A National Study of

Infrastructure Risk
A report from Infrastructure Australia’s
Market Capacity Program

October 2021
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TABLE OF CONTENTS PAGE

Executive Summary 3 Project risks, risk sharing and risk appetite 38

4.1 Assessment overview
Introduction 16 4.2 Market sounding
2.1 Strategic context for this report: COVID and bushfires 4.3 Construction complexity and size
2.2 Current policy settings: market capacity and national risk 4.4 Optimism bias
2.3 Approach to risk assessment 4.5 Political risks
2.4 Methodology for preparing the report 4.6 Project approvals across governments
2.5 Current policy setting 4.7 Utilities and relocation risk in urban environments
4.8 Integration risks
4.9 Unpredictable ground conditions
4.10 Interface risks
Systemic risks for Australian infrastructure 26 4.11 Insurance premiums and coverage
3.1 Assessment overview
3.2 Climate risks Critical risks by infrastructure sector 50
3.3 Decarbonisation and transition
3.4 Labour shortfalls 5.1 Assessment overview
3.5 The Australian contractor market 5.2 Transport risks: performance, pipeline, critical risks
3.6 Material costs 5.3 Social infrastructure risks: performance, pipeline,
3.7 Uninsurable risks critical risks
3.8 Enduring COVID impacts 5.4 Energy risks: Performance, Pipeline, Critical Risks
3.9 Social license and fatigue 5.5 Water risks: Performance, Pipeline, Critical Risks
3.10 Technology and cyber risks 5.6 Waste risks: Performance, Pipeline, Critical Risks
3.11 Designing for technological change 5.7 Telecommunications and digital risks: performance,
pipeline, critical risks

Appendix 90
6.1 References
6.2 Data sources
6.3 Risk Taxonomy 2
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Section 1

Executive
summary

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Major Findings

As Australia heads towards an historic level of infrastructure investment, there is

evidence of emerging delivery risks across the national infrastructure pipeline
● Australia is witnessing historic investment across transport, utilities, and social infrastructure.
Pipeline of infrastructure projects
In total, more than $300 billion of projects will be delivered in the next 10 years. Spending will
peak in 2023 at $45 billion,1 twice the spend in 2021, and multiples of post-GFC investment. $60
Forecast

Annualised spend rate

● The structure of the pipeline has also changed. There are nine times more mega-projects,
$50
defined as projects over $1 billion in capital cost.

(A$ billions)
○ Mega-projects can involve higher levels of risk. Oxford Business School analysis $40
commissioned for this study confirms a correlation between the capital cost of a project
and its level of schedule and cost risk, in energy and digital infrastructure, and between $30
different types of transport assets. For example, a large Australian energy project over
$350 million is more than twice as likely to run over cost than a project under $350
million. $20

● Market participants in this study observed how the ‘volume of risk’ increases with concurrent $10
large projects. From an industry point of view, one contractor noted that delivering multiple
large projects, each with large sums at risk, left no room for error on their balance sheet. $0
● This report tests evidence and market perceptions of risk, from contractor failure to increased
disputes, to the unavailability of insurance and workforce shortages.
Transport Utilities Building
● In addition, this report evidences the emergence of new risk categories, such as cyber risk
which has grown rapidly, technology risks which create uncertainty around design and
commissioning, and policy and market design risks around newer asset classes, such as Figure 1: Projected construction activity in Australia
renewable and waste to energy projects.

● These risks come at a time when the Australian infrastructure sector has had to respond to
catastrophic one-off events, including the COVID-19 pandemic, the 2019-20 bushfires and the
2021 floods - which underscore the significant risk environment for major projects delivery. The size and structure of the future infrastructure
pipeline poses a growing risk, exposing emerging
● This report gauges the level of risk across the infrastructure market over the next five years, market constraints and some provider fragility
the market’s appetite for this risk, and whether the approach to sharing of risk is adequate. It
compiles evidence, and draws together market and sector insights, to inform its analysis. 4
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Major Findings

While the infrastructure sector is confident of managing the growing pipeline of

projects, it is less confident about servicing very high levels of growth
Please rate your confidence in your organisation’s ability to respond to further growth in the public
infrastructure pipeline in the next five years
>50% increase
19% 25% 16% 41%
over 12 months

50% increase over 23% 29% 23% 26%

12 months

25% increase over

12 months 45% 33% 9% 12%

10% increase over

12 months 74% 18% 6% 3%

5% increase over
12 months 79% 18% 3%

Confident Not Confident

Figure 2: Survey responses on the confidence market respondents had on their organisation’s ability to respond to further growth of the infrastructure pipeline.
Source: Infrastructure Australia 2021 Market Sounding Survey

Survey respondents indicated that as the pipeline grows, there is a reducing The Australian infrastructure pipeline is expected to see construction
confidence in their organisation’s ability to upscale to accommodate this spending grow by close to 50% annually during the forward estimates.
growth. This trend is relatively linear from a 5% to 25% increase in the These results were strengthened in market soundings, where contractors and
pipeline. However, at increases of 25% and 50%, sharper falls in market investors confirmed confidence to manage growth, while noting that the
confidence were observed, with a 26% decrease in confidence. Less than half current pipeline contained appreciable risks.
(44%) of respondents felt confident with their organisation’s ability to meet
pipeline growth of over 50% within 12 months. 5
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Major Findings

Contractors were most concerned about construction risk, while government

agencies perceived contractor and workforce capacity as the greatest current risks

Key Results
● Contractors indicated ground conditions, utilities
and contamination as their biggest risks, with a
2 1 suite of labour risk and insurance/bid costs
3 following after.
● While not as high as the government
4
respondents, contractors indicated their capacity
5 was a risk, indicating both groups appreciate
there is a tightness in the market.
● Overall there is an interesting difference in the
level of risk perceived by these two groups, with
private indicating an overall greater level of risk
than government.
● When asked to rate risks in priority order,
government respondents cited contractor
capacity and white collar workers (eg
experienced project managers) as the most
critical risks.
● The government respondents, overall, indicated
a lower average level of risk rating with only 4
risks being above 50% as high or critical.
● The contractor respondents had 11 risks where
over 50% thought they were high or critical.
Figure 3: Survey responses on the criticality of different delivery risk, comparing government and private sectors. Graph is in order of
contractor risks from largest to smallest
Top five government risk is indicated by the number above the relevant bar.
Source: Infrastructure Australia 2021 Market Sounding Survey
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Systemic factors appear to drive risk ‘convergence’ across sectors, while common
delivery risks are amplified by current conditions, requiring a national response
Major market change or
extreme weather events
have wide impacts across SECTORAL (Section 5)
SYSTEMIC (Section 3) sectors.
Transport Social Energy Water Digital / Telco Waste

Declining
Challenging ground Competition
conditions Access to Returns on Lack of experienced SMEs in
with economic Grid connection delays
Economic Labour and materials shortage
infra for funds
skilled migrants Private sector

Higher than Investment

anticipated land
acquisition costs Policy Policy Market
Demand Shifts
Uncertainty Uncertainty Incentives for Low Market
Critical Shift to Low Uninsurable & Population
Inaccurate demand hindering hindering Regional & Readiness
Environmental weather Carbon Risk modelling Growth
investment investment Remote

Labour
shortage Digital planning Lack of workforce planning Lack of contractor interest in Climate change risks not Regulatory requirements not Stakeholder opposition to
Technological Cyber Risk Rate of Tech Change risks are sub-par (capacity and capability) solar market considered in planning captured in design construction

converging
with the
Expert Changing
complexity of Social Licence
stakeholder Consumer Delays in obtaining planning Poor operational readiness
Community
User Community fatigue COVID demand change projects, Issues approvals
Concerns Delay
conflicts Preferences
resulting in
errors and
Network Underinvestme Inadequate
projects Unfunded Complex
PROJECT RISKS (Section 4) integration nt in network Planning and
costs, further operations Network Governance
risks improvement Investment
impacting connection and
infrastructure
Planning Ground contractor Security and
Planning & Conditions
Optimism Growing unavailable
Approval bottom lines scale of supply
Governance Bias Contractor Land contamination Land contamination
Hardware & software
Fragmented Risks interfaces are not adequately for W2E
Claims defined

Land Lead time and

Procurement Insurance costs and availability Contamination Climate change risks not
high costs of
Stakeholder opposition to
considered in planning construction

Tunnelling/ hydroelectric Key:

Geotech Major risks highlighted in the
Digital
Construction/ Integrati Land body of this report
Delivery Utilities on Acquisition Identification of existing These risks are included in Infrastructure
Complex Large Supply chain disruption Clashes with existing utilities
& (Urban utilities Australia’s risk repository and accompanying
interface Projects Critical project risks, dashboard, aligned to sectors
Contami Projects)
s cost risk while not new, are
nation
Geography amplified by the pipeline 7
of urban projects.
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Major Findings

Many critical project risks, such as ground conditions, are least well understood in
early planning and development, the stage when risks are most effectively mitigated

Key results:

● The majority of market sounding survey responses

indicated that risks are “partially understood and
managed” across the major phases.

● Confidence that critical risks are understood and can be

managed was strongest during project delivery stage, and
weakest during project planning and development, where
only 25% of respondents felt risks were well understood
and managed.

● 8% of respondents considered that critical risks were

unable to be properly understood during planning stage.

● On the other hand, industry participants observed that in

ground conditions and other risks needed considerable
mitigation during planning phase.

Figure 4: Results from the market sounding survey showing how well respondents think critical risks are
understood across the project lifecycle.
Source: Infrastructure Australia 2021 Market Sounding Survey

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Major Findings

Government and private sector participants in the Australian infrastructure sector

differ on who should bear critical project risks
Public and private market participant views on who is best Public and private market participant views on who is best
placed to take on critical delivery risks placed to take on critical delivery risks
Government Private Government Private Government Private Government Private Government Private Government Private
Respondents Respondents Respondents Respondents Respondents Respondents Respondents Respondents Respondents Respondents Respondents Respondents

25%
38%
61% 46%
57% 61% 65% 63%
71% 75%
75% 88%

75%
62%
46%
17% 26% 13% 26%
43%
29% 25% 22%
25% 22% 13%
12% 13% 8%
Planning and Utilities Geotechnical Risk Latent Conditions
Interface Risk Integration Risk
Environmental Approvals

Figure 6: The figure shows who government and contractor respondents think is responsible for utilities,
Figure 5: The figure shows who government and contractor respondents think is responsible for
geotechnical and latent condition risks.
planning approvals, interface and integration risk. Source: Infrastructure Australia 2021 Market Sounding Survey
Source: Infrastructure Australia 2021 Market Sounding Survey

Survey responses by public and private sector respondents varied considerably around There is a general consensus between public and private sector respondents that utilities
which party should bear interface and integration risk. Private sector participants and latent geotechnical risks should be shared. However, 13% and 22% of public sector
categorically viewed integration risk as best born by government, while 22% of public respondents believed that the private sector should bear utilities and geotechnical risks
respondents suggested private should bear integration risk. respectively.

There was agreement that planning and environmental approvals should be either shared Similarly, with respect to latent conditions risk, no private sector respondents suggested
or borne by government (public sector). However, 57% of public sector participants they should bear these risks, in contrast to 52% of public sector respondents suggesting
that the risk should be borne by private or shared.
suggested the risk should be shared, compared to 25% of private sector participants.
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Major Findings

Industry’s appetite for risk will be influenced by recent experience and market
conditions
The elements considered on this page represent some of the considerations which were seen to be heightening risk, or impacting future risk appetite.

Declining contractor profitability Rapid decline in professional indemnity Social licence issues could increase
project delays and cost
Tier 1 contractor profits, historically ~4-5%, Proponents noted that price of PI insurance One report estimates that community
dropped steeply in 2019, in one case to -7.5%, had escalated up to three times in two years, opposition to projects over the next decade
while winning significant new work. with a 50% drop in insurance capacity.
could amount to a $40 billion cost.30

Climate risk impacts on insurance Cybersecurity risks increased sharply Cost optimism bias is significant
Insurance premiums in some cases 35% of cyber incidents impact critical On the future pipeline, the projected cost
increased by 400% following the 2019-2020 infrastructure providers, with one metro uplift required could amount to more than
bushfire season.11 water utility observing thousands occur $90 billion nationally.
daily.31

Price escalation of construction materials Labour shortages are evident Risk transfer and sharing

While 2020 ABS data shows rising steel costs, Shortages in experienced project managers 68% of survey respondents indicated that
proponents noted acute recent price increases are evident across all sectors, with 33.5% traditional contracting methods did not
of timber and steel.22 One lender reported a drop in skilled migration through COVID, and adequately manage for emerging risks.
contractor had an 80-90% steel price increase with 40-75% national vacancy rates for
from tender submission to award. critical skills such as civil engineering.18,19

Utilities risk Project complexity and size are a driver

Decarbonisation costs to construction
An estimated 128 projects would deal with of cost overruns in some sectors
One estimate is that the cost of utilities risk over the next five years.2 The Larger energy projects had twice as large
decarbonising construction would be 0.4- Sydney Gateway project will manage 487 cost overruns on average as compared to
0.6% of global GDP.17 utility connection points. smaller projects,
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Major Findings

By sector, transport and social infrastructure projects comprise 73% of the pipeline,
with ground conditions and urban growth requirements driving complexity
TRANSPORT SOCIAL INFRASTRUCTURE
The Australian market has successfully delivered a growing number of major Social infrastructure projects tend to break the traditional nexus between project
Recent Major Projects

transport projects in recent years, with Australian transport projects out- size and project complexity. Sector experts noted that hospital and prison
performing their comparator projects overseas on cost and schedule projects for example - large or small - have more complex risk profiles, with
Performance

outcomes. complex stakeholder issues, design risk and uncertainty over future operating
Nonetheless, recent project completions and procurement processes such as requirements from policy and technology change.
WestConnex Stage 2, NorthConnex Twin Tunnel and West Gate Tunnel
highlight the ever-present concern of ground conditions and growing claims. Wider concerns about contractor experience in a tight infrastructure market were
Industry who were consulted for this report argued strongly that while they observed as well as ground condition risks. Social infrastructure project risk
are well placed to manage these risks when found, ground conditions over tends to heighten nearer the point of commissioning.
long corridors are ‘unknowable’ and ‘unpriceable’ before construction.

There are 125 major transport projects in the pipeline, representing 58% of In the next five years, social infrastructure comprises 15% of the project
pipeline projects in Australia. Over the next 5 years, the Australian market pipeline, with 25 hospital projects under planning, or $17 billion of investment,
will also be delivering an unprecedented program of rail development, and new justice, entertainment, social housing and education infrastructure.
Critical Risk Assessment

including Inland Rail, Cross River Rail, METRONET, Suburban Rail Loop,
The review identified four critical risks:
North East Link, Melbourne Metro, Gold Coast Light Rail Stage 3 and Sydney
● Service, operations and design: Disconnects to service planning place new
Metro.
hospitals or prisons at risk of delay, stakeholder issues, and redundancy
● Competition for public investment: At the point of investment decision and
Therefore, critical risks identified for this sector include:
during procurement, social projects are competing with other infrastructure
● Contamination and cost to remediate: flexibility is needed regarding
projects for selection, skills and capital.
sharing and management of risks
● Growth infrastructure: New building models and significant land acquisition
● Urban and community disruption: community opposition to projects
will be needed to deliver infrastructure that meets urban and population
can delay project starts and add cost
growth
● Tunnelling and ground movement issues: there will be a 25%
● Technology considerations: Will disrupt service and provider models and
increase in tunnelling projects in the next five years
require more flexible (and more costly) asset design.
● Land acquisition: infrastructure development in brownfield areas that 11
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Major Findings

In water and energy are navigating significant market transition, participants noted
that policy uncertainty was a risk to investment and to delivery
WATER ENERGY
Delivery of traditional water projects carries mature and known risks. Recent The energy investment pipeline is growing significantly, with significant wind,
Recent Major Projects

projects include Urannah Dam, Lower Fitzroy, and Pilbara Coastal Water solar and energy storage developments in the five years to 2020. These assets
Project. have been impacted by policy uncertainty, which has impacted pricing and
Performance

value, the timing of grid connection, and on some projects, completion risk.
Emerging technology in water and waste treatment has introduced
complexities to projects during option selection and commissioning. The recent failure of several major contractors is seen by market observers as
an indication of new risks not being properly understood or managed.
Projects have seen planning delays and some planning uncertainty with recent Consolidation of solar portfolios is viewed as an indication of policy and pricing
climate variability. uncertainty.

