Voices of the Industry presented by Steer - #3 Keeping infrastructure projects on track: Lessons from New South Wales

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[Music] hello and welcome to voices of the
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industry a podcast series bringing you leading industry voices who challenge thinking across Transportation
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infrastructure and [Music]
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cities today on voices of Industry presented by steer we have the opportunity to talk to ingred Emory who works in water infrastructure in New
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South Wales and has played a number of roles across the infrastructure planning process the theme of today's voices of
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Industry presented by steer is on decision- making assurance and development of Mega projects this is a
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topic that will certainly be relevant to listeners across North America involved in the public sector maybe as a sponsor
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a planner working in project development or delivery or even Project funding as well as the general public who might be
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interested in how decisions might be made elsewhere my name is Patrick Miller I lead steer's Transportation strategy and decision support team out of Toronto
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we work across North America with clients in Canada and the United States at all levels of government on similar
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topics to those we'll be talking about today ultimately our goal of today's podcast is to explore what we can learn from Australia on the development of
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decision-making Frameworks Assurance Frameworks and product development Frameworks for transportation infrastructure projects infrastructure
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projects all begin with tremendous promise but as they develop an all to Common story can play out costs are
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higher than expected which causes scope choices to be made to maintain affordability and manage those cost
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increases these scope changes can also erode benefits and result in the product that does not meet its original desired
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outcomes and as the product shifts to delivery there might even be further changes with an aim of optimizing if respect to cost and avoiding getting
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stuck in analysis paralysis by trying to further augment benefits this all in all limits opportunities for improvement
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around the world we see this story play out with infrastructure projects however different agencies and governments have
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started to develop processes and decision Frameworks to maximize benefits control costs and avoid falling into
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analysis paralysis today we will look at an emerging practice from New South Wales in Australia and see what key
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lessons we can learn for North America we're lucky to be joined today by ingred Emory who brings extensive experience
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across water infrastructure and other types of infrastructure in the New South Wales context across all stages of the
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project life cycle spanning project development through to business case making decision making assurance and
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other elements of making sure projects are the right project delivered the right way welcome today ingr great to have you thank you it's great to be here
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kicking things off could you share a few of your Reflections on infrastructure development and some of the key challenges I mentioned previously that
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notion that more often than not we see extreme cost escalation which sometimes is responded to with reducing scope and
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reducing benefits ultimately so taking sort of a broader perspective research from University of Oxford has actually
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shown that nearly 12,000 projects that they've analyzed only one in two
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projects meet their budget only one in 12 met their budget and their schedule and only one in 200 met budget and
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schedule and benefits and Australia is not unique in some of those challenges in Australia we've actually got a huge
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pipeline of projects at the moment with over 400 projects valued at over $100 million currently in planning or
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delivery and of that around 170 projects are valued over a billion dollars we've
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seen some success stories but we've certainly seen some challenges with these projects with recent construction
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cost inflation spanning from 10 and any anywhere up to 50% we've seen redesigns
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of projects that have met challenges and having to re look at the the scale and
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so certainly within Australia we've had project challenges in terms of cost
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escalation that we've seen recently and also that then flows on to how we scope
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up and design the projects where there's government starting to look for ways to reduce the scope and hence reduce the
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benefits it's quite startling to hear about that research from Oxford you mentioned that out of the 12,000 projects only one in
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200 met budget schedule and benefits I think that speaks to the central challenge that we're exploring today
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that your origional scope and plan for these projects can often be challenging to deliver as we understand more about the risks and requirements to fully
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deliver these projects respect to the context you shared about Australia and the new state of New South Wales it's
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it's a quite startling to hear about the size of the pipeline there's a significant amount of development going on across all types of infrastructure
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that you articulated there but a significant size of problem coming with that with the significant inflation you mentioned one of the things I found
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doing a bit of background research on New South Wales is that despite those challenges the government's been able to deploy a series of processes policies
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and tools to help curb those challenges while making sure that benefits get enabled you mentioned in our previous
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conversations leading into this podcast that there are four key insights from New South Wales that want to consider in
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the North American context the first being the use of a Project Life Cycle to make transparent decisions and keep the
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project on track with respect to costs and benefits throughout that life cycle using business cases to navigate major
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decisions especially during project design where there can be that pressure to cut scope or modify scope to control
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costs at the loss of benefits third the use of a dedicated and independent Assurance function to minimize risks
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while ensuring The credibility of the project development process and fourth the notion of integrating the public and
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decision makers into product development seamlessly to minimize surprises and improve transparency I think it would be
