DISCUSSION PAPER
Gainshare/Painshare Regime Guidance Paper with sample model/drafting
Prepared by PCI Alliance Services (PCI)
Notes: 1. This document is based on a document that PCI prepared for the Alliancing Association of Australasia (AAA) in Nov2010. That document is in the processes of being reviewed by the AAA as the basis for an AAA guidance paper to supplement the model form of Project Alliance Agreement published by AAA on its website. 2. This document has been modified from the version originally prepared for the AAA. 3. This document has not yet been formally reviewed by the AAA, nor is it endorsed in any way by the AAA. 4. This document is copyright and all intellectual property rights remain with PCI Alliance Services. Users are free to copy and distribute this document provided the entire document including this page is copied/distributed. Users may reference material from this document provided they acknowledge PCI and this document as the source of that material.
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Gainshare/Painshare Regime Project Alliance Agreement
Guidance Paper with sample model/drafting
Table of Contents 1
Introduction ........................................................................................................................3 1.1 Context................................................................................................................................. 3 1.2 Scope and limitations of this document ............................................................................... 3
2
General Guidelines ............................................................................................................4 2.1 Underlying rationale ............................................................................................................. 4 2.2 Structuring the Gainshare/Painshare Regime ..................................................................... 5 2.3 Guidance on drafting ........................................................................................................... 7
3
Sample model and drafting ...............................................................................................7 3.1 General ................................................................................................................................ 7 3.2 Sample model ...................................................................................................................... 7
4
Gainshare/Painshare Regime (sample drafting) .............................................................9 4.1 Overview of Gainshare/Painshare mechanisms.................................................................. 9 4.2 Target Out-turn Cost (TOC) ................................................................................................. 9 4.3 NOP downside risk cap ....................................................................................................... 9 4.4 Overall KRA Score (OKS) .................................................................................................... 9 4.5 OKS pool............................................................................................................................ 10 4.6 TOC underrun/overrun ....................................................................................................... 10 4.7 Performance in non-cost KRAs ......................................................................................... 10 4.8 Major Event Modifier (MEM) .............................................................................................. 10 4.9 Sharing of pain /gain amongst NOPs ................................................................................ 11 4.10 Charts and worked examples of Gainshare/Painshare Regime ........................................ 11 4.11 Target Adjustments ............................................................................................................12 4.12 Actual Outturn Cost (AOC) ................................................................................................ 12 Appendix 1 – Gainshare/Painshare Regime Particulars ................................................................... 13 Appendix 2 – Charts illustrating the Gainshare/Painshare Regime .................................................. 14 Appendix 3 – Worked examples of Gainshare/Painshare Regime ................................................... 20
List of Tables Table 1 – Rationale underlying Gainshare/Painshare Regime ..................................................................... 4 Table 2 – Overview of typical Gainshare/Painshare components ................................................................ 5 Table 3 - Gainshare/Painshare components ................................................................................................. 9 Table 4 – Summary of the build-up of the TOC .......................................................................................... 13 Table 5 – Key information for the worked examples in Appendix 2 ............................................................ 20
Acronyms used in this document AAA AOC KPS KRA MEM NOP OKS PAA PDP PEP TCE TOC
Alliancing Association of Australasia Actual Out-turn Cost KRA Performance Score Key Result Area Major Event Modifier Non-Owner Participant Overall KRA Score Project Alliance Agreement Project Development Phase Project Execution Phase Target Cost Estimate Target Out-turn Cost
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1
Introduction
1.1
Context
Guidance Paper with sample model/drafting
The Alliancing Association of Australasia (AAA) has developed a model form of document that generally represents a common approach amongst AAA members to the core features and principles of a project alliance agreement (PAA). In the AAA’s model form of PAA the Compensation Framework is set out in Schedule 5. Section 4 of Schedule 5 notes: The Gainshare/Painshare Regime should be developed with the assistance of a commercial advisor. A separate Guidance Paper and Model is available to assist with the completion of this section of the Compensation Framework While this Guidance Paper with sample model/drafting can be read in conjunction with the AAA’s model form of PAA, it can also be read in conjunction with other forms of Project Alliance Agreement currently in use in Australasia. Defined terms have the same meaning assigned to them in the AAA’s model form of PAA 1 . 1.2
Scope and limitations of this document
This document aims to: a)
provide general guidance on how to structure a Gainshare/Painshare Regime for a stand-alone capital project alliance; and
b)
give an example of the drafting of a typical model.
This document does not provide guidance on how to structure or draft a Gainshare/Painshare Regime for alliances other than a stand-alone capital project alliance (eg. long-term maintenance or operational alliances, multi-project program alliances, etc.). While the underlying principles are the same for other types of alliance the mechanics are generally quite different to the approach illustrated in this Guidance Paper. This document is not intended to be a complete or comprehensive guide to structuring or drafting a Gainshare/Painshare Regime – only a general overview. Readers are encouraged to read section 4.3 and Appendix E of the Practitioners’ Guide to Alliance Contracting 2 for further guidance. Regardless of the type of alliance, when developing the Gainshare/Painshare Regime advice should be sought from an experienced alliance commercial advisor who: •
understands the principles of alliancing;
•
knows how to structure the Gainshare/Painshare Regime in line with those principles, and
•
is able to draft the Gainshare/Painshare Regime in clear precise terms.
1
Note that this paper uses the term “Gainshare/Painshare” instead of the term “Gainshare” used in the AAA’s Project Alliance Agreement
2
Published by Department of Treasury and Finance Victoria, October 2010. Available from www.dtf.vic.gov.au
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2
General Guidelines
2.1
Underlying rationale
Guidance Paper with sample model/drafting
Table 1 below gives a summary of the rationale underlying the design of a Gainshare/Painshare Regime: Context
The Gainshare/Painshare Regime is a critical part of the PAA as it determines how risks (and opportunities) are allocated between the Participants. It should be written in clear and precise terms.
Purpose
To align the commercial interests of the Non-Owner Participants (NOPs) with the Owner’s project objectives and encourage the Participants to behave in a manner that is consistent with the Alliance Principles. It is often stated that the Gainshare/Painshare Regime drives the performance of the NOPs. While this is technically correct it can be misleading. It is perhaps more correct to say that effective leadership drives performance and a well-designed Gainshare/Painshare Regime will support and reward effective leadership by aligning the commercial interests of the Participants and removing barriers to effective leadership across the whole project team.
Key guiding principles
Outcomes
1.
All Participants either all win or we all lose - win/lose, win/neutral or lose/neutral outcomes are not acceptable.
2.
Gainshare/Painshare is based on the collective performance of the Participants, not on the performance of individual Participants or the NOPs.
3.
Complete transparency in all arrangements – ie. full open-book.
4.
Equitable sharing of gain and pain, commensurate with actual performance and the real value attributed by the Owner to the alliance's performance across all key result areas (KRAs). [Note that equitable does not necessarily mean equal or symmetrical.]
5.
Must encourage and support all Participants in adhering to the Alliance Principles.
6.
Make it practical and keep it as simple as possible. Must be easily communicated to, and understood by, those people whose behaviours it is aiming to influence.
A well-designed and well-implemented Gainshare/Painshare Regime will result in the following outcomes: A.
All Participants are fully committed to the Gainshare/Painshare Regime, based on a genuine belief that the Gainshare/Painshare Regime is fair and equitable. All Participants remain fully supportive of the Gainshare/Painshare Regime, regardless of the financial outcome – ie. no complaints from the Owner if the NOPs secure maximum Gainshare, and no complaints from the NOPs if they suffer maximum Painshare.
B.
The Gainshare/Painshare Regime is defensible, regardless of the actual outcome. The Owner can demonstrate how the Gainshare/Painshare Regime is linked appropriately to the real value to the Owner of the alliance's performance/outcomes.
C.
