Resilient Infrastructure, Risk & Adaptation Strategies

Risk! Engineers Talk Governance Podcast
Season 7, Episode 3

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis discuss Resilient Infrastructure, Risk & Adaptation Strategies.

Following their attendance at the recent forum hosted by Engineers Australia's Risk Engineering Society and the Institute of Strategic Risk Management they unpack the big questions it raised about resilient infrastructure.

From Victorian bushfires to the Dreamworld tragedy, to Finland's invasion-proof subways, they explore what resilience really means in practice; who defines it, who's responsible for it, and why "future proofing" is often considered optional.

They discuss why resilience can't be managed in silos, how it means different things to different people, and how a due diligence and SFAIRP approach can shift resilience from a reactive response to a proactive strategy.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers, Richard Robinson and Gaye Francis discuss resilient infrastructure, risk and adaptation strategies.

(00:14):

We hope you enjoy the chat. If you do, please support our work by giving us a rating and subscribing on your favourite podcast platform. And if you'd like more information on R2A, our newsletter and resources or have any feedback or topic ideas, head to the website r2a.com.au.

Gaye Francis (00:32):

Hi, Richard. Welcome to another podcast.

Richard Robinson (00:35):

Morning, Gaye. Pleasure to be here.

Gaye Francis (00:38):

Good to hear. Today we're going to talk about a forum that we attended last week. I attended in person. You were online.

Richard Robinson (00:45):

Most recent, very recently.

Gaye Francis (00:46):

Very recently. That is true. And it was run by Engineers Australia's Risk Management or Risk Engineering Society and the Institute of Strategic Risk Management. And they were talking about resilient infrastructure, risk and adaptation strategies. And it was quite an interesting and robust discussion. There were some very interesting presentations and they were quite diverse.

Richard Robinson (01:15):

As you pointed out, I missed part of it because they couldn't actually get the online part working initially. So you were there for the whole thing and I was sort of sporadic.

Gaye Francis (01:24):

That's correct. So I guess one of the first things that for me that came out was the notion of resilience and what is resilience. And nobody really had a precise definition of what that meant. And they were taking it from different contexts and different ways. And I think one of the interesting ones was the presentation by Luke Belford, and it was about authorising resilience and value. And I think he came up with three key points: Success is silent. Failure is visible. Future proofing is seen as optional. And in the resilience space, it sort of showed up as avoided costs in the event of a disaster. I know the people in the resilience world don't like the word disaster, but it shows up when something happens. So for me, resilience is really about, it's a solution to a disruption or to a risk per se.

Richard Robinson (02:27):

Yes. I agree.

Gaye Francis (02:29):

So it was how risk management and resilience went hand in hand. And I think some of those things were really interesting.

Richard Robinson (02:36):

Well, we were talking about this before we started the podcast, and the ones that immediately came to mind to us with the Victorian bushfires and the desalination plant. Now the Victorian bushfires, because it's a fascinating thing because of the activities of the AER, the energy regulator, and the fact that a lot of bushfires are started by clashing conductors, but it's self-evident the bushfires start for all sorts of other reasons too, like lightning and so forth.

(02:58):

And that the bushfire, the really bad ones that burn lots of houses happen about once a generation in Victoria. And so the question then becomes, well, how much trouble are you going to go to to try and stop these things? And there comes a point where there's diminishing returns and it's better to be resilient. And so, okay, well, we want to keep building expensive houses, we'll all evacuate when the bad fires appear. And if it happens to burn our house down, it's cheaper to build back than it is to ... And you consider it as part of the cost of resilience.

Gaye Francis (03:23):

And I think that was one of the key things about the resilience discussion was what are we trying to protect against? What is the extent that we want to be resilient to? So what is this infrastructure? And it was an infrastructure context, of course. What does this infrastructure have to deliver and for how long and what situations does it have to be resilient to?

Richard Robinson (03:47):

But we took that a little bit further because one of the comments we have was in the Dreamworld incident where the four young people got killed, the cost of the payout to the people who got killed was about $3 million or so, but the cost to the underwriter for shareholder value was about a $30 million claim. And you're sort of going, wait a minute, that's the sort of order of magnitude.

Gaye Francis (04:07):

Seems disproportionate doesn't it.

Richard Robinson (04:08):

And the fact that the company was badly managed or didn't think these things through and wasn't applying the legislation consistently, these things like that, and the underwriter had to pay the shareholders for it. There's something not quite right about that. But of course, but if you define the whole purpose of company to make shareholder value, then it's entirely rational.

Gaye Francis (04:28):

And that was one of the other presentations was about that strategic risk management element and what boards had to consider in terms of being resilient. And we were talking along the lines of the board's there to sort of see the longer term strategy of an organisation typically, but then board directorships are often only a shorter term tenure.

Richard Robinson (04:52):

But that sometimes depends on the type of board. I mean, if you're talking about a water company, its business is providing a service to the community first and foremost ahead of any commercial consequence. Okay? It's meant to do it cost effectively, but failure to deliver water is number one.

Gaye Francis (05:06):

Yes. So the resilience comes in, is it the failure of water supply? And we've talked about this in a number of other podcasts, I think, and how long do you have to continue to deliver water or an essential service in the event that another essential service such as power goes out?

Richard Robinson (05:23):

And we did that cabinet in confidence work addressing that not so long ago in Victoria.

Gaye Francis (05:27):

So the key is you really do have to come top down and articulate what your critical success outcomes are or what is fit for purpose. What's the definition of this.

Richard Robinson (05:41):

What are you doing here? What are we trying to achieve? Now, the problem is politically that's a difficult thing to do because if you state that and then it all goes wrong, it's a bit of a problem.

Gaye Francis (05:50):

Well, and that went back to Luke's third point, wasn't it about future proofing is seen as optional.

Richard Robinson (05:56):

Well, if it hadn't gone wrong in your term of office, I mean, we've talked about this before, but if you're a politician, you actually quite like things going badly for the guys who are in office, because that means you're likely to get into power in the next election.

Gaye Francis (06:09):

That's a bit cynical, but true, true.

Richard Robinson (06:12):

That's like underwriters. I mean, underwriters are all in favour of losses as long as it's not to their company. It's fine when it's all the other insurance companies, because then premiums go up. It's a great success.

Gaye Francis (06:23):

You would hope though in a critical infrastructure environment, we're trying to have the whole community, the resilience of the community as a whole. But I think that comes down to one of our other issues that we've talked about in a number of other cases, and that's things are done in silos.

Richard Robinson (06:39):

Correct.

Gaye Francis (06:41):

And bringing it all together for that greater good of a community. And I think resilience is larger than an organisation.

Richard Robinson (06:49):

Well, that's meant to be what cabinet does for you, because they're the ones who meant to balance all these things. I mean, you want a well-educated community, you want to have a resilient community against bushfires, and there's obviously a balance there that has to be decided. Now, the problem you got is your political ... The politics has gone a bit strange in different parts of the world, and we're trying in Australia in some odd ways that I haven't quite figured out... But to have the high level resilience is ... I mean, why do you need a defense force to be resilient against external threats? And when you need it, you need it, so you better get it right. And it's getting very complicated out there.

Gaye Francis (07:30):

But I've never seen an overall infrastructure plan or resilient infrastructure plan for a community as a whole.

Richard Robinson (07:39):

Wait a minute, you go to Finland, of course you do.

Gaye Francis (07:42):

Explain.

Richard Robinson (07:43):

The Fins have their world set up for an invasion. They're all trained, they're all ready to go, and they can put every member of their community into a secure facility in the event of war. True or false? You've been telling me about this. Not me. <laughs>

Gaye Francis (08:02):

They all do national training and yeah.

Richard Robinson (08:05):

And when they design something like a subway or an underground station, they design it so it becomes a bunker that they can protect themselves against just about anything.

Gaye Francis (08:13):

Yeah, true. I guess I never thought about it like that as a...

Richard Robinson (08:16):

But you've been telling me. <laughs>

Gaye Francis (08:19):

I think one of the other interesting things, Richard, was the sort of perception that you got that things are being done in silos. So the whole wasn't considered. So it was being thought out from a commercial aspect or an environmental aspect and not maybe from the whole of organisational aspect or whole of community aspect. And what was surprising to me, I guess, because we do a lot of our stuff from a safety perspective, there wasn't much discussion about the relationship between the safety aspect and resilience.

Richard Robinson (08:56):

Well, and that was interesting too, because one of the things we've noticed that safety can actually drive a solution. In fact, one of the speakers did make the point that when you look at when there's a disaster or an emergency, like during COVID and various things like that, we were really good at making rapid decisions on what was best as fast as we could get there.

Gaye Francis (09:13):

And finding resources to make things happen.

Richard Robinson (09:17):

But once the disaster was over, we just sort of slump back to whatever slow decision-making process we were previously used to. That's not particularly helpful. You would have thought that we could actually do better than that.

Gaye Francis (09:27):

And I think it is bringing that idea of resilience into a proactive manner rather than making it reactive. And that changes the way that people think about what resilience is.

Richard Robinson (09:40):

Yeah, because it has been a term which a lot of people use, which everyone sort of understands, but it's sort of gone to the same category as risk because it's a term everybody uses with great enthusiasm.

Gaye Francis (09:50):

Correct.

Richard Robinson (09:51):

And yet when you actually try to investigate what they mean by it, there's a general underlying confusion.

Gaye Francis (09:57):

And it means different things to different people depending on the context in which you find yourself.

Richard Robinson (10:02):

That's correct. I mean, we keep noticing that in our courts and our legislators actually use it as a noun and a thing in itself, the risks. And then they talk about the risk associated with the hazard, meaning it's a description or an adjective associated with it. And that's sort of a basic fundamental problem. And that's even in the legislation.

Gaye Francis (10:18):

When Jordan (Bartlett) used the term resilience in his particular presentation, it was the buildup to a certain capacity. You've defined a capacity that you can achieve for a fit for purpose and you can be resilient to that capacity and then disaster results once you exceed that capacity.

Richard Robinson (10:40):

Yeah. Well, it's interesting because that's a bit like in a cabinet in confidence stuff we were doing for the water utilities. I mean, how long should a water utility be able to supply water if there's a loss of power and deal with sewage and is it eight hours, 24 hours or two days? Obviously it'd be nice if it was two days, but it would cost an awful lot and that's where you have to balance those community...

Gaye Francis (11:00):

Expectations.

Richard Robinson (11:01):

You can't do it just within a silo. I think that was the main takeaway, wasn't it?

Gaye Francis (11:05):

I think that was the main takeaway. I think there are a couple of main takeaways for us. It's top down. You really have to articulate and define what you're trying to protect. It can't be done in a silo. And I think you've got to consider the collective. So it is the safety aspects. It is the disruption aspects. It is the commercial aspects. It is the community expectation. So all of that needs to be articulated and then what you can put in place. And I think that's where that SFAIRP provision comes in because you're really saying not just from a safety viewpoint, here are the controls that we can put in place or the precautions we can put in place, what are reasonable in the circumstances?

Richard Robinson (11:47):

Yeah. Well, I think that's what we took it to be a moral imperative. And I think that's what the parliaments basically were trying to say. They were taken chiefly from a safety viewpoint, but as we've pointed out, Victoria's thrown it into environmental legislation and there's no particular reason that it couldn't actually be thrown into other areas if we chose to do it.

Gaye Francis (12:05):

And I think that was one of the other comments from one of the presenters that risk analysis doesn't necessarily get you over the line for issues of resilience.

