Risk is integral to all engineering, but rarely are the stakes higher than on large infrastructure projects. Past experience and future technology must combine to reset the way engineers perceive, measure and make decisions.
As a civil engineer and researcher in risk management, currently completing a PhD focusing on risk allocation in transport megaprojects, Thomas Moore FIEAust is always on the lookout for examples of innovation and best practice.
Moore is particularly pleased that he doesn’t have to look offshore for these exemplars. In Australian engineering, he said, we’re beginning to see excellent risk management processes despite increasingly complex projects.
“Critics are always out there and they will bring up the projects that aren’t delivered on time, within budget or to a particular standard,” Moore told create. “But if you look at the many examples of projects that are delivered successfully, they have broken down barriers between contractors in construction. They share knowledge and experience – both good and bad.”
As an example, Moore points to Melbourne’s Level Crossing Removal Project (LXRP), which represents an excellent example of risk management practice in Victoria. The alliance framework around the program of works has had significant and positive effects on risk management capabilities, he says. This is mainly due to the fact that the project has incorporated a continuous learning and improvement aspect across each of its 85 packages of work.
“Each time they do that, the next project becomes more manageable, and also less risky and uncertain.”
The LXRP risk environment has become so familiar that it assists good decision-making in all business areas throughout the entire alliance.
“It is a great example of how excellent risk management can be applied to what effectively is a big, complex portfolio of work,” Moore said. “And any major infrastructure program is a big, complex portfolio of work.”
Indeed, major infrastructure projects and assets require unique risk engineering and uncertainty management approaches, said Pedram Danesh-Mand CPEng FIEAust, President of Engineers Australia’s Risk Engineering Society.
“We need to change our engineering mindset to the entire asset lifecycle, from investment prioritisation and optimisation throughout development, delivery, commissioning, operation, decommissioning and rehabilitation,” explained Danesh-Mand, who is also Executive Director and Head of Project Controls & PMO at KPMG Australia.
Focusing solely on development and short-term objectives may not only negatively impact investment decisions, but will likely also overlook critical aspects that arise during the latter stages of an asset’s lifecycle.
“We see today, for example, situations where asset owners might have underestimated the costs and resources needed for asset decommissioning and rehabilitation,” he said.
A holistic understanding of the full scope of potential challenges allows for better preparation and more strategic intervention across the lifecycle.
“Now we are seeing billions of dollars of investment in renewable energy projects, the challenge is to plan how we want to maximise productivities and efficiencies. This might involve using more risk-balanced contracts. In developing these assets sustainably, how do we want to operate and maintain them? Who’s going to pay for them? What’s the risk associated with them? And how do we want to decommission them?
“By incorporating insights from the full lifecycle into their strategies, engineers and organisations can achieve better outcomes, ensuring infrastructure investments are maximised for value, longevity and sustainability.”
Identify the parent risks
Joshua Watkin, former Head of Projects at Sydney Metro, is learning how to define and trace each type of risk on a major project, to break them down into manageable chunks.
It’s vital for engineers on large infrastructure projects to develop a harmonised work breakdown structure (WBS) across asset locations, work schedule, cost and risk, he said.
“This allowed us to connect the dots across the entirety of the portfolio,” Watkin, referring to his experience on Sydney Metro, told create. “We could pull on a thread around a risk and identify all the locations and assets that would be affected or touched by it.”
The WBS offered a robust, data-led portfolio view across the many thousands of risks on the Sydney Metro project, and across contingency allowances.
Most powerfully, the WBS also enabled the distillation of those thousands of risks into themes, which made them much easier to collectively manage.
“We found seven parent-level risks that accounted for about 80 per cent of the overall risk model,” he said. “They were the huge ones – geotechnical and subsurface hazards, precinct planning approvals, etc.
“By identifying them, you can shift your focus rather than look at thousands of individual risks. Or, rather than look at just the most consequential ones, you can take a portfolio-level intervention into subsurface hazards, for example. We’d spend three months going through controls design and effectiveness testing at a portfolio-wide level, to see where we found ourselves.”