The Gainshare/Painshare Regime encourages and supports behaviours that facilitate effective leadership throughout the alliance and are consistent with the Alliance Principles. Table 1 – Rationale underlying Gainshare/Painshare Regime
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Gainshare/Painshare Regime Project Alliance Agreement 2.2
Guidance Paper with sample model/drafting
Structuring the Gainshare/Painshare Regime
To ensure full “ownership” from all Participants, the Gainshare/Painshare Regime in its final form should reflect the genuine alignment of all the Participants (not a begrudging or forced agreement). However in most cases, given that the Gainshare/Painshare Regime must focus on the outcomes that are of value to the Owner, in the first instance the Owner should prepare a proposed Gainshare/Painshare Regime as the starting point for the alignment discussions with prospective NOPs. The number of different ways of structuring the Gainshare/Painshare Regime is limited only by the imagination. A Gainshare/Painshare Regime that is suitable on one project is unlikely to be appropriate on other projects. However an Owner with a portfolio of individual project alliances would typically adopt a broad overall framework that is common across all the projects but customise the detailed mechanisms and/or specific parameters within that framework to suit each particular project. The “risk/reward profile” (from the perspective of the NOPs) can be altered radically for different projects by changing the detailed mechanisms or specific parameters within the same overall framework. The Gainshare/Painshare Regime typically comprises the components set out in Table 2 below. Capital cost performance
A sharing of the overrun/underrun depending on how the Actual Out-turn Cost (AOC) compares with the final Target Out-turn Cost (TOC). There are many different ways of varying this component – such as changing the ratios for distributing underrun/overrun between the Owner and the NOPs, and amongst the NOPs. For example, although the typical default is a sharing of 50:50, this can be varied: • the ratios may be different between underruns and overruns; • the ratios may vary for different magnitudes of overrun/underrun, or may include “flat zones” within which overruns or underrun are absorbed 100% by the Owner (or the NOPs), and/or • a portion of underruns may be set aside to fund Gainshare in non-cost KRAs
Schedule/time performance
A sharing of the perceived value to the owner where the alliance completes the project (or specific milestones) before or after the agreed target dates. [Schedule/time is sometimes subsumed with the “Other KRAs” component, and does not appear as a separate component.]
Other KRAs
Incentive mechanisms focussing on other KRAs that are of vital importance to the Owner, such as: • occupational health and safety 3 • care of the environment • stakeholder interface/satisfaction • interface with and impact on Owner’s operations • performance of the asset in operation, including on-going operating costs • legacy The actual mechanisms and the relative weighting between the different elements will vary widely between different Owners and different projects. Table 2 – Overview of typical Gainshare/Painshare components
3
Note - many practitioners believe that health & safety is of such paramount and fundamental importance that it is better not to link health & safety practices and/or outcomes to Gainshare/Painshare.
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Guidance Paper with sample model/drafting
There are many different aspects to be considered when designing a Gainshare/Painshare Regime. The following is a list of some of the things that should be considered – there are many other considerations not listed here: 1)
Typically the Painshare for each NOP is capped, usually at a level equal to the NOP’s Fee. Sometimes the Gainshare is also subject to an overall cap, typically also equal to the Fee. More recently some commentators have suggested that having a Painshare cap may not be appropriate 4 and some even suggest a reverse cap (where the Owner’s downside risk is capped). Practitioners are urged to make sure they fully understand the consequences before suggesting or agreeing that the Painshare cap should be removed. In many cases it will not be in the Owner’s interests to remove the downside cap.
2)
One of the key principles noted in Table 1 above is to “make it practical and keep it as simple as possible”. Even minor deviations from a relatively simple base model can introduce complexities into the Gainshare/Painshare Regime that may not at first be apparent. For this reason it is recommended that the Gainshare/Painshare Regime is modelled and tested (eg. using Excel or equivalent modelling software) so that it is fully understood by the Owner and the prospective NOPs before being finally agreed.
3)
In designing the mechanisms for non-cost KRA incentives it is preferable where practical to link Gainshare/Painshare to actual measureable outcomes rather than initiatives that are expected/assumed to deliver the desired outcomes (eg. alliance team culture).
4)
It is fairly common on project alliances in Australia and New Zealand to have some form of modifier mechanism that modifies the Gainshare/Painshare otherwise flowing to/from the NOPs under the base mechanisms within the Gainshare/Painshare Regime.
5)
How will the Owner fund payments to the NOPs for superior outcomes in KRAs that are not inherently self-funded? There are many different ways of doing this.
6)
The gain/pain profile as perceived by the NOPs – in this respect: • Typically the incentive mechanisms for non-cost KRAs are inherently capped in that a fixed or limited amount of gain/pain is associated with the extreme ends of the performance spectrum. • What is the balance between maximum theoretical/likely Painshare and maximum theoretical/likely Gainshare? It is not unusual for the maximum theoretical Painshare to be several times greater than the maximum theoretical Gainshare. This may be equitable where the value lost by the Owner through inferior outcomes is much greater than the value gained by the Owner from superior outcomes. • What about the rate at which gain accumulates compared to the rate at which pain accumulates? • How “aggressive” is the TOC? For instance, where a Monte Carlo analysis of the inherent uncertainties is carried out, the output from the Target Cost Estimate will be in the form of a cost probability distribution curve. At what point along this curve should the TOC be chosen – should it be the point that matches a probability of 50% (the P50 point) or some other point?
4
Appendix E, p150 of the Practitioners’ Guide to Alliance Contracting, says that the Painshare cap “may undermine the key features of the alliance, including the concepts of risk and opportunity sharing and ‘Best for Project’ decision-making”.
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Gainshare/Painshare Regime Project Alliance Agreement 2.3
Guidance Paper with sample model/drafting
Guidance on drafting
Whatever the model that is adopted for the finally agreed Gainshare/Painshare Regime, it should be drafted in clear unambiguous terms. In this respect: 1)
The drafting should aim to set out clearly and precisely for the agreed Gainshare/Painshare Regime the commercial impact for each Participant across the full range of possible outcomes. Precise mathematical formulae should be used to avoid any ambiguity. The inclusion of background information explaining the underlying rationale or how the deal was arrived at is unnecessary and may give rise to ambiguity. The drafting should say what needs to be said – no more and no less.
2)
In some cases it may be useful to include charts and/or worked examples to illustrate the operation of the Gainshare/Painshare Regime. However if charts and/or worked examples are used it is essential that they have been checked and tested to ensure that they match the provisions in the main document. In particular it is recommended that worked examples are taken from a spreadsheet that has been rigorously tested and that charts are generated from that spreadsheet and not based on a “freehand” intuitive basis.
3
Sample model and drafting
3.1
General
Section 4 below contains an example drafting that could be inserted into the relevant part of the section/appendix of a typical Project Alliance Agreement, based on the relatively simple Gainshare/Painshare Regime described below. It is not suggested that this is the only or the preferred way to draft the Gainshare/Painshare Regime. However it is considered to be an example of appropriate drafting. 3.2
Sample model
The sample draft in section 4 below is based on the following Gainshare/Painshare Regime: Description of Gainshare/Painshare Component
1
Sharing of underrun/overruns i.e. where Actual Out-turn Cost (AOC) is less than or more than the Target Out-turn Cost (TOC) AOC
2
TOC
Overall KRA Score (OKS)
Step 1 - Performance is measured in each KRA by a KRA Performance Score (KPS) - a number between -100 (total failure) and +100 (gamebreaking)
3
KRA1
KPS1
W1%
KRA2
KPS2
W2%
KRA3
KPS3
W3%
KRA4
KPS4
W4%
Step 2 - The KPSs are blended using preagreed KRA weightings (W) to calculate an Overall KRA Score (OKS)
Legend:
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An OKS of +100 would secure all of the OKS pool for the NOPs, an OKS of 50 would secure 1/2 the OKS pool
There is no Gainshare associated with MEMs
The MEM score (MEM) is a number between -100 and 0, based on an accumulation of (negative) points where the Alliance is responsible for causing certain negative events in critical areas that are completely unacceptable to the Owner and the NOPs
= measured performance
Painshare Overruns are shared 50:50 between the Owner and the NOPs
The NOPs pay the Owner a portion of a maximum OKS pain amount (pre-agreed as a % of the TOC). An OKS of -100 would require NOPs to pay the full maximum pain amount, an OKS of 50 would require payment of 1/2 the maximum pain amount
OKS
Major Event Modifier (MEM)
MEM
Gainshare Underruns are shared between the Owner and the NOPs with some portion set aside to fund Gainshare payments for superior performance in the other KRAs. Sharing ratios depend on the extent of the underrun The NOPs receive a portion of an OKS Pool, comprising a seed fund provided by the Owner plus any top-ups from underruns.