The next five years will see significant water infrastructure development with The Clean Energy Council predicts there are 98 projects in construction or due
15 major projects including dam and water treatment infrastructure.2 to commence soon, representing 10,395 MW and $19 billion in investment.3
Upcoming projects include Warragamba Dam Raising, South Creek, Urannah
Critical Risk Assessment

Dam, Prospect to Macarthur Link. Critical risks include:

● Need for funding and planning of grid infrastructure: to meet
Critical risks identified in this review include: scheduled completion and to manage completion risks for new generation
● Workforce shortage and contractor availability: In particular, access to projects
skilled migration is impacting on the delivery of water infrastructure ● Policy coordination and uncertainty is discouraging investment:
● National policy uncertainty: Proponents noted that infrastructure Market participants indicated that there were global investors who
planning and investment risk need a single national water strategy to considered the Australian market too high risk on energy policy
manage diversity and transition to circular economy water systems ● Changing preferences: Changing preferences from customers and
● Governance: Complex governance arrangements raise project uncertainty investors are accelerating a structural change in investment portfolios.
within the sector. ● Hydro projects have relatively high risk of cost overruns

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Major Findings

Current market and investment settings are inadequate for waste and
telecommunications
WASTE TELECOMMUNICATIONS AND DIGITAL
Relatively few waste projects have been delivered in recent years in The NBN (revised) build was completed in 2020, with NBN Co reporting
Australia, with the Kwinana Waste to Energy Plant being the first such that the build provided successful connecting of over 11.86 million
Recent Major Projects

project to be delivered. However, recent national waste export bans and premises, and around 100,000 complex premises yet to be made 'ready
state and national policy development will drive investment in circular to connect' (RTC), expected to be reduced to around 35,000 as at 31
Performance

and waste processing infrastructure in coming years. December 2020.

Recent project developments prove ongoing community concern and While the roll out was subject to policy and design changes, and late
social licence issues surrounding infrastructure development in this construction deadlines, the overall construction build was delivered
sector, which carries forward into the immediate pipeline of projects. reliably. In 2020, additional capacity was released to ISPs during the
lockdowns to meet increased demand from working from home activity.

There is a pipeline of around $2 billion in waste infrastructure in NBN Co made a recent commitment to deliver the next ‘targeted’ phase
Australia, and significant growth is likely as the market adjusts to the of investment and network improvement by 2023. A program of $4.5
waste export ban. Projects are planned and under development, billion will deliver improved wholesale speeds for 75% of homes and
including Swanbank, Australian Paper Energy from Waste Facility, and businesses in the fixed-line footprint, invest in initiatives with retail
Critical Ris k As s es s ment

Parkes Recovery and Energy from Waste Facility. internet providers, and support state and territory partnerships in
This review identified critical four risks: regional and remote Australia. This will occur alongside state government
● Inadequate infrastructure planning and development: the ‘Gigabit program’ initiatives and private sector investment in 5G and
pace of planning and development is not yet sufficient to meet the mobile connectivity.
level and type of demand that a circular economy requires The review identified some critical risks:
● Community concerns: projects have been deferred or rejected due ● Underinvestment and poor affordability: The size of planned
to community concerns and social licence network investment is insufficient to meet policy objectives around
● Security and scale of supply: waste to energy requires bankable universal regional and remote access
feedstock volumes, which are difficult to consolidate and to transport ● Lack of market incentive in rural and remote areas:
● Low market and regulatory readiness: technology adoption and underinvestment in regional infrastructure due to commercial models
regulation do not yet have the right incentives for timely investment. ● Declining returns on investment and ‘free rider’ issues with
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Major Findings

Delivery risks were observed to have geographic dimensions, with thin market issues
in Northern Australia and remote areas, and heightened complexity in urban areas
Developing Regions Small Towns, Rural Smaller Cities and
and Northern Australia Communities and Remote Areas Regional Centres Fast -growing Cities

Within Developing Regions and Smaller Towns, Rural Communities Smaller Cities and Regional Centres Within Fast-growing Cities the risks
Northern Australia the risks relate to and Remote Areas have challenges of were not called out by experts and relate to the urban environment and
access to land claims, labour, access to labour and materials similar organisations as having significant, associated complexities with ground
materials, energy and water. to Northern Australia. unique risks. conditions, utilities and disruption to
● Native title: there is a notable local communities during construction.
exposure to native title claims on These towns and communities also Major contractors indicated that
greenfield sites for infrastructure face similar challenges in securing getting access to staff in smaller cities Some risks that were identified
development. This process can add contractor workforces to their regions and regional centres was relatively include:
3-4 years before a project can begin for planned construction activity. easy, given the desire for people to ● Contamination and cost to
Key risks (0-5 years)

and create barriers to investment. live in these locations. remediate: flexibility is needed
● Electricity and water: in these There are two risks that were regarding sharing and management
areas, access to critical items like highlighted for this place type: What was identified though was risk in of risks.
ground water and energy can be ● Ensuring access to operational attracting contractors given smaller ● Urban and community
challenging. As an example, skills: there is a risk that jobs: disruption: growing fatigue from
Newman (WA) uses the electricity infrastructure is built in these ● Contractor attraction to smaller projects can delay project
provided by mining companies and regions that do not have the skills work programs: this was identified commencement and delivery and
before any major public and equipment to operate or as a risk to infrastructure projects in add cost.
infrastructure requiring energy were maintain. these areas, which tend to be ● Tunnelling and ground
to begin, new baseload power would ● Digital access: given the expanse smaller in size and without a clear movement issues: there will be a
be required. of regional Australia, some areas do pipeline of future work in the area, 25% increase in tunnelling projects
● Labour and materials: there are not have broadband access or it can be challenging to get a in the next five years with potential
challenges in accessing materials mobile coverage, this puts these contractor of sufficient size to bid impact to above ground structures
and labour particularly resulting regions at disadvantage regarding and complete the work. from ground movements and
from competition with mining and the potential adoption and associated claims.
resources companies. deployment of digital engineering ● Land acquisition: infrastructure
and other modern techniques. development in brownfield areas
carries additional complexity. 14
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Major Findings

National risk data and reporting, market capacity reforms, and risk assessment and
best practice procurement could support better risk management in the next five years
While Australian projects typically apply a mature approach to managing risk, with significant data captured by projects, the understanding of risk across the pipeline of infrastructure is varied
and incomplete. The activities below outline elements for a national response to better monitor, report and manage risk.

BETTER DATA MARKET CAPACITY NATIONAL PROJECT RISK BEST PRACTICE

ASSESSMENT PROCUREMENT

The availability of risk data across the The single most critical factor in meeting Better project risk assessment will need to Proponents noted the impact of an
infrastructure pipeline is a major the coming pipeline of projects will be be applied both during project planning and engaged procuring client, who sought
constraint in the way Australian ensuring the sustainability of Australia’s post project delivery: to understand market capacity and to
governments can manage across sectors contractor market: engage market participants, bringing
● Streamlined planning and approvals:
and projects: embedded expertise to the delivery of
Referral pathways between state and
● Identify options for supporting the project:
Commonwealth planning should progress
● Build National Risk Register: scaled growth for tier 2 and 3
to completion.
continue to develop the National Risk contractors. While measures are ● National contract and design
Repository. being done by individual agencies, ● Develop and update a National Risk standardisation: Precedents
shared learnings are required across Framework: adopt a common format for abroad include the NEC and Fiddich
● Further build risk mapping jurisdictions. project assessment and post-completion standards, RIBA design stages.
capability: The current risk map could risk capture for IPL projects.
be developed in successive stages if ● Undertake a review of the market ● Managing design risk early:
desired, to enable near real time conditions for infrastructure ● Pipeline planning: continue regular Leveraging best practice approaches
mapping of climate and spatial risks and insurances: the harden professional reporting to National Cabinet on market to engaging stakeholders,
their impacts on networks. This would indemnity insurance market is a major capacity, including supply chain, and practitioners, and users early, as
complement the resilience focus of the constraint on consultants requiring workforce and risk requirements. well as engaging contractors.
National Resilience and Resilience action.
● Broader use of reference class
Agency, Australian Climate Service and ● Best practice packaging of major
benchmarking and forecasting or
others. ● Northern Australia and remote projects to maximise competition
similar methods which assess cost and
infrastructure: skills attractions and market capacity.
schedule outcomes post project
● Open-source hazard and climate remains challenging for remote
completion, and apply these on future
risk data: standardise and publish regions, with limited options. These ● Update guidelines to incorporate
projects.
national climate data and scenarios, regions face further challnges collaborative contracting and
including hazard maps. associated with access and availability develop alternative risk sharing
to data for decision-making. models.
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Section 2

Introduction to
the report

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Strategic Context for this Report

The recent COVID pandemic, natural bushfires and floods prompted National Cabinet
to expand the role infrastructure plays in supporting economic recovery
The past two years have seen widespread disruption to the Indicative
Australian economy and to its infrastructure sector from
extraneous events:
● The COVID-19 pandemic triggered lockdowns, which drove 2019/2020 bushfire season
led to an estimated $5B in
economic recession, with negative GDP growth of 0.3% and costs, and reduced GDP by
7.0% in the last two quarters of 2020 (FY). an estimated 0.3-0.4 pct

● Australia suffered its most costly natural disaster to date,

the 2019-20 bushfire season, with one estimate of the
damage to be over $100 billion.
● The Queensland floods in 2010-2011 cost the Australian
economy an estimated $30 billion.13
Australian governments responded by initiating major
The Australian economy
infrastructure stimulus and rebuilding efforts: COVID-19 lockdowns begins to recover, assisted by
trigger a sharp reduction the $14B infrastructure
● The infrastructure sector established ‘critical services’ in growth, with stimulus package.
status for construction projects, leading to construction unemployment growing
from 5.2% to 7.5%
activity quarterly growth in the last quarter of 2020.4
● The National Bushfire Recovery Agency was established,
and state agencies established recovery and investment
programs.
Figure 7: Annualised GDP growth per quarter.
● Stimulatory investment was committed to accelerate the Source: Department Treasury Finance, 2021

delivery of roads, water, and other projects.

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Strategic Context for this Report

Unprecedented infrastructure investment is planned for delivery in the next five

years, which is well timed, but nonetheless, has some risks to successful delivery
Australia’s infrastructure pipeline is its largest ever,
with more than approximately $300B+ of projects $60
planned for delivery over the next 10 years. The Forecast
pipeline is due to peak in 2023 with over double the
$50
current construction spend in 2021.

Annualised spend rate

The infrastructure sector has also highlighted the $40

(A$ billions)
extent to which the structure of the pipeline has
changed, with investment in emerging asset classes $30
such as renewable energy, and a ninefold increase
in complex and major projects over $1b in size.
$20
While the timing of this pipeline of spending is
supportive of stimulus and rebuilding efforts, there $10
is evidence that these factors together amount to a
more complex risk environment over the next 0-5
$0
years, and that a systematic approach to risk will be
2017 2018 2019 2020 2021 2022 2023 2024 2025
critical to the effectiveness of economic recovery.

Transport Utilities Building

Figure 8: Projected construction activity in Australia

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Current Policy Settings

A national focus on infrastructure risk has developed in recent years, with

increasing capability within governments to assess risk across sectors and projects
This report builds on the significant work which has already been underway across national and state governments in order to improve the
planning and delivery processes, and to mitigate risks across the infrastructure delivery lifecycle. Ths reports seeks to build on existing work
and provide a broad, national view on infrastructure risk. This work includes, but is not limited to:

Infrastructure Australia 2019 Audit CSIRO National Outlook 2019 Department of Home Affairs Critical
This report identified seven future trends which This report explored the six main challenges Infrastructure Resilience Strategy
pose a risk to the way people will interact with facing Australia over the coming decades, of Developed a number of strategies to protect
infrastructure into the future, which covers areas which some will impact infrastructure usage and Australia’s critical infrastructure, such as hospitals
of environmental sustainability, economic, demand, including climate change, technological and electricity networks, from external threats
population, and labour force changes, quality of change, the ageing population, and social which can manifest through supply chains, data
life and cost of living, and the development of cohesion. security, cyber attacks, and security breaches.
new technologies.

Infrastructure Australia Infrastructure National Recovery and Resilience Agency State Infrastructure Bodies
beyond Covid-19 A national program aimed at bringing together Many state bodies, including Victoria’s Office of
This report identified five key trends brought government and non government entities to help Projects, Major Projects Canberra, NT
about by COVID which are having an impact on in response to natural disasters such as bushfires Infrastructure Commission, Infrastructure
infrastructure use and which include: digitisation and floods, and to assist in the development of Victoria, Infrastructure NSW, Infrastructure SA,
of the workplace, decentralisation in demand for infrastructure in communities affected by these and Infrastructure WA have assisted in
utilities and infrastructure, greater use of local disasters. streamlining infrastructure planning and approval
infrastructure, innovative service delivery in processes, supporting key infrastructure projects,
schools, health and the workplace, and the and assisting teams in both government and
adaptability of infrastructure to meet demand. industry involved in the infrastructure
development process.
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Approach to Risk Assessment

METHODOLOGY

This report examined the current risk environment for infrastructure delivery
across three layers; systemic risks, project risks and sector risks
Infrastructure Risk Layers

Systemic risks Project risks Sector risks

Common risks across the lifecycle, risk Sector and industry specific critical risks
Large scale, network-level risks
appetite and sharing

Climate and hazard risks Planning Transport

Economic and market capacity risks Procurement Water

Community and user risks Construction Social infrastructure

Telecommunications & Digital

‘Risk is the effect of uncertainty on objectives’
Source: ISO31000 standard Waste

Energy

Figure 9: Visual representation of the research approach used in this report. Risk was broken into three categories with interview questions framed within
the risk framework (page 24). 20
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Methodology for Preparing this Report

A program of research and market consultation informs this report

1. Broad Review: Macroscopic Lens 3. Market Sounding and Surveys

A macroscopic review of ‘systemic’ risks to the A consultation to test emerging views within the
Macroscopic Lens
infrastructure pipeline was conducted. infrastructure sector on critical risks, risk
appetite and risk sharing was undertaken.
● A review of 19 Australian risk-related Database Review
datasets was undertaken. ● A market sounding was conducted, with
● Analysis drawing on the Oxford Global senior leaders from 37 organisations in
Projects’ global and Australian project the infrastructure sector being
dataset to benchmark cost and schedule Relevance Testing interviewed.

Expert and Data Validation

overruns. The database includes over ● This was followed by a sector survey

Expert
Matter Expert
11,000 projects valued at US$3 trillion. which collected the views of 40 senior

Market Sounding

Data Driven Risk

infrastructure executives.

Market Sounding
● Risks identified were examined for impact,

Market Sounding
and Survey

Interviews
Interviews
likelihood, direction and manageability. ● Consultation was undertaken withpublic

Subject Matter
Testing
Interviews

Survey
Prioritise list of procuriong and delivery agencies, banks,
risks included in
2. Detailed Review: Microscopic Lens equity investors, Tier 1 and 2
this report
contractors, and insurers to calibrate the

Subject
A detailed analysis of risk-related project identified risks to the current market.
documents to build the evidence base for recent
project risks.
● Review of publications, recent project Risk Register 4. Expert and Data Validation
business cases, ANAO and state Auditor Initial consultation and findings validation were
General reports and project risk registers undertaken throughout the project.
across transport, energy, water, social,
waste and digital projects. Literature Review ● The validation tested informed risks and
● Risks were assessed, with more than 150 initial findings with sector-based, subject
risks compiled in a risk repository under Microscopic Lens matter experts.
the risk framework. ● Over 70 expert interviews were
● A digital mapping tool was developed to conducted with government executives
Figure 10: Visual representation of the methodology used throughout this report.
store the risk repository and to identify its The macroscopic and microscopic components have been highlighted.
and the PWC Infrastructure team across
geospatial dimensions where possible. renewables, transport, energy, water, 21
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Approach to Risk Assessment

The risks included in this report use the below risk rating and trend approach,
based on the detailed risk assessment framework
As risks were identified through reviews of project registers, expert interviews and Risk Matrix
market soundings, we sought to test them against the five criteria aligned to the risk
Almost
framework outlined earlier - Impact, Likelihood, Rating, Trend and Certain
Medium High High Critical Critical
Manageability.
Likely Low Medium High High Critical
For the purpose of the risks and risk themes outlined in this report, we have used a Likelihood
Possible Low Medium Medium High High
simplified risk assessment framework, comprising a risk rating (based on likelihood Low Low Medium Medium High
Unlikely
and impact) and a trend (showing the direction of the risk).
Rare Low Low Low Low Medium
Risk ratings were identified based on risk likelihood and impact definitions that have Insignifi-
Minor Moderate Major Critical
been developed for Infrastructure Australia. Importantly, different organisations have cant
different risk appetites and definitions for what would constitute these ratings (i.e. Impact
Low, Medium or High). We have made an attempt to ‘normalise’ these for the
purposes of a National Risk Assessment framework. For more details on the
definitions, see Appendix section 6.4 Risk Taxonomy.
Risk Key for this Report
Risk rating:
● Low - risks that can be managed through routine procedures
● Medium - risks that require active management and regular monitoring,
without which they could become high or critical Risk rating Critical
Low Medium High
● High - risk that exceed project risk tolerance and requires priority
management
● Critical - risks that require immediate escalation and focussed Reducing Stable Increasing
executive/board/ministerial effort Trend
Risk trends are also identified (decreasing, stable or increasing) to identify
whether the risk will become more prevalent over the course of the next calendar /
OFFICIAL Figure 11: All risks in this report were assessed and assigned a rating against the risk key.22
financial year period.
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Approach to Risk Assessment

The risk assessment approach was developed and used to assess risks and develop
an initial national repository of infrastructure risks that will be developed over time
Figure 12: The risk assessment process used as the framework to
Economic develop this report.
SYSTEMIC
A National Risk Assessment Framework Environmental
has been development based on ISO
Large scale, Risk assessment process
network-level risks Technological
standards and definitions, it was Communication and consultation (with external and internal stakeholders)
developed to apply to the three major
User
risk layers. The framework also drew on
best practice risk management process. Planning &
PROJECT RISKS Governance #1. Reassess #2. Risk #3. Risk #4. Risk #5. Risk
the context identification Analysis Evaluation treatment
In addition to the development of a risk Common risks Procurement
framework, a risk repository was across the lifecycle,
Construction/ Outcomes
created from the review of risk registers risk appetite and
Deliverability
and reports, compiled across sectors to sharing The scope of risk
management
A catalogue of
risks against each
Complete risk
repository with
Complete risk
repository with
Understanding of
whether risks will
provide an indicative list of recent risks activities for the project type in the key risk data key risk be considered and
current period is selected pipeline attributes (excl. treatments and treated by
impacting on infrastructure projects. agreed. is identified. mitigations) connectivity stakeholders
identified. identified. within the
Transport Refreshed ecosystem.
This risk repository will be dynamic and configuration /
calibration of risk
updated over time as projects are Energy
SECTORAL model.

completed, to support ongoing learning

Social infrastructure
on infrastructure risk. The repository Sector, industry
has been used as the input data for part and place specific
critical risks Water
of the visualisation tool developed to Monitoring and review (through engagement with stakeholders on an ongoing basis)
support this report. Telecommunications
& Digital

Waste 23
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Approach to Risk Assessment

A risk visualisation tool was developed to show climate and project risks in the
repository
This first version of the tool provides insight into climate Guide to online risk visualisation tool
risks, and provides access to the project risk repository
using a series of filters.