All of a sudden, the project began experiencing rapid, portfolio-wide maturity improvements.
“This enabled better communication and forced knowledge sharing,” he said. “You might have a couple of new project managers who say that’s never been a problem for them. But you can demonstrate how all these parallel issues correlate, and tackle the parent risk in a consistent way across the portfolio.”
Threat versus opportunity
Such systems, driven by technology, also help engineers understand what Watkin refers to as “opportunity risk” and “threat risk”.
An example of technology helping to manage threat risk was when Watkin and his colleagues integrated data from electricity and water utilities providers to bring all of their information into a single, digital model. This meant they could remain aware of all underground assets without having to consult countless sources, and with all sub-projects and follow-on contractors remaining aligned on a single picture.
“It let us understand all geotechnical hazards up front,” Watkin said.
From an opportunity risk perspective, technological capability made “value engineering” a much cleaner and more efficient process.
“We could instantly look at our digital model and challenge whether we needed four escalators or six escalators. By turning on or off filters, we could instantly run models to see what would work and what wouldn’t. We could feed the latest patronage model into the system and see time horizons to failure.
“Technology informed by good data makes that value engineering, cost-improvement activity so much more seamless and efficient because you have evidence-based decisions right in front of you.”
Such technology helps engineers on megaprojects understand interdependencies and “system traps”, Watkin said.
“If someone comes to me with what they think is a great opportunity, to perhaps vary a specification so it becomes 15 per cent cheaper in the delivery phase, do they really understand the effect the change will have on the next three follow-on contractors in the megaproject environment?
“These projects are a different ball game, culturally and experientially. In terms of risk, you need a much greater and overt focus on systems thinking.”
Community onboarding
Australian engineers generally do quite well with risk management, said David Cox FIEAust CPEng, Deputy President of the Risk Engineering Society. In fact, prior to ISO 31000, the international standard for risk management, Australia had its own risk management standard.
However, there’s always room for improvement.
“Things fall down when organisations don’t put enough resources into risk management, or don’t get thinking about it early enough,” Cox explained. “Things tend to go well when the risk function is resourced properly and when they start early, with the right people involved.”
For Cox, the “right people” means more than just engineers. Since major-project engineering is typically about improving outcomes for the community, stakeholders from the community should be involved from the beginning, too.
“Risk information must be fed upwards through the organisation in a timely manner, to enable good decision-making. But at the same time, if you don’t involve and engage the community early on, you’re not collecting all of the information you need to inform those decisions.
As an example, Cox referenced a collaborative process he was involved in, where disability groups were consulted around accessibility design. That feedback completely changed the outcomes, with solutions that outperformed those developed on other projects.
The community members whose ideas had been adopted became active ambassadors for, and supporters of, the project.
“Actually, some of the people involved became quite emotional about it,” he said. “A lot of them had bad experiences, for example where the steps were at the front of the building, and the ramp was all the way around the back.
“This way, they got to influence a much better solution. And for the client, that consultation turned risk into opportunity.”
Read more: These engineers convinced clients to commit to risky engineering projects – how?
A complex risk future
Many large engineering firms in Australia, Danesh-Mand said, are managing several major projects concurrently. As they share people between those builds, while also keeping an eye on future projects, entirely new types of risk arise.
“The risk associated with a portfolio is quite different to the risk associated with a major project,” he said. “However, both need to start with a definition of the entirety of the risk. That understanding must then be used to inform all business decisions.”
That is quite a different practice to what we see today in many organisations, Danesh-Mand said, where risk management is often considered a compliance task.
“The world is changing. The challenges our engineers are facing these days and over the next few decades are significantly different.
“We need to change our risk management mindset moving forward. It should be integrated into day-to-day engineering activities and processes. We must move towards risk-based decision-making for engineers.”
This article was originally published in the May 2025 issue of create with the headline “Rethinking risk”.
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