If the MEM score was -100, to the extent that the NOPs were entitled to a net Gainshare from all other components, 100% of that entitlement would be lost. Also, 25% of the Fee would also be lost. For an MEM score between 0 and -100 the loss would be pro-rated
= calculated score
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Guidance Paper with sample model/drafting
Some points to note in respect of the sample model/drafting: 1)
The drafting/model is based on a total of four NOPs where NOP1 and NOP2 are constructors and NOP3 and NOP4 are designers/consultants.
2)
No separate Gainshare/Painshare component for Schedule/time. [Schedule/time could still be one of the KRAs within the non-cost KRAs component.]
3)
A Major Event Modifier (MEM) mechanism has been included. The MEM modifies the net Gainshare (if any), and up to 25% of the Fee, which would otherwise be payable to the NOPs, where the Alliance is responsible for causing certain negative events in critical areas that are totally unacceptable to the Owner and the NOPs. [This style of MEM has been used on numerous project alliances in Australia.]
4)
The maximum theoretical Painshare from the OKS (at 4% x TOC) is twice the seed fund (at 2% x TOC) being made available by the Owner for OKS Gainshare.
5)
There is an overall cap on NOP Painshare equal to the Fee. This is (or at least has been to date) the common practice on Australian and New Zealand project alliances.
6)
For simplicity, the drafting is based on the premise that the TOC has already been agreed. This would be the case where the PAA is used only for the Project Execution Phase (PEP). If the PAA was being used to cover both the Project Development Phase (PDP) and the PEP, then the PAA would need to be signed before the start of the PDP and the drafting would need to be modified in several places (a little, not a major amount) to deal with the fact that at the time the PAA is drafted/executed: (a) the TOC is not known or agreed, and (b) the Performance Measurement Procedures would not exist, but would be a document that is to be developed by the Participants during the PDP.
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Guidance Paper on Gainshare/Painshare Regime Project Alliance Agreement
Section 4 of Schedule 5 Hypothetical model/drafting
4
Gainshare/Painshare Regime (sample drafting)
4.1
Overview of Gainshare/Painshare mechanisms
4.1.1
The Gainshare/Painshare Regime will comprise three distinct components as set out in Table 3 below. Each component is explained in detail further below. Component
Brief description
1) TOC underrun/overrun
A sharing of cost underrun or overrun determined by comparing the Actual Out-turn Cost (AOC) to the final TOC.
2) Performance in non-cost KRAs
Gainshare/Painshare mechanisms in each of the other KRAs to incentivise performance in those KRAs which the Owner regards as of significant value to the Owner and the Project.
3) Major Event Modifier (MEM)
A mechanism to modify the net Gainshare (if any), and the Fee, which would otherwise be payable to the NOPs, where the Alliance is responsible for causing certain negative events in critical areas that are totally unacceptable to the Owner and the NOPs. Table 3 - Gainshare/Painshare components
4.2
Target Out-turn Cost (TOC)
4.2.1
The amount of the TOC, prior to any TOC Target Adjustments (the “initial TOC” or TOCInitial), along with a summary of the make-up of the TOC is shown in Table 4 in Appendix 1.
4.3
NOP downside risk cap
4.3.1
Notwithstanding how poor the actual outcomes are or what figures are derived by the application of the various formulae set out in this clause 4, the maximum Painshare payable by each NOP to the Owner will be limited to the amount of the Fee payable to that NOP.
Note
It is common practice for the fee paid to the NOPs for work during the Project Development Phase (PDP) to be at risk under the Gainshare/Painshare Regime. If it is agreed that the fees earned during the PDP should be at risk then the drafting of clause 4.3 will need to be modified accordingly.
4.4
Overall KRA Score (OKS)
4.4.1
The Performance Measurement Procedures sets out the performance targets we have agreed within each key result area (KRA) along with full details of the methods and procedures we have agreed will be used to measure performance in each KRA. Pursuant to the Performance Measurement Procedures: a)
A key performance indicator score (KPI score) between -100 and +100 will be calculated for various aspects of performance within each KRA, using a mixture of objective, subjective, process-based and outcomes-based measures. The exact methodologies are set out in the Performance Measurement Procedures.
b)
A “KRA Score” between -100 and +100 will be determined for each KRA based on the weighted totals of the KPI scores within that KRA, using the KPIs and weightings set out in the Performance Measurement Procedures.
c)
An Overall KRA Score (OKS) between -100 and +100 will be calculated as the weighted aggregate of the KRA scores, using the weightings stated in Appendix 1.
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Section 4 of Schedule 5 Hypothetical model/drafting
4.5
OKS pool
4.5.1
A pool has been established (the “OKS pool”) to fund Gainshare payments to the NOPs where the Overall KRA Score (OKS) is greater than zero. The amount of the OKS pool will be calculated as follows: ¾ OKS pool
= OKSSeed + OKSTop-up, where
OKSSeed = the amount stated in Appendix 1 OKSTop-up = a portion of cost underruns, if any, determined in accordance with clause 4.6.1. 4.6
TOC underrun/overrun
4.6.1
Where the AOC is less than the final TOC the underrun will be distributed between the Owner, the NOPs and the OKS pool in the proportions stated in Appendix 1.
4.6.2
Subject to clause 4.3, where the Actual Out-turn Cost (AOC) exceeds the final TOC, the overrun will be shared between the Owner and the NOPs in the proportions stated in Appendix 1.
4.6.3
The sharing of TOC under/overrun, ignoring the impact of other Gainshare/Painshare components and the clause 4.3 cap is illustrated in Figure 1 in Appendix 2.
4.7
Performance in non-cost KRAs
4.7.1
If OKS is greater than zero the NOPs will be entitled to an OKS Gainshare amount (“GainOKS”) calculated as follows: ¾ GainOKS =
4.7.2
OKS 100
x OKS pool
Subject to clause 4.3, if OKS is less than zero the NOPs will be obliged to pay the Owner an OKS Painshare amount (“PainOKS”) calculated as follows: ¾ PainOKS =
OKS -100
x MaxPainOKS, where
MaxPainOKS = the % amount stated in Appendix 1. 4.7.3
Figure 2 in Appendix 2 illustrates the impact of different OKS outcomes across a spectrum of different cost outcomes.
4.8
Major Event Modifier (MEM)
4.8.1
We agree that it would be totally unacceptable for us in the performance of the Work under our Alliance to cause any of the events denoted in the Performance Measurement Procedures as Major Event Modifier events (“MEM events”).
4.8.2
The full list of the MEM events and the negative points associated with each event contained in the Performance Measurement Procedures is referred to below as the “Table of MEM events/points”
4.8.3
If in the performance of the Work under our Alliance we cause the occurrence of any MEM event the negative points associated with that event as noted in the Table of MEM events/points will be recorded. MEM points will accumulate for each MEM event we cause.
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4.8.4
The MEM score, a number between 0 and -100, will be the sum of all the negative MEM points accumulated between the Commencement Date and the Date of Final Completion.
4.8.5
Subject to clause 4.3, if the MEM score is less than zero each NOP will be obliged to pay the Owner a MEM Painshare amount (“PainMEM”) calculated as follows: ¾ PainMEM =
[(FeeNOP x MEM%Fee) + GainTOC+OKS x MEM%GS] x (
MEM ), where -100
FeeNOP = The Fee payable to that NOP calculated in accordance with clause 3 of this Schedule 5. MEM%Fee = the % amount stated in Appendix 1 MEM%GS = the % amount stated in Appendix 1 GainTOC+OKS = In respect of that NOP, the sum of the Gainshare/Painshare amounts for TOC under/overrun (under clause 4.6) and performance in non-cost KRAs (under clause 4.7) except if the amount thus calculated is less than zero, it will be taken as zero for the purpose of calculating PainMEM. MEM = The MEM score (a number between 0 and -100). 4.9
Sharing of pain /gain amongst NOPs
4.9.1
Any amounts the Owner has to pay to the NOPs pursuant to clauses 4.6 and 4.7 (Gainshare) will be paid to the respective NOPs in the proportions stated in Appendix 1.
4.9.2
Any amounts the NOPs have to pay to the Owner pursuant to clauses 4.6 and 4.7 (Painshare) will be paid to the Owner by the respective NOPs in the proportions stated in Appendix 1.
