Project Due Diligence
Each year, the R2A Board reviews the R2A practice, what it is and how it achieves. The Board notes that the directors always feel that what they and the practice do ‘makes a difference’, not just to our clients but to the overall way business is conducted in Australia.
What is Engineering Due Diligence?
Richard was recently featured in an Engineering Online (EOL) video and answered 5 questions in two minutes on the topic of Engineering Due Diligence.EOL is a new Online Learning Centre recently launched by Engineering Education Australia (EEA) to support the professional development of engineering related professionals across all disciplines. Registration is free for members of Engineers Australia.
Have you ever wondered ‘What is engineering due diligence’ and what is it that ‘R2A does’?
As due diligence engineers we often get asked what is engineering due diligence and what it is that we actually do at R2A. To be honest, this has been a really difficult question to answer. Due diligence is a legal concept and often construed to only mean compliance in the engineering context which is not the case. Previously Richard has used throw away lines like ‘we align the laws of nature with the laws of man’ that is, ‘we make lawyers useful’. Although these are outcomes of what we do, they didn’t quite answer the question of ‘what engineering due diligence actually is’.
The role and responsibilities of an Expert Witness
Arising from a recent expert witness commission, the legal counsel directed R2A’s attention to Makita (Australia) Pty Ltd v Sprowles [2001} NSWCA 305 (14 September 2001), which provides an excellent review of the role and responsibility of an expert witness, at least in NSW.
Demonstrating Societal Due Diligence Using the Precautionary Approach
Arising from correspondence and discussion regarding earthquakes in New Zealand and bushfires in Victoria, R2A has been considering the possible application of the precautionary approach from a government regulatory perspective. The Venn diagram below is one result.
Operations Due Diligence vs Operations Risk Management
The meaning of the word risk has changed substantially over the last 20 years or so which has caused confusion in the operations risk management space. It used to refer to potentially catastrophic events for which insurance was normally purchased, a meaning which is still used by Factory Mutual and Lloyds underwriters.
In more recent times it has become associated with the term management, which has morphed it from the consideration of potentially catastrophic events to a process, which determines the optimum risk (upside and downside) outcomes, epitomised by the concept of ‘risk appetite’.
2013 The Year in Review
December again and 2013 is rapidly coming to an end. As part of our end of year wrap up, here are some of the highlights that we would like to share with you.
The year started with drinks and canapés to launch the 9th edition of the R2A text, Risk & Reliability: Engineering Due Diligence. The event was well attended by industry colleagues and provided an overview of the general state of affairs in industry.
Following on from this success, R2A will be hosting another event on Thursday, 6th February 2014 from 3pm to 5pm. Richard will launch the 2104 update of the R2A Text. R2A has concluded that the risk and liability world is changing so fast at the moment that, until further notice, the text will be updated annually at least.
R2A Event 2014
Following on from the success of our client and colleagues function in 2013, we will be hosting another event on Thursday, 6th February 2014 from 3pm to 5pm.
Richard will launch the 2014 update of the R2A Text. R2A has concluded that the risk and liability world is changing so fast at the moment that, until further notice, the text will be updated annually at least.
Matters of interest include:
- The introduction of the Rail Safety National Law which is complimentary but subordinate to the model WHS legislation.
- The expected approval in the new year of the Engineers Australia Safety Case Guideline (3 Edition). This specifically rejects the Risk Management Standard (AS 31000) as being able to positively demonstrate due diligence for high consequence – low frequency events.
- Why SFAIRP (so far as is reasonably practicable) can never equal ALARP (as low as reasonably practicable) legally.
- The logical limitations of Monte Carlo simulation for demonstrating project due diligence.
Origins of the Legal Concept of Due Diligence in the model WHS act
The case that launched the negligence tide is generally recognised as Donoghue vs Stevenson (1932). Essentially this tested the responsibility of a drink’s manufacturer for a stomach ache resulting from a late discovered decomposed snail in an opaque soft drink bottle, purchased by one of two friends to share. Until that time, the liability for a bad product rested with the contractual arrangement between the seller and buyer, not a third party friend with whom the drink was shared and who subsequently fell ill.
Interestingly, it was a split decision by the 5 judges in the UK House of Lords as to whether or not the case should proceed at all since the potential liability to the manufacturer lay outside the existing buyer-seller contract. The minority was concerned that a finding for the plaintiff would launch an uncontrolled avalanche of negligence claims in common law jurisdictions, a concern that has pretty much eventuated.
R2A Safety Due Diligence Process
In reality, to be safe means to be free from harm. In court, safe means that, despite something apparently unsafe having happened, due diligence has been demonstrated. In engineering terms this means that to be safe requires managing the law of nature in a way that is consistent with the laws of man and in that order.
At R2A we have developed a set of routinely successful process to positively demonstrate safety due diligence consistent with the requirements of the model Work Health and Safety (WHS) legislation that has commenced in all Australian jurisdictions except, at the time of writing, Western Australia and Victoria.