There is an opportunity to further develop this tool, to Select project

Select particular attributes to filter
inform project planners of locational and project type regions on the for relevant risks
risks, and could be developed with real-time updating map to show and locations.
capability to support network management of disruptive their applicable
events, for example. risks.

In preparing this online tool, various datasets were What climate risks
identified for use, including: are present?
What are the Information about
● Bureau of Meteorology
specific locations a selected
● CSIRO of the climate region/s is
● State planning departments risks? displayed.
● National Bushfire Recovery Agency Select which map
● Geosciences Australia. layers to show
from the drop-
down menus. What specific risks are
The Department of Agriculture, Water and the
relevant to my
Environment, alongside the Australian Climate Service, Risks have been location/s?
have recently commenced work to improve the sharing mapped to the Select a risk to
and compatibility of these data sets. four highlight the applicable
Infrastructure locations on the map.
Importantly, these data sets still show significant Australia ‘places’.
variation between jurisdictions in the way climate risk Applicable risk
information for
and flooding risk, for example is captured, making it
different regions,
difficult to compare. sectors, subsectors,
and asset types are
Improvements to the quality and consistency of climate presented in the table.
data would enable better resilience planning and
management.
Figure 13: Visualisation tool 24
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Current Policy Settings

The review of recent project risk registers, reports and business cases, also took
into account the different risk profiles of projects in different locations in Australia
Developing Regions Small Towns, Rural Smaller Cities and
and Northern Australia Communities and Remote Areas Regional Centres Fast -growing Cities

8 projects 26 projects 49 projects 76 projects

Infrastructure Priority List

specifically are are are

targeted at developing regions and planned, with a focus on road, planned, with a major focus on planned over the coming years,
northern Australia, which are water, and telecom infrastructure. roads and transportation. spanning across all sectors, but with
focused on improving transport and a major focus on public transport,
freight links, water accessibility, and roads, and energy.
energy infrastructure in the regions.

In addition there are also 21 national projects and programs that span across the transport, waste, social infrastructure, energy, and water sectors.

19 risks 13 risks 125 risks

Number of Identified

were identified that are prominent in Small Towns, Rural were identified were identified
Communities and Remote Areas. These risks were also prevalent in which was unique to the Smaller across recent projects in Fast-
Developing Regions and Northern Australia. Cities and Regional Centres. growing Cities.
Risks

These risks included project planning, project management, and stakeholder This region heavily overlapped with These risks spanned across the
risks across the transport sector. Fast-growing Cities in terms of the transport, energy, health, waste,
risks present in infrastructure and water sectors, and covered
development. risks across the lifespan of
infrastructure projects.

* Note: Data as of May 2021 25

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Section 3

Systemic risks for

Australian
infrastructure

26
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Assessment overview

Infrastructure is extensively exposed to systemic risks - large scale and extraneous

events and conditions that impact on multiple types of infrastructure
Systemic Risk: Assessment Overview 0-5 year assessment
Category Description
● A significant contributor to risk levels for infrastructure Rating Trend
delivery is the extent of external and systemic risk. Climate and Natural Increasing extreme weather events and a changing climate Critical
Hazards represent a risk to major network infrastructure.
● This section establishes the major systemic risk
categories (climate, market capacity, social and The global shift to a low carbon future will impact High
technology) and assesses 10 specific risks and their infrastructure design, delivery requirements and the supply
impacts on cost, schedule and benefit outcomes for chain, increasing costs.
infrastructure projects. Economic and Market Labour shortages are identified as a current and significant Critical
Capacity Risks future risk, delaying projects and increasing costs.
● Analysis in this section is drawn from desktop and data
analysis, research of Australian and global databases, The contractor market in Australia has grown, however there Critical
and market interviews and consultation with subject is fragility relating to financial sustainability and
matter experts concentration.
Evidence suggests significant infrastructure pipeline is High
● Importantly, this section highlights that systemic risks impacting cost of materials and will increase as the pipeline
are drivers of multiple project risks, from planning grows.
through to delivery to operation, have cross-sectoral Amidst growing insurance costs are a group of uninsurable Critical
implications, and are influenced by national and risks due to climate, COVID and complexity which
international conditions. governments need to accept.
Community and User COVID is resulting in lasting changes in both living and Medium
● This ‘convergence’ of risks, where a single systemic Risks working patterns as longer term population growth changes
change results in cascading impacts across networks underpin demand.
and projects, would suggest that systemic risks are Social license issues and community fatigue are leading to High
difficult to mitigate effectively at the level of individual additional project costs and delays.
delivery teams. For example, labour shortages,
Technology and Cyber The increasing reliance on technology within infrastructure is Medium
extreme weather events, and reduced insurance resulting in greater cyber security risks.
Risks
access, may involve workarounds at project level, but
nonetheless, will require more extensive consideration
Failure to accommodate for design for new and emerging Medium
by governments. 27
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Climate Risks

Critical weather events and a changing climate are a critical risk to major
Impact
Critical

network infrastructure Trend

The increasing intensity and frequency of adverse weather

events poses an episodic but extreme risk to developing and to
existing infrastructure, including in the near term.

● Australia has seen a 40% increase in bushfire

frequency between 2011 and 2016. The 2019-20
bushfires caused upto $100 billion in damage, including
$5 billion worth of road damage.9

● Rainfall is increasingly volatile, with extreme drought

and flooding in parts of the country.10

From an infrastructure perspective, the focus is on adaptation

and resilience building, with a number of key risks identified:

● Climate change stakeholders highlighted the lack Figure 14: Flood and bushfire risk map
ofstandardised, centralised and transparent data to
support planning

400% $5b $30b

● Climate resilient infrastructure can be built by
incorporating this data in developing structural
adaptations, such as changing the composition of road
surfaces so they do not deform in high temperatures
Insurance premiums have The 2019-2020 bushfire The total cost of Queensland
● Management adaptations can also be made during increased by 400% in some season resulted in $5 billion in floods in 2010-2011 resulted in
operation, such as to maintenance regions following the 2019- direct damages to road over $30 billion in damages.13
2020 bushfire season.11 infrastructure.12 28
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Decarbonisation and Transition

Impact

The shift to Environmental, Social and Governance outcomes will change High

investment and involves transition risks Trend

38% 0.5%
Industry participants, especially investors and financiers, pointed to
evidence of a recent and rapid shift towards Environmental, Social and
Governance (ESG), with investment appetite for sustainable projects
pushing ahead of regulatory requirements. This evidence includes:
38% of CO2 output globally is 0.5% of global GDP will need to be invested
● A number of banks have announced a net zero policy and carbon produced by the construction annually in clean energy transistion, to
budgeting for their lending portfolios, with more expected to follow in industry.16 achieve net zero emissions by 2020.17
coming months
● Recent oil and gas infrastructure deals which have struggled to get
finance.

Nonetheless, participants noted that the pace of energy transition and

implementation of transition strategies involve additional burden and
complexity. Uncertainty over future regulatory and market settings, due in
part to changes in Australia’s climate policy (see Figure 15), ‘cannot be
hedged’ and therefore represent a risk to investment and delivery.

With 70% of Australia’s greenhouse gas emissions associated with

infrastructure projects,14 the shift to ESG will also have implications for
construction, as materials supply chains are decarbonised within the 0-5
year timeframe.

“Total annual energy investment [will need to increase]

to USD 5 trillion by 2030” - International Energy Agency
*estimates based on the global energy sector hitting net zero emissions by 205015 OFFICIAL Figure 15: Number of new and amended changes to climate policy made from 2005-2015. 29
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Labour Shortfalls

Impact
Labour shortages are a significant risk to project delivery schedules and costs Critical

Trend

● Shortages of senior managers and field labour are a critical risk to

the delivery of a fast-tracked infrastructure pipeline, and are likely
to worsen within the 0-5 year timeframe.
● Local risk shortages have been compounded by the COVID-related
33.5% decline in skilled migration in the construction sector,
compounding a shortage of civil engineers and surveyors
nationally.
○ Pre-COVID data indicated shortfalls already existed in critical
skills areas with migrants critical to meeting this gap.18,19
● Industry participants spoke of their experience of getting the “D
Team and E Team”, on high risk projects where “grey hair actually
counts”.
● Skills shortages can lead to poorer risk management practices,
mistakes during cost planning, lower construction productivity and
higher levels of re-work, and can require firms to partner with
unfamiliar or poorly matched teams. Figure 16: Vacant civil engineering positions by state in 2019.
Source: Department of Education, Skills and Employment, 2020

○ One contractor observed a correlation to a higher incidence of

non-conformances, saying that “we’re finding more and more
mistakes” on projects.
‘Labour hours for particular ‘50% of the North-South
blue collar activities have more Motorway (South Australia)
○ A utility observed the growing risk of burnout for senior
managers, and the issues of having risk situations where
than doubled due to the project management team
teams are working above their experience levels, leading to experience levels of the have been poached for
costly mistakes. workers and managers’ competing infrastructure
● With the pandemic still of a critical concern globally, it is estimated projects’
that global travel may not return to pre-COVID levels before 2024, Interview, Subject Matter Expert
one year after the projected peak construction period.20 Interview, Subject Matter Expert
30
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The Australian Contractor Market

The contractor market in Australia is experiencing a ‘profitless boom’, with Impact

Critical

balance sheet risk and low margins posing a structural market risk Trend

● The Australian market comprises a small set of Tier 1 contractors, who Profit margins of tier one contractors
saw sharp declines in profitability from 2018-2019. The implications of
an insolvency scenario for competition are significant.
○ Lendlease sold part of its engineering business following the cost
blow out on WestConnex.21
○ In the UK, the insolvency of Carillion, whose major projects
encountered difficulty and increased debt levels, is a potential
warning about how much risk can actually be transferred to the
private sector.

● The ‘unaffordability’ of risks to contractor balance sheets from the

pipeline of megaprojects was viewed as a recent phenomenon.
○ A simple comparison of the ‘volume of risk’ at stake between a
10% cost risk on a $200m project versus a $2 billion project,
underscore the heightening risk where a contractor may be
Figure 17: Profit margins for tier one contractors John Holland, CIMIC and Lendlease have all
delivering multiple mega projects at once.
seen to rapidly decline in 2019 .
Source:John Holland, CIMIC and Lendlease 2015-2019 annual reports
○ A contractor noted that “the numbers are huge and people can’t
get their heads around it”.
Case Study: WestConnex and Lendlease
● The resulting increase in joint venture bids creates additional risk from
interconnectedness across the market. The high risk of cost blow-out and reducing profit margins, lead to companies
○ This implies a market structure akin to the Australian banking such as Lendlease taking on more financial risk. A cost blow on WestConnex has
sector, whereby major contractors may be “too big to fail”. forced Lendlease to sell part of its engineering business to Acconia for $180
million in 2020.21
● Competitive cost pressure to have the ‘cheapest price’ on the D&C
component of a project bid may contribute to optimism bias and a *Westconnex is a 33 km motorway network which spans across Sydney, while Stage 3 is
situation whereby risks are not well-priced. the development of connections to the M4 and M5 Motorway 31
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Material Costs

Growing demand is leading to cost and availability constraints for materials

Impact
High

and supplies Trend

The cost of materials such as iron and steel is forecast to peak

within the next two to three years, as demand from civil and
residential construction grows. This represents a risk to the timely
delivery and cost of infrastructure projects.22

During market consultations, interviewees implied that current

reported data understated emerging constraints.

● A contractor indicated they are experiencing increases in

the price of cement which has doubled over the past few
years.
● A bank reported that its contractor’s cost of steel had
increased 80-90% between bid submission and award
● A contractor noted that sourcing concrete and quarry
materials was more difficult, increasing the costs of
transportation which comprise an estimated 40% of the
total cost of concrete
● A contractor noted that availability of quarry stone and steel
were uncertain, timber was being redirected to serve strong
building demand in the United States, and shortfalls of
locally produced laminate timber were evident since COVID.

The specifications for materials can also change with new

requirements during tender, allowing a very short period of time to Figure 18: Projected price of iron and steel.
work with the supply chain to arrange changes. This risk is Source:IBIS World, 2021

converging with overall price rises and significant uncertainty in

ground conditions to create the potential for significant 32
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Uninsurable Risks

The COVID pandemic, bushfires, northern cyclones and recent storm events Impact
Critical

are creating ‘uninsurable’ risks Trend

Governments have traditionally tried to push as much risk as possible

onto the private sector [which] has led to a high numbers of claims for
One insurer noted that the past few years had seen “lots of
black swan events” in quick succession. The pandemic, time delays and quality issues.23
floods, bushfires and even cyber attacks involved a single
extreme event generating many losses at once, and Consult Australia
increasing loss factors and interruptions risk for many.

The annual level of insured losses for weather related events

shows exponential growth from the beginning of this century,
to more than $4 billion in 2011.

Further the increasing severity and frequency of natural

disasters in Australia has resulted in exponentially growing
insurance payouts which are being passed through to
insurance premiums for following years.