Richard Robinson (12:17):

Correct. I agree with that.

Gaye Francis (12:19):

And that's primarily because risk is really poor at dealing with high consequence, low likelihood events, regardless of what they are. So if you take the SFAIRP or due diligence approach, then you can do it that way.

Richard Robinson (12:32):

And resilience is all about what can be done. So it's an options analysis, which is the point you're making, which is what I guess an awful lot of the presenters that we've been listening to for the last few years are achievely saying.

Gaye Francis (12:44):

Yeah. So I think resilience is absolutely critical, especially in the risk management or the due diligence space. If you can be proactive rather than reactive, that'd make a huge difference. And if you take the due diligence approach, the SFAIRP approach, you will get an action list of things to do.

Richard Robinson (13:04):

Well, you've gone through the hierarchy, you eliminate it if you can, you prevent it if you can. If you can't do that, you can mitigate it. And I tend to regard resilience as an aspect of mitigation for the big things that you really can't fix preventativly.

Gaye Francis (13:18):

Outside of your control.

Richard Robinson (13:19):

Correct.

Gaye Francis (13:20):

But then you're talking about disaster recovery or recovery access.

Richard Robinson (13:24):

That's right.

Gaye Francis (13:25):

So I hope you found that interesting. Thanks for joining us today, Richard. See you next time.

Richard Robinson (13:29):

Thanks, Gaye.

Safe Work Australia's Best Practice Review of Model WHS Act & Regulations

Risk! Engineers Talk Governance
Season 6, Episode 3

In this episode, Risk! Engineers Talk Governance, due diligence engineers & R2A Co-Director’s Richard Robinson and Gaye Francis discuss Safe Work Australia's review of the model Work Health and Safety (WHS) Act & Regulations, and R2A’s submission response.  

Key points include:

• Contradictions between the WHS legislation, regulations, and common law requirements, particularly for designers and engineers. 

• Concerns around the hierarchy of controls and how they are interpreted by regulators.

• Inconsistencies in how the WHS legislation is implemented across different jurisdictions.

• Misalignment between WHS legislation and planning laws, creating challenges in integrating safety considerations early in the design process.

The discussion highlights the need for greater clarity and consistency in the legal framework governing workplace health and safety, to ensure effective implementation, especially for designers and engineers.

Submissions closed 3 November 2025.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss Safe Work Australia's best practice review of the Model Work Health and Safety (WHS) Act and Regulations and outline their submission response.

(00:20):

We hope you enjoy the chat. If you do, please give us a rating and subscribe on your favourite podcast platform. If you'd like more information on R2A's work or have any feedback or topic ideas, please head to the website www.r2a.com.au.

(00:38):

Tickets are also still available for our live forum in person and online on 21st of October, 2025. You can find the link in this episode's description.

Gaye Francis (00:50):

Good morning, Richard. Welcome to our podcast session.

Richard Robinson (00:53):

Good morning, Gaye. Welcome back.

Gaye Francis (00:54):

Thank you. It's been two weeks of school holidays, so it's nice to be back.

Richard Robinson (01:01):

I'll mention this to your kids the next time I see them.

Gaye Francis (01:04):

True, true. Straight into it today. What we're going to talk about today is Safe Work Australia has a discussion paper out titled Best Practice Review of the Model Work Health and Safety Laws - Discussion Paper dated September, 2025. And they're asking for submissions till the 3rd of November (2025). And of course, R2A can't help itself, but we need to respond to these sort of things.

Richard Robinson (01:28):

Particularly since there are some glaring contradictions and in so far as we can tell from the point of view of designers, Section 22 of the WHS legislation or section 28 if you happen to be in Victoria, which requires the SFAIRP application. And there has been quite really categorical contradictions, which we've never quite understood. And one would hope that Safe Work would be willing to have a crack at the legal framework to try and fix these things.

Gaye Francis (01:54):

I was just going to say that the key questions for this sort of best practice achieves the object of the Model WHS Act section three within this context, how do we maintain best practice in response to the changing nature of work and emerging risks? And how can harmonisation of WHS laws be strengthened and maintained across jurisdictions into the future? And I think getting that consistency across a whole lot of things, and we've sort of got three key points and we might go through them. We'll go through 'em today.

(02:22):

It's really that the Act versus the Regulation and the Code of Practice.

Richard Robinson (02:28):

Correct.

Gaye Francis (02:28):

And there's a contradiction there, and we'll go through that in a little bit more detail. I think there's a huge mess around the hierarchy controls of what's in the legislation compared to the common law and then what the regulators are promoting.

Richard Robinson (02:42):

Correct.

Gaye Francis (02:43):

And I guess we've come from it from a practical viewpoint of a practical implementation of the WHS legislation, especially for designers and engineers. And that sort of leads on to what you were saying before about the designer section, Section 8.

Richard Robinson (02:59):

Well, the other one is the basic non-alignment of planning law with WHS legislation, which has got us confused as engineers. And then as far as I can tell, the lawyers aren't clear on it either.

Gaye Francis (03:19):

So I think you've given the introduction of the contradictions for the designers and the requirements of designers. And so I guess the next one is the contradiction of the Act and the Code of Practice in particular.

Richard Robinson (03:37):

This is one which keeps emerging. The Code of Practice follows pretty much the Risk Management Standard. So I'm just going to look at the little diagram that the most recent one puts out. And it says Identify hazards, assess risk, control risks, and review risk controls. And that pretty much follows the Risk Management Standard, which so far as we can tell, doesn't follow the process that you need to in order to survive Common Law scrutiny and presumably statutory.

Gaye Francis (04:00):

And when we say assess the risk, we are talking about consequence and likelihood, aren't we?

Richard Robinson (04:04):

Correct. By risk assessment? So you can have high consequence, low likelihood to be low risk still.

Gaye Francis (04:09):

Yes.

Richard Robinson (04:10):

Despite the fact that something really nasty. So it's high consequence, low likelihood could still occur. Now the way we always do it, and we've tested it for so many lawyers, it really sort of got to the point that you, yeah...

Gaye Francis (04:24):

We're not quite bored with it, but it is going down that path.

Richard Robinson (04:28):

But our recommendation is you follow what we understand to be the Common Law approach, and that is you identify the credible critical ones, the ones that can kill the maim, then you identify the further possible precautions that could be put in place, and then you work out what's reasonable in the circumstances based on what you know, which then is supposed to be an objective test. And then you have a QA system to make sure that what you've agreed is sustained. Now that actually contradicts the Risk Management Standard approach very thoroughly.

Gaye Francis (04:55):

And some of the commentary that goes with that, it's sort of for known hazards. If there's known solutions, you just put those in place. But what we're saying is the SFAIRP principle actually asks you to look at all of the controls that could be put in place.

Richard Robinson (05:09):

Correct. For the critical ones.

Gaye Francis (05:10):

For the critical ones, and then determine what are reasonable in the circumstances. So that might be more or different to the ones that are already in place.

Richard Robinson (05:18):

And it may well be different to what's in a Standard.

Gaye Francis (05:21):

Yes. So you just have to be careful there that you're not just doing what everyone else does or what's common practice. It may not be relevant in the circumstances.

Richard Robinson (05:33):

Correct. And it will be the judiciary that decides what's relevant in the circumstances. I mean, the way it actually works, I mean something bad happens, somebody gets killed or maimed, it goes to court, or the expert pop up after the event, and say, with the advantage of hindsight, what could have been done, which isn't that hard. And then the court decides in all the circumstances whether the ideas dreamed up by the experts were sensible in view of what was known at the time the decision was made.

Gaye Francis (05:59):

That is, were they reasonable?

Richard Robinson (06:01):

Yep.

Gaye Francis (06:03):

So yes, that's probably the first one and we are putting that in our letter. The next one for me, and this is the one that probably annoys me the most, is the hierarchy controls and the different commentary that's going around about those, and especially from regulators. So we've covered this many times. The WHS legislation has a hierarchy of two. You must eliminate first, and if you can't eliminate, you can reduce it, so far as reasonably practicable. When you go to court, it's divided into three categories. Elimination, prevention, you stop the thing from happening and then mitigations, which stops the escalation of the consequences or reduces the consequences.

Richard Robinson (06:44):

And the example you usually give us is of the rail road crossings level crossing. So obviously if you want to eliminate, you can grade separate at great expense or you can put up boom barriers, which will stop the incident from happening at all. And if that fails, you go with crashworthiness, all of which happen to be engineering controls, and which engineering only pops up typically as one out of six controls that most regulators put up.

Gaye Francis (07:07):

And that's probably the other area is that how regulators do it. And we've seen 'em everything from three to four to seven sort of categories.

Richard Robinson (07:19):

Well, different jurisdictions have different things, but the most popular one seems to still be six with eliminate being the top and then another five. But Victoria's down to four I think. And sometimes you're seeing Queensland, they've got both six and three. It's very confusing if you're a designer as to which one you're supposed to use.

Gaye Francis (07:35):

And they've also grouped some of them together. So isolation, engineering and substitution.

Richard Robinson (07:41):

Well, that's how they shrink it down. What's interesting from our point of view is they're getting closer and closer to what we understand to be the way the courts go about it. But for some reason...

Gaye Francis (07:50):

The terminology is not the same though. And I think that's where it's confusing. So I think to harmonise the WHS legislation, if the regulators could get on board of what an agreed...

Richard Robinson (08:01):

It would be really helpful the regulators would talk to Safe Work Australia, I think.

Gaye Francis (08:04):

Yes. And streamline that process. I think that would take a lot of confusion out for engineers. And the third one is probably Richard's favourite part at the moment, is the planning legislation.

Richard Robinson (08:16):

Wouldn't call it favourite!

Gaye Francis (08:19):

Or the area that's causing the most difficulty and confusion is the planning laws and WHS legislation.

Richard Robinson (08:26):

Yeah. Because what seems to be happening is that planning law basically has a life of its own, unless there's some forced connection between WHS legislation seems to be ignored. I mean, probably the one that hit us the hardest, and that I've got to say practically was when we did the hazard and risk analysis for Western Sydney Airport because we didn't start the job until we got the Australian government solicitor to agree that the owner and operator at the airport had to comply with the WHS legislation. But then when the planning process went through, we sort of got told, well, you don't have to follow the legislation for the EIS. And that's really weird because most of the core hazards are set up right at the start of the planning process.

Gaye Francis (09:01):

Well set up, but also able to be dealt with at the most, at the easiest part on a pen and paper and a planning stage than it is once it's been implemented.

Richard Robinson (09:12):

Yeah, no, I think we've already spoken about it, so I don't propose to go into it here, but the only time when we've found a good connection between the two is when the planning law has a requirement that advice needs to be received from the relevant regulator, for example, major hazards, in which case the planning system actually does take cognizance of the obligations. But then it's more the obligations.

Gaye Francis (09:34):

Only if it's brought up though.

Richard Robinson (09:36):

That's correct. It has to be forced into the system somehow. And in that sense, in Victoria, the VCAT one we're talking about, the council had to actually ask the opinion of the WorkSafe Victoria with regards to a major hazard facility. WorkSafe Victoria presented an opinion, therefore that opinion then had to be thought about.

Gaye Francis (09:54):

Yeah. And I am sure there's other legislation that would have conflicting requirements as well, but that's the one that we've sort of come across.