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useful today to talk about some of these key processes used by New South Wales government primarily because they resemble some of the practices being
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used in North America however have they have reached a degree of development that maybe exceeds what we might see
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across North America thinking about the processes government has adopted or at least have some different features or elements that may be interesting to
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project sponsors decision makers or individuals playing that Assurance function in the North American context
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So speaking of North America there are ranges of life cycle approaches used by different governments and agencies
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however they may vary significantly so for those listening in from across Canada and the United States what you
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hear today about New South Wales might might not necessarily fit directly in your context but I certainly found
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exploring these topics of ingred there's a range of practices that can help us augment what we do and maybe some of
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them might even be able to be imported more directly ingred could you start and tell us a bit about how New South Wales
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uses their standard Project Life Cycle to support decision- making and product development yeah of course um so I might
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step back can really frame the way that Assurance is set up in New South Wales
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so we have an independent agency called infrastru New South Wales that is responsible for Assurance across all
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projects and they report that agency reports directly to the premier of the state the way that the insurance
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function Works in New South Wales is it's risk-based so all capital projects with a value of over 10 million do must
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be registered with infrastructure New South Wales but the level of assurance that applies to each of those projects
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varies by the level of risk assessed on those projects the highest risk projects
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have the most level of assurance and the most reporting but the lowest level of risk projects have a very very light
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touch there are seven gateways across the whole project life cycles starting at the go or no-go decision then moving
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on through to needs confirmation and going right through the benefits realization so for the highest risk and
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highest profile projects they have the most own erous requirements in terms of assurance reviews and Reporting they
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need to go through every seven sta each of the seven stages of project assurance
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and then they have periodic health checks and deep Dives in between but as I said for the lowest level of risk
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projects they really only have to go through the go or no-o stage and then
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the Assurance is done by the agency one of the things that I think makes new South wal is unique as well is that the
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Assurance reviews are undertaken by independent experts and and so what that means is you've got these people who are
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experts in their field who are coming in to take a look at various aspects of the projects which then gives the project
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teams an opportunity to make improvements to their project so it's not taken like it's in exam it's these
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Assurance reviews are really opportunities to make improvements to ensure that the project is fit for
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purpose and can be best delivered some of the aspects of that Assurance review process that's really beneficial is that
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it involves interview use with key stakeholders who are external to the project team and sometimes even external
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to government and they can then give independent perspectives on various aspects of the project and then those
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review reports go to elected officials to help make more informed decisions so I think the important aspect is that it
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is across the entire life cycle of a project it doesn't just stop when the project goes into delivery it's
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continues on through the delivery and it goes right through to the benefits realization stage so it does give the
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projects a better chance of being able to achieve the benefits they originally set out to achieve thanks Andrew for
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framing that out it's really helpful to get that broad context on the New South Wales approach one thing that stood out to me is the number of stage Gates you
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mentioned seven so having seven stage Gates might seem like a staggering number or significantly higher number
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than what might be used in North America can you help us understand those stage Gates a bit more clearly does this
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result are these smaller stage Gates that result in more focused analysis are they fairly comprehensive because some of our listeners might be used to uh a
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two-stage or a three-stage review and approvals process can you talk to us a bit about what happens in those seven stage gates at a high level so the seven
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stage gates to go through it briefly is a go and noo looking at the Strategic options a business case Readiness for
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Market tender evaluation Readiness for service and benefits realization so
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those stage Gates can happen over a very long time Horizon it's basically from the very first conceptual idea of for a
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project right through to when the project is in operation so for some major transport projects um major
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infrastructure projects that might span 10 years at each of those stage Gates you do for the highest profile and
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highest risk projects you do go through a independent review by independent
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assessors and that happens over the course of about a week there is an initial presentation by the project
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delivery team and they present to those assessors and then the next week there is a series of interviews with various
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stakeholders and people involved in the project or and that might be from different parts of government so the
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planning agency the treasury area Premier and cabinet and also potentially with external stakeholders like the
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local government and then the reviewers will prepare a report which then
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assesses the project across really seven key Focus areas spanning from service
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need through value for money social and economic and environmental sustainability governance risk
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management stakeholder man management and asset owners needs and change management so it's very comprehensive
