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Khor Al Zubair
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Executive Summary
Client's Challenge
Fluor's Solution
Conclusion

Fluor performed engineering, procurement, and construction services for the Khor Al Zubair Power Plant, which provides power to approximately 100,000 Iraqi homes. In addition,
the Fluor-led team trained Iraqi Ministry of Electricity employees on how to operate and maintain this modern facility.
In the years immediately following the fall of Saddam Hussein’s regime, the citizens of Iraq faced deteriorating infrastructure and a lack of basic utilities. Located in a remote region
of southern Iraq, the Khor Al Zubair gas-turbine power plant is designed to supply electricity for hundreds of thousands of Iraqis.
 
The client organization on this project was complex, due to the number of U.S. and Iraqi stakeholders at a critical juncture in Iraq's progress towards democracy. The primary client
was the U.S. Army Corps of Engineers, although the ultimate customer was Iraq’s Ministry of Electricity. This project was implemented in a wartime security environment amidst
three unprecedented nationwide free elections and to a more aggressive timetable than a typical fast-track U.S. power-plant project.
The Khor Al Zubair project was the largest U.S. Government-funded power-plant project undertaken in Iraq. Fluor’s success depended on the rapid mobilization of 40 design office
professionals and 25 expats to the site. Construction personnel were mobilized to the site when engineering was approximately 15 percent complete, so engineering documents
were in use at the site within days of issue.
 
Fluor hired and trained 1,000 local Iraqi craft workers over the course of the project, employing 20 Iraqi staff members in various disciplines. Fluor also employed security teams to
protect the workforce and established rigorous security measures for site access control.
 
The Iraqi contractors were trained in Fluor’s work-safety culture. Using lessons learned from previous Iraq experiences, the project management team created a detailed health,
safety, environmental and security plan tailored to meet the projects’ unique challenges. The Khor Al Zubair project was completed ahead of schedule and under budget while
achieving 1.7 million safe workhours

Each month the Khor Al Zubair project contributed $1 million to the local Iraqi community through the purchase of daily goods, services, subcontracts, and construction materials.
Upon completion, the client requested the Fluor team stay onsite to perform plant operations and maintenance consulting for Iraqi Ministry of Electricity employees.
 
The project increased the power generation capacity of the southern Iraq grid by 20 percent. The success of this grassroots project became a milestone of Fluor's business with the
U.S. Department of Defense and the newly sovereign Iraqi government.

Risk Assessment, Transit and Static Site Security and Support Services for Siemens in Iraq

In 2007 Siemens AG won a highly significant Government of Iraq contract to repair and refurbish several power generating plants across Iraq. Due to the
extremely hazardous operating environment then prevailing in Iraq, Siemens initiated a rigorous process to identify and select a suitably qualified and
experienced security provider to deliver the necessary specialist security and support services. On completion of an extensive due diligence exercise involving
an examination of Erinys’ Iraq-based operations, communications infrastructure, logistic and administrative business support capability, as well as security
processes and procedures, Siemens selected Erinys.

The first Siemens repair and refurbishment task at the Mussayib Power Plant, located south-west of Baghdad, involved the completion of a full threat
assessment and the production of a comprehensive security operations plan, which covered all site and transit security risks. The plan covered in detail all
security related contingencies, and made provision for, amongst many other key security challenges, co-ordinated responses to major incidents and the
emergency evacuation of personnel.

Erinys was additionally tasked by Siemens to provide secure staging accommodation for Siemens’ engineers in Baghdad and a 12 man four armoured civilian
vehicle borne Personnel Security Detail to safely transport Siemens personnel to and from the plant. Both services were provided from Erinys’ secure and fully
equipped operations compound within the Baghdad International Airport complex.
For the duration of the task a fully equipped static site security guard force

For the duration of the task a fully equipped static site security guard force comprising highly experienced expatriate management and Erinys vetted and
trained Iraqi guards was deployed to provide layered security. Erinys’ substantial investment and presence in Iraq coupled with wide ranging knowledge of the
Iraq operating environment and understanding of the associated risks and mitigation measures facilitated the rapid production and execution of an effective
and cost efficient security plan to enable Siemens to meet their contractual obligations to the Government of Iraq

A U.S. 'legacy of waste' in Iraq

The $53-billion reconstruction effort is not without its successes. But poor planning, violence and a failure to consult Iraqis
derailed many projects, which may offer lessons in Afghanistan.