Note
Clause 4.9 has been drafted on the assumption that the sharing ratios for sharing Gainshare/Painshare amongst the NOPs are the same for all components of the Gainshare/Painshare Regime (recommended unless there is good reason not to do so). Sometimes it is agreed that the ratios vary for different components of the Gainshare/Painshare Regime. In such situations the drafting of clause 4.9 would need to be amended accordingly.
4.10
Charts and worked examples of Gainshare/Painshare Regime
4.10.1 Appendix 2 contains charts illustrating the operation of the Gainshare/Painshare Regime. 4.10.2 Appendix 3 contains worked examples for different hypothetical scenarios illustrating the operation of the Gainshare/Painshare Regime. 4.10.3 All charts and examples are based on the assumption that there are no Target Adjustments – ie. the final TOC is identical to the initial TOC. Note
The Owner, in consultation with the prospective NOPs, should decide whether or not it adds value to the drafting to include charts and worked examples. If no charts or worked examples are provided then Appendix 2 and Appendix 3 would be omitted.
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Guidance Paper on Gainshare/Painshare Regime Project Alliance Agreement
Section 4 of Schedule 5 Hypothetical model/drafting
Note
The following clauses are needed to support the Gainshare/Painshare Regime but could be placed in separate sections within Schedule 5
4.11
Target Adjustments
4.11.1 For each Adjustment Event that it approves pursuant to clause 10 the ALT will determine:
Note
a)
the adjustment, if any, to the Owner Cost and Reimbursable Cost elements within the TOC, ie. excluding any consideration of Fee, (“TACosts”) with a break down into the various elements necessary to enable an estimate of the associated Fees payable under clause 3 of this Schedule 5 to be calculated, and
b)
the adjustment, if any, to any of the other Gainshare/Painshare targets.
If the Fee for any NOP is paid as a fixed amount based on the figures within the TOC, then a formula would be needed here to confirm the mechanism for adjusting the Fee.
4.11.2 The Fee for each of the NOPs is automatically adjusted incrementally up or down for each adjustment to the TOC pursuant to 4.11.1a) (since pursuant to clause 3 in this Schedule 5 the Fee is paid on the basis of actual Reimbursable Costs). 4.11.3 The initial TOC will be adjusted progressively (up or down) for each TACosts (“TATOC”) using the following formula: ¾ TATOC
=
FeeTA-NOP =
TACosts + FeeTA-NOP where the sum of the estimated additional Fee for the NOPs associated with TACosts calculated by applying their respective Fee%s as set out in clause 3 of this Schedule 5 to their respective amounts within TACosts
4.11.4 The final TOC (TOCFinal) will be calculated as follows: ¾
TOCFinal = TOCInitial + ΣTATOC + AdjOther, where ΣTATOC = the cumulative total of TATOC for all Adjustment Events. AdjOther
4.12
= Any adjustment, which may be positive or negative, that the ALT decides should be taken into account in calculating the final TOC.
Actual Outturn Cost (AOC)
4.12.1 The Actual Out-turn Cost (AOC) will be determined as follows: ¾
AOC = ΣRC + ΣOC + ΣFee - Σ$in, where ΣRC
= The total aggregate amount of the actual Reimbursable Costs across all NOPs (excludes GST).
ΣOC
= The total aggregate amount of Owner Costs for the Project
Σ$in
= The net income received by any of the Participants from the following sources: a) payouts from an insurance policy under clauses 12.2, 12.3 or 12.4 to the extent that such payouts are covering costs that have been treated as Owner Costs or Reimbursable Costs b) recovery from claims against 3rd parties to the extent that such claims relate to costs that have been treated as Owner Costs or Reimbursable Costs c) disposal of items pursuant to clause 2.10 of this Schedule 5.
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 1 – Gainshare/Painshare Particulars
Appendix 1 – Gainshare/Painshare Regime Particulars Reference 4.2
Particular information The TOC is the amount shown in cell S24 in Table 4 immediately below. D
1
E
G
H
K
L
O
Owner
NOP1
NOP2
NOP3
NOP4
ΣNOPs
2 Fee%s 3 All RCs (NOP1,2); Staff (NOP3,4) Other than staff (NOP3,4) 4 11 12 RCs 17,000,000 13 R&O provision 636,278 14 RCs including R/O 17,636,278 15 Consultants OTS RCs 16 Total (estimated) RCs 17,636,278 22 Fee - % 23 Fee - $ RCs + Fee 17,636,278 24 25
10.00%
12.00%
35.00% 10.00%
30.00% 10.00%
40,000,000 1,497,125 41,497,125
25,000,000 935,703 25,935,703
41,497,125 10.00% 4,149,712 45,646,837
25,935,703 12.00% 3,112,284 29,047,988
3,000,000 112,284 3,112,284 300,000 3,412,284 33.74% 1,119,300 4,531,584
2,000,000 74,856 2,074,856 400,000 2,474,856 26.77% 662,457 3,137,313
R
70,000,000 2,619,969 72,619,969 700,000 73,319,969 12.33% 9,043,753 82,363,722
S Total
87,000,000 3,256,247 90,256,247 700,000 90,956,247 9,043,753 100,000,000 TOC
Table 4 – Summary of the build-up of the TOC Note – where the PAA is signed before the Project Development Phase (PDP), this summary of the TCE/TOC would obviously not be available. In that case a similar but hypothetical summary of the TCE/TOC would need to be provided in Appendix 2 if charts and worked examples are to be provided. 4.4.1
Weightings used to calculate OKS
KRA1 KRA2 KRA3 KRA4 KRA5
4.5.1
OKSSeed
4.6.1
Sharing of underruns between Owner, NOPs and OKS pool
4.6.2
2% x initial TOC Owner NOPs
OKS pool
Underruns up to 5% of the TOC
30%
50%
20%
Underruns beyond 5% of the TOC
40%
30%
30%
Sharing of overruns between Owner and NOPs
50% Owner 50% NOPs
4.7.2
MaxPainOKS
4% x initial TOC
4.8.5
MEM%Fee
25%
MEM%GS
100%
4.9.1
Gainshare will be distributed amongst the NOPs:
In direct proportion to the total Fee payable to each NOP
4.9.2
Painshare will be distributed amongst the NOPs:
In direct proportion to the total Fee payable to each NOP
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
Appendix 2 – Charts illustrating the Gainshare/Painshare Regime Note
This Appendix is only necessary where charts are being provided to illustrate the operation of the Gainshare/Painshare Regime. The Owner, in consultation with the prospective NOPs, should decide whether or not it adds value to the drafting to include charts. CAUTION – if charts are used then it is essential that they have checked and tested to ensure that they match the provisions set out in the main part of Schedule 5. It is recommended that charts, if used, should be generated from a spreadsheet that has been rigorously tested and should not be drawn on a “freehand” intuitive basis. [Note that the charts below are provided to give an indication of the general approach. However the underlying spreadsheet has not been independently tested or checked.] Note, a selection of different charts have been included below. Specifically: > Figures 1 to 4 are based on the assumption that OKS and MEM are both = 0. > Figures 5 and 6, which are based on OKS = 75 and MEM = -25, show how the impact of the OKS and the MEM distorts the curves. There are several other pieces of information that could be illustrated in charts and no limit to the number of different examples (with differing OKS and MEM) that could be provided for each chart. The drafter will need to decide how many (if any) charts are used to illustrate the Gainshare/Painshare Regime.
