Project Due Diligence Gaye Francis and Richard Robinson Directors - - PowerPoint PPT Presentation

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Gaye Francis and Richard Robinson Directors R2A Due Diligence Engineers

Project Due Diligence

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Plan

• 1. Due Diligence vs Risk Management -

exclusive reliance on RM Standard fatal

• 2. The Project Due Diligence Process
• 3. Case study: Class E Tram Procurement
• 4. Thanks to the PTV, John Barry,

Nelson Jaiquiry and Alan Braithwaite.

Risk Paradigms

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Business Safety Project

Project Risk

With project risk, upside risk is assumed in the proposal. The risk analysis generally focuses on those issues which will prevent the assumed upside benefits from being achieved. That is, it is a downside risk assessment process from an assumed upside risk position.

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Risk Management vs Due Diligence

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Long tail event (low likelihood, high severity)

XXX XX X - Value addeds Project Due Diligence

Potential 'show stoppers'

Likelihood Consequence Promised project upside risk position Project Risk Management

Likely downside 'risks'

Silos

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Project Due Diligence

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Vulnerabilities Construction / delivery Operations & Maintenance Design and engineering Tendering / procurement Contract award Commissioning Demolition & disposal Concept / scoping Project critical success factors (Stakeholder requirements and expectations) Functional (time sequence) and zonal vulnerability assessments Credible threats Project Due Diligence

Military intelligence approach - threats to agreed critical success factors give rise to vulnerabilities

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2.0 Credible threats 5.2 Risk profile 5.1 Residual risk profile 5.2 Contingency sums 3.0 Credible vulnerabilities 1.0 Project critical success factors 6.0 Action list 5.0 Precautions / protection / controls 4.0 Criticality review 5.1 Risk assessment

Example - gas plant

Preliminary dependence diagram

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Vulnerability table

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Scoring

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xxx xx x

• v/a

Potential project show stopper. Project not viable until addressed. Moderate potential vulnerability that needs to be specifically addressed by tenderers. Minor potential vulnerability. To be addressed by successful contactor project manager. No detectable change. Possible value adding.

Show stoppers

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Representative Projects

Eastlink Marina Coastal Expressway (Singapore) Tugan Bypass (Queensland) Interim Rolling Stock Procurement (X’Traps) Class ‘E’ Trams Procurement South Morang Rail Extension

Functional Vulnerability Assessment

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Register

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Item Threat Critical success factor(s) impacted Vulnerability / mechanism Criticality Proposed Controls / Treatment Plans 1 Vehicle specification issues Enhanced service capability / flexibility, Maintainable asset over design life at target cost, Operationally safe, Compliant with Government Policies, Project reputation, First tram operational on time, First 5 trams operational on time, First 5 trams proven to be maintainable and reliable on time, Sixth tram operational on time, Reliable fleet maintained during rollout and Project delivered within budget xxx

• 1. Tram wheelchair lift trials conducted
• 2. Review of tram axle load and vehicle

kinematic envelop

• 3. Franchisee submitted functional /
• perational requirements
• 4. RTBU consultation re: new vehicles
• 5. Franchisee consultation, review, feedback

and acceptance

• 6. Facilitated discussions with industrial

parties

• 7. Social Transit Unit and PTAC consultation

and acceptance

• 8. Consultation with PTSV
• 9. Consultation with Myki and AVL project

teams

• 10. Functional specification developed

internally

• 11. Internal critique / peer review
• 12. Review of potential supplier proposals
• 13. Technical consultation with short listed

suppliers

Criticality, not risk

All senior decision makers assess decisions about future uncertainty initially at least, using criticality, not risk. NB: The minimisation of personal and electoral liability is logically prior to shareholder profits and taxpayer funds.

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