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and the reviewers will make recommendations that might be either critical which they have to do
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immediately essential which are recommendations that need to be done over the medium term of the project or
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suggested and ultimately the reviewers will give the project an overall level
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of confidence which might be low medium or high the low medium or high level of confidence is to provide governments
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with a level of assurance around how confident the infrastructure assurers
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are that the project will be able to successfully move to the next stage it is not a a mechanism to say that a
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project should not go ahead or should go ahead it's really to give the government and the decision makers confidence about
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what would happen or how uh well the project would be delivered if it does proceed to the next stage great thank
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you for providing that overview ingred it's helpful to get the whole picture of how these different stage Gates function what happens at each of the stage Gates
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and that role of the independent Assurance CU that is a fairly unique trait I think to the New South Whales approach ensuring that especially those
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high-risk projects get the critical view they need to make sure they're the right project for the public and are advancing in a efficient way one thing that might
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be helpful to think a bit about here as we talk about the life cycle is taking a step back about the different roles played by different actors and
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infrastructure planning you've alluded to a few of them in your overview the life cycle process but it' be helpful for us to understand a bit more about a
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few different key roles if I can speak generally so we have a planning role a deciding role a funding role and a
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delivery role the planner the person coming up or the agency coming up with the project the end decision maker who
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ultimately gives the go no go decision the fun where the actual money to build the project or operate the project comes
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from and the delivery entity so who's actually overseeing and managing the construction of any Capital Works
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associated with it could you talk a bit about how in the New South Wales context who plays each of those roles and how
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this assurance function and the stage gate function across the life cycle fits into those different roles yeah
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absolutely so infrastructure New South Wales as well as being the Assurance Authority has the authority and
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responsibility for preparing periodic State infrastructure strategies so they
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are prepared about every five years um and that's a legislated requirement to look at the overarching needs of the
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state in terms of infrastructure that sets the overarching kind of strategy for each of the individual agencies to
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to develop sector-based strategic plans for example we have the New South Wales water strategy and we have the future
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transport strategy among others and then that then flows through into Regional plans uh which are prepared by the
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agencies planning on a project level is done by the individual delivery agencies which include for example transport for
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New South Wales schools infrastructure New South Wales Health infrastructure New South Wales and water infrastructure
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New South Wales and then infrastructure New South Wales it's the Assurance body has a role in overseeing those Assurance
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functions the funding decisions are ultimately made by the elected officials through cabinet processes and funding
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itself is provided from a combination of New South Wales and Australian governments and sometimes local councils
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and sometimes financing is provided through the private sector in the form of ppps so they're most common for
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transport hospital and jails um the agencies as project sponsor are
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responsible for project development and delivery um and they usually contract the private
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sector for design and construction using various types of Contracting models and obviously in PP PS the private sector
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will operate and maintain the infrastructure as well upon completion you mentioned a number of different
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types of infrastructure in that response we we heard a bit about schools all the way through to major transportation
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projects through to your background at Water infrastructure it's a diverse array of projects and it sounds like
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infrastructure New South Wales is able to use a consistent approach across all thatp type of infrastructure which I I think would be fairly unique compared to
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many situations in North America where there might be a benefit cost analysis manual for rail there might be a
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different way to think about investment in education can you talk a little bit about how this approach Works across so
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many types of infrastructure what that value is to New South Wales of that consistent approach absolutely the the
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consistent approach creates transparency there is a really great set of resources
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that infrastructure New South Wales has including templates for business cases
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the resources for the reviewers it allows standardization and creates an
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ease for decision making on projects and it really creates a consistency between
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projects of a similar risk profile and I think the way that the framework is set up is that the themes are fairly broad
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it's around service need it's around environmental impacts it might be around
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risk management and they're all things that are consistent across projects even if the cont varies so I think it is a
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very useful framework which then can be tailored depending on the nature of the sector I think the other benefit of
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having a consistent approach is it creates a discipline among project practitioners and they know how to
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approach projects and what expectations there are for developing and delivering projects within the New South Wales
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context so it sounds like the key differentiator there is where we might focus more on the content of the project
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in North America is it a steel on steel rail train is it a pipeline to carry water in New South Wales it's really
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focused on the risk profile and the relevant risks for decision makers to consider in terms of assigning the level