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
15,000,000
Allocation of under/overruns (ignoring OKS and caps) ‐ stacked
Based on TOC of 100m, OKS = 0 and MEM = 0
10,000,000
Owner
5,000,000
NOPs
OKS pool ‐
NOPs (5,000,000)
Owner
(10,000,000)
(15,000,000) 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 1 - Sharing of cost under/overrun (with OKS = 0, MEM = 0) 8,000,000 Based on TOC of 100m
Amount at stake on the OPS (where OPS = number indicated)
6,000,000
4,000,000
2,000,000 OKS = 100 OKS = 50 ‐ OKS = 0 OKS = ‐50 OKS = ‐100 (2,000,000)
(4,000,000)
(6,000,000) 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 2 – Impact of OKS across spectrum of cost outcomes
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
8,000,000 Based on TOC of 100m, OKS = 0 and MEM = 0 6,000,000
Gain/Pain flowing to/from each NOP (limb 3)
4,000,000
2,000,000
‐
(2,000,000) NOPs collectively Constructors
(4,000,000)
Consultants NOP1 (6,000,000)
NOP2 NOP3 NOP4
(8,000,000)
(10,000,000) 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 3 – Gainshare/Painshare (with OKS = 0, MEM = 0) 10,000,000 Based on TOC of 100m, OKS = 75 and MEM = -25 8,000,000
Gain/Pain flowing to/from each NOP (limb 3)
6,000,000
4,000,000
2,000,000
‐
(2,000,000)
NOPs collectively Constructors Consultants
(4,000,000)
NOP1 NOP2
(6,000,000)
NOP3 NOP4 (8,000,000)
(10,000,000) 15%
10%
Copyright 2010 PCI Alliance Services
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Figure 4 – Gainshare/Painshare (with OKS = 75, MEM = -25)
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
16,000,000 Based on TOC of 100m, OKS = 0 and MEM = 0 14,000,000
NOPs collectively Constructors
Gross margin amount for each NOP (limb 2 + limb 3)
Consultants 12,000,000
NOP1 NOP2 NOP3
10,000,000
NOP4
8,000,000
6,000,000
4,000,000
2,000,000
‐ 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 5 – Combined Fee plus Gainshare/Painshare (with OKS = 0, MEM = 0) 18,000,000 Based on TOC of 100m, OKS = 75 and MEM = -25 16,000,000 NOPs collectively Constructors
Gross margin amount for each NOP (limb 2 + limb 3)
14,000,000
Consultants NOP1 NOP2
12,000,000
NOP3 NOP4 10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
‐ 15%
10%
Copyright 2010 PCI Alliance Services
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Figure 6 – Combined Fee plus Gainshare/Painshare (with OKS = 75, MEM = -25)
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
70 % Based on TOC of 100m, OKS = 0 and MEM = 0 Constructors 60 %
Consultants
Gross margin % for each NOP (limb 2 + limb 3)/limb 1
NOP1 NOP2 50 %
NOP3 NOP4
40 %
30 %
20 %
10 %
0 % 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 7 – Fee plus Gainshare/Painshare as a % of RCs (OKS = 0, MEM = 0)
80 % Based on TOC of 100m, OKS = 75 and MEM = -25 Constructors
70 %
Consultants
Gross margin % for each NOP (limb 2 + limb 3)/limb 1
NOP1 NOP2
60 %
NOP3 NOP4 50 %
40 %
30 %
20 %
10 %
0 % 15%
10%
Copyright 2010 PCI Alliance Services
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Figure 8 – Fee plus Gainshare/Painshare as a % of RCs (OKS = 75, MEM = -25)
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 2 – Charts illustrating Gainshare Regime
1.20 Based on TOC of 100m, OKS = 0 and MEM = 0
1.15
Owner Spend Factor
Owner actual spent /Owner target spend
1.10
1.05
1.00
0.95
0.90
0.85 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 9 – Owner spend factor (OKS = 0, MEM = 0) 1.20 Based on TOC of 100m, OKS = 75 and MEM = -25
1.15
Owner Spend Factor
Owner actual spent /Owner target spend
1.10
1.05
1.00
0.95
0.90
0.85 15%
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
(25%)
(AOC ‐ TOC) as a % of TOC = % under / (overrun)
Copyright 2010 PCI Alliance Services
Figure 10 – Owner spend factor (OKS = 75, MEM = -25)
© 2011 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
Appendix 3 – Worked examples of Gainshare/Painshare Regime Note
This Appendix is only necessary where worked examples are being provided to illustrate the operation of the Gainshare/Painshare Regime. The Owner, in consultation with the prospective NOPs, should decide whether or not it adds value to the drafting to include worked examples.
CAUTION – if worked examples are used then it is essential that they have checked and tested to ensure that they match the provisions set out in the main part of Schedule 5. It is recommended that worked examples are generated from a spreadsheet that has been rigorously.[Note that the examples set out below are provided to give an indication of the general approach. However these examples have not been tested or checked against the provisions set out in the main part of Schedule 5.] Table of key outcomes for worked examples
NOP4
Avg
OKS
NOP3
AOC
$ Under /Over
NOP2
% Under /Over
NOP gross margin (RCs + Fee) Constructors Designers
NOP1
Cost performance factor (PF) (actual/target) Owner
Scenario
Table 5 below shows a summary of the key financial outcomes across 6 hypothetical scenarios (involving a mixture of performance in costs, OKS and MEM). Note that all scenarios are based on the assumption that there are no Target Adjustments – ie. the final TOC is identical to the initial TOC.]
1
1.00
1.00
1.00
1.00
1.00
1.00
0.00%
100,000,000
0
2
1.00
1.00
1.00
1.00
1.00
1.00
0.00%
100,000,000
0
3
1.05
1.05
1.05
1.05
1.05
1.05
(5.00%)
105,000,000
4
0.95
0.95
0.95
0.95
0.95
0.95
5.00%
5
0.95
0.95
0.95
0.95
0.95
0.95
6
0.98
0.95
0.93
1.30
1.08
0.97
MEM %
-
Owner spend
Amount
%
Amount
Over/under
Factor
-
10.77%
7,261,997
30.27%
1,781,756
(0)
1.0000
75
-
12.56%
8,466,474
35.29%
2,077,279
(1,500,000)
1.0150
(5,000,000)
75
-
9.64%
6,822,112
27.08%
1,673,829
(4,000,000)
1.0400
95,000,000
5,000,000
75
-
16.72%
10,713,075
47.00%
2,628,491
250,000
0.9975
5.00%
95,000,000
5,000,000
75
(25)
14.56%
9,328,350
40.92%
2,288,743
1,974,473
0.9803
3.06%
96,942,034
3,057,966
75
(25)
13.21%
8,394,777
37.49%
2,665,226
1,005,157
0.9899
Table 5 – Key information for the worked examples in Appendix 2 Note
The drafted may consider that providing a table of outcomes for hypothetical scenarios (which of course can be expanded to more than 6) is sufficient. Alternatively the drafter may feel it is necessary to include full details of the derivation of the outcomes for each of the scenarios, as per the examples provided below. In these fully detailed worked examples: > The overall financial outcome for the participants for each scenario is summarised in rows 67 to 81 > The actual gross margin % return for each NOP, being Fee plus Gainshare/Painshare, expressed as a % of Reimbursable Costs, is shown in row 80. > Cell U80 (blue cell) shows the “Owner spend factor” – being the ratio between the Owner’s actual expenditure and the expected spend based on the TOC.
