners

Identify emerging technology needs

Client feedback

Practitioners’ networks

Align with Specific Market Strategy (i.e. water, plant, civil, transportation)

Identify sources of innovation

Through clients, NGOs, others

Through practitioners / GBUs

Establish responsibility to research and evaluate new technologies

Solutions / Services

Client Companies (or groups)

Start Ups / Early Stage Tech Firms

Established Tech (i.e. Siemens, JCI, Nalco)

NGO

Academia

Examples of potential academia partners Visibility into emerging technologies Limited investment required Enhances Brand / Image Source of new talent

Visibility into emerging technologies

Limited investment required

Enhances Brand / Image

Source of new talent

Cleantech Strategy Development… Integrate with Company Strategy Not separate Not an add-on Starting Off Start in one practice area or vertical Optimize, then build on success Align with key sustainability initiatives of strategic clients Benchmark Assess competition: current and forecasted Input from NGOs and other influencers Identify best practices Compare and identify gaps within practice areas Develop Timeframe Prioritize needs according to most important markets Quick wins vs. Long Term success; get both

Integrate with Company Strategy

Not separate

Not an add-on

Starting Off

Start in one practice area or vertical

Optimize, then build on success

Align with key sustainability initiatives of strategic clients

Benchmark

Assess competition: current and forecasted

Input from NGOs and other influencers

Identify best practices

Compare and identify gaps within practice areas

Develop Timeframe

Prioritize needs according to most important markets

Quick wins vs. Long Term success; get both

…and some ‘takeaways’…. Identify a strategic client, map to their need; and partner with them Find key wins, identify sustainability ‘attributes’, and leverage Leverage Social Networking / KM Foster development of ‘Communities of Interest’ to identify best practices Empower staff to make a difference in their work & community Take ‘credit’ for sustainability wins, and communicate Develop a Cleantech Alliance Strategy, and implement via a corporate development or BD group

Identify a strategic client, map to their need; and partner with them

Find key wins, identify sustainability ‘attributes’, and leverage

Leverage Social Networking / KM

Foster development of ‘Communities of Interest’ to identify best practices

Empower staff to make a difference in their work & community

Take ‘credit’ for sustainability wins, and communicate

Develop a Cleantech Alliance Strategy, and implement via a corporate development or BD group

Contact Info Scott Boutwell C – Level Strategies San Rafael CA [email_address] 415-279-3730 Complete bio may be reviewed at: http://www.linkedin.com/in/scottboutwell AEC & Cleantech Trends Blog : www.scottboutwell.blogspot.com

Q & A