Richard Robinson (10:05):

Yeah, they're the three sort of biggest that we've come across, which obviously we're going to advise. And for those of you who are contemplating coming to our October (2025) event with regards to SFAIRP, these sort of questions will pop up there possibly depending on what people ask.

Gaye Francis (10:24):

Yeah. And the discussion will sort of be around these things. So I think as we said before in our podcast, we're not actually sure what the event will turn out like and what discussions will be had.

Richard Robinson (10:35):

We're pretty sure it's the questions that are going to be the best part.

Gaye Francis (10:38):

The discussion part will be the best part. And I think some of these things that we've been talking about, there's no one answer to do it, but there's ways and people think about these things differently. And I think that's the important part that these difficult conversations are being had.

Richard Robinson (10:54):

Well, it is essentially, if you look talking the larger thing, I mean the WHS legislation was attempting to get societal alignment from problems that arose since Federation, big step forward. But it went to the highest level, the parliamentary level. And even Victoria still has to put in the adopted it, even though we have the SFAIRP business, we don't have the due diligence business, but we've certainly got all the obligations and designers that's pretty much the same. But then the next level down in effect is what we're actually talking about. And that harmonisation hasn't happened properly yet, which is what Safe Work is actually asking for.

Gaye Francis (11:27):

And I think if anyone was interested in going through that discussion paper, it's actually a good read and they've sort of put the differences between the different jurisdictions. So even though you've got a model WHS Act.

Richard Robinson (11:39):

You haven't got the regulators harmonising themselves yet.

Gaye Francis (11:41):

So there's some harmonisations and there's been a number of tweaks to the legislation that makes each jurisdiction that just that little bit different from each other. So they're sort of saying, is there some consistency that can be thought through?

Richard Robinson (11:56):

We don't know what motivated this particular best practice request. We have some suspicious that the points we're making may be relevant.

Gaye Francis (12:05):

Yes. So I hope you found today's podcast interesting. Thanks for joining us, as always, Richard, and we'll see you next time.

Richard Robinson (12:12):

Thanks Gaye.

How to Prevent Catastrophic Project Blowouts: Project Due Diligence

Risk! Engineers Talk Governance
Season 5, Episode 3

In this episode, Richard Robinson and Gaye Francis discuss How to Prevent Catastrophic Project Blowouts and R2A’s project governance and due diligence approach.

They discuss the three key considerations when undertaking project due diligence and preventing project blowouts as:

1. Ensure your scope is right, have identified your critical success outcomes are and all key stakeholders understand what the prize is and agree.

2. Undertake a completeness check of threats. Project due diligence is not a risk assessment, it’s about controls, and putting in controls to protect against threats. 

3. Review the project on a regular basis and at key milestones. If there are any scope changes being proposed, you need to question what it will actually do to your project and where it’s at now. Redefine the project scope, as appropriate, but ensure changes are communicated transparently and clearly.

This discussion follows R2A’s booklet: How To Prevent Catastrophic Project Blowouts (A Practical Guide for Directors).

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss: How to prevent catastrophic project blowouts.

(00:14):

We hope you enjoy their chat. If you do, please give us a rating and subscribe on your favourite podcast platform. If you'd like more information on R@A's work or have any feedback or topic ideas, please head to the website www.r2a.com au.

Gaye Francis (00:32):

Hello Richard, welcome to another podcast session.

Richard Robinson (00:35):

Good morning Gaye. Interesting trip in today!

Gaye Francis (00:37):

It 's been a difficult start to the morning, but we are here now and ready to do a podcast. So today we're going to talk about preventing catastrophic project blowouts and it's a bit timely in that we've just updated our little booklet for 2025 and that's now available.

Richard Robinson (00:57):

And you might notice one of my favourite chapters is in it.

Gaye Francis (00:59):

What's your favourite chapter?

Richard Robinson (01:01):

Eeke, Irk and Oops!

Gaye Francis (01:03):

You can tell Richard went about naming some of these chapters, can't you?

Richard Robinson (01:07):

Yes. But see, I explained this to you a long time ago and one of the first things that happened when you arrived at R2A if I recall correctly, and you said there's a fourth term. I was explaining how these are three critical terms in risk. And you said the fourth term is Grrrr. And I said, what does that mean? You said, it arises when you're a younger female working with an older male.

Gaye Francis (01:30):

It probably still exists today even though we've aged a little bit. So we've gone out off on a tangent already in the first two minutes of the podcast, but that's alright. So for ending catastrophic project blowouts, and it was also timely in that there was a recent article in Create at the end of February and it was called...

Richard Robinson (01:49):

Create Magazine from Engineers Australia.

Gaye Francis (01:51):

Correct. Big budget blowouts costing billions each year. And it was basically an interview and a chat with the national chair of the CROSS Engineering Society and it sort of covered projects like Inland Rail, Snowy Hydro, the Northeast Link, Paradise Dam, Project Energy Connect, and then the Northeast Link. And I think one of the interesting things that it said was they're typically not technical issues that slow a project down or stop a project down. And when they were talking about budget blowouts, they were talking in terms of cost, time and also scope, which was an interesting one. But they were saying that the engineers aren't so good at communicating such things as the environmentals approvals and legislation and land acquisition issues and they're typically the issues that can blow projects out.

(02:48):

So it was really interesting. I think one of the interesting things that he said was typically projects don't go wrong, they start wrong. And I think some of our stuff that we would observe in the project due diligence stuff that we do, and I think the governance process and the due diligence process at R2A applies to projects probably extends that cost engineering idea further because he's sort of talking about typically the most likely type of blowouts and things that can go wrong in projects and starting with other projects. But we're saying what are those catastrophic issues regardless of how likely they are, that can stop a project.

Richard Robinson (03:32):

And the key thing was to make sure you understand what it is you're actually doing. I mean one of the points we make is that our approach to all this is a very military intelligence approach because we learned, I got this with Bob Browning all those years ago and he got it off MI6, I think it was when he was on exchange to the UK. But the point was you need to clearly understand what is you're trying to achieve as setting out to achieve. And if you don't get that right, it will come unstuck. And I say it's the military intelligence technique because one of the things that you try to do if you're about to go on a military mission on which your life depends and if you get it wrong, things are going to go badly. You need to really spell out what success looks like and how you're going to get there. And then you make sure that anything that threatens those outcomes are dealt with them, we call them vulnerabilities, but that means we're looking at control. And one of the more interesting articles that popped up, I dunno quite why I came across it, but I was doing a search for some work we were doing. Oh it was we were doing course last week wasn't it?

Gaye Francis (04:25):

Last week for defense?

Richard Robinson (04:26):

For defense. And I came across an article by, it was an RMIT researcher and aI New Zealand army personnel person. And they were reviewing 10 years of the implication of WHS legislation on defense in Australia. And they said, this is sort of the first study this has been done. It's been around now for about 10 years from defense's viewpoint because it commenced in 2012. And they were asking the question, well what's the impact? And the last sentence, literally the last sentence in the whole article just says that the WHS legislation, the difference it's made, it's not about the level of risk, it's all about the level of control. And that's the final conclusion.

(05:08):

And that's our point because our frustration with all this stuff is particularly to do with the Rsk Management Standard. And I suppose I could mention a current court case I've got, but people still doing risk assessments, working out target levels of risk and safety when the legislation, it's just flowing from that very human thing. It's not the level of risk that counts. It's always been the level of control. And that's the same thing, whether it's projects or safety.

Gaye Francis (05:31):

And I think that's the difficult conversation that people have to have. Isn't it often the project comes unstuck because the aim or the objectives of the project aren't articulated that all the stakeholders agree that that's what they're working towards.

Richard Robinson (05:47):

Correct. I mean we make the remark about we watch defense in some of their gate procurement processes. If you don't keep an eye on what the overall outcome is, I mean they go through this gate and there's a two year team that's got to get through the next gate. Well for them that's their critical success outcomes. But if that team there isn't looking to what the final outcome is supposed to be, then they set all the other teams in the following gates up for the fall.

Gaye Francis (06:12):

So I think the idea of scope creep is a little bit of a funny one, because you've actually got to go back and say, alright, if we change that in our project, how does that affect our critical success outcomes? And it's not just time and budget, it's actually is it actually delivering what we want it to deliver? And do all the stakeholders agree to that?

Richard Robinson (06:33):

Yes. And one of the problems you've got is times change and if it's a long project, people's perceptions change and what's important, what it was trying to achieve can change too. I mean one of the funny things last week we got asked about Agile and I had a quick look at that. I mean I've come across it before, but all the different techniques that pop like PRINCE2 and all the other ones that different people say, this is the way to do it, if you don't do it this way, it's a failure. Whereas I think we would say it is better off to think through what you're trying to achieve rather than just rely on a (one technique).

Gaye Francis (07:02):

Previous experience on other projects, I think would be our suggestion to think it through. And then, I mean, don't lose all the lessons learned and everything, but don't use it as the basis for going forward. Use it as insight to reflect on the project that you are doing.

Richard Robinson (07:17):

But you've got to make sure you understand what it's you're trying to achieve. And if you don't, it will come and haunt you.

Gaye Francis (07:23):

We've actually walked away from projects because they couldn't articulate what they were trying to achieve.

Richard Robinson (07:27):

Well, you might remember that large desal project in Victoria and the project manager wanted to do it our way and because they wouldn't do it our way he walked.

Gaye Francis (07:35):

I think one of the other difficult things that there's a lot of pressure on projects at the moment and they're saying that there's big project blowouts and things like that, but many of these projects were scoped and started and estimated before Covid-19 and during Covid. And I think times have really changed. There's a big difference in the costs associated with projects in today's dollars compared to what they were five years ago.

Richard Robinson (08:02):

Yeah, it's been 10% per year roughly from what I can see. You watch the CPI figures and things like that and what's happening in procurement and so forth. Although I was listening to somebody saying, and one of the problems is just not having the people to do things at the moment, getting anybody even give you a quote or a tender is getting problematic, but somebody did say that that's all starting to slow down a bit and there might be more bodies available to do things in the future.

Gaye Francis (08:26):

So maybe there'll be an improvement in some of those?

Richard Robinson (08:31):

Maybe. I don't know. The world is a very strange place at the moment. If anybody's watching politics.

Gaye Francis (08:38):

It's also for us, we often see that look typically projects do some sort of risk management or due diligence with their projects, what we...

Richard Robinson (08:47):

They always do. Whether it's successful or not, that's the next question.

Gaye Francis (08:50):

Yep. I think the other thing is that we often see missing is there's gaps in it. There's not a completeness check of ideas. And a lot of the work that we do, I think that's one of our key criticisms of the risk processes or due diligence work that people undertake or organisations and projects undertake is you don't have that sense of completeness. It's sort of a brain dump of issues in no particular order. And I would agree with the Chair of the CROSS Engineering Society in that I think typically it's not technical issues.

Richard Robinson (09:26):

For a known technical issue, they seldom failed. It's the unknown one or unspecified one that nobody quite understood was there or chose not to understand.

Gaye Francis (09:36):

And so there's some planning associated with that. But if you go through a project due diligence viewpoint and you list the threats by project life cycles starting at the very, very top where you've got procurement and planning and approvals processes. One of the things that the inland rail was getting a bit of a bad rap about was basically it's a rail project, but it's going through three different jurisdictions, which means that there's three different approval processes and they didn't allow sufficient time. And I don't know whether they were actually one approval before you could get the next approval or whether you could go and get 'em concurrently.