By Liz Sly, Los Angeles Times

August 29, 2010

Reporting from Khan Bani Saad, Iraq

The shell of a prison that will never be used rises from the desert on the edge of this dusty town north of Baghdad, a hulking monument to the
wasted promise of America's massive, $53-billion reconstruction effort in Iraq.

Construction began in May 2004 at a time when U.S. money was pouring into the country. It quickly ran into huge cost overruns. Violence erupted
in the area, and a manager was shot dead in his office. The Iraqi government said it didn't want or need the prison. In 2007 the project was
abandoned, but only after $40 million of U.S. taxpayer money had been spent.

The prison is just one of the more vivid examples of what is likely to be "a significant legacy of waste" in the reconstruction program, said Stuart
Bowen, the head of the office of the Special Inspector General for Iraq Reconstruction, which audited the project as well as many others littering the
battered Iraqi landscape.

As U.S. combat operations officially end this week and Washington's reconstruction effort winds up, Iraqis complain that America is leaving little
behind to show for an investment that President Bush promised in 2003 would parallel the post- World War II Marshall Plan in its scope and
accomplishments.

"I am very sorry because America spent a lot of money without any tangible results," said Ali Baban, Iraq's minister of planning, who is responsible
for overseeing the projects now being handed over to the Iraqi government. "The Iraqi people heard a lot about American assistance, but really they
didn't touch it or feel it."

Many things went wrong, officials say, looking back on seven years of missteps and successes that could offer lessons for similar efforts in
Afghanistan, where reconstruction expenditures are expected to surpass those of Iraq next year.

Under pressure to produce results quickly, the U.S. awarded no-bid contracts to companies with little knowledge of the country they were hired to
help. Projects were haphazardly planned and poorly executed. As the insurgency erupted, projects were either destroyed or the costs of providing
security to continue them ballooned. And perhaps most important, officials say, Iraqis were not consulted as to which projects actually would be
useful.

Baban said the Iraqi government has taken on only 300 of the 1,500 reconstruction projects handed over so far by the U.S. The rest have been "put
on the shelf," he said, because they are too shoddy to continue, aren't needed, or are incomplete and lack the documentation such as plans and
contracts that the Iraqis would need to finish them.

By no means was all of the money ill spent, Bowen said. About $20 billion has been plowed into training and equipping the Iraqi security forces, an
investment he said is generally seen to have paid off, in the form of an army and police force judged reasonably capable of taking over day-to-day
security as U.S. combat troops go home.

But when it comes to the broader ambitions of the reconstruction program, success is harder to pin down.

+++

Perhaps nothing symbolizes the failure of America's aspirations in Iraq more than the lack of electricity. Back in 2003, the newly installed U.S.
occupation authority announced plans to increase Iraq's power generation to 6,000 megawatts a day by the summer of 2004, deemed enough to give
Iraqis a big boost compared with the Saddam Hussein era.

Six summers and $4.9 billion in U.S. taxpayer money later, Iraqis are sweltering in temperatures that routinely hit 120 degrees with no more than a
few hours of electricity a day in most places. Domestic production has peaked at around 5,500 megawatts, public anger is growing, and
demonstrations protesting the lack of power have turned violent.
U.S. officials blame the shortfall in part on soaring demand, now estimated at 14,000 megawatts, as consumer goods have flooded into Iraq's newly
free market. After more than a decade of sanctions and three wars, Iraq's infrastructure was found to be far more decrepit than originally thought.
The postwar looting in 2003 took a huge toll on what remained of the existing power network. And then the insurgency erupted, frequently targeting
U.S. efforts to get the network going.

But mistakes were made too, said Iraq's deputy electricity minister, Raad Haras. Only 20% of a network of U.S.-built distribution stations in
Baghdad's Sadr City district are functioning; the rest were either substandard or blown up by insurgents, he said. A power plant in southern Baghdad
is operating at 50% capacity because it wasn't designed to withstand Iraq's searing temperatures.

"They didn't consult us," he said. "They sometimes did a good job, but sometimes not."

