Project Due Diligence vs Project Management

Gaye FrancisRisk Management Framework

Project Due Diligence vs Project Management

Risk management is a key element required in large infrastructure development projects. Organisations want a robust and transparent system that can be utilised during current and future development phases of a project to inform decision-making and guide levels of investment in various project investigations.

In setting up a risk management framework for a project it is essential that it take account of all risks to Project including technical, environmental, economic, stakeholder, political delivery and on-going operational considerations.  This must be done in the context of the current operations.

The risk management framework and system must be set up so that the Organisation has confidence in the process and results, ownership of the outcomes and can maintain and utilise the system going forward.  It must be set up to ensure that the project is right the first time.

To ensure the project is successful in terms of both delivery and ultimate project performance, R2A has developed a project due diligence methodology.

This differs from the traditional project risk management approach.

Traditional project risk management isn’t always as successful as desired especially in the eyes of the government when it comes to delivering large projects.  This is because it does not view the project from finish to start.  It typically only refers to the management of project uncertainty during the construction phase (tendering to commissioning) as shown in the diagram below.  This short sightedness is the cause of many delays and budget / cost blowouts as well as not achieving the ultimate goals of the project.

Project due diligence refers to the consideration of risk over the entire project life cycle.  The due diligence aspect arises from confirming that the ultimate objectives (critical success factors) of the fully functioning outcomes are achieved for all stakeholders rather than just the delivery portion to the contract specification.

Project due diligence uses a combination of top down and bottom up risk techniques and generally involves two main tasks: a high level functional vulnerability assessment and associated risk profiling supported by specific detailed bottom up reviews.  The overall concept can be described by the following figure.  Sometimes an intermediate assessment is also required to deal with issues on a geographic or zonal basis, especially for infrastructure projects.

The benefits of the project due diligence approach are:

    1. The project critical success factors in terms of performance are identified and articulated by the Organisation long term.  This ensures all risk work (current and future) is completed in the decision maker’s context.
    2. The project is able to focus on the credible critical threats to both project performance (the owner’s concerns) and project delivery (the contractor’s concerns).
    3. The Organisation has a confidence that all potential project show stoppers have been identified and are being effectively managed.
    4. Project scoping and sub-project planning is optimised before tendering / detailed design.
    5. Value adding opportunities are identified during the planning stages.
    6. The project does not experience unexpected issues.
  1. The potential for continual blowouts in terms of cost and time in minimised.
  2. A succinct and manageable risk register is developed.

This ensures the organisation has confidence in the risk management process and results and will help to ensure that the project is right the first time.

For further information on we can help your organisation with your project’s due diligence using engineering methodologies, contact us on 1300 772 333 or fill in our contact form and we’ll be in touch.

See also our project due diligence whitepaper.