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of analysis uh for each type of project but I do understand and we'll move to business cases in a moment that there are specific guidelines and tools to
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develop that conduct that Project Specific analysis for the types of benefits and risks and costs that may
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only be related to one type of project but it sounds like overall the key focus in New South Wales is focusing the
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decision-making Assurance process on that risk profile of costs ultimate technical deliverability risk of benefit
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erosion and other risks to the public or stakeholders would that be a fair summary of that yeah I think that is
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correct it's really around can we deliver this project and will we realize the intended outcomes I think those are
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questions that certainly span all types of infrastructured aren't they I think that's a great segue to the next piece of the conversation on business cases so
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in North America things that look like business cases you might see in Australia uh have been used for decades
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we also have a number of agencies moving towards a more formalized business case approach and for those listening in New
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South Wales and the Australian government do have fairly prescriptive or well-defined approaches to business
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case across a range of different types of infrastructure and INR North America we started to use business cases or other forms of structured
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decision-making documentation in a few ways the first is making fairly large and significant decisions almost
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existential decisions for projects the big go no go or defining the level of funding a second family of decisions
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would be on how to optimize projects so maybe deciding on number of stations on a metro line or whether or not a number
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of crossovers are needed on a railway or maybe thinking about different uh bus facilities that might be included so not
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necessarily questions on whether or not we do the project on the whole ways to optimize the project we also find that
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business cases are used in two types of General government processes the first is what we'd say uh is petitioning the
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government for powers or funds for a new project so public sector or or private Partners come up with the idea for a new
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project make the case and go to elected officials and say this might be an interesting project here's our case for
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it the second format is working on a project that decision makers have directed agencies to develop to ensure it's optimized reflects the public
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interest and is the the strongest version of that project possible thinking about those four dimensions B
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essential go noo decisions optimizing projects petitioning government for powers or funds to build a project or
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optimizing a prodject that government's identified to move forward can you tell us a bit about the New South Wales approach and how it might fit into those
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four types of use or perhaps how it might be different or apply differently in the New South Wales context I'd have
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to say that there's proba those four uses that do apply um in New South Wales but we have a more prescriptive or um a
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more structured approach to business cases so all projects over $10 million
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need to have a business case though they can be lighter touch for smaller or low risk projects and we have templates
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available on the infrastructure New South Wales website and they are either for the light touch projects or for the
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the more comprehensive um business cases that are required and business cases are really at two stages for projects in New
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South Wales the first is the Strategic business case and that's a preliminary look at what is the service need how
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does that align with government policies and priorities what are the various options to address that that service
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need how would they be delivered what are the costs and benefits and then um
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making a recommendation around the preferred option to progress to a final business case stage and if the
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government accepts the recommendations for for the from the Strategic business case will then move to a final business
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case and that really takes the preferred option and makes the case for investment it assesses the deliverability and it
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makes plans for implementation including a procurement plan how the delivery
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phase will be governed how the stakeholders will be engaged and managed through that delivery phase and um how
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the risk will be managed and mitigated and that final business case also identifies the preferred funding and
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financing options which then is presented to government um and they will make a decision about whether or not to
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proceed to the the next stage um and really the the way that the why business
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cases are used in New South Wales is they provide decision makers with the information they need to make
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evidence-based decisions about whether to move ahead with a project and to provide the government with confidence
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that sufficient planning has been completed to allow successful project delivery we've actually got a couple of
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examples in New South w including ones I've worked on um where they haven't
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proceeded to the next phase because they were found to either not be viable or
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while feasible they were too expensive didn't generate the relevant benefits
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and and so they didn't progress beyond the business case stage I think it's interesting the the key terms you
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highlight are credibility confidence so making sure decision makers are aware of the trade-offs and consequences of a
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project going ahead or not going ahead in the examples you men mentioned and ensuring that they have full confidence
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in the sponsor's ability to deliver it and realize benefits one of the things I'm curious a bit about is how has the
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framework evolved to reach this point where you're able to so to accurately crystallize some of these trade-offs and
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consequences and help build that confidence of decision makers are there any recent Trends or developments that have helped the business case framework
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uh enable effective decision making yeah so infrastructure New South Wales was actually set up in back in 2014 so it's
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been around for a while and they have recently gone through a few improvements with their infrastructure investor
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Assurance framework the most recent version was re-released in October 2022