Richard Robinson (10:19):

You might remember the Tugan bypass Queensland said New South Wales goes under a federal airport. And we had 40 people in the room, remember, because it was all becoming a bit unstuck. But it did come down to who has the biggest, well, I'm not quite sure, but it seemed to me that the Queensland's were paying for it, but New South Wales had the greatest impact, which seemed a bit unfair to me.

Gaye Francis (10:40):

I think that was because from emergency services viewpoint, they were the one that would respond to any incident under the tunnel. So that's that discussion around which we've had many times around stakeholders, key stakeholders and interested parties who actually live and dies by the (decisions). So by going through all of this stuff, it's not just the technical issues. If your project's only considering the technical issues, you will come unstuck.

Richard Robinson (11:04):

And people are still trying to apply the Risk Management Standard. Just again, because I'm in this Expert Witness thing, you're talking about unlikely things and one of the thing is experts are not omniscient. They can't be. So they can't say when you're talking about rare, big, bad things, they of themselves can't say what all those things are and how they might manifest. But you can go about it another way. But if you try to risk assess it and you're trying to say, I've identified them all, it is all about the control. It's not about the risk assessment. That doesn't help at that point because you cumulatively, you can't work out from a calculation viewpoint what that might be.

Gaye Francis (11:45):

So the three key things that we would say for project due diligence and preventing catastrophic project blowout is make sure you've got your scope right and you've identified what your critical success outcomes are.

Richard Robinson (11:55):

And you've communicated to everybody. So everybody understands what the prize is.

Gaye Francis (11:58):

And everyone agrees! That's always a bonus. I think you happen to have a completeness check of threats because you can typically manage... You can't manage the surprises. Projects can typically manage things that can go wrong. And then, as you said, it's a controls review to say, well, these are the controls you can put in place to protect against these sort of threats.

Richard Robinson (12:24):

And things that pop up if you've got the control there can be dealt with. But when there's no control, it's just a surprise.

Gaye Francis (12:32):

And I guess that takes us down to our last point. It's not do you due diligence review or your risk assessment and then pop it on the shelf for the entire remainder of the project. You've actually got to review these things on regular basis and the key times to do that are project milestones or if there's one of those scope changes being proposed, you really got to pull that out and say, well, what does that scope changer actually do to our project and where we are. Now, you can redefine it, that's fine, but you have to take everybody on the journey and it has to be transparent and clear.

Richard Robinson (13:06):

And that's what I understood the Agile process was trying to do.

Gaye Francis (13:09):

A change management process? Ok. So again, we're not saying that any of these things are wrong or anything like that.

Richard Robinson (13:18):

Hey, hang on a minute, we've in crucifying, the risk management standard. And I will point out that...

Gaye Francis (13:22):

In isolation.

Richard Robinson (13:23):

But I will point out that article I read, it was commenting that the Engineer's Australia Safety Guideline actually said the Risk Management Standard was an error and that the defense had been agreeing with that.

Gaye Francis (13:34):

For safety terms.

Richard Robinson (13:35):

For safety terms, correct.

Gaye Francis (13:37):

Correct. So understand what your different processes and tools do and then yeah, use 'em as guidance rather than the answer, I would say.

Richard Robinson (13:48):

Yep.

Gaye Francis (13:48):

Thank you for joining us today and we hope that our chat has prevented a catastrophic project blowout for your particular project. Thanks, Richard.

Richard Robinson (14:00):

Thanks Gaye. Always interesting.

Gaye Francis (14:01):

Bye.

Aviation Industry & the Application of the Due Diligence Process

Risk! Engineers Talk Governance Podcast
Season 4, Episode 3

In this episode, Richard Robinson and Gaye Francis discuss the application of the due diligence process to the aviation industry. 

Richard discusses his recent presentation to the Australian Aviation Wildlife Hazard Group where he used the expert witness view: What is it that could have been done and if it had been done, would it have stopped it going wrong? 

Key take-aways:

• Hazards and vulnerabilities in aviation, 

• Why R2A stays away from the term risk and adopts the military approach which is to say threat, 
  Preferred communication tools, and 

• The point of the due diligence process, which legislation requires, is demonstrating you were diligent and demonstrated you cared; that you did everything reasonably practicable you could in the circumstance.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss the aviation industry and the application of the due diligence process.

(00:15):

We hope you enjoy the episode if you do we'd love a rating. Also, if you'd subscribe on your favourite podcast platform. If you have any feedback or topic ideas, please get in touch. Email admin@r2a.com.au.

Gaye Francis (00:34):

Hi Richard, welcome to another podcast session.

Richard Robinson (00:37):

Morning Gaye. It's good to be back.

Gaye Francis (00:38):

It is good to be back. Today we're going to talk about one of our industry specific applications of our due diligence work that we do. And today we're going to talk about aviation and how it relates to the aviation industry. And it's really based on a presentation that you recently gave to the Australian Aviation Wildlife Hazard Group at Melbourne Zoo recently and how that went. So I'm guessing if you do an intro of what you did for that conference and then we can have a chat about some of the language that they use in the hazards that they experience.

Richard Robinson (01:17):

Just from those remarks you might gather from what Gaye just said, that we don't normally practice these (podcasts) in advance. But anyway. Basically I gave the standard expert witness view of how you go about managing these things and just explained that after it's all gone wrong and other people have died or serious injuries occurred, and you all wind up in court, the expert witnesses pop up and say: What is it that could have been done, if it had been done, would've stopped it going wrong. And obviously, after the event, when the fact is certain, that's not that hard a task, it's usually pretty obvious after the disaster, what could have been done if it had been done would've dealt with the matter. And this is just hammering the point that the court's testing as a retrospective design review, whether all reasonable controls are in place. It's not testing whether or not there was a standard or target level of risk achieved because after the event that has no meaning.

(02:08):

And I have to say the group, I think the group got that pretty fast. They understood that. And in fact because of who they are, they're talking about obviously aircraft damage and aircraft falling out of the sky. For example, somebody was going through all the stats about the number of bird strikes around the world and how much damage had been caused and how many people had died. And one of those Max 8 collisions of about 186 people died or something like that. One of the reasons why I thought it might've happened is that they thought the pitot tube, which tells the aircraft what speed it's doing had got damaged. And so it was giving the wrong information and the most likely reason for doing that was that it had been struck by something. Now they couldn't find that obviously in the crash site because that would've occurred before everything started going wrong. And if you obviously include that particular incident, that expands it further. There were a couple of other things which I hadn't realized, which obviously I thought about it briefly.

(03:00):

Australia, for example, has these wasps that like building mud homes in holes and one of the most likely places to build it is in the pitot tube. And so these airspeed indicators of aircraft can often be damaged just because the wasps are doing their thing. And it can happen quite fast. Wasps build these mud nests pretty damn fast. If the aircraft's sitting there for 24 hours, then you could have a mud nest then it quite easily. So there's a whole lot of things they have to check.

(03:26):

But the other thing which was interesting was that... you might've noticed they called the Australian Aviation Wildlife Hazard Group. It used to bird strike, but they said, well, and as you would've observed fairly unhappily,

Gaye Francis (03:38):

I will share that one of the handouts in the bag was different wildlife strikes around the world. For example, giraffes in Botswana, an alligator in the US. So a number of other animals were also experienced on the runway.

Richard Robinson (03:53):

Well, somebody had a problem, an overseas pilot had a problem in Australia with an emu and they referred to it as an Ostrich, which sort of slowed the Australians down just a bit. And the other problem they have too is a lot of time you can't actually identify the bird strike because there's not much left. I mean, one of the handouts they gave us was a sort of picture of a Boeing 747 with a bit of red on the front saying, what splat is that? Because it's important to know what kind of bird strike it is.

(04:22):

I mean you can recall we did that one at Brisbane airport I think it was. And the only reason why they knew they'd had a bird strike is because the runner on one of the jet engines had gone and they'd been badly damaged. And the reason why that was the case was because it was the ring off a homing pigeon, and that was a steel ring that had got caught in the runner. And they sort of said, what's a homing pigeon, a racing pigeon doing in our engine at Brisbane airport? And then they discovered that the local

Gaye Francis (04:50):

Pigeon club.

Richard Robinson (04:51):

Pigeon club ran racing pigeons and they used to let the pigeons off close to the airport and depending on what the weather was and what was going on, sometimes the pigeons as a flock went across the runway. Obviously the launch site was relocated for the pigeons once this became clear that that was the case, but that was only became the case because they discovered this pigeon ring that goes around the ankle. That was the only thing that was left.

Gaye Francis (05:15):

I think one of the other interesting things in your bag was this dangerous 10 species identification that was in there and sort of names 10 Australian bird species that represented in the ATSBATBS statistics. And I think it's really interesting groups. There seems to be two groups. There's sort of galahs and flying foxes and seagulls, but then there's also the white ibis and the buzzard and there seems to be two groups. There seems to be groups of birds that fly in big flocks. So the number of birds is one of the issues, but then they also put these additional birds in where the buzzards, the white ibis, because of their sheer size and the mass of them.

Richard Robinson (06:00):

They exceed what the engine can handle. I mean most people seem to know that now they fire chickens at test jet engines and all it does is provide more thrust to the engine most of the time. But birds, birds big enough. That's what actually happened in the US where they landed in the river, they flew into a flock of Canada geece and Canada geese are such a size that they will take out an engine and obviously if you have a flock, both engines can go down because one of your main precautions or controls is that each engine is capable of delivering all phases of flight. And as long as only one engine goes down, you're good. That's the second engine goes down, that gets problematic.

Gaye Francis (06:42):

Okay. So we spent a lot of time talking about the hazards or the vulnerabilities that they're exposed to.

Richard Robinson (06:48):

That was the other point. You see, they talked about this a fair bit, you might've noticed they said the Australian Aviation Wildlife Hazard. So they changed it from bird strike to wildlife because kangaroos have been struck and emus have been hit and things like that. So that was a fair thing. But they also changed the hazard and the way they were defining the terms, you see, one of the things they'd realized is that the term risk is so badly used and abused that nobody really knows what it means. And I just expanded on them because they'd understood this already, but I just expanded the presentation. I mean we've got five, but the three key ones are because we had an underwriter speak just before me who was explaining what whole losses and what had gone on in the world and what they underwrote. And the other thing was there were an awful lot of people from Southeast Asia there too. About 30% of the audience, about 140 people were from other countries. And they were particularly impressed with what the Australians were doing and how they're doing it, and particularly the ATSBs database and how they presented the information.

(07:47):

Anyway, this business of the risk, because I said look, the underwriter spoke about the risk as the thing in itself like the hull and the aviation and the aircraft is the risk. The technical people always talked about risk, likelihood and consequence, the simultaneous depreciation of both. But when you wound up in court when the fact is certain the likelihood side of the equation is now one, it's happened. And so the only risk you're talking about was the likelihood of that particular event occurring. And so the courts were just talking about likelihood. So unless you actually had this understanding

(08:17):

Now the way they were defining it, they were saying that the hazard was the problem of bird strike or animal interference at all. Then they had the threat, which was the creature being there at all. Then they called the risk, the conjunction of aircraft with whatever might be hit. And then they called the consequence, the outcome. Now we, as R2A, obviously stay away from the word risk altogether and just adopt the military intelligence approach, which is to say threat. We're happy with the hazard definition I think. But then you would have the threat, which is the potential bird strike or whatever animal strike. And then we would call that the vulnerability, that follows the military intelligence process.

