Review of Victoria’s Electricity and Gas Network Safety Framework

Gaye FrancisDue Diligence

On 19 January 2017, the Minister for Energy, Environment and Climate Change announced an independent review of Victoria’s Electricity Network Safety Framework, to be chaired by Dr Paul Grimes. On 5 May 2017, the Minister announced an expansion to the review’s terms of reference to include Victoria’s gas network safety framework.

Due Diligence vs Risk Management

Richard RobinsonDue Diligence

We desire that our world be prosperous and safe. And it seems that due diligence has become essential to these outcomes. Due diligence (or care) is a legal concept, derived from the societal need to ensure fairness in dealings between human beings. It has been variously defined, for example:

The diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or obligation1 and,

A minimum standard of behaviour which provides against contravention of relevant regulatory provisions and adequate supervision ensuring that the system is properly carried out.2

Such legal obligations can be created by statute law, for example the Model Work Health and Safety Act (2011)3 or from the common law as a defence against negligence4.

Project Due Diligence vs Project Management

Gaye FrancisRisk Management Framework

Risk management is often a key element asked for in large infrastructure development project. 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 have developed a project due diligence methodology.

Due Diligence and ALARP – Are They the Same?

Richard RobinsonDue Diligence

With the paradigm shift occurring to precautionary risk assessment from hazard-based risk assessment, R2A have heard a number of discussions suggesting that if an organisation demonstrates ALARP (as low as reasonably practicable) then can also demonstrate due diligence.

R2A’s opinion is that this may not necessarily be the case. The concept of ALARP is in fact hazard focused, comparing risk (likelihood and consequence) to acceptable or tolerable target levels of risk and safety.  The use of such quantified risk assessment processes to satisfy target (tolerable or acceptable) risk criteria has never been able to satisfy post event common law scrutiny in Australia, which requires a demonstration of due diligence. 

However, many industries that use the ALARP principle currently appear to be redefining its meaning by adding a number of caveats in what appears to be an attempt to close the due diligence loop and satisfy the courts after an event.  The shift from hazard based risk assessment to due diligence is shown in the diagram below.

Risk Management Standard – AS/NZS ISO 31000

Gaye FrancisRisk Management Process

Thoughts on AS/NZS ISO 31000

In Australia, we are currently undergoing a paradigm shift in the way safety risk management is conducted. The new Work Health & Safety Act is replacing the old approach typified by the standard, AS/NZS ISO 31000.  

We have heard conversation in the Engineering community that the move away from AS/NZS ISO 31000 doesn’t necessarily it present a better way forward and the standard can in fact demonstrate safety due diligence.  R2A does not share this view.

The key issue arises from the use of the notion of target (tolerable or acceptable) levels of risk.  The standard is quite specific in the definitions and process explanations:

 

Engineering Implications of the Harmonised Safety Legislation

Richard RobinsonRisk Management Framework

Questions & Answers

Reader response regarding Richard's article – 'Engineering Implications of the Harmonised Safety Legislation'

This is a response that Richard received following the publication of an article in Engineering Media. Read the article here.

Hi Richard

Safety assurance is one of the 3 key elements of technical integrity (the other elements being fitness-for-service and environmental compliance), and as such risk assessments are a fundamental and important part of our engineering activities.