As these climate risks worsen, becoming more frequent and

causing greater damage to the built environment, insurers
may no longer be willing to insure infrastructure, housing and
buildings in high risk regions, or will only be able to insure
them at affordable rates. This could create insurance “red
zones” across Australia, as has already been occurring in
recent years.24

AECOM rejected projects every week due to the rising

cost of insuring them.23 Figure 19: Department of Infrastructure and Regional Development graph on the increasing levels of
insurance payouts for natural disasters.
AECOM 33
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Source:Department of Infrastructure and Regional Development, 2014
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Enduring COVID Impacts

COVID is resulting in changes in both living and working patterns as longer Impact
Medium

term population growth changes underpinning demand Trend

The impact of the COVID pandemic on infrastructure risk has three

dimensions, and is moderate overall in the 0-5 year timeframe:

● Reduced worker movement and migration. While

migration is expected to return, reduced migration through
COVID has reduced the expert workforce available for certain
projects and reduced the expected size of Australia’s
population by the equivalent of a city the size of Adelaide, as
can be seen in the graph of the government’s population
forecasting.25

● Supply chain requirements. These were most evident early

in the pandemic, however, builders did report a significant
impact on project delivery from state lockdowns, a motorway
project had to open without panels which were unable to be
transported during the pandemic, and contractors reported the
heightened need to diversify supply lines. One contractor noted
that many supplies, even those manufactured in Europe for
example, still transited through China, raising concerns around
supply chain resilience

● Infrastructure demand. COVID may have lasting impacts on

how infrastructure is used, for instance, a mode shift in
transport, changes to municipal infrastructure use, and a
growing reliance on communications infrastructure. As such it
is possible that lasting demand impacts from COVID-19 will
underpin infrastructure use over the next five years and
beyond.26 Figure 20: Population Forecasts
Source:Centre for Population, 2020

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Social License and Community Fatigue

Social license issues and community fatigue are leading to additional project Impact
High

costs and delays Trend

Industry participants engaged as part of the market sounding pointed to major cost and project
delays that resulted from community opposition to infrastructure projects, and community
‘fatigue’ with construction. Case Study: Melbourne Skyrail
Initial apprehension from local communities over the
71% of Australia’s population living in major cities will be impacted by projects in the forward- proposed Melbourne Skyrail, included concerns over noise,
looking infrastructure pipeline.2,27 The result is that many of the country’s most complex property values, pollution, environmental damage, and
engineering projects also experience high levels of community opposition and concern. maintenance expectations of the infrastructure. However,
these issues were addressed in the design and maintenance
The concept of Not-In-My-Backyard (NIMBY) is a major hurdle for projects within urban areas, as of the Skyrail, such as through erecting noise barriers and
locals pushback against the localised impacts of city-shaping projects.
fixing drainage issues around the parks. This has led to
Examples of recent project cancellations highlight the challenge of managing social license issues.
many residents seeing the new overpass as a net benefit to
It is estimated that $20 billion worth of infrastructure has been cancelled over the last decade as the community due to improvements in local traffic and
a result of community opposition.30 greenspace.28,29

This risk can be reduced, however it requires a strong community involvement and coordination
across projects to ensure projects are completed quickly and with minimum disruption to the Case Study: Eastern Creek Energy from Waste
communities impacted. In 2017 a large scale waste-to-energy plant in Western
Sydney faced strong community opposition due to fears of
Early project announcements, overly specific details in announcements and optimism bias in health risks and pollution, which contributed to the project
planning stages are setting unrealistic expectations of project delivery times in some cases, and failing to receive planning approval. Ultimately a lack of
these can fuel community opposition where there are perceived delays. community engagement about the facility and its impacts
on the environment and local region contributed to the
failure of the proposal.30

$20b OFFICIAL
Previous decade - estimated historical impact from community oppositions.30
35
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Technology and Cyber Risks

Impact

The increasing reliance on connected technology within infrastructure is Medium

resulting in greater cyber security risks

Trend

Of cyber incidents
There has been a substantial increase in cyber attacks in recent years, with impacted critical
over 2000 cyber security incidents reported in 2019, and over 1,000 of these
35% infrastructure
providers.31
targeting government and critical infrastructure providers (see Figure 21).31

Globally cyber attacks have resulted in the disruption including the attack on
Johannesburg’s electricity grid, the 2015 disruption to power facilities in
Ukraine and the 2017 Triton attacks on Saudi petrochemical facilities.32

Cyber security risks have the ability to have extreme impacts on Australian
infrastructure. Our growing dependence on technology and the need to Government
embed connected technology into infrastructure means this risk will continue State/Territory
to grow.
Governments
This risk can be reduced by strongly considering cyber security risks at the
planning stage and investing in security measures.
Health

Water

Communications

Case Study: Colonial Pipeline Transport

In May 2021 Colonial Pipeline, one of the largest gas pipelines in the US, fell victim
to a ransomware attack, which led to the pipeline being shut down until a $5m 0 100 200 300 400 500
ransom was paid. This resulted in a state of emergency being announced for 17 Figure 21: Number of reported cyber security incidents in 2019.
states due to potential fuel shortages. 36
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Source:Annual Cyber Security Threat Report, 2020
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Designing for Technological Change

Impact
Medium

Failure to design for new and emerging technologies pose a risk to asset Trend

investments and usage

Technology continues to grow at an accelerated pace Only 8% of construction
companies globally
Whilst it is difficult to predict the technologies which will define categorise themselves as

8%
the future, the continued acceleration of the internet of things technologically adept.33
(IoT), increased consumer control of infrastructure use, shared
assets and rise of automation are all rapidly growing trends which The inability to
will likely define the next 30 years and pose a moderate risk to
infrastructure obsolescence.34
effectively design for
emerging technologies
Given the immense investment made in infrastructure limits the potential
development, it is important to protect infrastructure from benefits of infrastructure
obsolescence. and reduces their
effective lifespans.
As such infrastructure will need to be designed to be more
technologically adept. Poorly integrated infrastructure will be most Without costly
at risk of lower than expected demand, risking a benefit underrun
retrofitting,
and reduced economic viability of infrastructure.
infrastructure which is
Therefore the failure to design for new and emerging technologies not being to adapt to
pose a low risk to the infrastructure over the pipeline, however future technology will be
this risk will grow with time, thus decisions need to be made at at risk of large benefit
the planning stage to future proof infrastructure in a technological underruns.
world.

37
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Section 4

Project risk sharing

and risk appetite

38
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Assessment overview

While some project risks are unchanged, in-ground conditions and contractor risks
are growing, and may lead to lower willingness to share these risks
Project Risks: Assessment Overview Category Risk name Desciption
0-5 year assessment

● There is a long list of common project risks, however,

Rating Trend
current industry views on which risks are critical reflect
recent project experience and confidence in the Optimism bias Optimism bias in cost estimation is creating
Planning &
deliverability of the forward pipeline. Generally, the Governance budgetary constraints and delivery risk as cost Critical
principle on who is best placed to bear a risk reflects pressures mount in delivery.
consideration of who has greater control over the risk or its
mitigation. Planning approvals Cumbersome and fragmented planning approval
processes are slowing down projects and adding High
costs
● This section identifies eight project risks across the early
stages of the infrastructure lifecycle that are currently ‘top Procurement Insurance The capacity in the insurance market has
significantly dropped with increased premiums High
of mind’ for sector participants, and captures stakeholder
views on changing risk appetite and approaches to risk and reduced coverage.
sharing. It also draws on evidence of major factors behind Project scale and As projects get larger the increased complexity
schedule and cost overruns on Australian projects, namely complexity results in more frequent and proportionally larger High
optimism bias and approval process delays. cost overruns.

Construction & Utilities relocations Utilities relocation risk will continue to be a key
● Importantly, a major finding is the prevalence of critical Critical
Delivery issue in the delivery of the infrastructure pipeline
risks during construction phase on urban projects, such as with potentially significant consequences
geotechnical risks, in-ground conditions, and utilities risks,
as well as integration and interface risks that increase the Technology integration Integration risks is increasing due to new
infrastructure projects and technologies requiring Critical
complexity of projects, and result in greater cost overruns
and delays. These would appear to be amplified by recent integration into existing systems
major projects and the forward pipeline. Ground conditions Unpredictable ground conditions can lead to
significant impacts during project delivery and High
● Section 3 was developed using market soundings and
interviews with over 70 subject matter experts, and a Interface Interface risk is becoming more pronounced with
survey of senior executives within the infrastructure sector, the increasing size, scale and complexity of the Critical
both covering large and small contractors, insurers, infrastructure pipeline 39
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Market Sounding

Market sounding interviews indicated confidence across the sector in the

Australian market, but highlighted emerging capacity constraints
Market sounding interviews were conducted with 40 organisations, with a summary of each segment captured below

Banks and Lenders (Debt) Funds (Equity)

• Capital deployment: Investors are taking ESG considerations more
• Liquidity is Strong: Whilst the infrastructure market is heavily banked,
seriously within their portfolios, this sector is growing quickly. However,
respondents highlighted there was plenty of capital available, with 20-
capability to assess and manage risk in new asset classes is still developing
25 banks participating in the provision of funding.
and market and policy frameworks are still uncertain. ESG opportunities are
• Contractor risks: Contractor risk remains the biggest risk factor when undervalued.
providing debt to infrastructure. The growing size of projects means few
• Need to refocus on public value over lowest price: When prices are
Tier 1 contractors are capable of bidding, however competition means
pushed too hard to win contracts, there is a higher risk of claims, and less
profit margins are reducing despite contractors taking on more risk.
sustainable behaviours that involve ‘playing the contract’.
• Sovereign risk: Despite project cancellations and policy changes,
lenders agree sovereign risk is not a deterrent from investing in
Australian infrastructure.
What is the • Case for rebalancing risk allocation: The heavily leveraged
infrastructure market in Australia has made capital deployment difficult due

• Strong ESG Focus: Clients demand visibility around how current risk to the limited voice that equity may have in the investment. There is a case
to rebalance debt/equity ratios due to the size of infrastructure projects and
Environmental, Social and Governance (ESG) policies are applied into
their investments. This has seen reduced liquidity in industries such as profile in the growing risks contractors are taking on with lower profit margins.

coal.
Australia and Insurers
Contractors how is it • Tightening Market Capacity: Concurrency across projects, a large number
of claims, and a reduction in global provider capacity, with syndicates pulling
• Market capacity: The increased size and scale of projects, have limited changing? out and less profitable portions being culled, has put pressure on pricing and
policy coverage. Coverage capacity is dropping potenitally by 50% and
the number of participants who can compete on a project, yet contractors
premiums are increasing significantly over the past 2 years.
are experiencing a ‘profitless boom’. Increased risk is driving joint
ventures. Critical market exposure would occur in the event of a single • Contractual Frameworks: Insurers are encountering contractual
contractor failure. arrangements that introduce additional insurance requirements and costs, eg
provisions for Delays in Start Up (DSU), Product Specific Professional
• Resourcing constraints: There is a limited capacity for Tier 1
Indemnity and Warranty or Guarantee protection.
contractors to bring their ‘A team’ to each project due to the volume of
projects concurrently running in Australia. This poses a threat to the • “Lots of black swan events” in the past 2 years: Significant interruptions
quality of such projects. from COVID, and catastrophic weather events have driven a large number of
claims, with high loss factors. This has driven scrutiny of cost/price adequacy.
• More sophisticated risk sharing is needed: The volume of
megaprojects in the pipeline requires a more sophisticated approach to • Cyber risks are growing: There was a significant increase in 12 months of
risk sharing, as commissioning, interface, resourcing and completions risk claims, across the project lifecycle, with large market losses. 40
become more pronounced OFFICIAL
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Market Sounding

While critical risks tend to be less well understood during planning, many
construction and delivery risks are best mitigated during the planning phase
According to those surveyed, the current ‘top five’ critical
risks in the infrastructure sector are:
● Contractor capacity
● Labour shortage across blue collar, white collar
and managerial positions
● Utilities and ground condition risks
● Availability and cost of insurance
● Contamination risk, utilities and ground
conditions.
Figure 22 shows that survey participants viewed critical
risks as least understood during planning and
development, and best understood during delivery.
8% of respondents considered that critical risks were
unable to be properly understood during planning stage.

Nonetheless, contractors observed in consultation that

‘unknown elements’ such as in ground conditions must
largely be mitigated during planning phase.
Figure 22: The extent to which market participants believe critical risks are understood across the project life
cycle.
Source: Infrastructure Australia 2021 Market Sounding Survey For example, a bid on Sydney Light Rail that had priced for
hundreds of potential utility connections would have been
seen as unlikely to be competitive.
41
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Construction Complexity and Size

Impact

Mega-projects tend to involve greater project complexity, resulting in more High

frequent and proportionally bigger cost overruns

Trend

The number of large projects (over $350m and over $1b) has risen in recent
years, increasing ninefold over the decade.

Oxford analysis of projects across energy, road, and digital/IT projects has found
that globally, larger projects (valued at $350m or more) are more likely to face
cost overruns, and proportionally larger cost overruns, than smaller projects. Their
analysis of Australian projects is statistically comparable.

Globally, large energy projects had twice as large cost overruns on average
compared to smaller projects. This trend continued when looking at projects of
$1b or more as compared to projects of between $350m and $1b. This
relationship also held for IT projects.

However, on average large road projects were not more prone to overrun than
smaller ones, with both having an average 30% cost overrun. This partially
conflicts with some industry preconceptions which suggest that as the size of
Australian road and rail projects increased so too did the likelihood and size of cost
overruns. It is important to note that the Oxford dataset while large does not
include very recent transport projects from Australia.

Large projects tend to have bigger cost overruns towards the extremes of the
distribution. This finding is corroborated by Grattan research which found that
over one third of transport cost overruns since 2001 were driven by just seven Figure 23: As projects get larger, the proportion of the cost overrun also increases.
megaprojects, which overestimated benefits and underestimated costs due to Source: Grattan Institute, 2020

optimism bias and project complexity.

The primary exception to this trend are social infrastructure projects, such as
hospitals and prisons, where projects’ stakeholder, design, and policy risks can be
42
complex regardless of size. OFFICIAL
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Optimism Bias

Impact

Major cost overruns are attributable to shortcuts in planning and optimism bias Critical

Trend

While planning and pipeline visibility has improved since the

establishment of infrastructure bodies and publication of
infrastructure plans, research continues to find optimism bias in
project costs, schedules, and benefit forecasts at all project
stages.35

Optimism bias can manifest during the planning and business case
phase, or during project procurement, e.g. with risk ultimately
borne by government. This can lead to:
● over-estimation of net benefit results in cost-benefit analysis;
● the actual costs of delivering a project exceeding the forecast
expected costs, leading to budgetary stress;
● an erosion of the public’s confidence in infrastructure
planning, assessment and delivery processes;36
● insurance or compensation claims or claims for further funding
from government.

Globally, according to analysis by Oxford Global Projects, optimism

bias uplifts in Transport projects range from 60-80% of the cost of
all road and rail projects, with cost or schedule overrun and benefits Figure 24: Based on an analysis of 144 urban rail projects and 977 motorway projects, statistical analysis of the difference
between the final business case and actual cost of the project is used to deduce the potential cost uplift required at various
shortfalls against the base case. Oxford Global Projects indicated certainty estimates on the future infrastructure pipeline for motorways and urban rail. NB - these projects are global but are
that Australian projects were statistically similar to global findings, statistically similar to Australian projects and therefore the curves are the same.
Source: Oxford Global Projects, 2021
with similar cost curves.

This research advocates for:

● Improved pre-tender Project Development and Due Diligence
(PDDD) can reduce the level of uncertainty in design
development (e.g. ground conditions)
● Techniques such as ‘reference class forecasting’ to remove
43
optimism bias and develop more accurate forecasts. OFFICIAL
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Project Approvals Across Governments

Approval processes for major infrastructure projects are cumbersome, Impact

High

fragmented and involve multiple layers of approvals across government Trend

Public and private market participant views on who is best

Contractors and investors viewed planning and environmental approval placed to take on planning approval risks
processes as an unpredictable risk to project timelines and a driver of delay.
The need to coordinate across multiple layers of government to obtain Government
Respondents
Private
Respondents
approvals, and the requirement to meet increasingly onerous conditions
attached to many approvals, (e.g. in relation environmental approvals)
prompted concern over delivery times.

The sector survey brought to light differences between government and

private sector participants around who should take on risks around planning
approvals. Of private sector respondents, three-quarters felt this was a
government responsibility, compared with 43% of government respondents.

While slow planning and approvals is not a new issue, the scale of the
upcoming infrastructure pipeline will magnify its impacts nationally.

Planning and environmental approvals are typically shared by state and

private sector parties. Key approvals are typically obtained by the state, with
minor and technical approvals allocated to the contractor. Issues arise where:
Figure 25: The figure shows who government and contractor respondents think is responsible for
planning approvals.
● Key decisions around design requirements are not made early in the Source: Infrastructure Australia 2021 Market Sounding Survey

process and mandatory approval requirements are unable to be clearly

defined and articulated. This creates a risk that the final design is likely Risk sharing - market sounding insights:
There is significant divergence between government and contractor respondents on
to have elements requiring rework after contract reward, leading to
who should carry planning and environmental approval risk, with 75% of private
potentially significant time and cost overruns. indicating that government should solely carry planning risk compared with only 43%
of government respondents. 57% of government respondents thought this should be a
● During delivery some smaller approvals require the contactor to consult shared risk, compared with 25% of private. This risk is becoming more prevalent as
or obtain consents from numerous stakeholders, where it can be argued the pipeline grows, requiring an approach that is supported by both parties and
that the State can more easily manage. reduced the risk over delays and costly compensation claims.

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Utilities and Relocation Risk in Urban Environments

Utilities relocation risk will continue to be an issue in the forward pipeline, with Impact
Critical

potentially significant consequences Trend

Utilities relocation risk represent a significant risk in the delivery of major projects, in
Public and private market participant views on who is best
particular given the number of brownfield projects in developed areas with multiple and placed to take on utilities risks
varying utility infrastructure that is often not well mapped or able to be easily identified.
Government Private
Accordingly, it is often difficult to price accurately. Respondents Respondents

This risk is challenging for any project party. Market soundings indicate that traditionally
government clients have sought to transfer this risk to the private sector. However the
ability for any party to effectively manage this risk is limited by the absence of any
meaningful commercial incentives or bargaining power that can be leveraged in
negotiations with utility companies.