Gaye Francis (08:56):

And that's the coincidence of the airplane being there at the same time as the wildlife.

Richard Robinson (09:00):

Correct.

Gaye Francis (09:01):

Yeah, that makes sense.

Richard Robinson (09:05):

How well that went down. I've yet to see.

Gaye Francis (09:08):

Have to see at the next presentation whether they've changed the name in their group or not. So they've identified the hazard. What are the controls that they can put in place?

Richard Robinson (09:20):

Well, we actually had done this at a previous presentation and I was basically explaining how we particularly prefer single line threat barrier diagrams because they're just the most communicative of a device. I mean, they were talking about bow ties, but you know how large complicated bow ties people get lost in the detail.

(09:38):

And the only technique that we've found that really works. Now I did explain it by sort of putting the James Reason swiss cheese model up because the aviation sector for reasons that are slightly obscure to me, really like that one and just sort of pointed out that it's a better alternative. And the main reason why is because when you wind up in court, I mean the legislation's clear and you remember we didn't start, for example, the hazard and risk analysis for the Western Sydney Airport until the Australian government's solicitor had actually signed off on that the way we wanted to do it, which was consistent with the provision of the WHS legislation was the right way to do it. Not using target levels of risk and safety such as New South Wales wanted to use.

(10:18):

Now the other way which I explained is that the quickest way to get to the question of what's reasonable in the circumstances was to put up a pros and cons table. And so I put that example up and the example I had on the threat barrier diagram I think was a bird scare, which means that you have basically a radar there, which is putting a laser on the birds or whatever creatures around. So if you show up and you're a kangaroo, suddenly get a green laser pointed at you or something, which sort of makes you, I dunno what this is, but this is not a good place to be.

Gaye Francis (10:49):

So you're removing the vulnerability.

Richard Robinson (10:51):

Correct.

Gaye Francis (10:52):

The intersection of the two.

Richard Robinson (10:53):

But obviously they have radar that can pick these things up. It's hard to pick up a single bird on a radar, although a flock apparently does show up.

Gaye Francis (11:00):

Right.

Richard Robinson (11:01):

And ordinarily you wouldn't expect a single bird to be able to take out a major commercial aircraft. At worst, they damage one engine. And as I pointed out earlier, we design aircraft so any single engine of a two engine aircraft can maintain all phases of flight. Even if you had to go round, it could be done.

Gaye Francis (11:20):

And I guess for this approach as well. So that was the application to wildlife and birds. But we've also used this approach in many other aerodrome or airspace, collision risk reviews that we've done.

Richard Robinson (11:32):

Well, that's basically what we did for Western Sydney Airport. It was basically a single line threat barrier diagram. It was interesting because I had a chat with the CASA (Civil Aviation Safety Authority) guy afterwards. Obviously DASA, that's the Defense Aviation Safety Authority, (and they) basically go about it the way we describe. But CASA, to some extent, has reverted to using target levels of risk and safety, which we have expressed to them several times in the past. And you will recall, we declined to keep doing work for them when they reverted back to that.

Gaye Francis (12:00):

So they're using the target level of risk and safety that something's acceptable or not. But I mean, we've done some recent jobs in the last couple of years in New Zealand, and we've definitely used the WHS approach.

Richard Robinson (12:12):

The WHSA in that jurisdiction, NZ.

Gaye Francis (12:16):

And that was the precautionary approach. And I think one of the interesting things when we were looking at the airspace one, and it was based on a model that we developed for Tapo many years ago, and it was really saying, well, there's only half a dozen or so controls that you can put in place to make airspace safe.

Richard Robinson (12:35):

Correct.

Gaye Francis (12:37):

And you're really saying what's reasonable in the circumstances? And when you break it down to that by flipping that question, the review process becomes so much more straightforward and less complex.

Richard Robinson (12:50):

Well, I think the other point was, which I don't think people quite understand. I mean, when something horrible happens, there's a tendency to say, well, whose fault was that? Right? I mean, that's been explained to us that the rules of the road for the shipping business is all about finding fault for who's going to pay for it, in effect for what the damage was.

(13:07):

But the point about the due diligence processes, which is what the legislation requires, it isn't that you can be right all the time. And we come across this situation where engineers in particular, something bad's happened and the engineers sort of saying, it's all my fault. I didn't get it right. And you sort of got to point out to 'em. That's not the way the system works. Your duty is to be diligent. You can't be right all the time. Now the world's a complicated place, and the courts understand that. The courts aren't saying that you have to be right all the time. What the courts are saying is that you need to be diligent and demonstrate do you care? That's an entirely different thing. And so when you're talking to one of these engineers or somebody who's got themselves in the situation based saying, well, had you done everything reasonably, you could in the circumstance, because if the answer is yes, then you have been diligent.

Gaye Francis (13:53):

And what else could have you done in the circumstance?

Richard Robinson (13:54):

What else could you have done? That was the same story we had with that CFA captain who sort of said, look, I know if I keep doing this job as a volunteer for the next 10 years, I'm going to lose someone. But what I need to be able to do is look the relatives the next to kin in the eye and say, look, it wouldn't have mattered if it was my son or daughter there. We'd done everything reasonable we could. There are dangers associated with what you do here, and sometimes bad things will still happen.

Gaye Francis (14:21):

So I think we might wrap it there. But what we hope we've shown you today is, and we're going to continue in this season to do a number of applications to the due diligence process. So the due diligence process is a governance process, and it is a process that can be applied to basically anything. And I hope today that we've shown you just how we apply it in the aviation sector. So thanks for joining us, Richard, and we'll see you next time.

Richard Robinson (14:45):

Thanks Gaye.

R2A's Due Diligence Process: Why it works

Risk! Engineers Talk Governance Podcast
Season 3, Episode 3

In this episode, Richard and Gaye discuss R2A's preferred approach to due diligence. 

They explain why they start with a top-down approach, usually starting with the military intelligence, threat and vulnerability technique. And how often organisations who have started with a bottom-up process have been floundering for some time, come to R2A to cut through the detail.

Richard and Gaye also discuss the:

• importance of selecting the right tools and techniques for the job,

• need for multiple perspectives and approaches to ensure a comprehensive analysis, 

• importance of bringing key stakeholders together and the challenges of working in silos, 

• need for preparation and adaptability in the due diligence process.

Read the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis chat about their due diligence process at R2A and why it helps their clients. We hope you enjoy their chat. If you do, please give us a rating. Also, don't forget to subscribe on your favourite podcast platform.

Gaye Francis (00:25):

Good morning, Richard. Welcome to another podcast session.

Richard Robinson (00:28):

Morning Gaye. Been a busy couple of weeks.

Gaye Francis (00:30):

We have had a busy couple of weeks. It's been good and interesting.

(00:36):

Today we're going to talk about R2A's preferred due diligence approach. We often get asked why we do things a certain way and we've covered in another podcast, I believe, the different tools and techniques that are out there and that there's many tools and techniques out there. And one of the first things that you've got to do is select what you're going to use.

Richard Robinson (00:56):

Which of the approaches you're going to use out of the eight by three matrix that we suggest is available to you (refer R2A texts).

Gaye Francis (01:02):

That's correct. So part of today's podcast has been recorded because we've been congratulated, which you don't often expect as consulting engineers to be congratulated on doing a job well done. It's just I guess what you expect when you get paid to do something. But we've had a number of stakeholders come up to us after workshops and say: That was a really good process, I really understand what we are doing now. So we thought we'd go through the approach that R2A uses.

Richard Robinson (01:30):

And anybody lives on the 65th floor who thinks that, yes, it's kind of interesting, isn't it?

Gaye Francis (01:39):

So do you want to kick off and I'll throw some comments in?

Richard Robinson (01:42):

Yeah, by all means! So what we thought we'd do was actually just explain which approach we prefer to start with.

(01:48):

Now what we tend to do is start with this one, and if it doesn't work, then we go scratching around looking for other ones. I mean, for example, in three by eight matrix, the legal review, we always suggest that ought to be done, but we don't start with the legal review. That's something that once you've gone through your process, you get the lawyers to actually check. And it actually is quite important because Gaye has talked about this and she keeps forgetting the line. I keep making the (Immanuel) Kant remark that engineers seem to like: The meanings in the process, the results are only consequences. So whatever analysis or review process you adopt that will define the consequences.

Gaye Francis (02:25):

There are types of results that you're going to get from.

Richard Robinson (02:28):

And we keep coming across people who started with bottom up processes and they wonder why they get lost in detail and floundering around. And I've got to say that's the reason why we actually get quite a lot of work is because they've been floundering around for quite some time and they're rather desperately looking for somebody to sort of cut through the Gordian knot and bring in the thing to a useful place.

Gaye Francis (02:44):

And resolve the situation, isn't it, that they can make a decision going forward?

Richard Robinson (02:48):

Correct. So we just thought we'd say, well, okay, this is the approach we normally take.

(02:53):

Now we always start top down and the only really effective top down approach that we know about is the military intelligence, threat and vulnerability technique. That's where you spell out what you're trying to protect, what's important to you, what the credible threats to what it is you're trying to protect are. And then you look to see whether those threats expose what you're trying to achieve or protect. And if you find one of those, that's called a vulnerability just for the record. I mean Asia for example, does threat assessments. They don't do hazard assessments. That's what organisations and bottom up tends to do hazard assessments.

Gaye Francis (03:27):

But there's a whole lot of ways that you can do the threat and vulnerability assessments. So sometimes we look at critically exposed groups.

Richard Robinson (03:33):

Which we did for tunnel and fire design.

Gaye Francis (03:36):

You can look at it on a functional basis.

Richard Robinson (03:38):

Which we did for safety cases for ports like Sydney and Sydney Harbour and other places.

Gaye Francis (03:43):

Which comes in as a geographic basis as well. And then you can do other completeness checks for railways, for example. You can do the different train types, different collision types, different track types. So there's a whole lot of ways that you can get...

Richard Robinson (03:57):

The last job we were just doing was done by task.

Gaye Francis (04:00):

Yes.

Richard Robinson (04:02):

We went through and broke down the tasks. We then also came back and double checked against critical exposed group, make sure we didn't have overlook anything. But that means we took two cuts through at a high level. And I think that's the point. One of the points we keep making; risk is this multidimensional creature. If you think a single cut is going to get you the answer that you want, it's probably not the case. I mean, we always suggest you have the lawyers review it, come hell or high water anyway, because it's got to work for the lawyers because if you don't, it won't survive post legal scrutiny.

Gaye Francis (04:30):

But I think one of the interesting things with the job that we just did when we did look at the tasks that were being done, there are a whole lot of controls that came out of that. But then when we went through the critically exposed groups, there were some additional controls. So I think sometimes you do have to have that, because it is multidimensional, you've got to have a number of ways of looking at it and checking it to make sure that you haven't overlooked anything. And that's one of the ways that you do do your completeness check.

Richard Robinson (04:56):

Now having done that though, when we're looking at a particular vulnerability, the way we tend to like to do that is just to write out a single line threat barrier diagram. Now that's a very Newtonian way of thinking about things. If this then that time goes on and flows in one direction, there's no quantum mechanics, it's just a single flow of ideas. And that's certainly what we used in the VCAT proposal and certainly what we used in the last two reports that we've done. And the reason why we particularly like using this, from the point of view we explain in the hierarchy controls, it's one of the really crisp ways to present the elimination option always comes first. If you can't eliminate, then you say, okay, can we prevent it from occurring? If you can't prevent it from occurring, you say, right, can we mitigate the scale of the consequences? We prefer that to multi bow ties, motor alarm bow ties, because everybody gets lost.

