This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for thistranslation or for direct, indirect or any other forms of damages arising from the translation.

June 27, 2024

Notice of Measures to Prevent Recurrence of Inappropriate Cost Management
We received an "Investigation Report on Inappropriate Cost Management( the “Report”)" dated April
16, 2024, compiled by Internal Investigation Committee.
We took seriously the causes of this case. The causes are like that there was pressure to avoid losses,
the cost adjustment procedure was complicated, and the checkpoints to approve the monthly report werenot clear, etc. Those cause were pointed out in the investigation report. And then we proceeded withconsideration and partial implementation of the preventive measures proposed in the report.
Now we notice that we have decided on the details and implementation schedule of the primarymeasures to prevent recurrence as follows.
To ensure the effectiveness of these recurrence prevention measures, we will clarify them in regulations,guidelines, etc. as necessary, and confirm them through internal audit procedures, etc. in the future. This
will be confirmed in the future through internal audit procedures.
Notes
1.

Measures to prevent recurrence for Strengthening the approval process for the Monthly
Report(1) Thorough daily input of work hours for each job into the monthly report system
Appropriate cost management is based on accurate monthly time input by all employees.
The Report points out the need to ensure accurate inputs. All employees should enter their work
hours by each business into the monthly reporting system on a daily basis.
In response to this issue, we will take the following two preventive measures.
(a) Issuance of a notice regarding thorough daily input of monthly report and continuous
awareness
A notice from Director, the Chief of Administration Headquarters was issued on May 30, 2024
to all employees to ensure daily input into the monthly report system.
In the future, we plan to continue to raise awareness by explaining the importance of thoroughly
daily entering monthly report in our compliance training.

(b) System improvement to ensure accurate input into the monthly report
We will be implementing system improvements to ensure daily inputs The changes are that if
the monthly report for the previous day has not been entered, after clocking in to start work,
the system will transition to a screen that prompts the user to enter the monthly reports, andthat in order to ensure the accuracy of the information entered, the system will restrict theadvance entry of working hours for the following day and beyond. This system improvement isscheduled to be completed by this July.

(2) Clarification of checkpoints of approval of the monthly report
We prepared checklist to clarify what to be checked by the managers approving the monthly
report.
The checklist shows whether the actual working conditions correspond to the records in themonthly report, and whether the records related to the actual work performed are recorded.
These measures to prevent recurrence were informed throughout the company in a noticeissued by Director, the Chief of Administration Headquarters on May 30, 2024.
(3) Visualization of the process for approval and return of monthly report
The Report points out that we need to strengthen the approval process for the monthly report.
For example, when a manager corrects the monthly report, he/she needs to confirm the GeneralAffairs Division as an outsider.
We will improve the system to address this issue/ When a manager return a monthly report to amember, he/she must include the reason.
This allows the General Affairs Division to verify the revision process from a third-party
perspective and to send back any applications that are in doubt.
This system improvement is scheduled to be completed by this July.
(4) Establishment of a system in which the manager can confirm the status of businessexecution of all members of the department
The Report points out that inappropriate cost management was carried out after employee
prospected that the cost rate exceeded 100%, such as by shifting the costs of the business toother businesses with larger cost margins.
To prevent this, we will make modifications, by linking our internal systems, it becomes possible
to confirm at the time of approval that the work entered in the monthly report is the work that theperson entering the work is engaged in. Specifically, we will be making improvements so that if aperson enters and applies for work in a monthly report that differs from the work registered in thecontract management system as the work they are engaged in, a warning message about thedifference in work will be displayed when the monthly report approver approves it.
This system improvement is scheduled to be completed by this July.
(5) Thorough management of work hours of temporary employees for each business
The Report points out that work hours of temporary employees for each business are recorded
inaccurately, while total work hours are accurate.
Therefore, we will record the actual work hours of temporary employee by business unit.
As a method of recording, we will begin recording in spreadsheets from this June,. At the sametime, we will be modifying our monthly report system to record the working hours of temporary
employees.
The system improvement is scheduled to be completed by this August.
2.

Strengthening the Approval and Monitoring Process for the Execution Budget(1) Monitoring of cost occurrence status for each business
The Report points out that we need to review the working budget in a timely and appropriatemanner to carry out proper cost management, in response to events that could not have been
anticipated at the time of the initial budget formulation stage or changes in the situation due toexternal factors.
In response to this criticism, we will establish criteria for when to review the working budget andwill revise the system so that an alert is issued to encourage a review of the working budget
depending on the degree of change in incurred costs.
When an alert is issued, the department manager will check and provide guidance on whether
the working budget should be revised.
The system improvement is scheduled to be completed by this August.
(2) Improvement of the statement of reasons for exceeding the cost control standard
When a cost rate of a business exceeds our internal management standards, we have a rule
to pick up the business through the system, and to make a statement of reasons for the cost
excess.
The Report points out that we should ease the standards for submitting such statements andreduce the administrative burden on supervising engineers, since the effort required to prepare astatement of reasons can sometimes motivate cost transfer.