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and earlier this year in February the cost benefit analysis guidelines have been refreshed so those have been really
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to take into account things like the recent Trends we've seen in escalation but also with the cost benefit analysis
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guidelines it's included two really interesting developments one is that the
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social discount rate has been reduce from 7% to 5% which is required for all
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projects and that really helps projects which have long dated benefits um and
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particularly ones where they might be for regional populations where you've got a very large cost project but the
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cost is spread over a very wide population base the other really important and interesting development in
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those new cost benefit analysis guidelines is there is a requirement for climate change to be taken into
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consideration When developing and delivering infrastructure how that looks will depend on the sector in the water
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sector where I work we've actually done a lot of work in developing complex hydrology models which consider climate
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change projections and how that impacts hydrology and water availability which
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then feeds into our business cases so it's we're actually I think in a really good position to take account of those
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requirements of the cost benefit analysis so it sounds like a key shift there has been moving from a quite steep
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discount rate to something that allow a bit more intergenerational thinking noting that a lot of the projects underway are to support future growing
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population or the pressure of growing population or to provide uh benefits that expand beyond the current generation it was interesting to hear
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your perspective ingred on the change to discount rate and I think it sounds like that's reflective of a broader shift into looking at business cases as a tool
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to understand decisions that don't just impact current Generations or current populations but might also respond to
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Growing populations or the pressures of growth uh and meeting wider policy goals right now in North America we have a
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number of wider policy goals reflecting Equity or climate change and any number of other topics that can sometimes put a
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challenge on the business case process for example analysis may have been traditionally heavily driven by traffic
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or or volumes of passengers in the transportation space and hasn't always focused on some of those wider values
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that decision makers are interested in you talked a bit about the past evolution of the business case framework and benefit cost analysis conducted by
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infrastructure New South Wales in the past five or so years but can tell us a bit about what's Innovative and what's next to try and capture some of these
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wider policies that are perhaps have always been pressing but are more pressing now than ever and are are uh taking significant consideration from
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our decision makers yeah so there's a few trends that we're starting to see one is in relation to climate change and
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particularly focusing on sustainable procurement and how sustainability has been captured in the procurement
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strategies of the business cases that are being developed the other one is really important in New South Wales and
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that's around how to incorporate First Nation cultural values into the benefit cost ratio that's something we've had to
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Grapple with a lot in our sector because a lot of our projects have impacts on
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First Nations cultural values or are actually beneficial to the First Nations
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communities particularly when we're working in Regional areas given the importance that First Nations people
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place on water we are also starting to see an emerging Trend around taking into
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consideration resilience which is really playing back into the impacts of climate change and how that will need to be
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factored into infrastructure designs and delivery one of the other interesting developments that we've seen as well is
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infrastructure New South Wales is also starting to move into Assurance around Asset Management to ensure there's a
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consistent and improved approach to asset planning and delivery across government so that's more on the operations and maintenance side but
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they've recently released an asset management policy which requires certain Assurance Gates around operations and
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maintenance which I think is a really beneficial approach as well those are a lot of interesting directions for us to
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consider in North America I know one that a lot of agencies we work with fast about is that last point on resiliency
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and climate and then the impact of resiliency and climate considerations on state of good repair we we do hear a lot
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of questions and a lot of thought being put into how do we better make decisions that allow us to understand the long-term requirements to keep this
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asset operational but how do we make sure it's operational under a number of different scenarios perhaps of sea water
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rise or sea level rise in some of our jurisdictions or extreme heat or weather
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patterns that don't really resemble what we see today uh certainly an interesting Challenge and one will be curious to watch North America's New South Wales
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grapples of the tool kits required to explore those those pressing questions during the decision-making process you
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ended off they talking about Assurance so why we move to the third feature of the New South Wales approach that we're talking about today on Assurance and I
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think one thing that's come across in all of our discussions so far today is that role of independent Assurance you've articulated ingred that
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infrastructure in New South Wales puts a high value on having an independent view of these projects and making sure that
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they've been fully reviewed analyzed evaluated for their value and their deliverability that risks are properly managed we do see independent Assurance
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emerging in North America as well and historically there's been a number of uh independent Assurance roles played although they're typically played on
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specific projects maybe are highest risk highest cost projects we don't always see them across the whole spectrum of
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projects the way that you were articulating that for New South Wales we also see North America that it's not always uncommon for the team that plans