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
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Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 1
All outcomes as per targets (ie. no underrun or overrun, OKS = 0, MEM = 0)
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
© PCI 2010 Target
D
E
F
Owner PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Grouped RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
1.0000 1.0000 17,636,278
Underruns up to node
Total underrun/overrun sharing (ignoring OKS and MEM) OKS
0
17,636,278
17,636,278
G
H
I
NOP1
NOP2
Σ Constrs
Actual
Returns
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0000 1.0000 2,474,856 662,457 3,137,313 7.33%
5,887,141 1,781,756 7,668,897 19.70%
73,319,969 9,043,753 82,363,722 100.00% 0
5,887,141 1,781,756 7,668,897
1.0000 1.0000 41,497,125 4,149,712 45,646,837 45.88%
1.0000 1.0000 25,935,703 3,112,284 29,047,987 34.41%
67,432,828 7,261,997 74,694,825 80.30%
1.0000 1.0000 3,412,284 1,119,300 4,531,584 12.38%
0
0
0
0
0
0
ΣNOPs
30.00% 0
22.94% 0
17.21% 0
40.15% 0
6.19% 0
3.66% 0
9.85% 0
50.00% 0
Share %s Amounts
30.00% 0
22.94% 0
17.21% 0
40.15% 0
6.19% 0
3.66% 0
9.85% 0
50.00% 0
OKS sharing %s within NOPs OKS amounts within NOPs
45.88% -
34.41% -
80.30% -
12.38% -
7.33% -
19.70% -
100.00% -
-
Owner 17,636,278
Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin)
17,636,278
17,636,278
17,636,278
-
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
41,497,125 4,149,712 0 45,646,837 4,149,713
25,935,703 3,112,284 0 29,047,987 3,112,284
10.00% 10.00% 9.09%
0
0
12.00% 12.00% 10.71%
-
0 -
0 (7,261,997) 0
Σ Constrs
-
0 0 Not applicable Not applicable (1,119,300) (662,457) N/A N/A 0 0
67,432,828 7,261,997 74,694,825 10.77%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
67,432,828 7,261,997 0 74,694,825 7,261,997
3,412,284 1,119,300 0 4,531,584 1,119,300
2,474,856 662,457 0 3,137,313 662,457
10.77% 10.77% 9.72%
32.80% 32.80% 24.70%
0
0
26.77% 26.77% 21.12%
-
R
S
T
U
V
Total
73,319,969 9,043,753 82,363,722
Share %s Amounts
0
Q OKS pool
-
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
P
M Σ Consultants
Underrun
0
L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
O
L NOP4
25,935,703 3,112,284 29,047,988
Total Gainsgare/Painshare (ignoring caps) 0 0 Gain cap Not applicable Not applicable Pain cap (4,149,712) (3,112,284) N/A N/A Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) 0 0
Target
N
K NOP3
41,497,125 4,149,712 45,646,837
Total gain/pain ignoring MEM MEM
J
90,956,247 9,043,753 100,000,000
TOC
1.0000 1.0000 90,956,247 9,043,753 100,000,000
0 20.00% 0
100.00% 0
AOC/TOC 0.00% 1.0000 X-check OK
20.00% 100.00% 0 0 X-check OK 2,000,000 From seed fund 2,000,000 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
0 -
0 (1,781,756) 0
Σ Consultants
0 (9,043,753)
0 9,043,753
0
5,887,141 1,781,756 7,668,897 30.27%
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
5,887,141 1,781,756 0 7,668,897 1,781,756
73,319,969 9,043,753 0 82,363,722 9,043,753
30.27% 30.27% 23.23%
Cap deltas
12.33% 12.33% 10.98%
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 90,956,247 9,043,753 0 100,000,000
Owner overspend Owner spend factor
100,000,000 100,000,000
100,000,000
(0) 1.0000
Page 21
Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 2
On budget (no underrun or overrun), OKS = 75, MEM = 0
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
© PCI 2010 Target
D
E
F
Owner PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Grouped RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
1.0000 1.0000 17,636,278
Underruns up to node
Total underrun/overrun sharing (ignoring OKS and MEM) OKS
75
17,636,278
17,636,278
H
I
NOP2
Σ Constrs
Actual
Returns
P
M Σ Consultants
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0000 1.0000 2,474,856 662,457 3,137,313 7.33%
5,887,141 1,781,756 7,668,897 19.70%
73,319,969 9,043,753 82,363,722 100.00% 0
5,887,141 1,781,756 7,668,897
25,935,703 3,112,284 29,047,988
1.0000 1.0000 41,497,125 4,149,712 45,646,837 45.88%
1.0000 1.0000 25,935,703 3,112,284 29,047,987 34.41%
67,432,828 7,261,997 74,694,825 80.30%
1.0000 1.0000 3,412,284 1,119,300 4,531,584 12.38%
0
0
0
0
0
0
ΣNOPs
22.94% 0
17.21% 0
40.15% 0
6.19% 0
3.66% 0
9.85% 0
50.00% 0
Share %s Amounts
30.00% 0
22.94% 0
17.21% 0
40.15% 0
6.19% 0
3.66% 0
9.85% 0
50.00% 0
OKS sharing %s within NOPs OKS amounts within NOPs
45.88% 688,273
34.41% 516,205
80.30% 1,204,477
12.38% 185,647
7.33% 109,875
19.70% 295,523
100.00% 1,500,000
688,273
516,205
1,204,477
185,647
109,875
295,523
1,500,000
-
Owner 17,636,278
Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin)
17,636,278
17,636,278
17,636,278
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
41,497,125 4,149,712 688,273 46,335,110 4,837,985
25,935,703 3,112,284 516,205 29,564,192 3,628,489
11.66% 11.66% 10.44%
13.99% 13.99% 12.27%
1,204,477 (7,261,997) 1,204,477
Σ Constrs
-
-
185,647 109,875 Not applicable Not applicable (1,119,300) (662,457) N/A N/A 185,647 109,875
67,432,828 7,261,997 74,694,825 10.77%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
67,432,828 7,261,997 1,204,477 75,899,302 8,466,474
3,412,284 1,119,300 185,647 4,717,231 1,304,947
2,474,856 662,457 109,875 3,247,188 772,332
12.56% 12.56% 11.15%
38.24% 38.24% 27.66%
31.21% 31.21% 23.78%
295,523 (1,781,756) 295,523
Σ Consultants
S
T
U
V
Total 90,956,247 9,043,753 100,000,000
TOC
1.0000 1.0000 90,956,247 9,043,753 100,000,000
0 20.00% 0
100.00% 0
AOC/TOC 0.00% 1.0000 X-check OK
20.00% 100.00% 0 0 X-check OK 2,000,000 From seed fund 2,000,000 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
1,500,000 (9,043,753)
Cap deltas 1,500,000 10,543,753
1,500,000
5,887,141 1,781,756 7,668,897 30.27%
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
5,887,141 1,781,756 295,523 7,964,420 2,077,279
73,319,969 9,043,753 1,500,000 83,863,722 10,543,753
35.29% 35.29% 26.08%
R
73,319,969 9,043,753 82,363,722
30.00% 0
-
Q OKS pool
Share %s Amounts
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
O
L NOP4
-
0
L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
N
K NOP3
41,497,125 4,149,712 45,646,837
Total Gainsgare/Painshare (ignoring caps) 688,273 516,205 Gain cap Not applicable Not applicable Pain cap (4,149,712) (3,112,284) N/A N/A Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) 688,273 516,205
Target
J
Underrun
Total gain/pain ignoring MEM MEM
G NOP1
14.38% 14.38% 12.57%
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 90,956,247 9,043,753 1,500,000 101,500,000
Owner overspend Owner spend factor
100,000,000 100,000,000
101,500,000
(1,500,000) 1.0150
Page 22
Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 3
All participants 5% over budget, OKS = 75, MEM = 0
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
© PCI 2010 Target
D
E Owner
PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Grouped RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
1.0000 1.0500 18,518,092
Underruns up to node
Total underrun/overrun sharing (ignoring OKS and MEM) OKS
75
17,636,278
18,518,092
G
H
I
NOP1
NOP2
Σ Constrs
Actual
Returns
P
M Σ Consultants
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0000 1.0500 2,598,599 695,580 3,294,179 7.33%
6,181,498 1,870,844 8,052,342 19.70%
76,985,967 9,495,941 86,481,908 100.00%