Gaye Francis (05:49):

And I think we've been using it more to get everybody on the same page and to almost set the context of the review. We don't often use them as an analysis tool. They're often as a communicational explanatory tool. So it gets everybody on the same page that focuses them on the key issue of concern. These are the controls that we've got in place. These are the possible additional controls you could have. And then you may or may not need to go to another level of detail to determine what's reasonable or not.

Richard Robinson (06:19):

And just remember whilst we start that way, it isn't always the way. I mean, for example, we're doing that Supreme Court expert witness job on the effect of rolling blackouts. And we started off trying to use threat barrier diagrams to describe all the scenarios that we could think of. And in the end, you actually couldn't do it. We had to actually go to a probabilistic basis, an epidemiological basis rather than a causal Newtonian basis.

Gaye Francis (06:45):

And that was because there wasn't just a single cause associated with it.

Richard Robinson (06:48):

Well, there was a single cause, but the mechanisms were so varied. So people were getting trapped in elevators, blood blanks freezing over, trains stopping in tunnels, and all sorts of complexities. But there's a whole multitude... And all the traffic lights going out tends to cause a bit of chaos too.

Gaye Francis (07:04):

It sort of sets the context for the review as well. When you're determining what's reasonable.

Richard Robinson (07:09):

Now, when we're actually look at the threat barrier diagrams, the other thing that we do, and we've just been commissioned to do another major review - This one's an international one, just! - but what we then do is when you're looking at the particular barrier in the threat barrier diagram and saying how reliable is that barrier? In terms of trying to explain it to somebody, the best tool we've found to use it is reliability block diagrams or success block diagrams. So the success block diagrams describes what elements provide success for that particular barrier. Now, the advantage of doing that is that the threat barrier diagram then remains fairly uncomplicated because just whack in what that functional barrier is, and then you explain in the reliability block diagram all the elements and what needs to achieve.

Gaye Francis (07:52):

I think one of the interesting things with that as well is it often shows the weakest link in the chain and it's often not the one that you're focusing on. And so it's no use putting in another barrier that's really, really reliable and gold plating something if you've got another barrier in there or another element in there that's actually limiting the success of that whole chain.

Richard Robinson (08:18):

If you've got a single point of failure, it's always going to cost you mega dollars to gold plate it, and that single point of failure will not go away.

Gaye Francis (08:26):

And I think that was one of the things that came up in the recent jobs, wasn't it? They were focusing on a particular issue of concern. And when we went down to that, and we did need to go back down to that reliability block diagram level, the issue that they were trying to resolve the solution was totally different to the original one that they were looking at.

Richard Robinson (08:45):

Correct.

Gaye Francis (08:45):

Just to address that common mode failure, because if they didn't address that common mode failure, whatever they were talking about doing would've had immaterial impact.

Richard Robinson (08:56):

The other key point in all this, which I think is actually really important, I suspect that's one of the reasons why we keep getting a job out of all this, is that the whole point of the WHS Legislation (OHS Act) going back from Maxwell QC when he wrote his thing, was that one of the core frustrations of the health and safety business was that people had split responsibilities. And the fact that somebody over here failed to do something, the people were saying: Well, it's not my job, it's their job to get it right. And he said: Well, no, that's not right, to the extent that you have to control, you've got to do stuff and you can't just keep blaming the other person and not doing anything, you've got to get on with it. So in both the last couple of jobs, there's been a tendency for somebody to say: Well, this is the responsibility of, say a fire engineer and you, the fire engineer, have to sign off on the problem; it's all your problem, the rest of us just sit back and wait until you figure it out and sign off.

Gaye Francis (09:46):

And the poor fire engineer says: No, no, no!

Richard Robinson (09:49):

I'd sooner withdraw from the job. I'm not taking responsibility for everything that could go wrong. Mainly because you people want to have some other solution which provides operational benefits, but you're not willing to take into account these serious long-term consequences of that fire design. Which by the way, as the fire engineer, I inherit for the rest of my working life. So it's actually quite interesting and it's rather interesting from my point of view -- I obviously started life as a fire engineer with Faction Mutual, and I guess I was doing this before it was trendy, but I moved on to being a due diligence engineer. But when you put the due diligence context together, the fire engineer is particularly pleased to say: That makes sense! I'm with you.

Gaye Francis (10:31):

I think that's one of the other benefits of the due diligence approach that we do. I mean, we said this on a number of occasions, the tasks that we usually complete are generative interviews to come to get a first cut of the situation before you go into a stakeholder workshop. You never go into a stakeholder workshop unprepared or with a blank piece of paper. That could always lead to disaster. But I think one of the things that the due diligence approach does, and there's been multiple stakeholders in the last few jobs that we've worked on.

Richard Robinson (11:01):

Multiple multiples.

Gaye Francis (11:02):

And they've often been doing their things in their own little silos. And this is the first approach that's brought them all together to bring them onto the same page. And so I think collectively, they could then go forward. Whereas when you're trying to solve it in your own silo, it's almost impossible.

Richard Robinson (11:21):

Well, that's what the case is. And what happens is you get these huge delays and after a while the delays get so large that the whole process stalls. But you might remember, we noticed this when we were doing the Gold Coast, the Tugan bypass, the tunnel under the Gold Coast airport. You remember we had that workshop, and I thought it was pretty tough because the Queenslanders were fundamentally paying for it, but it went under the Gold Coast airport. So that means it had the federals in there, and it then sort of popped out in New South Wales. But the New South Wales regulators were giving everybody hell. And nobody would agree. And it wasn't until we ran that last workshop. We did not previously prepare for that one that, well, I recall.

Gaye Francis (11:58):

No, we had about 54 stakeholders across all of the jurisdictions. So it was a pretty exciting time.

Richard Robinson (12:05):

Absolutely. And yet we managed to land it. Now, what I also understood about that, it wasn't so much that our process per se was the most brilliant on the day, but the process of getting the right people in the room and taking it through a structured process does work.

Gaye Francis (12:20):

Yes. Yeah. So any last comments? So that's what we thought we'd share with you today. I hope you found it interesting. Again, not a single size fits everyone.

Richard Robinson (12:32):

Well, you might recall we were doing that Warragamba Dam upgrade. Remember how we started the process and it didn't go well, and at lunchtime we had a sudden... We need another approach here! And we found a way forward that we could land it through the group.

Gaye Francis (12:49):

I would've preferred to end on our successful jobs that we've used, our preferred process. But yes, I guess it just shows...

Richard Robinson (12:55):

<laughs> My point being that you can't just assume it's going to work every time.

Gaye Francis (12:59):

That is true. And you have to have enough tools and techniques up your sleeve that you can adapt if you need to on the day. But preparation, preparation, I'm all for that.

(13:09):

So thank you for joining us and we hope for you to listen next time. Thanks.

Richard Robinson (13:14):

Thanks.

Project Due Diligence - Using a Military Intelligence Approach & Critical Success Outcomes

Risk! Engineers Talk Governance
Season 2, Episode 3

Richard Robinson and Gaye Francis discuss project governance due diligence.and highlight their unique approach that has incorporated a military intelligence approach and the importance of focusing on critical success outcomes and vulnerabilities rather than threats. They also emphasise the need for early involvement of key stakeholders. They also discuss the airport rail link project in Victoria and the Commonwealth Games in Victoria, and touch on the limitations of Monte Carlo simulations in identifying high consequence, low likelihood events. 

Full transcript below.

Episode transcript

Megan (Producer) (00:03):

Welcome to the latest episode of Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis talk about project governance due diligence. They discuss how they have applied a military approach to their work and also how they focus on critical success outcomes.

(00:26):

Enjoy the episode. Please give us a rating if you enjoy our work, and also ensure that you subscribe on your favorite platform.

Gaye Francis (00:36):

Hi Richard. Welcome to another podcast session.

Richard Robinson (00:38):

We're here again, Gaye.

Gaye Francis (00:40):

We are. Today we're going to talk about project due diligence, which is, I guess, close to our heart. And I attended a recent conference and presented a paper at Risk 2023, which was in Brisbane in September, 2023. And the theme of the conference was Risk Engineering for Resilient 2030. I think one of the key takeaways for me from the conference was that it was a really interesting conference and there were lots of papers given and everything. But there was a real focus, especially from the keynote speakers, around top-down criticality and vulnerability. And the people that were speaking as those keynotes were probably people that were putting projects together, so bigger projects. For example, the cladding replacement in Melbourne, that was one of the guys that spoke. But when you went and talked to people and the participants in the conference, one of the things that was still happening was those rare showstoppers were still bringing projects undone, those things that were critical and rare.

(01:51):

And my presentation was all around project governance and the little booklet that we've got out, "How to demonstrate due diligence - A practical guide for directors". And it really is that top down, focusing on the credible critical things, project showstoppers.

Richard Robinson (02:08):

High consequence, low likelihood.

Gaye Francis (02:11):

Yeah. And we've used this process for very many years on projects that have ranged from - am I going to get this right!? - $500 million to $2.5 billion?

Richard Robinson (02:27):

I think we started about $10 million up to $2.5- $3 billion.

Gaye Francis (02:30):

There you go.

Richard Robinson (02:30):

Australian dollars. I think Marina Coastal Expressway was about $2.5 billion US, as I recall.

(02:38):

And I guess if we just talk through today about what makes our process that little bit different from the traditional processes that we've seen, and we've said in many of our podcasts that there's a whole lot of tools and techniques out there, and they provide you with different insights into the risk issues that you do and some of the safety stuff that we - we've focused on safety in some of these podcasts - but the tools and techniques really do apply to projects as well, or can apply to projects as well.

(03:06):

Yep. Mostly.

Gaye Francis (03:10):

I guess, Richard, do you want to outline the process?

Richard Robinson (03:13):

Well, so far as we're concerned, it's really a military intelligence process, and it was originally developed to deal with people going on missions. So if you get it wrong, you're all going to die. So it's actually worth getting it right. What you don't do is take on a course of action where there's a credible critical showstopper that can come and bite you, even if it's rare, you just don't do it. We just adapted that.

(03:32):

Now, part of the reason why I adapted, I got it off Bob Browning who used to work with us. Unfortunately he is no longer with us. And he used to be the head of protected services for Asia. He said he got it off MI6 because he was working there for three years with the English for a while. And when he came back to Australia, I was working with him, he just explained how it works and what it was, and we just kind of adapted it.

(03:55):

But basically it sort of says, well, the simplest way to describe is to compare it to way most people do project risk management now. And that is what they do is they get people who have suffered pain in similar projects together in a room and they try to express their pain, usually by adapting a risk register from the previous nearest project they've been able to find. And you can normally tell that's the case because somebody has failed to do a global search in the spreadsheet and the name of the price project still buried in there. And then they all pour the pain they've previously suffered on this similar project and augment this risk register.

Gaye Francis (04:31):

So we're talking about hundreds of items in a risk register, which is just unmanageable.

Richard Robinson (04:36):

Yeah. And they do this usually around the tender stage. And as the project goes through, every now and then they drag this thing out and try to make sure they haven't overlooked something. And by the time they get to practical completion, they say, well, this is the end of the risk management process of practical completion. And then they hand it over to the poor sod who's got to live with the result who then has to spend a fair amount of time fixing all up and making sure that it really does achieve the outcomes that everybody intended.

