Lendlease Annual Report 2022

Renewal 27 Risk Management Framework Five contract types Construction management Managing contractor Design and construct (two stage) Design and construct (one stage) Design and construct (PPP) Governance structure Investment Committee Pre-construction review Project Control Group Project review Functional reviews Completion & commissioning plan Four key elements Limits of authority | Contract risk limits | Risk appetite framework | Global Minimum Requirements Rigorous risk management Our risk management processes have evolved from decades of experience. It starts with disciplined origination that incorporates thorough market assessments and aligns our value proposition with potential opportunities. Diversity by client, contract type and sector forms part of this origination strategy. Substantial de-risking takes place prior to commencement of construction. Formulating detailed project briefs, which is our key project management skill, involves selecting a team with the optimal skill set for the project. Depending on contract type, we then go into product design and cost planning. The delivery phase is about construction management, production and program controls, functional reviews and reporting. Post construction, we apply a rigorous commissioning process for a smooth transition to the client. We remain disciplined with our approach to winning work and strive to maintain an industry leading approach to risk management. Our construction capability plays a critical role in the delivery of our urban projects. Partnership approach with supply chain Working collaboratively with our partners is essential to mitigating supply chain risk and achieving our sustainability targets. The significant disruption caused by COVID and geopolitical uncertainty has emphasised the importance of the supply chain in the successful delivery of our projects. We have implemented a range of initiatives to counteract supply chain disruption. By working directly with global steel manufacturers, the material experiencing the greatest price pressure, we have improved certainty and cost of supply. Global agreements have been advanced with a number of strategic partners for glass and aluminium. In addition, we reduced the risk of disruption through a relationship with a large global logistics providers. Key focus areas include: • Knowing our suppliers and their suppliers in order to proactively manage risk • Developing broader and more advanced strategies for key high risk trades and critical supplies • Establishing the right trading partnerships to introduce low embodied carbon materials • Building a more connected supply chain via the use of digital technologies. Opposite: Sydney: Sydney Place This page: Sydney: Randwick Campus Redevelopment Opening the door to business opportunities Not only has the Construction segment contributed to the origination of integrated projects, it has also introduced new business opportunities to the Group. Almost two decades ago, when the US Department of Defense was privatising its military housing portfolio, our US construction business, through its delivery capability, facilitated our entry into the housing privatisation program. Similarly, our construction business in Asia has a strong history delivering data centres and life sciences buildings. This provided the entry point for expanding the integrated model into these two growing real estate sectors.