Private sector participants have limited means to manage utility company demands and
can often be forced to absorb the pricing and program implications of any demands.
However, given the likely magnitude of time and cost delays in the context of the current
infrastructure pipeline, we are likely to see a trend where the market will either not accept
this risk, or engage in disputes with the client in order to recover significant losses.

The well publicised dispute between the contractor and the state government on the
Sydney CBD Light Rail demonstrates the significant cost and schedule impacts of Figure 26: The figure shows who government and contractor respondents think
managing such risks. The resulting cost overrun was in the order of $1 billion, or around is responsible for utilities.
50% of total project value. In addition, service commencement was delayed, for which the Source: Infrastructure Australia 2021 Market Sounding Survey

contractor brought claims against the government.

Risk sharing - market sounding spotlight:
Significant divergence exist in who should bear utiliti risk. 75% of private sector
However, some headway is being made to mitigate risks associated with utilities believe it should be a shared risk compared with 61% of government and 13% of
relocations. For example, early works packages have proven effective in mitigating this government respondents believing the Private e should solely take on this risk. A
risk. In particular, those early works packages procured under collaborative contracting similar % on both sides believed government should take the lead for this risk.
models may be a useful mechanism for minimising the risks associated with utilities
relocation. Given the size and potential impact of this risk, steps will need to be taken in the
future to seek to improve the level of understanding of utilities risk as well as a
OFFICIAL mature approach to sharing the risk.
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Integration Risks

Integration risk increases as new assets and technology merge with legacy Impact
Critical
systems Trend
Systems integration risk is the risk associated with commissioning and Public and private market participant views on who is best
integrating a completed major project into the broader network or placed to take on integration risks
existing asset base. Government Private
Respondents Respondents

This risk will become more prevalent given the scale and concurrency
of the infrastructure pipeline, with significant brownfield projects
meaning new infrastructure and technology are required to integrate
into existing systems.

● On brownfield rail projects, integration risk is heightened by the

introduction of high capacity train control systems, new rail stock,
ticketing, and faster and additional rail services, for example.
● With renewable energy projects and small-scale generation,
connection to the grid and integration that can unlock the
benefits of distributed generation, will be needed.
The integration component of the project can often be overshadowed
by the construction component, which is usually the largest portion of Figure 27: The figure shows who government and contractor respondents think is responsible for integration.
the project’s cost. However, the more complicated piece can often be Source: Infrastructure Australia 2021 Market Sounding Survey

around systems integration, requiring early value engineering and a

strong holistic delivery focus by the client. Market sounding spotlight:
Significant divergence exist in who should bear integration risk. 88% of private respondents
Importantly, 22% of government respondents believed integration was believe it should be a shared risk compared with 61% of government respondents. 20% of
the role of private sector partners, while 88% of private sector government respondents believed contractors should be solely responsible for this risk
respondents felt the risks needed to be shared between parties.

Pipeline planning also has a role to play in mitigating integration risk. Case Study: Redcliffe Peninsula railway line
Where multiple projects are being delivered on related parts of a The Redcliffe Peninsula railway line was delayed for six months due to signalling system faults
network, the sequencing of their design, specification, procurement at Petrie where the new line joined the existing rail system. The project was delivered by the
and delivery is important. Department of Transport and Main Roads without the end user Queensland Rail (QR) being
directly involved in the design and construction phase of the project. 46
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Source: Cross river rail review
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Unpredictable Ground Conditions

Unpredictable ground conditions is a common risk which can lead to Impact

High

significant impacts during project delivery Trend

Information from the market sounding and SMEs identified unpredictable ground Public and private market participant views on who is best
conditions as a common challenge for all major projects, and in particular transport placed to take on latent condition risks
projects - especially those that involve tunnelling.
Government Private
Respondents Respondents
The risk arises because:
● It is often not possible to fully understand ground conditions ahead of the
commencement of construction;
● Environmental challenges associated with groundwater and contamination,
particularly in developed areas;
● The need to resolve issues relatively early in the construction phase (such that
where unexpected issues arise they have a knock on effect across the project).

The extent to which unknown ground conditions are an issue is dependent on the
specific geology of a region. For example, Melbourne’s geology makes this issue
particularly acute because its ground conditions are inconsistent. In these
circumstances even the most comprehensive pre-construction sampling has the
potential to miss features that could cause issues during delivery.

An issue for private sector tenderers is that they can be provided with extensive
Figure 28: The figure shows who government and contractor respondents think
documentation during the tender phase which includes geotechnical reports and
is responsible for latent conditions.
investigations on a ‘no-reliance’ basis. In these cases, firms would argue they Source: Infrastructure Australia 2021 Market Sounding Survey

should be entitled to rely on information provided to them during tender phase -

and accordingly be provided with time and cost relief in the event the ground
conditions turn out to be different than what the relevant reports concluded.
Market sounding spotlight:
There is broad agreement between government and private sector executives in
During consultations, some industry participants indicated they would be less relation to ground (latent) conditions being shared (44% to 38% respectively), with
willing to accept ground conditions risks moving forward. This means that effective 8% of government executives believing the private sector should bear this risk.
management and collaboration between government clients and the private sector
will be critical to effectively mitigate unknown ground conditions.
47
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Interface Risks

Interface risk is becoming more pronounced with the increasing size, scale Impact
High

and complexity of the infrastructure pipeline Trend

Interface risk arises where multiple projects (or packages of a single project) Public and private market participant views on who is best
interact with one another or existing operations and maintenance during the placed to take on interface risks
design and construction phase. This risk is becoming more prevalent due to the Government Private
volume and concurrency of major projects within close proximity or a Respondents Respondents

brownfield location resulting in more complex interactions across projects and

project stakeholders.

Some examples of key interface risks include traffic switching, design

inconsistency, community messaging and temporary road connections. The risk
manifests when stakeholders cannot reach agreement, or cannot effectively
coordinate, resulting in project delays, cost overruns, legal disputes, and
potential reputational harm.

Overly aggressive programs significantly amplify interface risk. Where there

are issues on one project or package, the change of a consequential impact on
interfacing works is minimised if there is time to remediate problems without
altering the program for other works.

Packaging should deliver the simplest interfaces possible. Overly complex

interfaces increase risk. Packages should be defined to ensure that interfaces Figure 29: The figure shows who government and contractor respondents think
are at points with the minimum technical and engineering complexity. is responsible for interface risks.
Source: Infrastructure Australia 2021 Market Sounding Survey

Market sounding spotlight:

Case Study: Sydney Metro (stage 2) is a $15.5 billion rail line connecting the Public and private sector respondents differed on who is best placed to bear interface risk,
metropolitan rail network in Chatswood, through the CBD to the Southwest in with a quarter of each indicating the other party was better placed. Nonetheless, the
Bankstown. The project was originally intended to be procured as a single PPP. majority of respondents agreed that interface risk should be shared.
However, in response to market feedback about the overall scale of the project and the
difficulties associated with managing interfaces between different elements of the
project, a decision was taken to disaggregate the packaging.
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Insurance Premiums and Coverage

Capacity constraints in the insurance market have increased premiums and Impact
High

reduced coverage Trend

Changes to the availability and cost of insurance are having a significant impact
on the delivery of infrastructure projects. This reflects global changes to the
structure of the insurance market, as well as domestic factors such as the size
and complexity of the infrastructure program, and growth in the number of
claims for delay and other types of risk.

Industry participants informally estimated a 50% reduction in the capacity of

insurance for the construction market as the costs continue to rise.
Climate Cyber Risk Contractor Contractor
Risk Capacity Claims
The impact is most pronounced with professional indemnity where there is
challenge in understanding contractor requirements, with firms indicating the
availability of professional indemnity insurance had dropped from $150-$200
million to around $50-$60 million, and that this could influence participation in
bids. Material reduction in the
Insurers confirmed there had been a wider shift towards more defined policies,
and more niche insurance products in emerging areas such as cyber coverage.
capacity for insuring
construction 3x
Particular points of impact were observed: Cost increases in insurance
By 50% according to a leading over the last 2 years - Leading
● Contracting model impacts - traditional risk transfer procurement models
(e.g. design and construct) have a higher exposure compared with an
insurer insurer
alliance model which shares the risk across parties;
● Asset type - a single site (e.g. a hospital) has more exposed risk in a single
location as compared to a rail line where the risk is spread across the line.

●
Renewable energy assets also have higher claims relative to other asset
types particularly on solar panels;
Social change - insurance for items like thermal coal is almost impossible.
$200 on $5b
● The insurance risk can be managed, but ultimately it results in transfer back Maximum insurance on tunnelling
to government. projects for collapse - Tier one 49
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Section 5

Critical risks by
infrastructure
sector

50
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Transport Energy Water Social Waste Telecom

municati
Assessment overview ons

Project risks vary by sector and asset type

Sectoral Risks: Assessment Overview Dispute resolution board - insights

● This section provides a summary assessment of Delay in planning

Road user frustration
sector specific infrastructure risks, and assesses Indigenous/European approvals
Traffic detours, reduced
potential forward looking risks in the 0-5 year heritage site Allocating planning approvals
speeds and longer commute
timeframe. Each sector is structured in three parts: Inadequate heritage to contractor, who may not be
times creating risk of fatigue
investigations leading to sufficiently informed or
1. Recent major project completions and risk to future project
delays and cost overruns equipped to resolve, leading
2. Recent risk performance, including Oxford being supported and approved
to delays and cost overruns
Global Projects analysis on the sector
3. Future projects pipeline and likely risk
considerations
Community impacts
Ground conditions
● Assessments were informed by a review of project Road construction impacting Wet weather provisions
Failure to assess ground
registers, business cases, ANAO and Auditor General communities through noise, Insufficient provisions within
conditions and plan for
reports, the Dispute Resolution Board Foundation, dust and visual impacts contracts around wet weather
utilities movements, leading
Infrastructure Australia, and industry publications. leading to increase costs and days leading to project delays
to delays and cost overruns
project delays
● In addition, analysis was commissioned from Oxford
Business School, to benchmark Australian projects
against global peers in relation to risk (cost and
schedule) outcomes. Handover issues
Mis-match in expectations Hydro approval conditions Reference design change
● In total, 234 historical projects which were completed between the Principal and the Departure of the final Late understanding of
in the last five years have been considered to validate conditions of approval from inadequacy of the reference
Contractor as to how the
risk identification and assessments, as well as market the estimated conditions, led design, exposed contractor to
handover requirements would to significant cost increase risk
sounding interviews with executives from
government, private, debt and equity providers and be administered.
insurance companies.
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Transport Energy Water Social Infra Waste Teleco

mmuni
Assessment overview cations

0-5 year assessment 0-5 year

TRANSPORT PROJECT RISKS assessment
Sector SOCIAL INFRASTRUCTURE PROJECT RISKS
Rating Trend
Rating Trend

There are 215 major transport projects in the pipeline, representing 58% of pipeline projects in Australia.
Over the next 5 years, the Australian market will also be delivering an unprecedented program of rail In the next five years, social infrastructure comprises 15% of the project pipeline, with 25 hospital
development, including Inland Rail, Cross River Rail, METRONET, Suburban Rail Loop, NE Link, Melbourne projects under planning, or $17 billion of investment, and new justice, entertainment, social
Metro, Gold Coast Light Rail S3,and Sydney Metro.2 Critical risks for this sector include: housing, and education infrastructure. Critical risks for this sector include:

Increasing prevalence of social license issues as network disruption Business cases for social infrastructure are
from multiple concurrent projects heightens impacts in urban areas. High frequently without adequate Operations and
Critical
Maintenance funding resulting in significant un-scoped
financial burden for governments.

Greater attention required to cost and scope environmental and

land contamination, which may result in costs and delays. Business case guidelines favour economic
High High
infrastructure projects compared to social projects.
Social
Demand shifts and population growth may result in
Increasing prevalence of tunnelling in projects will require greater
school infrastructure becoming redundant well within the Medium
specialist capability nationally, to manage increasing risks on ground Critical
asset life.
movements as well as geotechnical issues.

Over-reliance on health professionals rather than

Land acquisition challenges will result in increased project costs due care models is resulting in infrastructure not meeting High
to underestimated compensation costs to landowners, and/or late Critical needs.
changes affecting project scope and design
Transport and social infrastructure projects
Project based rather than network approach, resulting in re-work and
benefits underachievement. High
comprise 73% of the pipeline, with ground
conditions and urban environments driving
complexity... 52
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Transport Energy Water Social Infra Waste Teleco

mmuni
Assessment overview cations

Water and energy sector transition is driven by climate change, where uncertainty is impacting on long term
investment and deliverability
0-5 year
0-5 year assessment
assessment
ENERGY PROJECT RISKS WATER PROJECT RISKS
Rating Trend Rating Trend

The Clean Energy Council notes there are 98 projects in construction or due to commence soon,
representing 10,395 MW and $19B in investment, including Yandin Wind Farm, Sunraysia Solar The next five years will see significant water infrastructure development with 15 major projects
Farm, Sun Cable, Snowy Hydro and the Vic Big Battery Project.3 Looking ahead, the critical risks including dam and water treatment infrastructure. Upcoming projects include Warragamba Dam
for these projects include: Raising, South Creek, Prospect to Macarthur Link. Critical risks for this sector include:

Complex projects like hydroelectric dams are at risk of cost

overrun. High Complex governance issues with dispersed authority creates
High
decision uncertainty for delivering the infrastructure pipeline.

Underlying connection and transmission infrastructure to

support renewable energy is underdeveloped, creating potential Critical Inability to access skilled migrants increases competition for
for low grid resilience and ‘orphan infrastructure’ unable to connect
talent, with cost of labour expected to rise while the quality of High
into the network.
labour reducing.

Lack of policy coordination is disbursing investment focus,

leading to lower investment effectiveness and less efficient Critical Lack of national policy framework creates uncertainty for Critical
investment parameters. investment.

Consumer preference is changing type of energy demanded,

with consumers preferring energy produced through renewables. Medium

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Transport Energy Water Social Infra Waste Teleco

mmuni
Assessment overview cations

In waste and digital infrastructure, ambitious national policy objectives create a situation where
inadequate planning and market incentives are critical risks
0-5 year 0-5 year
assessment TELECOMMUNICATIONS AND DIGITAL assessment
WASTE PROJECT RISKS PROJECT RISKS
Rating Trend
Rating Trend

NBN Co made a recent commitment to deliver the next ‘targeted’ phase of investment and
There is a pipeline of around $2 billion in waste infrastructure in Australia, and significant network improvement by 2023. A program of $4.5 billion will deliver improved wholesale
growth is likely as the market adjusts to the waste export ban. Projects are planned and speeds for 75 % of homes and businesses in the fixed-line footprint, invest in initiatives with
under development, including Swanbank, Australian Paper Energy from Waste Facility, and retail internet providers, and support state and territory partnerships in regional and remote
Parkes Recovery and Energy from Waste Facility. Critical risks for this sector include: Australia. This will occur alongside state government ‘Gigabit program’ initiatives and private
sector investment in 5G and mobile connectivity. Critical risks for this sector include:

Inadequate infrastructure development coordination for all

stages of the waste cycle, from collection to aggregation to Critical
treatment, will cause cost overruns and benefits underruns. Underinvestment in network improvements. High

Ineffective community engagement continues to lead to social Lack of market incentives for regional and remote access.
Critical High
license problems causing project delays and increased costs.

Security and scale of supply of feed stocks for waste to energy Declining returns on private investment and ‘free rider’ issues for
Medium Medium
projects. 5G investment

Low levels of market and regulatory readiness. High Poor understanding of existing utility infrastructure, leading
Critical
to scope growth and cost overruns.