(05:00):

The other way to do it, which is the way we've always done it, and this is what the military intelligence people do, is you actually walk forward in time to the end of the project when it's in and working and it's kicking all the goals you really want it to kick. We call them critical success outcomes. And you get the senior decision makers to explain what those essential critical successful outcomes are. And then having established what this happy place is when it's in and functioning, not just practical completion, it's actually achieving all the things it's supposed to do when it's actually working. This is a happy place, by the way. This is where promotions are possible. Excellence awards abound. And even bonuses can sometimes be represented. But this future happy place. And then you step backwards from that happy place and say, what are the threats to those outcomes? Those threats create vulnerabilities to those critical success outcomes. They are the vulnerabilities. And if you eliminate all those vulnerabilities, then these will be the high consequence, low likelihood ones as a rule, then you'll always wind up at this happy place on time, on budget, to spec, and it's clean and simple.

Gaye Francis (06:06):

I think you said a couple of important things there, and I just want to touch on those. And that was really about that you're focusing on the vulnerabilities. We've seen a lot of projects focus on threats that don't necessarily affect a critical success outcome.

Richard Robinson (06:21):

Correct. And that was one of Bob's special points (that) he kept hammering.

Gaye Francis (06:24):

So the key is to focus on the vulnerabilities rather than the threats per se, because if it doesn't affect one of your critical success outcomes, you don't want to spend resources and time on that particular threat. So you're focusing on the vulnerabilities and they are the ones, the threats that affect your critical success outcomes.

(06:43):

The second thing is about stakeholders and making sure the right stakeholders. Now we've seen large projects and there are a number of interested parties that are very vocal.

Richard Robinson (06:55):

And have opinions

Gaye Francis (06:56):

And have opinions that are often very loud, but they are not necessarily the key stakeholders for the project. So it's really important to make sure that you've identified the key stakeholders.

Richard Robinson (07:09):

And what you mean by that are those who live or die by the success or otherwise of this project.

Gaye Francis (07:14):

And I think sometimes that's the difficulty around this project governance and project due diligence stuff is that there's a number of stages in a project. And unless you can get all of the key stakeholders involved in the project very, very early on, then there's often a mismatch of what the critical success outcomes are for the project.

Richard Robinson (07:35):

It's like the tram project we did the, or Gaye did the project due diligence for the procurement of the Class E trams, the first trams for the Class E trams in Melbourne. And the real problem we had was getting Yara Trams on board as I recall.

Gaye Francis (07:51):

At the design stage.

Richard Robinson (07:52):

At the design stage because until you've actually chosen who the tender was and all that sort of stuff. But obviously the people who have to sign off with the safety cases is the tram operator, and that case, it's Yara Trams. So whilst there's a tendency for them not to be involved at the start, if they're the people who have to live with the final result and actually get the credited safety case up, if they're not involved in the initial design stages, you get something which is quite peculiar.

Gaye Francis (08:18):

So it's almost critical that they're involved. And when we've seen this with other projects as well, that you really do need to get the ultimate operators and maintainers on board very early on because it's a lot easier to make changes at a design phase or at a design stage than it is to be delivered with a piece of infrastructure or vehicle and then it has to be modified once it's had been built. A lot cheaper as well.

Richard Robinson (08:48):

Well also your project will blow out. If you're talking about a five-year project and you only discover at the end of year four that you've got a basic design flaw, you won't fix that. You are over time and over budget no matter what happens.

Gaye Francis (09:00):

And you are looking for work-arounds to deal with that particular issue.

Richard Robinson (09:03):

And we've seen that happen a fair bit. We shouldn't mention any rail projects, which we're familiar, for example.

Gaye Francis (09:09):

One of the interesting other things that I guess we've been, and there's been a couple of high profile projects in the news lately, and one of them is the airport rail link for Victoria out to Melbourne Airport and the project due diligence around that. And we understand that the federal government's just committed to providing half the funding for that particular project and for it to go ahead. And now there's some discussions with the airport around what that project looks like. Apparently they want all underground, and the offer on the table is above ground solution. But working towards that, you need all of the stakeholders involved. And look, don't get us wrong, we've worked on projects and they have gone relatively smoothly. But it doesn't mean that doing this process doesn't mean that issues won't arise. <Correct.> What it does typically mean is if you correctly identify your critical success outcomes in your threats and your key vulnerabilities, credible critical vulnerabilities, those project showstoppers, typically you don't get surprises.

Richard Robinson (10:19):

That's right. You know there's a problem and you know how hard it is and you can make a decision about it, but I don't think we've ever had a surprise with any major project we've dealt with.

Gaye Francis (10:27):

No. We've had to refine some controls before and tighten up those when they did manifest itself. And often that's in terms of quality assurance systems, but it's relatively straightforward. As Richard said: Make sure you got your key stakeholders in the room. Make sure critical success outcomes are clearly articulated. That's where we've also seen projects come undone, where the ultimate owner has been unable to clearly articulate what they're trying...

Richard Robinson (10:58):

You're better off not proceeding with the project if the ultimate owner can't articulate what it is they're actually trying to achieve.

Gaye Francis (11:04):

And trying to second guess that is just impossible. You setting yourself up for a fall.

(11:09):

The other question we've been asked is what are our thoughts around the Commonwealth Games in Victoria saying that they're not going to proceed with the Commonwealth Games? Our understanding was that there was some promised funding from the federal government and that was withdrawn.

Richard Robinson (11:24):

About half, I believe.

Gaye Francis (11:26):

So from a governance viewpoint, if half your funding gets withdrawn, you can't proceed with your project.

Richard Robinson (11:34):

You won't achieve your critical success outcomes. It's just one of those things. It's just simply don't have the resources to make it so.

Gaye Francis (11:40):

And we've seen a number of projects have to be withdrawn and not proceed because there are these potential showstoppers that can't be addressed.

Richard Robinson (11:48):

But the other point is just to make a remark about Monte Carlo simulations, because we see a lot of this and people keep saying, Monte Carlo simulations has solved all your problems. No. We're not against Monte Carlo simulation because it'll tell you the most likely outcomes and that's worth knowing, we're not any doubt about that at all. But what Monte Carlo simulation simply can't do is pick the high consequence low likelihood event, because generally a rare combination of circumstances has to get together. The way I normally explain it, if you've got three probability distributions, you've got to add up from Monte Carlo simulation, the only way to do that is to do a number of trials to get the final probability distribution, and you might only do 15 or 20,000 trials if you're lucky. What happens to the low likelihood long tails of each of those distributions? Well, the answer is they just go missing. So if you had a one in a thousand chance for each of the three probability distributions in order to find the one in a billion chance where those three of those combined to cause a disaster, you'd have to do, well, at least a billion trials or to be statistically significant 10 billion trials. And nobody does that. So that means the long tail low likelihood events that can conspire together are just ignored and thrown away. Our process doesn't do that.

Gaye Francis (12:57):

I think that was my takeaway from the conference was that there was a real want to focus on top-down criticality and vulnerability. And that was from the owner's viewpoint to deliver, because there's a lot of big projects going on in Australia at the moment.

Richard Robinson (13:13):

And they're still going over budget badly.

Gaye Francis (13:16):

But the tools and techniques that are being currently used by organisations to identify the key risk issues for projects is still very much bottom up and lower level, the more likely lower consequence ones. So identify your potential project showstoppers first, and then the other stuff is done secondary. But you do need to do both processes.

Richard Robinson (13:41):

That's correct. And you'll find that all the senior decision makers, once you hit a potential showstopper, they will not let the project proceed. They will not let the tender be let until you have shown why that will not be the case, why it can't happen.

Gaye Francis (13:55):

So this is sort of a passion subject for me in particular, but I hope you enjoyed the podcast today and that you can join us next time.

Role of Standards & Do They Meet Your Legislative Requirements?

Risk! Engineers Talk Governance
Episode 3, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the role of Standards, why it's important to understand the different types of Standards, the information they contain, and why some Standards may not satisfy your legal obligations under the OHS/WHS legislation. 

Transcript

Megan (Producer) (00:02):

Welcome to this episode of Risk! Engineers Talk Governance. My name's Megan. I work behind the scenes as producer. In this episode, due diligence engineers Richard Robinson and Gaye Francis talk about the role of standards, particularly within the role of risk management and governance. We hope you enjoy the episode. If you do, please subscribe on your favourite podcast platform and give us a rating.

Gaye Francis (00:32):

Hi Richard. Welcome back to another podcast session.

Richard Robinson (00:36):

Okay, it's good to be here again.

Gaye Francis (00:37):

It's good to be here again. Today we're gonna talk about the roles of standards and some of the confusion that standards is creating and the different types of standards. We do outline this in our booklet "Criminal Manslaughter, How Not To Do It". So Richard's just gonna run through a quick summary of the different types of standards or have you got a bit of an introduction first, Richard? [I have a bit of an introduction first.] Go for your introduction.

Richard Robinson (01:01):

It's one of these important things. You see once upon a time, Australian Standards particularly was called by regulation and legislation. Now, one of the consequences of the OHS Act in Victoria and the harmonised WHS legislation around Australia is, we've been told this a couple of times by different lawyers, the parliamentary council's advice is that it's inappropriate to delegate the power of Parliament to unelected standards committees because if the committee changes their mind about something, then everybody's gotta follow because effectively it's got the power of Parliament behind it. Now, that was hammered into us when -- remember we did the dangerous goods review for defense and we were going around all the defense installations? We had a member of the Dangerous Goods Committee with us. And that fellow said, well, I'm on the committee. And so if we change our mind, it happens. And we sort of looked at him strangely and thought that can't be right. And that's why we found out about this question, the WHS legislation changing all this.

(01:51):

Now this is how the consequence of bumping down the role of standards. Because standards, if they're called up by regulation or by the Act, obviously have the same level of understanding. But after that, they got pushed all the way down. And I don't think it's something Standards Australia really has quite figured out yet. Now, the reason why it's also important is that people keep saying, well, I, if I've done something to the Standard, I must be good.

Gaye Francis (02:14):

I've complied with the Standard.

Richard Robinson (02:16):

I've complied, I must be good with the legislation. And the problem is that's not what the legislation intends. Now the legislation says you've gotta achieve the highest level...

Gaye Francis (02:25):

of precaution as is reasonably practical.

Richard Robinson (02:27):

That's right. Now it is true that the Act only defines reasonable practicability as one lawyers pointed out to us. But if that's the case, why does the intention of the Act say the highest level? Now it may be true that from a beyond reasonable doubt basis, the test of reasonable practicability would only be applied. But from a common law viewpoint, I would've thought the highest level that's reasonably practical would be the one that you'll be tested against.

(02:52):

Anyway, that sort of introduction then brings us to the question, what is a Standard? And the problem that we've noticed is that Standards, the fact that something is standard doesn't mean it's really a Standard. And that's really the problem. Now, historically, Standards have been developed in different ways and I'm just gonna read out the five standard types that we're aware of from our little book that Gaye mentioned before.

(03:16):

The first one is Standard as Measure -- weights and measures. I mean, what's a kilogram? You know, what's a lumen? What are those? [They're measurable things.] Yeah, measurable scientific things. Although the way they've been defining them lately is all in other physical properties like mass has now been defined in terms of energy just recently, follow from Einsteinian type things, which is really quite interesting. Well, the problem they had; they had this massive kilogram after the revolution in France and they had defined kilogram. And every time they measured it, after a few years, for some reason it was slightly decreasing. Only minusculely, but it was inconvenient! Anyway, nobody argues about Standards like that. They're not... it's not a moral question. They're factual. The next one was Specification Standards. And this is the one... Standards Australia was created by the engineers and it was particularly the engineering standards organisation.