25,935,703 3,112,284 29,047,988
1.0000 1.0500 43,571,981 4,357,198 47,929,179 45.88%
1.0000 1.0500 27,232,488 3,267,899 30,500,387 34.41%
70,804,469 7,625,097 78,429,566 80.30%
1.0000 1.0500 3,582,899 1,175,265 4,758,163 12.38%
5,887,141 1,781,756 7,668,897
ΣNOPs
(3,734,741)
(226,579)
(156,865)
(383,445)
(4,118,186)
Share %s Amounts
30.00% -
22.94% -
17.21% -
40.15% -
6.19% -
3.66% -
9.85% -
50.00% -
Share %s Amounts
50.00% (2,500,000)
22.94% (1,147,121)
17.21% (860,341)
40.15% (2,007,462)
6.19% (309,412)
3.66% (183,126)
9.85% (492,538)
50.00% (2,500,000)
OKS sharing %s within NOPs OKS amounts within NOPs
45.88% 688,273
34.41% 516,205
80.30% 1,204,477
12.38% 185,647
7.33% 109,875
19.70% 295,523
100.00% 1,500,000
(458,848)
(344,136)
(802,985)
(123,765)
(73,250)
(197,015)
(1,000,000)
-
Owner 17,636,278
Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin)
18,518,092
17,636,278
18,518,092
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
43,571,981 4,357,198 (458,848) 47,470,331 3,898,350 9.39% 8.95% 8.21%
(802,985) (7,625,097) (802,985)
Σ Constrs
-
-
(123,765) (73,250) Not applicable Not applicable (1,175,265) (695,580) < pain cap < pain cap (123,765) (73,250)
(197,015) (1,870,844)
(1,000,000) (9,495,941)
(197,015)
(1,000,000)
Σ Consultants
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
2,598,599 695,580 (73,250) 3,220,929 622,330
6,181,498 1,870,844 (197,015) 7,855,327 1,673,829
76,985,967 9,495,941 (1,000,000) 85,481,908 8,495,941
25.15% 23.95% 19.32%
28.43% 27.08% 21.31%
11.59% 11.04% 9.94%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
27,232,488 3,267,899 (344,136) 30,156,250 2,923,762
70,804,469 7,625,097 (802,985) 77,626,581 6,822,112
3,582,899 1,175,265 (123,765) 4,634,398 1,051,500
11.27% 10.74% 9.70%
10.12% 9.64% 8.79%
30.82% 29.35% 22.69%
S
T
U
V
Total 90,956,247 9,043,753 100,000,000
TOC
1.0500 1.0500 95,504,059 9,495,941 105,000,000
(5,000,000) 20.00% -
100.00% -
AOC/TOC -5.00% 1.0500 X-check OK
0.00% 100.00% (5,000,000) X-check OK 2,000,000 From seed fund 2,000,000 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
-
5,887,141 1,781,756 7,668,897 30.27%
67,432,828 7,261,997 74,694,825 10.77%
R
73,319,969 9,043,753 82,363,722
(1,452,399)
-
Q OKS pool
(2,282,342)
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
O
L NOP4
(881,814)
0
L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
N
K NOP3
41,497,125 4,149,712 45,646,837
Total Gainsgare/Painshare (ignoring caps) (458,848) (344,136) Gain cap Not applicable Not applicable Pain cap (4,357,198) (3,267,899) < pain cap < pain cap Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) (458,848) (344,136)
Target
J
Overrun
Total gain/pain ignoring MEM MEM
F
Cap deltas (1,000,000) 8,495,941
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 95,504,059 9,495,941 (1,000,000) 104,000,000
Owner overspend Owner spend factor
100,000,000 100,000,000
104,000,000
(4,000,000) 1.0400
Page 23
Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 4
All participants 5% under budget, OKS = 75, MEM = 0
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
© PCI 2010 Target
D
E Owner
PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Grouped RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
1.0000 0.9500 16,754,464
Underrun Underruns up to node
Total underrun/overrun sharing (ignoring OKS and MEM) OKS
75
G
H
I
NOP1
NOP2
Σ Constrs
Actual
Returns
P
M Σ Consultants
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0000 0.9500 2,351,113 629,334 2,980,447 7.33%
5,592,784 1,692,669 7,285,452 19.70%
69,653,970 8,591,566 78,245,536 100.00%
5,887,141 1,781,756 7,668,897
ΣNOPs
64,061,187 6,898,897 70,960,084 80.30%
1.0000 0.9500 3,241,670 1,063,335 4,305,005 12.38%
881,814
2,282,342
1,452,399
3,734,741
226,580
156,866
383,445
4,118,186
Share %s Amounts
30.00% 1,500,000
22.94% 1,147,121
17.21% 860,341
40.15% 2,007,462
6.19% 309,412
3.66% 183,126
9.85% 492,538
50.00% 2,500,000
Share %s Amounts
30.00% 1,500,000
22.94% 1,147,121
17.21% 860,341
40.15% 2,007,462
6.19% 309,412
3.66% 183,126
9.85% 492,538
50.00% 2,500,000
OKS sharing %s within NOPs OKS amounts within NOPs
45.88% 1,032,409
34.41% 774,307
80.30% 1,806,716
12.38% 278,471
7.33% 164,813
19.70% 443,284
100.00% 2,250,000
3,814,178
587,883
347,939
935,822
4,750,000
16,754,464
2,179,530 -
1,634,648 -
Owner 17,636,278
Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin)
16,754,464
17,636,278
16,754,464
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
39,422,269 3,942,227 2,179,530 45,544,026 6,121,757
24,638,918 2,956,670 1,634,648 29,230,236 4,591,318
14.75% 15.53% 13.44%
17.70% 18.63% 15.71%
3,814,178 (6,898,897) 3,814,178
Σ Constrs
-
-
587,883 347,939 Not applicable Not applicable (1,063,335) (629,334) N/A N/A 587,883 347,939
67,432,828 7,261,997 74,694,825 10.77%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
64,061,187 6,898,897 3,814,178 74,774,262 10,713,075
3,241,670 1,063,335 587,883 4,892,888 1,651,218
2,351,113 629,334 347,939 3,328,386 977,273
15.89% 16.72% 14.33%
48.39% 50.94% 33.75%
39.49% 41.57% 29.36%
935,822 (1,692,669) 935,822
Σ Consultants
R
S
T
U
V
Total
73,319,969 9,043,753 82,363,722
90,956,247 9,043,753 100,000,000
TOC
0.9500 0.9500 86,408,434 8,591,566 95,000,000
5,000,000 20.00% 1,000,000
100.00% 5,000,000
AOC/TOC 5.00% 0.9500 X-check OK
20.00% 100.00% 1,000,000 5,000,000 X-check OK 2,000,000 From seed fund 3,000,000 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
4,750,000 (8,591,566)
Cap deltas 4,750,000 13,341,566
4,750,000
5,887,141 1,781,756 7,668,897 30.27%
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
5,592,784 1,692,669 935,822 8,221,274 2,628,491
69,653,970 8,591,566 4,750,000 82,995,536 13,341,566
44.65% 47.00% 31.97%
Q OKS pool
1.0000 0.9500 24,638,918 2,956,670 27,595,588 34.41%
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
O
L NOP4
1.0000 0.9500 39,422,269 3,942,227 43,364,496 45.88%
17,636,278
0
L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
N
K NOP3
25,935,703 3,112,284 29,047,988
Total Gainsgare/Painshare (ignoring caps) 2,179,530 1,634,648 Gain cap Not applicable Not applicable Pain cap (3,942,227) (2,956,670) N/A N/A Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) 2,179,530 1,634,648
Target
J
41,497,125 4,149,712 45,646,837
Total gain/pain ignoring MEM MEM
F
18.20% 19.15% 16.08%
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 86,408,434 8,591,566 4,750,000 99,750,000
Owner underspend Owner spend factor
100,000,000 100,000,000
99,750,000
250,000 0.9975
Page 24
Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 5
All participants 5% under budget, OKS = 75, MEM = -25
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
© PCI 2010 Target
D
E Owner
PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Grouped RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
1.0000 0.9500 16,754,464
Underrun
Actual
Returns
I Σ Constrs
J
N
O
K
L
M
NOP3
NOP4
Σ Consultants
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0000 0.9500 2,351,113 629,334 2,980,447 7.33%
5,592,784 1,692,669 7,285,452 19.70%
69,653,970 8,591,566 78,245,536 100.00%
5,887,141 1,781,756 7,668,897
ΣNOPs
1.0000 0.9500 39,422,269 3,942,227 43,364,496 45.88%
1.0000 0.9500 24,638,918 2,956,670 27,595,588 34.41%
64,061,187 6,898,897 70,960,084 80.30%