In response to this criticism, we will grasp the actual situation regarding the submission ofreason statements. Considering the importance of reason statements, we will review some of thestandards for submitting reason statements, such as relaxing the cost exceedance standards forsmall-value business.
This will reduce the need to submit excessive explanations and ease the administrative burden
on managing engineers.
The system modifications to extract target business operations in response to this arescheduled to be completed by this June
(3) Visualizing the Status of Cost Generation in Operations
The Report points out that technical department managers and management divisions of eachbranch office need to strengthen their monitoring of the status of budget revisions by management
engineers, and create tools that make it easy to understand the elapsed time and cost occurrence
status of each business We also need to create a system to check and provide guidance tomanagement engineers if there are any problems.
In response to this criticism, we built a tool in this May and are currently conducting trial
operation.
A system for checking and providing guidance to management engineers and others in theevent of a problem is scheduled to be established by this June.
3. Reinforcing Compliance Education
The Report points out the need for thorough compliance education for all employees.
We conduct compliance education for all employees in September of each year.
In response to the occurrence of this incident, we have decided to implement it in June, three months
earlier than usual, to foster appropriate cost management awareness at an early stage.
Compliance training is targeted at each base office and group company (9 companies), and for thepast few years has mainly been conducted via the web.
However, starting this year, there is a concern that the training may lose a sense of reality because
it is conducted through a screen, so to ensure that employees understand that the content of thecompliance training applies to them personally, we will be conducting group training primarily faceto-face.
The same training content will be held multiple times to increase opportunities for face-to-faceparticipation.
The instructor will emphasize the motivations, opportunities, and justifications that led toinappropriate cost management, and carefully repeat the reasons why cost transfer is not allowed
so that participants can understand.

4. Fostering a Corporate Culture that Avoids Inappropriate Cost Management
The Report indicates that our corporate culture and atmosphere may have been a remote cause of
inappropriate cost management. Specifically, it is pointed out that there is an atmosphere in which
numerical targets such as management targets and execution budgets of departments areemphasized more than necessary.
Considering this, a notice was issued on April 16th of this year in the name of the CEO, informing
employees of the following:・In conducting business activities, it is inevitable that some individual operations will result in losses.
・Even if a loss-making operation occurs, it will not be treated as an immediate disadvantage.
・Appropriate cost management is important.
Additionally, the Director, Managing Executive Officer' Notice dated May 30th of this year also
reiterated the importance of proper cost management. We will continue to monitor the situation andwill continue to issue notifications and other announcements as necessary.
In addition, Chief, each Branch Office and General Manager will continuously inform them of theimportance of cost management once a quarter to avoid inappropriate cost management.
5. Recurrence prevention schedule
Please refer to the attachment. The schedule is subject to change. It also notes about alreadycompleted measures.

Attached Recurrence Prevention Measures and Implementation Schedule
Measures to prevent recurrence

1(1) Strengthening
Approval
Processthe forMonthly Report

Thorough daily input of work hours foreach job into the Monthly Report System

3

Visualization of the process for approval
and return of monthly report

・ Guidance to monthly report input after the start ofwork
Improvement of the Monthly
・ Restrictions on entering schedules into the Monthly Report System
Report SystemCreation of a checklist

・ When a monthly report approver returns themonthly report to an employee, they shall return it with
Improvement of the Monthly
the reason, and establish a system to confirm theReport Systemreason for the return from outside the General Affairs
Department of the office, etc.

MayEndBeginning

June
Mid-

End

Beginning

Start ofoperation

System requirements definition

System improvement

Start ofoperation

System requirements definition

System improvement

Start ofoperation-Monitoring of Cost Occurrence status foreach Business6(Improvement of accuracy of executionbudget)

・ Issuance of alerts according to the status of cost
occurrence(Excessive remaining cost for the period until the endof the construction period, etc.)

Improvement of the Cost
Information System--・ Review of the judgment criteria (threshold) in thestatement of reasons for cost overrun

Improvement of the Cost
Information System-

SystemeRequirements
Definition-

Preparation and implementationof Excel templates-

System requirements definition

System improvement

Start ofoperation

System requirements definition

System improvement

Start ofoperation

System modification

Start ofoperation

Tool publishing・ Trial

Implementation of face-toface lectures

10 Message from the CEO・ Message from the Representative Director andIssuance of Notice by thePresident, CEO and notice from the General Manager Representative Director and・ Thorough communication within the office
President, CEO and・ Communicate the importance of cost management Representative
to each business site once a quarter (* To beDissemination at business
implemented annually thereafter)
sites

End--・ Conduct multiple face-to-face training sessions(* To be held annually thereafter)

AugustMid-

Start ofoperation

Improvement of the Monthly
Report System(Preliminary implementationin Excel)

Reinforce Compliance Education9regarding cost management

Beginning

System improvement

・ Create a monthly Excel business report
Thorough management of work hours for (Use and Storage of Invoices as Evidence)5
each job by temporary employees
・ Examination of management by monthly report
input system

Construction of "Cost andBudget View"

EndSystem requirements definition

Improvement of the Monthly
Report System

・ Released the "Cost and Budget View" created by
the Engineering Division as a tool to visualize costs
・ Establishment of a system for monitoring andguidance

JulyMid-Done・ Check whether the business number entered bythe approver in the monthly report is the business
number registered as the person in charge(cooperation with the contract system)

Improvement of the statement of reasons(2) Strengthening
7 for exceeding the cost control standard
the Approval and(Relaxation of Submission Standards)
Monitoring Processfor the Exection
Visualizing the Status of Cost Generation
Budgetin Operations(Strengthening of management in the8 management of the Engineering
Department, executives of businessestablishments, and the General Affairs
Department)(4) Fostering acorporate culturethat avoids
Inappropriate Cost
ManagementMethod・ Thorough daily input
Notice issued by the General・ Compliance with the approval deadline for the firstManager
and second half monthly report・ Confirmation by checklist
Clarification of checkpoints of approval of2(Viewpoints of Labor Management, Cost
the monthly reportManagement, and Expense Management)

Establishment of a system in which theGeneral Manager, who is the secondary
4 approver, can confirm the status ofbusiness execution by all members of thedepartment(3) Reinforcing
Compliance
Education

Concrete measures

Schedule

Review of monitoring and guidance systems

To beimplemented
sequentially
Issued: Implemented
Publicity:Continuedimplementation

Start ofoperation