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Rob Harries-Harris

Strategy and Commercial Model

Date: February 2014

Agenda

• Key Principles• Governance• Best Athlete Approach• Effective Planning and Control• Commercial Model• Contractual Architecture• Collaborative Management Plan

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• Ways of working based on:– Best athlete commercial arrangements

– Resource mobility

– Common goals

– Trusting, but not cosy, relationships

– Best practice without a nuclear premium

• Partner Capabilities– Effective planning and control at the heart of delivery

– Supply chain innovation

– Construction expertise during client design

– Delivery integration

Guiding Principles for DDP

Governance

Decommissioning Division

DDP Board

SellafieldProgrammes

DDP Lead Partners

DDP Management Group

OtherSellafield

Alliances /Contracts

DDPDelivery

Work Allocation

Independent CostScrutiny

DecommissioningProgramme Partner

Client / ContractManagement

Safety / CommercialFinancial / Intelligent Customer

SLSelf-

Perform

Best Athlete Approach

Decommissioning Division(Client)

DDP Board

SellafieldProgrammes

DDP Lead Partners

DDP Management Group

OtherSellafield

Alliances /Contracts

DDPDelivery

Work Allocation

SLSelf-

Perform

DDP Umbrella Agreement

Work Allocation/Reallocation

Master Plan

Need Identified

Master PlanSentencing

Make BuyAssessment

Buy Onlyor Make & Buy

Make Only

SLSanctionProcessRequired

SLSanctionProcess

Not Req’d

Delivery usingSL in-house

resources only

Delivery usingone or more of:

Delivery partnerDelivery Partner’s

supply chainSL in-house

resourceSL Supply chain

Business CaseAcquisition

Strategy

OptioneeringAgainst Criteria

Business CaseApproved

Business CaseNot Approved

LearningFrom

Experience

Delivering Improved Performance

Phase 1 Phase 2 Phase 3

Effective Planning

and Control

SPI

CPI

SPI

CPI

SPI

Effective Planning and Control

Asset Performanceand condition/level

of riskFuture Demand

Client strategies

New Issuese.g. resilience

Client Specifications Risk

BaselineWork

Programme

OptimisedWork

Programme

Annual Work Programmes

OtherActivity Schedules

Accelerations& Carry Over

OptimisedWork Programme

Current RiskLevel

Emergent Work Funding

AnnualWork

Programme

IncentivesThrough

Work

Commercial Models

• Fixed Fee modified annually in light of annual work programme (for costs not associated with project execution)

• Project Execution– Target Cost

– Cost Reimbursable

– Fixed Price

Incentive Model

• Four levels of incentives: project, programme, fee and annual work programme

• Limited project incentives immediately available to Delivery Partner

• Greater part of project incentives attributed to programme-level fund

• Programme fund shared with Delivery Partners on annual basis. Fund moderated by KPIs:– Customer service & Relationship/Integration

– Socio-Economic/SME Performance, Capacity/Capability Improvements

– Innovation

– Delivery on Time

– Delivery on Cost

– Delivery to Quality

– Health, Safety and Environmental Requirements

– Adherence to DDP Processes

• KPI Performance will also moderate Fee and Annual Work Programme

Contractual Architecture

DeliveryPartners

SellafieldLtd.

NewSupply Chain

ExistingSupply Chain

Delivery partner access to / management of SL supply chainD

eliv

ery

par

tner

acc

ess

to /

man

agem

ent

of

SL

su

pp

ly c

hai

nWork packages

Wo

rk p

acka

ges

Wo

rk p

acka

ges

Umbrella Agreement

Collateral Warranties

Collaborative Management PlanCollaborativeManagement

Plan(Operating Model)

ProgrammeManagement

People & CultureCommercialEHSSQOperations &

DeliveryICT

ProgrammeGovernance

StrategicCapability Plan

Programme RiskMitigation

TechnicalManagement

DesignManagement Plan

Commissioning

Project controls

Security Plan

LFE & KnowledgeManagement Plan

Audit Plan

DocumentControl

Health and safetyPlan

QualityManagement Plan

EnvironmentalManagement Plan

Annual WorkAllocation Plan

ContractManagement Plan

Tactical Make vBuy & Allocation/Reallocation Plan

KPI Management

Supply ChainStrategy Plan

Risk andOpportunity Plan

BenefitsRealisation Plan

Reporting Plan

StakeholderManagement Plan

ResourceManagement Plan

CulturalDevelopment

Plan

TrainingManagement Plan

Socio-EconomicPlan

CommunicationsPlan

InformationCommunicationsand Technology

Plan

Works planningand execution

DoseManagement Plan

Constructionmanagement Plan

EmergencyResponse Plan

HandoverManagement Plan

BusinessContinuity Plan

DisclaimerImportant Information

• This communication and its contents have been provided to you for informational purposes only. This communication is not advice on or a recommendation of any kind with respect to the matters described herein, including without limitation, contracting structures, contracting instruments, contracting strategies, related legal and commercial issues or any combination of such matters. This communication does not offer advice.

• No information contained herein constitutes an offer or solicitation by or on behalf of Sellafield Ltd to enter into any contractual arrangement. Sellafield Ltd. makes no representations or warranties, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information, assumptions or analysis contained herein or in any supplemental materials, and Sellafield Ltd. accepts no responsibility or liability in connection therewith. Opinions expressed in this presentation are subject to change without notice.

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