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RISKASSESSMENT RISK ASSESSMENT & RETURNONINVESTMENT RETURN ON INVESTMENT

forMitigationCustomers g MINIMIZING ANG$ ANG$T

DEFINITIONS

Customer
PrivateDeveloper p PrivateCompany Local,state,regionalor federaldevelopmentagency federal development agency InLieuFeeProgram (outsource)

Producer
InLieuFeeProgram g (inhouse) MitigationBank FullDeliveryContractor Full Delivery Contractor Design/Construction Contractor

Investment
Marketcosts StaffResources Partnerships Reputation Reputation

Risk
Fundsnotwellspent Permitsandother consequencesofnot producing

TEMPUSFUGIT
NC

WETLANDS,STREAMS, BUFFERS&NUTRIENTS BUFFERS & NUTRIENTS

RISKTOCUSTOMER RISK TO CUSTOMER Developer or InLieuFeeProgram


ILF
or

MB
or

MB
or

DBB
or

DBB
indicatespresenceofrisk tocustomer

FD
customersresponsibilityisover whenmoneypaidtoproducer h id d

NCEEPsMitigationProcurementSystems

DesignBid DesignBidBuild
LandAcquisitionbyState; Design,Build,&Monitoring g , , g Servicescontractedout
and

FullDelivery
RFP&CompetitiveSelection RFP & Competitive Selection amongFullDeliveryContractors

EXAMPLE: NCEEPsSTAFFING NCEEPsSTAFFING


(50=100%)

Production*29(58%)
incl.FullDeliveryAdministration2(4%)

Executive Administrative Executive,Administrative,21(42%) 21 (42%) Science,andAssetManagement


Yet,contractvalueawardedbetween2002and2010: DesignBidBuild$70M(<$3m/productionemployee)29% FullDelivery$174M($87m/productionemployee)71% y $ ($ /p p y )
*Productioncompriseswatershedplanning,securingpermits, andprojectmanagementthroughallphasesandmethods

260

NCEEPAnnualMitigation FY08 Orders(FY04=100)


FY09

220

180

140

100

200102 0203 0304

FY10 FY11
0506 0607 0708 0809 0910 1011

EEPbegins

60 0405

INVESTMENT(I) RISK (R),FLEXIBILITY INVESTMENT(I),RISK(R) FLEXIBILITY (F) INVESTMENT (I),RISK(R),FLEXIBILITY(F)


Customer D l Developer ILFH Banker Designer Constr.Contractor
Bad Good

IRF
H H M H H L

H=HighM=MediumL=Low

GREATER
90 80 70

100

RISKASSUMPTION CURVES
CUSTOMER (eg,ILF)

Extent tof Ris sk

60 50 40 30 20 10

PRODUCER (eg,Banker)

LOWER

0 0 10 20 30 40 50 60 70 80 90 100

OutSourced %

ReturnonInvestmentinfluencedby Return on Investment influenced by

QualityofMitigation Q lit f Miti ti Q QuantityofMitigation y g CreditAvailabilitySchedule OrganizationFlexibility O i i l ibili


andsubjecttoriskstaken/assumed

10

HIGHER
9 8 7 6 5 4 3 2 1 0 0 10 20 30 40 50 60 70 80 90 100

R RelativeRateofRet turn

RETURNON INVESTMENTCURVES

LOWER

OutSourced %

CONCLUSIONS
CUSTOMERBUSINESSMODELISKEYTOSUCCESS CUSTOMERBUSINESSMODELISKEYTOSUCCESS 1.HIGHINHOUSE PRODUCTION
Needstaffthatincludesindividualswithnatural resourceseducation&training,andindividuals resources education & training, and individuals withprojectmanagementskills;largerstaff

2.HIGHOUTSOURCED 2 HIGH OUT SOURCED PRODUCTION


Needstaffofindividualswithnaturalresources education&training,plusprojectmanagement g, p p j g skills;fewerstaff

CONCLUSIONS(continued)
3.CUSTOMERSSHOULDDECIDEONPRIMARY PRODUCTIONMETHOD
NotaQUALITYvs.QUANTITY QUALITYvs.QUANTITYissue,bothareachievable eithermethod andtransitionfrominhousetooutsource maybechallengingbutispossible may be challenging but is possible

4.OUTSOURCINGOFFERSMOSTFLEXIBILITY
Intemporaryeconomicdownturn,productionstaff haveskillstomanageandevaluatesmallerprogram

THEEND THE END

DavidRobinson dcr@full dcr@fulldelivery.com www.full www.fulldelivery.com/contact.html

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