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Section 5.2

Transport risks
Transport Social Energy Water Waste Telecommunications

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TRANSPORT SECTOR - RECENT COMPLETIONS

Recently completed projects highlighted the importance of early planning for

ground conditions, and the emergence of collaborative contracting
The Australian market has successfully delivered a growing Recent completions
number of major transport projects in recent years, with
Australian transport projects out-performing comparator Megaprojects
Legacy Way Tunnel Project
projects overseas on cost and schedule outcomes.
●

● Toowoomba Second Range

LIST NOT EXHAUSTIVE Crossing Project

0
Gold Coast LRT - Stage 1 (Gold
Nonetheless, recent project completions and procurement ●

Coast University Hospital -

processes such as WestConnex Stage 2, NorthConnex Twin Broadbeach)
Tunnel and West Gate Tunnel, highlight the ever-present ● Brisbane Airport Expansion Project

7
- Parallel Runway
concern of ground conditions. ● Gateway Upgrade North Road
Project

3
Gateway Motorway North Upgrade
Industry participants consulted for this report argued ●

● Redcliffe Peninsula Line Project

strongly that while they are well placed to manage these

1
risks when found, the ground conditions over long corridors Megaprojects
are ‘unknowable’ and ‘unpriceable’ before construction. ● Sydney Metro North West Rail Link
Pacific Highway Upgrade Project

10
●

● WestConnex Motorway Project

Analysis identified the following 5 critical risks: ● WestConnex Motorway Project -
1. A shortage in the specialised workforce within the Stage 2
WestConnex Motorway Project
transport industry, could delay projects resulting in
●

● NorthConnex Twin Tunnel

schedule and cost impacts. ● Sydney CBD and South East Light

4
2. Land acquisition challenges can lead to sub-optimal Megaprojects
Rail Project (Circular Quay -
Randwick)
design, extended project schedules, and higher costs. ● Port Hedland Expansion
● Hunter Expressway
Gateway WA - Perth Airport and
3. Inadequate scoping of utilities can lead to utility
●
● South West Rail Link Project
Freight Access Project
Pacific Highway Upgrade Project
disruptions, schedule and cost overruns, and design
●
● NorthLink WA

changes.
4. Unexpected geotechnical conditions can impact project Megaprojects
Webb Dock Redevelopment
milestones and increase project costs and schedules.
●

● Caulfield - Dandenong Level

5. Ongoing COVID-19 recovery could limit construction Crossing Removal Project
West Gate Tunnel
work and delay projects. 56
●

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TRANSPORT SECTOR - OXFORD GLOBAL PROJECTS ANALYSIS

Complex transport projects have steeper cost uplifts, but small road projects can
overrun by more than large road projects
Small vs large road projects (global dataset) Asset type comparison (global dataset)
● On average large road projects were not more prone to cost overrun ● Globally, 75% of road projects were delivered over budget, with motorways
than smaller ones, with both having an average 30% cost overrun. and non-motorways being relatively similar in expected cost overruns. The
● However projects under $350m displayed a tendency to have larger worst performing 5% of road projects had disproportionately large cost
cost overruns, with the median cost overrun of smaller projects being blowouts.
50% greater than the median cost overrun of large projects (21% vs ● Urban and high speed rail had the greatest tendency to go over budget, with
14%). 80% of all project costing more than expected, while half of projects costed at
● Large projects tended to have greater cost overruns towards the least 30% more than budgeted.
extremes of the distribution. ● Conventional rail had the least cost variance, with half of the projects having
a cost overrun of 10% or less (one quarter of projects also came out under
budget), while fixed linked projects which went over budget tended to do so
to a greater degree than conventional rail projects.

Figure 31: Cost uplift required for transport projects by asset type. Global dataset, including
Figure 30: Cost overruns for transport projects above and below $350m. Global dataset, 57
including Australian data and statistically similar to Australia OFFICIAL Australian data and statistically similar to Australia
Source: Oxford Global Projects, 2021
Source: Oxford Global Projects, 2021
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TRANSPORT SECTOR - OXFORD GLOBAL PROJECTS ANALYSIS

Schedule overruns vary by transport asset type

Small vs large projects (global dataset) Asset type comparison (global dataset)
Transport projects with an initial budget of less than $350m had Globally, fixed link rail projects had less severe schedule overruns than other rail
statistically more significant schedule overruns than larger projects, with projects, with 25% of fixed line rail projects exceeding a 35% schedule overrun (vs
the median small project having a 50% schedule overrun compared to 40% of non fixed link rail projects having a similar overrun).
larger projects being roughly on time.
Half of fixed link rail projects were within a 5% overrun of the scheduled delivery
Smaller projects tended to have a much larger range of schedule outcomes, time, while only 35% of other other rail projects delivered on time or earlier.
both under and over schedule, with 25% of smaller projects taking over
twice as long to complete than initially planned. On average road projects were completed on time relative the schedule estimates in
their final business cases, with roughly half being finished earlier than expected while
the other half finished later than expected. For projects which did exceed the
expected timeline, half of those went over it by less than 10%, and three quarters of
them went over by less than 20%

Figure 33: Schedule uplift required for transport projects by asset type. Global dataset, including
Figure 32: Schedule overruns for transport projects above and below $350m. 58
Global dataset, including Australian data and statistically similar to Australia OFFICIAL
Australian data and statistically similar to Australia
Source: Oxford Global Projects, 2021 Source: Oxford Global Projects, 2021
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TRANSPORT SECTOR - FUTURE PIPELINE OVERVIEW

The forward looking pipeline of transport projects will potentially be exposed to

recent technical, in-ground risks, as well as integration and interface issues
Future pipeline

Future projects by asset type

The forward pipeline for transport is significant and comprises the
majority of projects in the national infrastructure pipeline.

There has been a major increase in the number of megaprojects in

the future pipeline, including metro development, transcontinental
freight corridor development, and major rail and road upgrades.2

The large program of major urban projects suggests that

contamination, in-ground and utilities risks, community opposition
and interface risks, are likely to be amplified in the next 5 years,
with more complex tunnelling projects and connections to existing
networks in planning.

While the COVID-19 pandemic continues in 2021, it is unlikely to

be a major risk factor in future. Further detail on Transport related
risks are detailed later in this section.

58% of the future pipeline is Transport Figure 34: Projected $ proportions of future transport project by asset type, next 5 years.
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TRANSPORT SECTOR - CRITICAL RISK CONSIDERATIONS

The next tranche of transport projects will continue to be exposed to risks associated
with urban disruption, land contamination and tunnelling risks
Business and community disruption Contamination and cost to remediate Tunnelling and ground movement risks
● Social licence issues arise where ● Contaminated land can have a high ● There will be a 25% increase in the number of
urban project delivery conflicts with impact on planning delays, with OHS and Impact tunnels in Australia’s major cities over the next 5
existing economic and social uses. Over Impact additional approval processes required High years.2 Impact
the past 10 years, community opposition High affecting the budget and timeline of the ● An emerging risk in Australia associated with Critical
resulted in $20 billion in infrastructure project. Trend
tunnelling relates to ground movements both
delays and cancellations.30 Trend ● Uncertainty around the level and volume during and after construction. Trend
● The recent Sydney Light Rail project of contamination risk in urban areas is ● Limitations in geological surveys to accurately
led to $31 million of compensation to an extreme risk to new infrastructure determine the exact geological conditions under
small businesses due to light rail projects, specifically asbestos, PFAS and the ground is a large challenge to tunnelling. The
construction delays, and significant alkaline soils. Uncertainty around the uncertainty of ground conditions leads to project
community opposition to the corridor quantity of contaminated materials delays as engineers revise technical plans. A major
development.42 manifests in time delays and the costly aspect of the $2 billion cost blow out of the
● In Victoria, 10 small businesses have remediation pose a risk to budget Melbourne Metro was attributed to encountering
to date closed as a result of its level blowouts. an unexpected soil density, resulting in digging
crossings programs. ● West Gate case study: The discovery delays.44
of harmful contaminants in the soil ● For the contractor to satisfy itself as to the
resulted in lengthy disputes between character and quality of the subsurface materials,
private and the government, delaying they will be required to perform additional site
the project by at least 12 months, and investigation after award of the contract.
led to both cost overruns and laid-off ● Whilst these risks will almost certainly pose an
workers due to work on the project critical impact on tunnelling projects, the overall
being halted while the contaminated soil impact to the transport projects is possibly posing
was removed. a moderate impact.
● The estimated cost of all remediation
works for contamination for the M4
widening was $200m in Western Sydney,
from a total project cost of ~$500m.

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TRANSPORT SECTOR - CRITICAL RISK CONSIDERATIONS

Transport projects will continue to encounter network integration and land

acquisition risks
Network integration planning is often delayed resulting Poor land acquisition assessments and processes
in costly rebuilds of infrastructure are resulting in higher project costs
● Across the Transport sector there is a risk associated with ● Failure to carry out the usual enquiries for assessing
the development of individual projects without properly market value, producing a “restricted assessment”
planning for current and future network integrations.
Impact with a lower level of assurance leads to inability to Impact
High
● This risk can manifest in the shifting of capacity capture benefits and overvaluation of land. Critical

bottlenecks to alternative locations on the transport ● This risk is particularly prominent in linear
network, or in terms of technology interface issues, such
Trend infrastructure, such as transport projects, where large Trend

as a new signalling system being incompatible with an tracts of land need to be purchased for the projects
operational system. often with significant contamination issues.
● Taking a broader corridor or network approach to ● This has led to overcompensation of land for the
transport infrastructure planning ensures that project Western Sydney Airport as identified by the ANAO.
benefits are maxmised for the network as a whole and ● The Parramatta Light Rail project announcement lead
enabling reforms or projects are in place. to the price of land in Camellia increasing sharply, for
● These risks can be driven by heavy focus during the which the government paid three items the estimated
planning and business case phase on the project and price of land. Further, according to 2015
avoiding key legacy costs issues to improve the BCR and contamination study, Camellia had “high likelihood of
viability of the project. significant soil and groundwater contamination”,
● There is also a capability challenge in the tools, skills and including carcinogenic chemicals which could add
expertise to plan and think about a network/corridor additional remediation costs of up to $200m.46
approach to infrastructure as well as the supporting
processes, including investment.

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Section 5.3

Social infrastructure
risks
Transport Social Energy Water Waste Telecommunications

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SOCIAL INFRASTRUCTURE SECTOR - RECENT COMPLETIONS

Recent social infrastructure projects have had risks manifest in relation to future
operating requirements not being correctly considered
Social infrastructure projects can break the
traditional nexus between project size and project Recent completions Projects
● Northern Territory Secure Facilities
complexity. Sector experts noted that hospital and (Darwin Correctional Precinct)
Sunshine Coast University Hospital
prison projects for example - large or small - have
●

Project
‘trickier’ risk profiles, with complex stakeholder ● Logan Hospital Expansion Project
LIST NOT EXHAUSTIVE New Lady Cilento Children's
issues, design risk and uncertainty over future ●

Hospital
operating requirements from policy and technology

0
● Townsville Hospital Redevelopment
change. Project
● North Queensland Stadium

6
Wider concerns about contractor experience in a Projects
tight infrastructure market were observed as well as ● ACT Law Courts Project
University of Canberra Public
ground condition risks. Social infrastructure project
●

Hospital
risk tends to heighten nearer the point of
7
● South East Regional Hospital
commissioning. ● Northern Beaches Hospital
Charles Perkins Centre - University

4
●

of Sydney
Analysis of recent major projects identified the ● Chris O'Brien Lifehouse

16
Royal North Shore Hospital -
following high risks:
●

Clinical Services Building

1. Inadequate site due diligence leading to ● Royal North Shore Hospital
remediation or enabling works. Redevelopment Project
● UNSW Materials Science and
2. Failure to design for emerging technologies can Engineering Building
impacts future operations of infrastructure like

22
● Abercrombie Precinct
Projects
● Western Sydney Stadium
hospitals. ● Perth Children's Hospital
● Abercrombie Precinct
Eastern Goldfields Regional
3. Not considering operational costs in the design ●

Prison Project
● Inner Sydney High School
phase can lead to higher costs and impact ● Fiona Stanley Hospital
Projects development
Ravenhall Prison Project
future operations.
●
● Harry Perkins Institute of
● Bendigo Hospital Project
Medical Research
4. Inaccurate expectations of land acquisition ● New Perth Stadium
● New Monash Children's Hospital
Projects Peter Doherty Institute for Infection
costs and timelines can delay projects ● New Royal Adelaide Hospital
●

and Immunity
5. Inadequate scoping of main line services (NRAH) ● Faculty of Architecture
around a site can lead to accidental disruptions. ● Medical and Nursing School ● Epworth Geelong Teaching
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●

●
Flinders Medical Centre Expansion
New Calvary Adelaide Hospital
Hospital - Stage 1
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SOCIAL INFRASTRUCTURE SECTOR - FUTURE PIPELINE

The future social pipeline has significant hospital projects requiring strong
operations planning
Roughly two-thirds of Australia’s social infrastructure pipeline will comprise
new health infrastructure and upgrades to existing health facilities.2 Future pipeline
The events of COVID-19 have highlighted a need to ensure health
infrastructure is adequate to support a growing population and increased risk Future projects by asset type
to pandemics.

Social infrastructure is a major part of the national infrastructure pipeline,

with the majority of those projects being hospital redevelopments or new
builds.2

Risk registers, reports and extensive SME discussions highlighted the

following risks to the future pipeline:
● Funding - too much capital expenditure spending and too little
operational funding to support.
● Risk that social infrastructure benefits, and consequently
infrastructure projects, are heavily demand driven. This causes the
risk that shifts in population trends may result in early benefit
underruns

Those risks are further outlined in the following pages, excluding materials
which is explored in the project risk section of this report.
Figure 35: Projected $ proportions of future social infrastructure projects by asset type, next 5 years.

Over $17b in hospital infrastructure OFFICIAL

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SOCIAL SECTOR - CRITICAL RISK CONSIDERATIONS

Funding and operational models are not being appropriately accounted for in selection
and design, causing greater operational risks
Social infrastructure projects and benefits Demand shifts and population growth
Unfunded operations for new infrastructure quantification results in low asset utilisation
● The cost to service social infrastructure outweighs ● Market proponents have identified unique ● Social infrastructure is unique in that its
the cost of the infrastructure itself. Unlike Impact
challenges in submitting successful business
Impact
benefit is directly correlated to its use by
Impact
Critical High Medium
transport, for example, where project construction cases to obtaining approval for social people in neighbouring communities.
represents over three-quarters of the cost, social infrastructure, particularly acute facilities. ● Whilst it is possible to predict national or
Trend Trend Trend
infrastructure can see delays at commissioning, or due to difficulties in quantifying the city level population growth, it is difficult to
suboptimal use, if service and infrastructure intangible benefits of social infrastructure predict changing demographics of suburbs.
planning are not aligned. initiatives. ● The uncertain nature of community
● Over the decade 2007-09 to 2017-18 New South ● This could in part explain why there are demographics increase the risk of benefit
Wales, Queensland, Western Australia, Tasmania, relatively few social infrastructure projects underruns in social infrastructure
Northern Territory and the ACT recorded average compared to other demand driven developments.
annual per-person funding growth of just 1-2% developments such as infrastructure in the ● A market proponent highlighted this issue in
despite hospitalisations growing by 3.3% per year transport sector. school infrastructure, where sudden
on average.54 Ultimately this has seen benefit ● This will have a major impact on those migrations into a suburb force schools to
underruns in increased patient waiting times and projects still in pre-approval stages, expand (either through land acquisition or
bed shortages, despite growth in infrastructure specifically posing a risk to their likelihood of vertical expansion), only to see demand
spending.54,55 going ahead. decline in 6-10 years as students pass out
● With the new 2020-25 public hospital funding ● Proponents suggested that business case of school.
agreement to be delivered with the same funding guidelines favour economic infrastructure ● The proponent suggested the need for
formula, it is almost certain new hospital projects compared to social projects and flexible infrastructure to cater to
infrastructure will encounter this risk and will this would need to change to help reduce unpredictable shifts in demand, with one
continue to pose an extreme impact on the this risk. solution being temporary school buildings.
realisation of benefits.
● This issue can be avoided, although market
proponents have agreed this requires a
fundamental change in the funding structure.

“In 2020-21, the Commonwealth share of public hospital

funding will be indexed by just 2.1% – a rate that is too low
to accommodate for growth in service volume.” - Australian
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SOCIAL SECTOR - CRITICAL RISK CONSIDERATIONS

Complex stakeholder environments make it difficult for

new projects to pioneer future models of care
● There is a growing risk associated with the development of
new hospitals relating to the balance of input from clinical Impact
staff vs the design and build of infrastructure being driven High

by the model of care required.

● Traditionally the approach has taken a strong stakeholder Trend

input into the development of social infrastructure,

particularly hospitals, however evidence from expert
discussions, indicate that the often views do not properly
consider and take into account future care models,
resulting in a mismatch between the physical build and
how services will need to run in the future.
● The impact of this is high, with infrastructure being built
that may not properly support the operational
requirements of the future hospital given the lack of
alignment to new care models being introduced. This can
lead to re-development costs of the hospital over time.
● This can be mitigated through the careful consideration of
the model for design for new hospital infrastructure to
ensure it focussed on future care models.

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Section 5.4

Energy risks
Transport Social Energy Water Waste Telecommunications

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ENERGY SECTOR - RECENT COMPLETIONS

85% of recent energy projects were wind and solar with infrastructure investments
impacted by policy uncertainty
Recent completions
The energy investment pipeline is growing significantly, with projects
significant wind, solar and energy storage developments in the LIST NOT EXHAUSTIVE ● Kennedy Energy Park
● Lilyvale Solar Project
five years to 2020. ● Clare Solar Farm Project
● Mount Emerald Wind Farm

1
Darling Downs Solar Farm
These assets have been impacted by policy uncertainty, which ●

has impacted pricing and value, the timing of grid connection,

and on some projects, completion risk.