1.0000 0.9500 3,241,670 1,063,335 4,305,005 12.38%
881,814
2,282,342
1,452,399
3,734,741
226,580
156,866
383,445
4,118,186
Share %s Amounts
30.00% 1,500,000
22.94% 1,147,121
17.21% 860,341
40.15% 2,007,462
6.19% 309,412
3.66% 183,126
9.85% 492,538
50.00% 2,500,000
Share %s Amounts
30.00% 1,500,000
22.94% 1,147,121
17.21% 860,341
40.15% 2,007,462
6.19% 309,412
3.66% 183,126
9.85% 492,538
50.00% 2,500,000
OKS sharing %s within NOPs OKS amounts within NOPs
45.88% 1,032,409
34.41% 774,307
80.30% 1,806,716
12.38% 278,471
7.33% 164,813
19.70% 443,284
100.00% 2,250,000
3,814,178
587,883
347,939
935,822
4,750,000
(593,454)
(1,384,726)
(213,429)
(126,318)
(339,747)
(1,724,473)
Total Gainsgare/Painshare (ignoring caps) 1,388,259 1,041,194 Gain cap Not applicable Not applicable Pain cap (3,942,227) (2,956,670) N/A N/A Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) 1,388,259 1,041,194
2,429,453 (6,898,897)
374,454 221,621 Not applicable Not applicable (1,063,335) (629,334) N/A N/A 374,454 221,621
596,075 (1,692,669)
3,025,527 (8,591,566)
75
17,636,278
16,754,464
Total gain/pain ignoring MEM
Target
H NOP2 25,935,703 3,112,284 29,047,988
Total underrun/overrun sharing (ignoring OKS and MEM)
MEM
G NOP1 41,497,125 4,149,712 45,646,837
Underruns up to node
OKS
F
2,179,530
-25
(791,272)
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1
Owner 17,636,278
Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin)
16,754,464
L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
17,636,278
16,754,464
1,634,648
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
39,422,269 3,942,227 1,388,259 44,752,754 5,330,485
24,638,918 2,956,670 1,041,194 28,636,782 3,997,864
12.85% 13.52% 11.91%
15.41% 16.23% 13.96%
2,429,453
Σ Constrs 67,432,828 7,261,997 74,694,825 10.77%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
64,061,187 6,898,897 2,429,453 73,389,536 9,328,350
3,241,670 1,063,335 374,454 4,679,459 1,437,789
2,351,113 629,334 221,621 3,202,068 850,955
13.83% 14.56% 12.71%
42.14% 44.35% 30.73%
34.38% 36.19% 26.58%
596,075
Σ Consultants
Q
R
OKS pool
S
T
U
V
Total
73,319,969 9,043,753 82,363,722
90,956,247 9,043,753 100,000,000
TOC
0.9500 0.9500 86,408,434 8,591,566 95,000,000
5,000,000 20.00% 1,000,000
100.00% 5,000,000
AOC/TOC 5.00% 0.9500 X-check OK
20.00% 100.00% 1,000,000 5,000,000 X-check OK 2,000,000 From seed fund 3,000,000 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
Cap deltas 3,025,527 11,617,093
3,025,527
5,887,141 1,781,756 7,668,897 30.27%
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
5,592,784 1,692,669 596,075 7,881,527 2,288,743
69,653,970 8,591,566 3,025,527 81,271,063 11,617,093
38.88% 40.92% 29.04%
P
15.84% 16.68% 14.29%
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 86,408,434 8,591,566 3,025,527 98,025,527
Owner underspend Owner spend factor
100,000,000 100,000,000
98,025,527
1,974,473 0.9803
Page 25
Guidance Paper on Gainshare Regime Project Alliance Agreement Scenario 6
Mixed cost outcomes; OKS = 75; MEM = -25
A 1 21 23 24 30 31 32 33 34 35 36 37 38 39 40 44 45 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81
Section 4 of Schedule 5 (hypothetical sample) Appendix 3 – Worked examples of Gainshare Regime
B
C
D
E
© PCI 2010
Owner
Target
PDA + PAA
Hypothetical AOC Actual (speculative)
RCs incl OTS (limb 1) Fee - $ RCs + Fee
17,636,278
Budget PF (for PAA work) Separate RCs (limb 1) - from PDA RCs (limb 1) - from PAA Fee (limb 2) - based on switch settings AOC Ratio of NOP Fees within AOC
0.9800 0.9800 17,283,553
17,636,278
17,283,553
I Σ Constrs
J
K
L
M
NOP3
NOP4
Σ Consultants
67,432,828 7,261,997 74,694,825
3,412,284 1,119,300 4,531,584
2,474,856 662,457 3,137,313 1.0800 1.0800 2,672,845 715,453 3,388,298 7.94%
7,108,814 2,170,543 9,279,357 24.10%
70,651,287 9,007,194 79,658,481 100.00% 2,705,241
5,887,141 1,781,756 7,668,897
41,497,125 4,149,712 45,646,837
25,935,703 3,112,284 29,047,988
0.9500 0.9500 39,422,269 3,942,227 43,364,496 43.77%
0.9300 0.9300 24,120,204 2,894,424 27,014,628 32.13%
63,542,472 6,836,651 70,379,124 75.90%
1.3000 1.3000 4,435,970 1,455,089 5,891,059 16.15%
2,282,342
2,033,359
4,315,701
(1,359,475)
(250,985)
(1,610,460)
N
O ΣNOPs
30.00% 917,390
21.88% 669,198
16.07% 491,332
37.95% 1,160,531
8.08% 247,003
3.97% 121,449
12.05% 368,453
50.00% 1,528,983
Share %s Amounts
30.00% 917,390
21.88% 669,198
16.07% 491,332
37.95% 1,160,531
8.08% 247,003
3.97% 121,449
12.05% 368,453
50.00% 1,528,983
OKS sharing %s within NOPs OKS amounts within NOPs
43.77% 857,273
32.13% 629,419
75.90% 1,486,691
16.15% 316,422
7.94% 155,582
24.10% 472,004
100.00% 1,958,695
2,647,222
563,426
277,031
840,456
3,487,678
(461,089)
(1,089,096)
(231,799)
(113,974)
(345,773)
(1,434,869)
Total Gainsgare/Painshare (ignoring caps) 898,464 659,662 Gain cap Not applicable Not applicable Pain cap (3,942,227) (2,894,424) N/A N/A Test against applicable caps Gain/Pain flowing to/from the NOPs (caps applied) 898,464 659,662
1,558,126 (6,836,651)
331,626 163,057 Not applicable Not applicable (1,455,089) (715,453) N/A N/A 331,626 163,057
494,683 (2,170,543)
2,052,809 (9,007,194)
75
Total gain/pain ignoring MEM MEM
1,526,471
-25
Overall Summary Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Limb 1 + Limb 2 Fee (limb 2) as % of limb 1 Reimbursable Costs (RCs) - limb 1 Fee - limb 2 Nett Gainshare/Painshare - limb 3 Limbs 1 + 2 + 3 (revenue) Limbs 2 + 3 (gross margin) L2+3 as a % of original limb 1 target L2+3 as a % of actual costs L2+3 as a % of revenue
© 2010 – PCI Alliance Services PCI_Gainshare-GuideModel_A_07Feb2011.doc
(628,007)
Owner 17,636,278 17,636,278
17,283,553
17,283,553
1,120,751
NOP1 41,497,125 4,149,712 45,646,837 10.00%
NOP2 25,935,703 3,112,284 29,047,987 12.00%
39,422,269 3,942,227 898,464 44,262,959 4,840,691
24,120,204 2,894,424 659,662 27,674,290 3,554,086
11.67% 12.28% 10.94%
13.70% 14.73% 12.84%
1,558,126
Σ Constrs 67,432,828 7,261,997 74,694,825 10.77%
NOP3 3,412,284 1,119,300 4,531,584 32.80%
NOP4 2,474,856 662,457 3,137,313 26.77%
63,542,472 6,836,651 1,558,126 71,937,249 8,394,777
4,435,970 1,455,089 331,626 6,222,685 1,786,715
2,672,845 715,453 163,057 3,551,356 878,511
12.45% 13.21% 11.67%
52.36% 40.28% 28.71%
35.50% 32.87% 24.74%
494,683
Σ Consultants
Q
R
OKS pool
S
T
U
V
Total 90,956,247 9,043,753 100,000,000
TOC
1.0000 0.9694 87,934,839 9,007,194 96,942,034
3,057,966 20.00% 611,593
100.00% 3,057,966
AOC/TOC 3.06% 0.9694 X-check OK
20.00% 100.00% 611,593 3,057,966 X-check OK 2,000,000 From seed fund 2,611,593 Total OKS fund (for OKS = +100) (4,000,000) OKS max pain (for OKS = -100)
Cap deltas 2,052,809 11,060,003
2,052,809
5,887,141 1,781,756 7,668,897 30.27%
ΣNOPs 73,319,969 9,043,753 82,363,722 12.33%
7,108,814 2,170,543 494,683 9,774,041 2,665,226
70,651,287 9,007,194 2,052,809 81,711,290 11,060,003
45.27% 37.49% 27.27%
P
73,319,969 9,043,753 82,363,722
Share %s Amounts
OKS
Returns
H NOP2
352,726
Total underrun/overrun sharing (ignoring OKS and MEM)
Actual
G NOP1
Underrun Underruns up to node
Target
F
15.08% 15.65% 13.54%
Total 90,956,247 9,043,753 100,000,000 Owner provision Owner budget incl. provision 87,934,839 9,007,194 2,052,809 98,994,843
Owner underspend Owner spend factor
100,000,000 100,000,000
98,994,843
1,005,157 0.9899
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