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the project to also sponsor the project do the business case for the project project and review the business case for it and I think that might sometimes be a
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byproduct of a capacity constrained environment aren't as many resources to review projects fully or or different
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governance models but when we think about Assurance in New South Wales it it sounds like you've been able to establish this independent role that
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doesn't necessarily impede sponsor momentum doesn't take up a lot of extra resources to conduct and it also
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maintains this Independence so the individuals the groups the organizations running the Assurance aren't the same
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people designing planning or advocating for the project can you tell tell us a bit more about this assurance role and
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how you're able to so effectively run it without slowing down projects or breaking momentum especially on some of these more complex projects that you're
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working on yeah absolutely so as I've mentioned a few times infrastructure New South Wales is the independent agency
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and they report directly to the premier they facilitate the Assurance reviews they don't actually undertake them
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themselves what they do is they actually engage independent experts who might have been had a career in construction
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they might have had a career in planning system in government and now consult
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back to the New South Wales government um they might be from other jurisdictions as well around these to to
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undertake these Gateway reviews they have different sectors and backgrounds that they've come from and different
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reviewers are used for different projects it's really tailored to the the individual projects the Gateway review
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process is very standardized and there's as I said there's several key Focus
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areas against which the reviewers make recommendations and assess the level of
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confidence and then provide an overarching level of confidence for the project around how confident they are
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for the project to move forward to the next stage the project teams and project sponsors really understand the process
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and they Factor this into their project planning and as I said before the reviews can be done very quickly they
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from start to finish you can do it in as little as a month and that is factored into the timeline of projects the the
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process is the project team and the project sponsor will upload the documents for the reviewers to start a
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review within a week they have a planning day during which the project team gets an opportunity to present to
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the external reviewers around the project across the various Focus areas and then the week after that the
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interviews are conducted with various independent and project team members to
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give the reviewers an opportunity to understand different perspectives on the VAR ious Focus areas at the end of those
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two days the reviewers will meet with the project sponsors and provide them
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with the key findings and their thoughts and then within another week or even a few days the project reviewers will
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provide the report back to the project sponsors so it can be done very quickly and the review reports are then provided
30:18
to government and that allows them to then make a decision about whether to provide funding for the next stage of
30:24
the project ing it's been interesting to hear about the Assurance process as you described it it sounds like there are a few items that might be quite
30:30
interesting for our listeners in North America going back to what we talked about in the overarching life cycle that idea of allocating projects into a risk
30:37
category and using that to shape the Assurance I think will be a helpful concept there's no one- siiz fits-all
30:43
approach it sounds like for projects but there is some stratification and some standardization that allows different
30:48
projects to have a predictable pathway through the life cycle and a predictable amount of assurance sounds like some intentions has been built into this
30:54
process to minimize surprises or or some people might say torpedoing a project at the last minute I thought it was also
31:00
interesting to hear about how even on the most complex projects that Assurance process might only be a month so it sounds like for me what you're
31:06
describing isn't a kind of forensic review of tunnel schematics or a standard of operations or concept of
31:13
operations review but rather a more thoughtful strategic review of the key factors that will influence project
31:19
success and failure could you maybe talk through a little bit more what that might look like if we take one of the more complex projects I think a lot of
31:25
our audience today maybe sponsoring or plan plan or trying to deliver a mega project several billion dollars be
31:31
curious to hear a bit more about how we can we can use Assurance to improve the decision-making process so if I'm working on maybe a uh you know three or
31:37
four billion dollar Rail Project for example what what could that that month look like in a bit more detail so that
31:43
month will really look like pulling all your documents together as a project team you'll be pulling out the Strategic
31:50
business case or the final business case depending on what stage you might be at you'll be looking at providing the cost
31:55
benefit analysis models the costing reports by the costers the various
32:01
design reports and providing those uploading those to to infrastructure New South wales's portal so that the review
32:07
team can commence their review of those various aspects of the project it'll involve pulling together a presentation
32:14
around each of those key theme areas to give the reviewers confidence about what the project team has done what are the
32:20
various elements you've already thought through and how the government can have confidence that the project can be
32:26
delivered and then if will be a matter of the revieww team confirming the
32:32
interview list and those people coming through and being interviewed it might involve the someone from our
32:38
biodiversity and conservation team which is separate to the project team it might involve someone from New South Wales
32:44
treasury who's talking about the funding and financing it might involve the local Council on Whose land it might be being
32:50
built and they will give the reviewers a different perspective across those key theme areas and then ultimately what the
32:56
project team will be Prov provided is a report which probably is say 30 pages of
33:01
content across those key theme those Focus areas with high level recommendations about how the project
33:08
could be improved it might be at an early stage of the project around saying you've not actually thoroughly looked at
33:13
all the options we need you to go back and start looking at those options again that's a fairly extreme example but it
33:19
might also be a case where you've done a great job with stakeholder management and we had a project where we recently
33:26
received a recommendation like this and this should be used as an example for other projects so we have a
33:31
recommendation that is not critical but it's a kind of you guys have done a fantastic job and somewhere in between
33:37
those two extremes it'll be things like you need to go and get an independent cost review done of your costings it's
33:44
not going to be looking with a fine line at where you've placed a station entrance or exit it's not going to be
33:49