(04:04):

And it was particularly a military thing in the sense that if you're manufacturing bullets, they have to fit the barrel or it's just kind of stupid. And so Specification Standards, they're not particularly arguable either. You know, they're sort of, either you're gonna meet the standard or you're not.

(04:18):

The next Standard is Standard is Rules. And that's like AS3000 wiring rules. Now AS3000 is a pretty good Standard. It's pretty robust sort of Standard. Okay. If you're building a house, you'd normally build it to AS3000. But as we mentioned another time, it's a Standard and that means it tends to inhibit thing and new developments from occurring. For example, I think I used this example another time, if you're wiring up a house, if you've gotta achieve the highest level of precaution you can, the home handyman fiddling with the wires of the roof space, doing them in.

(04:50):

And you might remember the Royal Commission we had where people were stapling the new installation. And people got killed. And the whole Royal Commission into that. Well, these days you could buy the house with power of ethernet, which uses extra low voltage wiring, 48 volts AC in the roof. All the lights could be power of ethernet. You can get 25 volt lumineers these days for the power of ethernet. A new building, a new house should probably be wired with extra low voltage wiring and not up to AS3000, 240 volt low wiring. That's what the legislation requires you to do. I'm yet to see a house that's been built because of the WHS legislation imperatives. But anyway... [Or it has to be thought through anyway] The point is this one does have some arguability, but for the most part, AS3000 is a pretty robust standard. And if somebody's doing something to that, you wouldn't normally argue the point.

(05:40):

But that leads on to Design Standards. And boy, (Australia's) Design Standards are arguable, because there's any number of ways, if you're an engineer, you could do Design Standards. The case that I'm thinking of in particular is... Remember there was that large digger? The big spinning rotary digger that got a crack in it? <affirmative> And um they imported a German Professor of Mechanical Engineering; I think he was a doctor. And he basically, he was a member of the... the German's have two mechanical design codes. And he was a member of one committee. And he chose to apply the standard with which he was familiar. And it went wrong. And so one of the big mining companies took it to Australian courts. And that, that's where that line comes out; now, engineers should remember that in the eyes of the court, an Australian Standard is only about recommended practice. You've gotta do better than that if you can. And they took him out for that reason. They took him down for I don't know how much cost.

Gaye Francis (06:39):

And that was because the second Standard that was there knew of this deficiency of the first Standard.

Richard Robinson (06:45):

And he was of that.

Gaye Francis (06:45):

And he was aware of it. And the second Standard addressed that deficiency and he chose not to adopt that for that particular purpose.

Richard Robinson (06:54):

Yep. And so that means design things... And that's the quote I've got here (reading from Criminal Manslaughter booklet). "Engineers should remember that in the eyes of the court, in the absence of any legislative contractual requirement, an Australian Standard amounts only to an expert opinion about usual recommended practice. In the performance of any design reliance on an Australian Standard does not relieve an engineer from a duty to exercise his or her skill and expertise." And that's Paul Wentworth commenting on AS7000, which is the high voltage transmission standard.

(07:22):

That then leads you to the last category, which is the one that drives us crackers! And that is Technique or Method Standards like ISO31000 or the COSO Risk Management Standard.

Gaye Francis (07:35):

It's about a process; how to apply a process.

Richard Robinson (07:37):

A process.

Gaye Francis (07:38):

And it might or might not work for your organisation.

Richard Robinson (07:42):

Yeah. Such Standards, I mean I understand that you do need certain sorts of Standards like that, like Accounting Standards. If you don't have some kind of commonality, how can you compare and understand what's going on? But this is more a question.

Gaye Francis (07:55):

But they're almost guidance documents then, aren't they? Or methodology guidance documents of different ways.

Richard Robinson (08:00):

It's not Standard Standard. It's not like a Weights or Measures Standard. And so from my our point of view, I think we sort of came to the view that a lot of... When when somebody says: It's the Risk Management Standard, that's actually a marketing term. That's not a Standard. It's just an idea.

Gaye Francis (08:17):

And I think with the Standards, in particular the Design Standards and things like that, they're all re always retrospectively looking at it. They're what's been done in the past and it always takes Standards a long time to catch up. So it's not even almost recognised good practice. Sometimes it's recognised good practice three or four years ago when the Standard was written.

Richard Robinson (08:39):

Well the one that sort of, I mean this is historic because I haven't actually looked at it lately, but you see I was trained by Factory Mutual as I've pointed out (previously). They actually designed theSprinkler Standard for North America NFPA 11 or NFPA 13. NFPA 13 was in fact the Factory Mutual Standard. And they're a bunch of engineers and if they have an unfortunate incident, they get into their research facility in Norwood, Massachusetts, they rack it up and burn it down and find out what the sprinkler standard has to be to put it out. The Australian Standard AS 2188 on sprinklers is based on the fire offices committee of the UK, which is the insurance officers. And what they basically do is after a few buildings are burnt down, they sort of think, huh, maybe the Standards are not quite right, perhaps we should improve it. But it's not an Engineering Design Standard.

Gaye Francis (09:23):

So they haven't actually tested it the way in that Factory Mutual test it.

Richard Robinson (09:27):

Well they are doing it, and they've now got their research facilities. Australia's starting to do that. But there's been a tendency to sort of... these things kind of osmosed, they're not sort of engineered Standards in the the way the Factory Mutual certainly is.

Gaye Francis (09:39):

Mm-hmm. I think also in James Reason terms, and we talked about James Reason in a number of ways, we always think that Standard approach is the bureaucratic approach, isn't it? The base standard. You know, it's sort of that minimum thing that you must achieve. And the WHS legislation's really saying generative, what is the highest level of protection that you can achieve? Rather than just what the minimum standard is. And you know, it changes the question from: Is it bad enough that we need to do something about it creeping up to that standard level; to: Here's a really good idea, why wouldn't we do it?

Richard Robinson (10:12):

Correct.

Gaye Francis (10:14):

So, you know, Standards can be as useful or not. And, and I think everyone's got it that you have to comply with the Standard and we say to our clients sometimes when you're doing work, sometimes Standards actually aren't relevant to the piece of work that you're doing. But you have to have an argument as to why it's not relevant and you can still be diligent by not applying a Standard.

Richard Robinson (10:36):

Well, it's a long time ago now, but I was doing a, a job on an old folks' home and the reason was is because they'd installed it to what was then the Australian Smoke Detection Standard.

Gaye Francis (10:47):

So that was their fire alarm system.

Richard Robinson (10:49):

Their fire alarm system. And there was some old souls in this place who were doing various things like smoking when they shouldn't be in bits and pieces in their rooms and so forth. And the alarm kept going off and they kept evacuating the place and more people were dying from the evacuation process than

Gaye Francis (11:03):

More from heart attacks than from the alarms.

Richard Robinson (11:05):

That's right! And so we turned up and said, well, applying the Standard was not the right solution to the problem. It might be true for example in a student accommodation. But even there, I remember doing the work in the US all those years ago, you know, if you've got people waxing skis and doing wacky things that students do around the place, the fire alarm goes off regularly (and) after a while they just don't respond, they just ignore it. And that's even worse! You only ever want fire alarms to go off when there actually is an incident and then you want people to respond appropriately.

Gaye Francis (11:33):

So false alarms are worst thing that you can almost have.

Richard Robinson (11:37):

Well the 1937 Chairman of Victoria's Division of Engineers Australia got it right when he was talking about Standards, I think. He commented, I think it's one of those Kernots -- you know, the first professor of Engineering at Melbourne (uni) was a Kernot. I think, I can't remember it was a brother or son. I got a bit lost in those brothers. You (Gaye) live in a street in where your suburb, where all the engineering professors are lined up. I've gotta point out. But, he made the point that the Standards really only have two purposes in life: To prevent fools from their folly and rogues from their roguery. And the reasoning is, if somebody's made a mistake and you want to hang the poor sod, the quickest way to do it is say 'you rotten bastard, you haven't complied with the Standard, you are toast'. And that's rogues from the roguery. <affirmative>. But what you ought to be doing from an engineering design viewpoint is figuring out how you think it ought to be and then you check back against the Standard, which is the sort of cumulative history of good designs to test to see whether you overlooked something.

Gaye Francis (12:37):

That you haven't looked overlooked something. Yeah.

Richard Robinson (12:40):

That's fools from their folly. <affirmative>. And if you do that, that's the right way to do it. That's 19... when did I just say?

Gaye Francis (12:47):

1932. A long time ago.

Richard Robinson (12:50):

You know, it's almost a hundred years ago. And we're still arguing about what is the utility of a Standard and we're still misusing them.

Gaye Francis (12:55):

Just going back to your story about the older folks' home and you're realising that the Standard, or the Building Code, wasn't appropriate for that case, but you could put in place things that were in-line with the intent of the Standard.

Richard Robinson (13:10):

Correct. And that's what we did.

Gaye Francis (13:11):

To make sure, because you're looking at the function of it. You wanna evacuate people and make sure that if a fire does occur that the residents are notified and accordingly. So what you can do is you can actually put the first alarm to the nurses' station, which is what you believe I did. Someone then had time to go and have a look to make sure there was a fire and it wasn't just somebody, you know, who'd burnt their piece of toast or whatever before the full evacuation alarm went off. So you just have to think these things through and it's not just the automatic: The Standard says this, we'll do this without thinking these things through. I think standards are stop people from thinking what needs to be done. And I think you've said it at the start of this podcast, was they're really become almost inhibitors to what can be done better. You know: 'This is what the Standard says, so that's all I'm going to do'. Whereas the legislation asks you to put in place what's reasonable, practical, and the reasonableness of some of those things that are emerging now is becoming more and more reasonable than it was 10 years ago, for example. And some Standards are still 10 years old.

Richard Robinson (14:13):

Correct. I mean that's one of the reasons, I mean I think in this sense, Engineers' Australia's abrogated its role to some extent when they basically just gave all intellectual property over to Standards Australia, breaching the Code of Ethics of Engineers' Australia, by-the-by, because there is a duty to give credit where credit's due. The NFPA Standards, for example, the members of the committee are listed by name and which organisation they work for and who the alternates are, in Standards Australia, it's just organisational. You have no knowledge of who's on the committee or what they've done and who's ultimately responsible for this thing. But that transparency question just isn't there. I just find the whole thing incredibly annoying. And it inhibits engineers from doing their role and their duty under all this legislation that's popped up. It's really gonna be fascinating with the Registration of Engineers, which is popping up everywhere, just how well that's gonna roll out. Cuz I don't really think people have been thinking this through. But you know, we'll see.

Gaye Francis (15:12):

We'll watch that with interest.

(15:15):

So I guess for this podcast, what we're saying is Standards aren't necessarily wrong, but you need to be aware of the different types of Standards, the information that they contain, and be careful that they may not satisfy your legal obligations under the OHS/WHS legislation.

Richard Robinson (15:33):

Especially ISO 31000. But that's probably its own podcast, I think.

Gaye Francis (15:39):

Yes. I think we might cover that topic at a different session. So have a great day everyone. Thanks for joining us again.

Richard Robinson (15:45):

Thanks everyone.