The recent failure of major contractors including RCR Tomlinson,

14
9
Todae Solar, and R&L Solar, is seen by market observers as an
indication of new risks not being properly understood or projects
● Nyngan Solar Plant
managed, while the consolidation of solar portfolios is viewed as
5
● Taralga Wind Farm
an indication of policy and pricing uncertainty. ● Moree Solar PV Farm
● Silverton Wind Farm

20
● Broken Hill Solar Plant
The analysis of recent projects identified the following four high ● Boco Rock Solar Plant
risks: ● Gullen Range Wind Farm
● Crookwell 2 Wind Farm
1. Equipment and labour shortages due to the large pipeline, ● White Rock Wind Farm

13
particularly at the higher levels such as project managers. ● Sapphire Wind Farm
Wellington Solar Farm
2. Global supply chain disruptions (amplified by COVID) leading projects
●

to project delays and cost increases. ● Yandin Wind Farm projects

Eastern Goldfield Pipeline
3. Underdeveloped transmission and distribution infrastructure ●

Mumbida Wind Farm

● Mt Mercer Wind Farm
● Mortlake Gas-Fired Power Plant
is creating physical network congestion, constraints and
●
Yarnima Power Station Bald Hills Wind Farm

3
●
●

delays to project completion. ● Dundonnell Wind Power Project

4. Supplier insolvency and procurement issues can delay ●

●
Western Rail Plan
Glenrowan West Solar Project
projects and limit supply of key materials. ● Ararat Wind Farm

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ENERGY SECTOR - OXFORD GLOBAL PROJECTS ANALYSIS

The Oxford Global Projects database indicates that larger and more complex
energy projects are at higher risk of cost overruns
Small vs large projects Asset type comparison
The median cost increase for projects across the global energy infrastructure space
Larger energy projects had twice as large cost overruns on (excluding transmission line projects) were 25% for hydro, 7% for thermal, and 5%
average as compared to smaller projects (32% vs 74%) for wind. Only roughly 40% of solar projects went over budget, while only 10% of
Similarly the median cost overrun was 50% greater for larger projects, solar projects had cost overruns which exceeded 16% of the initial cost.
highlighting the fact that larger energy projects have a tendency to
have proportionally much larger cost overruns as compared to smaller Solar and thermal projects had a greater tendency to be under budget, with 25% of
ones. solar projects and 40% of thermal projects cheaper to deliver than originally costed.

Globally, half of hydro projects are more than 25% over budget, while one quarter of
hydro projects cost over 75% more than their budgeted construction costs. Solar and
wind projects tend to have the lowest variance in costs relative to their initial budget.

Figure 36: Cost overruns for energy projects above and below $350m. Figure 37: Cost uplift required for energy projects by asset type. 69
Source: Oxford Global Projects, 2021 OFFICIAL
Source: Oxford Global Projects, 2021 FBC = Final Business Case
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ENERGY SECTOR - OXFORD GLOBAL PROJECTS ANALYSIS

The Oxford Global Projects database indicates the majority of energy assets are
delivered later than expected
Small vs large projects Asset type comparison
Globally, larger projects (>$350m) tended to have Globally, solar projects were the most likely to meet the expected construction timeframe. Three
proportionally slightly larger schedule overruns as out of four solar projects were delivered on time and nearly half were delivered earlier than
compared to smaller projects, however the difference expected, while 95% of solar projects were delivered with less than a 15% schedule overrun. In
was not statistically significant contrast roughly 65% of wind projects and 75% of hydro and thermal energy projects were
However, when comparing projects with an initial cost of $1b delivered later than expected.
or more to those costing less, there was a significant Globally, hydro projects were the most likely to run over schedule with an average schedule
difference in schedule overruns, with larger projects being overrun of 33%. Less than 25% of them met the expected delivery date, while ¼ of hydro
more likely to have schedule overruns, and having projects went at least 50% over the expected construction timeframe.
proportionally much larger overruns when they did occur Solar and wind projects tended to have the least cost variance and limited cost blowouts, while
hydroelectric dams had a strong tendency to run over budget.

Figure 38: Schedule overruns for energy projects above and below $350m.
Source: Oxford Global Projects, 2021
Figure 39: Schedule uplift required for energy projects by asset type.
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Source: Oxford Global Projects, 2021 FBC=Final Business Case
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ENERGY SECTOR - FUTURE PIPELINE

There is significant growth in the energy pipeline with materials, policy uncertainty
and consumer preferences shaping success

Due to technology enhancements and continuing build-out of a Future pipeline

renewable energy target, Australia has seen a substantial increase
in renewable projects in the future pipeline across solar, wind, Future projects by asset type
hydro and the emerging arrival of (green) hydrogen.

Add to this the significant shift globally to Envrionmental, Social

and Governance (ESG) outcomes with lenders and equity investors
indicating during market soundings that future investments will
have to comply with clear ESG requirements and published
trajectories.

Energy represents a significant portion of the national

infrastructure pipeline, and has had a large increase in projects
relative to previous years. Large-scale renewable hubs, which are a
combination of ‘green’ energy sources, will form the majority of
energy projects over the next five years.2

The prioritised risks impacting the future pipeline are outlined

further in this section.

20% of the priority pipeline is energy. Figure 40: Projected $ proportions of future energy projects by asset type, next 5 years 71
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ENERGY SECTOR - CRITICAL RISK CONSIDERATIONS

Next generation energy infrastructure, policy uncertainty and funding drive the
high risks in energy infrastructure

Policy coordination could encourage investment Underdeveloped grid infrastructure

● Investment in renewable energy assets has declined from
● There has been concerns about the absence of a long- its peak in 2017-18. The Clean Energy Council announced Impact
term policy setting, which provides limited incentives to Impact
investment of $600m in large-scale renewable projects in Critical
Critical
invest into large scale renewable energy project at a Q2 2020, which represents a drop of almost half from the
national level. previous quarter. Trend
Trend
● Instead, multiple states have set state level renewable ● At the same time, significant additional investment will be
energy generation targets.51 required to achieve the goal of 90% electricity provision by
● Although a minor impact to the pipeline, it is worth noting 2035.49
that short election cycles and green energy used as a ● A significant and growing challenge limiting investment is
political argument between major parties leads to changes achieving connection to the grid. Market proponents from
in energy policy over time. For example, a planned new Northern Australia have noted this is particularly challenging
national energy policy, the National Energy Guarantee, in remote areas, which has created uncertainty for
was abandoned in 2019 under the current government’s renewable energy developers through significant delays in
regime. connecting to the grid.
● Policy announcements when made often include little ● Similar issues are being experienced in other regions across
detail, creating great uncertainty around investment - for Australia, including South West NSW and North West VIC -
example, the Underwriting New Generation Investments due to significant volumes of renewable projects attempting
program. to connect to weak grid infrastructure.
● As a result, a lack of consistent direction in the transition ● In response to these challenges, policy and regulatory
of Australia’s electrical grid to renewables has created changes imposing output constraints, marginal loss factor
investment risks, and reduced renewable energy reductions and the imposition of additional technical
investment, as investors sacrifice low maturity renewables requirements on new generators has had further impact on
energy projects in favour of projects that provide greater the attractiveness of new renewable energy investment and
certainty on cash flows and investment return. general confidence in the sector.

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ENERGY SECTOR - CRITICAL RISK CONSIDERATIONS

Complex projects have significantly higher Consumer preference is changing type of Case study - Sunraysia Solar Farm
risk of cost overrun energy demanded
● The next generation of energy infrastructure ● Sunraysia Solar Farm is located in South
● Consumers prefer energy produced through West NSW
relies on wind, solar, hydroelectric and storage
Impact renewables, and can opt for these in their energy plans. Impact ● After achieving financial close in 2017 and
assets such as batteries. Whilst renewable energy Medium
High Current renewable investment is not enough to meet with commercial operations anticipated in
now generates 63 TWh annually, the industry is 2019, Sunraysia is still yet to finish the
this, with renewables contributing to only 27.7% of
still relatively early stage and will require further Trend commissioning process. This delay has
Trend total annual electricity generation in Australia.52
development overtime to facilitate ongoing resulted in significant losses to Project
● We have seen an exponential increase in the installed
growth.47 owners John Laing and Maoneng, and has
capacity of small scale solar systems that generate up contributed to John Laing’s decision to exit
● To support this growth, new and augmented
to 100KW, with roughly 3200 megawatts installed the Australian renewables market
transmission and distribution lines, systems and
annually in 2020.53 ● This delay is primarily a result of limited
interconnectors need to be built to support further grid infrastructure contributing to significant
● Growing use of residential batteries and solar is
renewable build out. curtailment to project output and a reduction
creating greater demand for localised industrial battery
● Network projects are large complex, highly- of MLF (reducing project revenues by 20%)
capability. More batteries will be needed to stabilise
regulated ventures which by nature affect ● Delays to commissioning have also
energy supply on the grid. contributed to a dispute with the project’s
kilometres of land area and communities and
● Consumer preferences are also influenced by ESG contractor Decmil, resulting in extensive
generally take 5-10 years from concept to
considerations. While debt and equity providers have legal costs. Similar issues around liability for
completion. They are at great risk of cost overrun, delays have contributed to the insolvency of
all agreed that there is an abundance of capital
with network costs ultimately borne by contractor RCR Tomlinson, and Downer’s exit
available, fund managers have stated ESG has become
consumers. of the Australian solar market
a key driver in investment decisions, including decisions
● Consistent with history, hydroelectric systems are
to not invest in coal and other fossil fuel projects.
also at great risk of cost overrun, due to greater
● ESG has come a long way over the last decade, with
development lead time and high upfront costs
new emission regulations pushing companies to not just
with engineering and construction.48
think about their emissions, but rather to show how
they have strived for carbon neutrality.

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Section 5.5

Water risks
Transport Social Energy Water Waste Telecommunications

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WATER SECTOR - RECENT COMPLETIONS

Recently completed project saw planning delays and lack of a national water
strategy impact on efficient infrastructure delivery
The delivery of traditional water projects carries mature and known risks. Recent completions
Recent projects include Urannah dam, Lower Fitzroy, and Pilbara Coastal
Water Project.

Nonetheless, emerging technology in water and waste treatment that support

a shift towards sustainable and circular infrastructure, have introduced
complexities to projects during option selection and commissioning.

In addition, major water projects have seen planning delays and planning 0
uncertainty with recent climate variability.
0
The analysis of risks in the water sector identified five risks, outlined below:
3
0
1. A lack of coordinated water strategy between states and territories and
the Australian Government can impact approval times.
2. Lack of early stakeholder and community engagement can delay projects
due to planning approval processes, and community acceptance. 1
3. Lack of sufficient compensation of landowners can lead to legal
challenges.
4. Inexperienced project managers and skilled workers for specialised
infrastructure such as dams can delay projects.
0
Projects
Pilbara Coastal Water Project
5. Lack of private funding to develop desired infrastructure. ●

● Mundaring Water Treatment Plant

Projects
● Murray River (Wentworth) - Broken Hill
● Southern Seawater Desalination
Water Pipeline Project
Plant Expansion (Stage II)

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WATER SECTOR - FUTURE PIPELINE

The forward pipeline will have greater exposure to labour shortages and continue
to be challenged by complex governance

In the future, as climate change continues to cause significant change to Future pipeline
rainfall patterns, distribution and intensity, the planning of water
infrastructure will need to shift away from traditional climate dependent
infrastructure (eg dams) to climate independent assets (eg desalination). Future projects by asset type

Currently, the forward pipeline of water infrastructure projects represents

a relatively small portion of the total infrastructure pipeline. However, the
majority of these comprises dam-related projects.

This significant change carries transition risks.

- Emerging technology in water and waste treatment that support a

shift towards sustainable and circular infrastructure introduce
complexity during option selection and commissioning.
- More distributed models of water capture and supply require a
significant shift in the way water is managed, similar to the shifts
that are underway in the energy sector.
- There are also shifts associated with evolving economic needs to
meet the demands of existing agriculture and mining industries, as
well as emerging industries such as hydrogen production.

The following slides provide further detail on future project risks.

56% of water projects in the pipeline are dam related.

Figure 41: Projected $ proportions of future water projects by asset type, next 5 years.

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WATER SECTOR - CRITICAL RISK CONSIDERATIONS

Insufficient supply of skilled construction professionals and the absence of a

national framework for water are increasing risks in the sector
Inability to access skilled migrants increases
Complex governance competition for talent
● There is an increasingly complicated and influential
● The future infrastructure pipeline in water growing at an
governance arrangement for water across the jurisdictions Impact Impact
average of 6.3% over the next 5 years. This creates
resulting in delays and sometimes cancellation of projects. High High
significant demand for key resources that are common across
● This has most recently been seen within regional water
other infrastructure groups such as project and program
infrastructure and the program of work around new or Trend Trend
managers, commercial managers and cost estimators.
improved dam infrastructure across NSW.
● The restrictions of COVID-19 on international migrants. 30%
● In addition to the influence of government into the
of the labour resources for infrastructure at Sydney Water
infrastructure delivery pipeline there are also challenges
have been sourced from the UK. These include project
associated with arrangement of several jurisdictions having
managers, project engineers and project schedulers. The same
independent boards who will develop pipelines that drive
resources will be required in other local infrastructure projects
more immediate improvements to revenue vs longer term
such as health and transport, where demand for local talent
economic benefits required by government departments.
has grown steadily over the past 5 years. This will continue to
have an impact on available resources for water and other
infrastructure as they all compete for those same resources.
The impact will be rising cost of labour and therefore projects,
as well as a reduction in the quality of people leading projects
in a scarce environment resulting in potential for more
mistakes and costly/timely fixes.
● The significant amount of dam infrastructure in the future
pipeline also creates a risk of shortage of specialist engineers
in this field.
● This risk can be managed through securing long term
partnerships with providers for the future pipeline. As an
example based on information from experts in the market
sounding, resources have been secured for at least 60% of
Sydney Water programs through long term partnerships and
recruitment prior to the closure of borders.
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WATER SECTOR - CRITICAL RISK CONSIDERATIONS

Lack of national framework created uncertainty for

investment

● Market soundings have revealed that water planning on the basis Impact
of both short and long term population growth projections is Critical
problematic as well as with the changing water dynamics as a
result of climate change. With the growth of our major cities Trend
consistently underestimated and the challenges of COVID-19 on
internal and overseas migration worsening uncertainty with
predicting water demand in the next 2-3 years.
● The uncertainty and the associated financial risk can be reduced
by allocation of financial risks and returns that enables public and
private sector to earn risk adjusted returns. This can be done by:
○ Policy instruments to recover cost of investment and
improve financial performance (e.g sanitisation and water
supply tax)
○ Identification of permanent revenue stream such as
charges on drinking, waste and industry usage
● Market proponents and climate projections both suggest that
Australia’s water future is uncertain given an inevitable population
growth (particularly in major cities) and increasing variability in
rainfall.
● As such a reliance on rainfall to fulfil water demands of densely
populated regions is a critical risk and current investment in dam
infrastructure does not account for this.
● Market proponents have agreed that the water sector requires a
clear policy on the future vision for water, one which highlights the
need for decentralisation in water systems and increased use of
recycled water.

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Section 5.6

Waste risks
Transport Social Energy Water Waste Telecommunications

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WASTE SECTOR - COMPLETED PROJECTS

Few waste projects were developed in recent years, underscoring key challenges with
developing circular economy infrastructure quickly enough
Recent completions
Relatively few waste to energy projects have been delivered in
recent years in Australia, with the Kwinana Waste to Energy Plant
being the first such project to be delivered.

Recent national waste export bans and state and national policy
development place a very strong incentive for ‘catch up’ investment

0
in circular and waste processing infrastructure in coming years. Projects
● Waste Coal Mine
LIST NOT EXHAUSTIVE

1
Gas Power Plant
Recent project developments prove ongoing community concern
and social licence issues surrounding infrastructure development in

1
this sector, which carries forward into the immediate pipeline of
projects.