looking at the overarching pipeline diameter for a water project but it might be a question of have you actually
33:56
considered this pipeline rout and the risks that are involved with the particular pipeline route that might be
34:03
related to land acquisition or the like so it's trying to really identify where there's risks or hiccups that might come
34:09
into a project in the future and um ensuring that those are being acknowledged by the project team and
34:16
being able to address them before the project goes forward or as part of the project going forward it sounds like
34:21
this process has been developed to achieve a few things I think the first thing I really hear there is the ability to conduct an efficient review and help
34:27
government augment the outcomes of her project or understand how to best Advance the project going back to that theme of confidence we've talked a lot
34:33
about today it also sounds like the process as it structured allows for a lot of institutional knowledge to be generated infrastructure New South Wales
34:40
as well as through the different independent reviewers who get involved in these projects so that further efficiency can be unlocked you know if
34:46
you've reviewed three Subway projects or four water pipelines in the last three or four years doesn't seem like that
34:52
knowledge boils off it's retained in the organization and allows these reviews to move forward seamlessly one element we
34:57
found I think this is common in all countries working on infrastructure is the individuals involved in planning reviewing and assuring projects have as
35:04
much of an impact on the outcome of the product as these Frameworks and tools themselves depending on the expertise you bring the skill sets you bring how
35:10
does infrastructure New South Wales find the experts to conduct the insurance process and make sure you're developing that knowledge and following the process
35:17
as as described but still having that openness to you know explore new angles
35:22
or new factors in these projects that might shape success infrastructure youth Wilds uses range of independent expert
35:29
reviewers and they come from various different sectors and a lot of them come from other states of Australia or
35:36
potentially from New South Wales as well they might have been senior government officials who have who have retired they
35:42
might have been fairly significant players in the construction sector they
35:47
might have been academics and University professors or currently are from those fields and they also ensure that the
35:55
independent experts are are not conflicted obviously and don't have any conflicts of interests and that they are
36:02
appropriate to where that project's up to and what some of the key challenges are for that project for example for a
36:08
water project that's at a final business case stage you might be getting someone who has some background in
36:14
constructability and construction and you might also get someone who's an expert in costings because those two
36:20
elements are really critical to understand well have you got your costings right and have you got your constructibility right the experts might
36:27
differ from project across different stages because it has a different need but there's often a common theme of who
36:33
these experts are on an individual project so you get some consistency across the various stages of Project
36:38
Life Cycle one last one on the independent experts how are these paid for I can I can imagine some people might be wondering you know getting a
36:44
room of experts together when they've already perhaps procured Consultants Engineers Architects economists to
36:50
develop these projects might be another costs is that just part of the capital profile or is it a a budget that new
36:55
infrastructure new health Wales has how does this all get paid for the project team actually or the project actually
37:01
pays for the reviews they are fairly lowc cost because they're short and sharp they tend to be anywhere between
37:09
40 to 50,000 Australian dollars so $3,000 us for a Gateway review and for
37:17
health checks and deep Dives they're a lot less expensive they're sort of a quarter or a half that price but it is
37:22
something you do need to factor into the project budget but on a billion dollar project or a mul billion dollar project
37:28
it's fairly small scale yeah I think that's helpful to consider because one thing that really stood out to me in this conversation is a lot of the
37:34
technical due diligence that happens in North America is just that it's focused on is this Subway going to be safe to
37:40
operate is the construction appropriate and falling relevant fire codes and Engineering standards which is absolutely crucial and I I'm I'm sure
37:46
that happens as part of the design process in New South Wales as well but I think what you're really describing here is almost an a due diligence on the
37:52
decision-making process making sure all the right information has been considered that the product's being treated fairly and consistently that key
38:00
risks and rationale and requirements for the product are well understood and documented and pass muster if you will
38:05
and it's not so much a a process to again do that technical due diligence the engineering review it's more of a decision-making review is almost the way
38:12
I think about it that's absolutely right and I think as as I said earlier it's really around is this project going to
38:19
be able to be delivered and if it is delivered is it going to achieve the outcomes the government is seeking to
38:25
achieve so you can almost think of it as thin slice of value added on this assurance function rather than again a
38:31
comprehensive Shadow Engineering Process or or critical review of the design in detail which I think is really helpful
38:37
to understand and a feature of that certainly many jurisdictions in North America don't really deploy in their decision-making Frameworks a last
38:43
thought on this before we transition to the final part of our discussion today is I'm sure you know the point of
38:48
assurance function isn't to rubber stamp or green light every project there may be dissenting reviews both in terms of
38:54
the review coming back saying the project isn't ready the government shouldn't have confidence in moving it forward or you may have even
39:00
disagreements among the independent reviewers on the level of confidence a product should have you tell us a bit about how that works in the Assurance
39:06
process what happens when the reviewers are either entirely or impartial are not sold on the idea of advancing the
39:11
product they don't have that critical confidence so the reviewers do try to
39:16
stay fairly impartial the reviews aren't an exam what they do is they give the government a level of confidence in the
39:23
project moving forward and that's either low medium or high and the review make recommendations on things that are
39:29
either critical to do they must be done before the project can move to the next
39:35
stage essential so it needs to be done but can be done during the next stage of
39:40
development or delivery or their suggested recommendations I don't actually have the background as uh
39:46
seeing how the discussions go among the review teams to know what happens amongst resenting reviewers but I'm sure
39:52
it happens but ultimately they do come to an agreement and there is a head of those external experts who is really the
39:59
the lead on that review process so ultimately I assume they have a say even if a project gets a low confidence
40:06
rating with several uh critical recommendations an elected official can override the review recommendations and
40:13
progress that project but they will do so in the knowledge that there are critical recommendations that aren't
40:19
being addressed and that the reviewers do not have confidence in that project moving forward so there is ultimately a
40:26
decision that can be taken but they would do that with their eyes open and understanding the level of risks in
40:32
taking that approach it's helpful to understand that concept that it's not an examine it's almost not jury duty
40:38
there's no ultimate verdict it's about structuring recommendations to give to decision makers and ultimately it's not
40:43
a decision-making process it's an advice to decision maker process it's about helping decision makers understand how
40:48
any independent expert in the field might feel about the project moving forward informed by their diverse technical experience but I think it all
40:54
boils back to our theme today on on generating conf idence and helping decision makers understand how the more technical or professional body of
41:01
involved in the project would be confident if the project moved forward we ended that part of the conversation thinking a bit about elected officials