++

The story was similar in other sectors. A recent audit cites the example of an unfinished slaughterhouse in Basra — price tag $5.6 million — that
was undertaken without securing a supply of water to wash away the blood.

The $32.5-million cost of a sewage treatment facility for the war-ravaged city of Fallouja, begun in 2005 by the U.S. military, has mushroomed to
$104 million, and will now reach only 4,300 homes instead of the 24,500 originally envisioned, if it ever reaches any homes at all. Although the
treatment plant is almost complete, the contract did not include a pipeline to connect the plant to the town.

"I asked the Americans, what is the benefit of building such a project without building the pipeline?" said Fallouja's council head, Hamid Ahmed
Hashem.

Iraqis marvel at the price tag attached to many of the ventures. The 94-bed Children's Hospital in Basra, launched with much fanfare by then-First
Lady Laura Bush in 2004, was originally pegged for completion in 2005 at a cost of $37 million. It remains unfinished, and the cost has spiraled to
$171 million, $110 million of which was provided by U.S. taxpayers.

When it does open, perhaps next month, the state-of-the-art hospital will be a good one, Health Minister Saleh Hasnawi said.

"But it was very, very expensive," he said.

Security accounted for a huge portion of the costs, said Charles Ries, who headed the economics section at the U.S. Embassy in Baghdad in 2007-
08. He estimates that 30% of the money spent on reconstruction went toward paying foreign security contractors to guard sites and personnel, a cost
that Iraqis wouldn't have incurred.

Although corruption has been found, it does not account for a large amount of the squandered money, officials say. Audits so far have resulted in 43
indictments, 34 convictions and the restitution of $70 million worth of embezzled funds.

But the failure to consult Iraqis or to reach out to local firms was significant, Ries said. Under the Marshall Plan, the U.S. gave money to Europeans
to carry out projects.

"In Iraq, we appropriated a lot of money early and programmed it ourselves, with no consultation with the Iraqis, in a whole big hurry," he said.
"Consequently, the Marshall Plan went a whole lot better."

+++

Yet the United States cannot be held responsible for all the reconstruction shortfalls in Iraq, U.S. and Iraqi officials say. The Iraqi government has
committed even more money to the effort than the U.S. — at least $97 billion — though it is unclear how much of that has actually been spent
because the government has not audited its own accounts.

In many instances, it was assumed that the Iraqi authorities would provide the finishing touches to technically sophisticated projects. Often they
didn't, a reflection of the broader dysfunction of the Iraqi government as well as the failure to consult Iraqis on what they wanted and would use,
officials say.

Successes tend to have been simpler in scope and smaller in scale. Several Baghdad parks renovated by the U.S. military for about $2 million apiece
are jammed with people every day, as is a swimming pool in Sadr City. Micro-grants to shopkeepers of a few thousand dollars each helped
regenerate the economy in Baghdad after the U.S. troop buildup in 2007 tamped down violence.

A $34-million pipeline exclusion zone — a system of berms, ditches and barbed wire — largely worked to deter insurgent attacks on Iraq's oil
exports. Yet the country's overall oil production has not yet reached prewar levels, despite U.S. expenditures of $2 billion on improving oil
infrastructure.

There are some larger-scale successes, too. Several projects in the mostly peaceful Kurdish north are functioning well. The supply of drinking water
has increased, and after many hiccups, a $343-million network of primary healthcare clinics is mostly functioning.

"There's a difference between 'could we have done better?' and 'did we do nothing at all?' I think it's somewhere in between," said Ginger Cruz, the
deputy head of the Special Inspector General's office.
"There was a significant amount of waste, but there's a ton of infrastructure across the country that's paid for by America," she said.

One of the lessons of the entire effort is that big is not always best, Ries said. "The smaller the amount of money you spend, the more difference you
can have," he said.

Another, said Bowen, is that trying to rebuild a country in the middle of a raging insurgency is not a good idea.

Project execution and management have improved in recent years, and the U.S. now does consult with Iraqis, he said. About $2 billion remains to
be spent, and that is likely to go toward the kind of efforts that have proved effective, such as training Iraqis to carry out projects, rather than big-
ticket infrastructure.

"But unfortunately," he said, "billions of dollars have already been spent and billions have been wasted."

Copyright 2010 Los Angeles Times