41:08
and how they might interact with the independent Assurance so why don't we move to the last part of our conversation on the role of elected officials and the public in the
41:14
infrastructure New South Wales approach to decision- making and product advancement I think the processes we've talked about today sound robust they
41:20
sound effective you talked about the efficiencies that have been built in the desire here isn't to create more analysis paralysis the Des here isn't to
41:27
slow projects down it's about building momentum but making sure there's confidence and credibility behind that momentum one of the things I want to
41:34
talk a little bit about is the role of the public or key stakeholders and the ultimate role of elected decision makers
41:40
in this process one concern we hear in North America as we develop decision- making framework is what's the role of
41:45
the public going to be how do we engage if our elected officials in this decision-making process and how do we
41:50
fit it in with our our governance and I think while the explicit governance between Australia Canada and United
41:56
States may be different I think there's some common values on transparency on engagement on the Democratic process that we can see in
42:03
action in Australia and perhaps learn a little bit about North America so could you explore that that idea the idea of collaboration between the public and
42:09
decision makers as part of this New South Wales model for infrastructure advancement so normally the community is
42:15
engaged throughout the life cycle of the project in terms of development and delivery stages though it really will
42:22
vary by project and by agency and as well as it will vary with the degree of
42:27
sensitivity of the project and whether there is some particular sensitivities that need to be managed but it's
42:33
actually a requirement and one of the areas which are assessed under a Gateway review process is around stakeholder
42:40
engagement what the approach is how well stakeholders have been engaged and what the community feedback has been on the
42:47
process normally the way that we will engage with the communities through
42:52
information sessions through one-on-one stakeholder stakeholder engagement and also through have your say on various
42:59
reports um at different stages of the project one of the resources infrastructure in New South Wales is
43:04
actually put out is a guide for agencies and project sponsors around what type of
43:11
information and how detailed it should be at each level of project development
43:16
so very early on in the Project Life Cycle what should we be telling the community about the cost the time frames
43:23
in particular and as you move forward those costs and time frames can get more less of a range and more of a specific
43:30
so they have provided guidance to the commun to the project delivery agencies on that so ingred thank you for that
43:37
overview of community engagement and I think that's a crucial element to project development here especially as we serve diverse communities and
43:44
populations many with different needs uh and many who who require different things from the infrastructure we might
43:49
be building another element of this this final theme before we close out today is the role of elected officials now
43:55
previously you mentioned that elected officials might receive the recommendations uh from the Assurance
44:00
process and review them but how else do elected officials work in this process because it seems to me this again is a
44:05
decision support framework not necessarily a decision making framework sounds to me like the decision maker is
44:11
still the decision maker but this this Frameworks has been developed to assist them in that role can you tell us a bit about how that role plays out more
44:17
specifically in in New South Wales yeah so elected officials do still play a really important role and are ultimately
44:25
the decision makers usually the officials are briefed regularly on Project process uh and progress
44:31
including through monthly and quarterly reports to Cabinet depending on the level of risk of the project and uh
44:38
those reports cover how the project is tracking against key metrics they're a
44:43
really comprehensive overview but they are very short and sharp infrastructure New South Wales is actually responsible
44:50
for coordinating and preparing those packs to go to Cabinet on those infrastructure projects the role of
44:55
elected officials in decision making it's normally limited to when the project is seeking funding Andor
45:02
approval to move to the next stage so they don't have influence on the day-to-day decisions of a project but
45:08
they will have an opportunity to make decisions on funding and financing and
45:14
project progress so if I'm hearing you right it sounds like there's some key similarities in North America decision
45:19
makers are really focused on the macroscopic view of the project if we use a Subway example it's what's the line on the map what are the stations
45:26
what's the overall scope they aren't necessarily saying move that entrance to the left 10 MERS and maybe turn that
45:32
escalator into an elevator it's very much focused on the macroscopic issues and they're using a combination of the
45:37
business cases developed at each stage gate and the Assurance notes through briefings to inform their decision on
45:43
those go noo allocate funding or allocate Powers if needed decisions to advance a project would that be a fair
45:48
summary yeah that's absolutely right they also obviously have a fairly large role to play in terms of the media
45:55
announcements because uh all elected officials do like having a good media announcement when there's a ribbon to
46:00
cut or a a stage to open yeah certainly there are a wide R array of roles played across the life cycle by uh by All
46:07
actors including our decision makers I think we've had a great conversation today spanning a range of topics first we talked about the life cycle and how
46:13
there are seven stage Gates used to answer different questions about projects throughout the life cycle with projects stratified by risk and that
46:20
risk stratification defining which stage Gates they need to go through and the level of analysis required we then
46:25
talked about the business cases used to navigate decisions at each of those stage Gates and some of the emerging trends that New South Wales is working
46:32
with in the business case field whether that's changing discount rates to recognize the long-term benefits of these projects we incorporating key
46:39
priorities such as climate change into the decision-making tool kit the business case analysis toolkit we then
46:45
talked about assurance and how it's an independent and very lean and efficient process to make sure that decision makers have a full view of a project
46:52
before approving the next stage of development we finally closed out with the ultimate role of the Publican decision makers in developing these
46:58
projects ingred I think one thing that really stood out to me and I've mentioned this a few times in our conversation is that overarching theme of confidence this process wasn't
47:05
developed to add significantly more technical work design work modeling forecasting it really sounds to me it's
47:10
about asking the important and crucial questions as a project matures or evolves that ensure the teams behind it
47:18
the planners the designers the sponsors the funders and ultimately decision makers do have that confidence and can carry it through the life cycle and I
47:24
think that confidence as you described it really has broken down into a few dimensions first is this project ready for the next stage is there a credible
47:30
plan for it to move forward second do we have confidence it's still the right project at the right time and finally do
47:36
we have confidence the product is going to be delivered the right way do we have confidence that the delivery model procurement model and the approaches to
47:42
bring this product to life are are appropriate and sound so we appreciate you taking the time that you talk us through this model again I've learned a
47:47
lot from our conversations and think there's certainly many lessons that carry over directly to North America and maybe carry over a bit metaphorically or
47:53
indirectly to our our various jurisdictions on the continent would you like to share any closing thoughts before we uh close our podcast today no
48:00
I'd like to just thank you for the time it's been really interesting talking to you and learning more about the way that
48:06
the Assurance process operates in Canada and the US in particular great thank you
48:11
ingred look forward to Future conversations on all things infrastructure planning and have a great rest of your day thank you
48:28
n [Music]