The analysis identified the following four high risks:

●

●
Community apprehension towards waste infrastructure can
delay projects.
Inadequate infrastructure development coordination for all
0 0
stages of the waste cycle, from collection to aggregation to
treatment.
● Demand for waste management is not being met by
investment in waste infrastructure. Projects
Kwinana waste to energy
● Potential health risks to construction workers and future ●

project
workers/community due to malfunctions or poor ● East Rockingham Wastewater
construction. Treatment Plant

These critical risks are detailed further in this section. 80

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WASTE SECTOR - FUTURE PIPELINE

The future waste pipeline will benefit from a stronger national and state focus on
circular economy infrastructure, with policies that increase market demand

This sector includes infrastructure projects that utilise waste to energy Future pipeline
technology, anaerobic digestion and other biomass solutions to divert
landfill and to retain value from waste are underway. Project type Project name
The Kwinana Waste to Energy plant (Avertas Energy) in Western Kwinana Waste to Energy plant
Australia is the first utility scale waste to energy plant built in Australia.
This has likely improved appetite and confidence for this class of Parkes Materials Recovery and Energy from Waste Facility
infrastructure, and there now are around 20 projects in development on
the eastern seaboard. Energy from Western Sydney Energy and Resource Recovery Centre
waste
Future waste infrastructure projects will continue to focus on the East Rockingham Waste to Energy project
development of waste to energy recovery, with multiple facilities being Swanbank Waste to Energy Facility
developed across Australia in coming years, including both energy from
waste and waste processing facilities.2 Australian Paper Energy from Waste Facility

Waste projects are a small proportion of the national infrastructure Waste

pipeline, however the number of waste projects in development is larger
processing South East Melbourne Advanced Waste Processing Facility
than at any point in recent years.2
Renewable Crude Oil Production, Gladstone
Risks are not abating as yet. Policy uncertainty still exists, although
policy and regulatory development are underway, and remaining risks Other Renergi Biorefinery demonstration plant
are critical for near-term waste infrastructure development in Australia.
Malabar Biomethane Injection Project

Over $2B for waste facilities OFFICIAL

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WASTE SECTOR - CRITICAL RISK CONSIDERATIONS

Unclear planning and regulations, alongside a lack of community support is creating

uncertainty within the waste sector which is driving risks
Inadequate infrastructure Community concerns delay planning Security and scale of supply for waste
development coordination approvals to energy projects
● In December 2020, the Australian Parliament ● Many proposed waste projects have failed due to ● A major challenge to the development of
Impact Impact
passed legislation to ban the export of unprocessed Impact community opposition, which has led to significant Critical commercial scale waste to energy projects in
Critical Med
waste overseas. The Act implements a COAG ban planning delays and failure. Australia is the ability to secure bankable, reliable
on exports of waste plastic, paper, glass and tires, ● The ACT introduced a ban on waste incineration in Trend quantities of waste for energy production and/or
Trend
building impetus for developing circular economy response, after a proposal to build a W2E projects other byproducts. Facility operators may also Trend
infrastructure, alongside policies being developed in Fyshwick was withdrawn. need to respond to changes in feedstock volume
by all Australian governments. ● In 2018, a waste project proposed for Eastern or composition over time.
● Nonetheless, Australia remains far behind other Creek was refused on the basis of uncertainty over ● Municipal waste is typically contracted by councils
countries such as Norway and Denmark on rates of human health concerns and air quality. from a larger regional or national private waste
resource recovery. Historically inexpensive landfill ● The Next Generation Pty Ltd proposal is awaiting service operators. These service contracts are
levies and waste exports reduced economic consideration by the Land and Environment Court low margin, high volume contracts with varying
incentives for long term investment in onshore ● While waste technologies have improved to contract lengths.
facilities. Immature end markets also mean there capture emissions released from combustion of ● Analysis of successful energy from waste
is a lack of demand for the use of recycled materials such as plastic, to utilise residues and to markets, such as Europe, highlight examples of
materials. And the oversupply of materials that manage smells, ongoing concerns include local councils combining waste quantities to
followed the ban drove down the price of materials increased truck traffic and amenity impacts. achieve scale, and locating projects close to
for recycling, to zero for paper and less than 25% However, the urge to locate waste infrastructure major waste sources, and to points of grid
of the previous value for plastics, creating a further away from residential areas has serious connection.
significant challenge for local councils to fund their implications for the infrastructure required and for
recycling programs. higher transportation costs.
● The risk is that continuing market failures will lead
to a shortfall in the scaled planning and
development of critical infrastructure, including

$13.8B
waste to energy but also aggregation and Kwinana Waste to energy plant:
collection facilities. This would lead to the diversion
● 25% reduction in waste going to landfill
of a far great amount of landfill, and is pronounced
● 486,000 tonnes of CO2 avoided through reduced demand on
given the length of time such projects take to
traditional energy sources and avoided methane gas from landfill
develop. For example, Kwinana took 10 years to Value of the solid and liquid waste collection, waste ● 36MW of power, sufficient to power 50,000 homes
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WASTE SECTOR - CRITICAL RISK CONSIDERATIONS

Low levels of market and regulatory readiness

● As a nascent segment of the infrastructure market, there remain

several areas of low market and regulatory maturity. These include: Impact
High

○ Complementary Regulation and Investment: In addition to

planning approvals, energy to waste projects require a suite of Trend
support to ensure feasibility such as changes to landfill charges,
clarity around the waste hierarchy in to recycling, and upstream
changes to collections and processing of waste.

○ Planning Law: The Waste Recyclers Association of NSW in their

submission to a Federal Parliamentary Inquiry noted that “...[a]
lack of clarity around planning laws, outdated waste management
laws and a poorly educated community has long stifled innovative
solutions in energy from waste across Australia. The industry
requires clearly defined, agreed and acceptable timelines for the
processing of planning applications for new waste [and] recycling
facilities. The industry also requires government support to
progress suitable, best practice applications”.

○ Contractor and operator experience: There is currently only

one civils contractor with experience to build these types of
projects. Appetite is growing however, but these remain risky
projects with minimal familiarity within the market in terms of sub-
contractors, trades and unions. Operator risks remain untested in
the Australian market.

○ In relation to the development of recycling and small scale

resource recovery infrastructure, factors such as contamination
and low quality materials collection inhibit the investment signals
required. This will likely require a great level of coordination across
all levels of government.
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Section 5.7

Telecommunications and
digital risks

Transport Social Energy Water Waste Telecommunications

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DIGITAL SECTOR - RECENTLY COMPLETED

Investment in digital infrastructure was dominated by the roll-out of the NBN in

recent years.

Recent completions

The NBN (revised) build was completed in 2020, with NBN Co

reporting that the build provided successful connecting of over
11.86 million premises, and around 100,000 complex premises
yet to be made 'ready to connect' (RTC), expected to be reduced
to around 35,000 as at 31 December 2020.

While the roll out was subject to policy / design changes, and late
construction deadlines, the overall construction build was National broadband
delivered reliably. In 2020, additional capacity was released to
ISPs during the lockdowns to meet increased demand from
network - nationwide
working from home activity. rollout
There is also analysis of data from Oxford Global Projects on
digital and IT infrastructure projects.

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DIGITAL SECTOR - OXFORD GLOBAL PROJECTS ANALYSIS

The Oxford Global Projects database indicates that larger digital and infrastructure
projects have greater schedule and cost overruns
Cost overruns Schedule overruns
Larger IT projects (those greater than $350m) had statistically Globally, IT projects over $350m also had statistically significantly higher
significantly higher cost overruns as compared to smaller projects, with schedule overruns as compared to smaller projects, however due to
the average large projects having cost overruns 4 times as large as small small sample sizes this relationship may be tenuous.
projects (264% vs 68%) Smaller projects however had longer schedule overruns in the extremes
The median cost overrun in both groups was 0%, which highlights that of the distribution as compared to larger projects, however this is likely
when large IT projects go bad, they tend to have proportionally much due to the absolute schedules of smaller projects being much shorter,
larger cost overruns. which allows for such overruns (e.g. a 2 month projects taking 2 years to
deliver is possible, while a 2 year project taking 10 years to deliver is not
possible).

Figure 42: Cost overruns for digital projects above and below $350m. Figure 43: Schedule overruns for digital projects above and below $350m.
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Source: Oxford Global Projects, 2021
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Source: Oxford Global Projects, 2021
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DIGITAL SECTOR - COMPLETED PROJECTS AND FUTURE PIPELINE

Australia’s next stage of digital infrastructure development will need to address gaps
in network performance, and regional and remote connectivity
The Australian Government has set clear objectives in the context of its second
stage of its NBN infrastructure rollout, to be a digital Top 10 Economy by 2030. Future pipeline
While the NBN (revised) build was completed in 2020, FTTN and speed caps on
packages have meant that the portion of Australians able to access promised
internet speeds remains relatively small, especially in regional and remote
areas. NSW’s Regional Digital
Victoria’s Digital Future
Connectivity program
A recent announcement by NBN Co will deliver its next phase of investment by Now
$400m of investment to improve
2023. This will involve: $626m of investment to improve
access to mobile, digital, and
● $3.5b to deliver to 75 % of homes and businesses in the fixed-line mobile and broadband coverage
internet services across regional
footprint peak wholesale speed tiers of 500 Mbps to close to 1 Gbps1.2 across the state
● $700m in initiatives with retail internet providers, including in regional NSW
centres
● $300m in support for state and territory partnerships in regional and
remote Australia.

These comprise around the smallest proportion of the national infrastructure Tasmanian Radio
pipeline in terms of the number of projects of the infrastructure pipeline. Network National Broadband
$567m to upgrade Tasmania’s Network
A number of state government have initiatives ‘Gigabit programs’ that provide
additional investment and support.
radio network used by Over $4B to improve network
emergency responders and speed and connectivity across
In the next five years, a number of private programs of investment will also be government organisations when the nation
delivered, with favourable coverage in metropolitan areas. responding to emergencies

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DIGITAL SECTOR - CRITICAL RISK CONSIDERATIONS

There are risks driven by underinvestment, declining returns for telcos and
insufficient priority on digital aspects of infrastructure projects
Underinvestment and affordability Lack of market incentive to improve
challenges with network infrastructure Rural and Remote Access

● There is an emerging risk of underinvestment ● Significant issues remain in rural and remote
in digital infrastructure relating to the fibre Impact
areas for mobile and broadband services. Impact
High
and 5G infrastructure required to deliver High ● Geography also matters in terms of the cost of
against the Australian Government’s goal of providing telecommunications infrastructure in Farmers have varying levels of coverage
being a leading digital economy by 2030 - and rural and remote settings, and the returns
Trend reduce as population densities decline.
Trend across their properties
questions of whether investments needed to
‘future proof’ the network are affordable. ● While Australia’s mobile footprint includes over
● The impact of this underinvestment puts at 99% of the population (at their premises), it
risk a potential $90b in GDP growth over the covers only one-third of total landmass,
5 years to 2025 and $230b over a 10 year meaning little or no service for those working
horizon and the ~250,000 jobs enabled by this and travelling in rural and remote areas.62
digital transformation and the supporting ● With introduction of 5G this gap will be wider
competitiveness of organisations.60 as the new rollout prioritises high density /
Additionally underinvestment in digital greater return areas over rural areas.
infrastructure is likely to impact through
greater cyber security attacks, limiting the
ability to combat them.
● This is partially being mitigated by the
investment in future fibre to premise roll-outs
by the NBN and state based investments,
however this is unlikely to ensure complete
coverage for all Australians, particularly those
in remote areas and smaller towns.

Figure 44: Level of coverage across farmland.

Source: Zhang et al., 2018
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DIGITAL SECTOR - CRITICAL RISK CONSIDERATIONS

Declining returns on private investment and Poor understanding of existing utility

‘free rider’ issues for 5G infrastructure
● There is an existing but growing risk associated with
● There is a growing risk to the expansion of the 5G digital components of projects not being treating with the Impact
network in Australia relating to declining profits from Impact same level of importance as the civil infrastructure in Critical
investors from the network. PwC experts indicate that Medium projects.
return on capital is now around 6-8% and declining, ● New technology and demands from customer and the
compared with double digits historically. community to be better connected and have more Trend
Trend
● The 5G network requires approximately 10x the density integrated services will continue to drive the growth of
of infrastructure towers compared to 4G requiring technology and digital aspects within infrastructure.
significant investment by mobile operators. There is a ● Expert and market sounding interviews have told us
risk to this investment as the revenue derived from 5G that the capabilities, regulatory systems and project
benefit is likely to be captured by the application governance are not yet sufficiently geared to ensure that
providers such as Google and Microsoft with the cost of infrastructure projects are appropriately focussed on the
investment lying with mobile providers and limited digital/technology aspects. Once respondent told us “The
ability to increase consumer plans to cover the safety and regulatory environment is not well adapted to
infrastructure roll out cost.63 for the wave of digital orientated infrastructure coming.”
● A McKinsey report into 5G in 2018 and the underlying ● This risk is particularly prevalent in the Transport.
analysis indicated that revenues were flat for mobile industry with projects relating to train control and
providers from the rollout of 4G and this is anticipated signalling systems as well as smart motorway projects,
to be the same for 5G.63 however this is prevalent across critical infrastructure
● The impact of this risk manifesting could be significant, areas and will continue become more prevalent. This has
particularly for regional and remote areas where the implications for integration as well as cybersecurity.
return on investment for mobile providers is harder to ● The impact of not giving sufficient focus to the digital
achieve. This will adversely impact businesses unable aspects can lead to significant cost overruns and project
to access applications and tools built for 5G speeds as delays. In the case of Crossrail in the UK, this project is
well as communities who may need to access education delayed by at least 2 years and at least 10% of 2 billion
or health services using the newer technology. pounds over budget, which is, at least in part, attributed
to digital challenges and a lack of focus on these
components sufficiently early in the project.

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APPENDIX
6.1 Reference list
6.2 Data sources
6.3 Risk taxonomy

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6.1. References

6.1 - Reference List

1 BIS Oxford Economics 29 ABC, 2016. Angry Melbourne residents launch Supreme Court action against sky rail
2 ANZIP 2021, ANZIP Pipeline 30 Infrastructure Australia, 2020. Building Trust - Social Licence for Infrastructure
Clean Energy Council, 2020. 31 Department of Home Affairs, 2020. Australia’s Cyber Security Strategy 2020
3
https://www.cleanenergycouncil.org.au/ 32 Ransomware hits Johannesburg electricity supply - https://www.bbc.com/news/technology-49125853
Productivity Commission, https://www.pc.gov.au/research/ongoing/productivity-insights/recent-developments-2021/productivity-insights- 33 KPMG, 2017. Ten Emerging Trends in 2017.
4
2021-recent-developments.pdf
34 Mckinsey and Company, 2019. Australia’s infrastructure innovation imperative
5 Canberra Times, 2020. Fire crisis cost could balloon: economist.
35 Oxford Projects Data
6 ABS, 2020. Construction Activity: Chain Volume Measures, Australia.
36 Transport and Infrastructure Council, 2018. Australian Transport Assessment and Planning Guidelines O2 - Optimism Bias
7 Infrastructure Australia, 2020. Infrastructure beyond COVID-19
37 Grattan Institute, 2020. The rise of megaprojects - Counting the costs
8 International Standards Organisation, 2021. ISO31000 Risk Management
38 487 utilities
Dutta R., Das A. and Aryal J., 2016. Big data integration shows Australian bush-fire frequency is increasing significantly. NCBI. 3(2).
9 39 Australian Institute for Progress, 2020. Cross river Rail Project - Review of Challenges and Opportunities
Available at: 10.1098/rsos.150241
10 Bureau of Meteorology, 2020. State of the Climate 2020. 40 The Age, 2020. $3 billion overruns on West Gate Tunnel

11 ABC, 2020. Bushfire insurance premiums up by as much as 400 % in Victoria's alpine regions. 41 The Conversation, 2020. Rise of transport megaprojects adds to Australian taxpayers’ risk of paying too much.

12 Westpac, 2020. Counting the cost of bushfire’s fury. 42 The Daily Telegraph, 2020. Sydney Light Rail: $31 million compensation for businesses hits 31m

13 Queensland Government, 2020. Floods Fact Sheet. 43 Australian Financial Review, 2020. Early-adopting Australia's pile in on 5G handsets

14 Climate Works Australia, 2020. Issues paper: Reshaping Infrastructure for a net zero emissions future 44 ABC, 2020. Melbourne Metro Tunnel budget blows out by $2.74 billion, with Victorians to pay half

15 International Energy Agency, 2020. Net Zero by 2050 Australian National Audit Office, 2020. Purchase of the ‘Leppington Triangle’ Land for the
45 Future Development of Western Sydney Airport
UN Environmental Programme. Building sector emissions hit record high, but low-carbon pandemic recovery can help transform sector –
16 46 ABC, 2020. NSW Government bought land for three times its value for light rail project
UN report
17 Energy Transitions Commission, 2020. Making Mission Possible: Delivering a Net-Zero Economy 47 Department of Industry, Science, Energy and Resources, 2021. Electricity generation

18 Department of Home Affairs, 2020. Visa Statistics. 48 Department of Planning and Environment, 2018. NSW Pumped Hydro Roadmap
49 The Guardian, 2020. Large Scale Renewable Energy Investment Falls to Lowest Level Since 2017
19 Department of education, skills and employment
50 Clean Energy Finance Corporation, 2016. CEFC Annual Report 2015-16
20 Mckinsey and Co, 2021. Back to the future? Airline sector poised for change post-COVID-19
51 Reserve Bank of Australia, 2020. Renewable Energy Investment in Australia
21 Australian Financial Review, 2019. Lendlease stuck with losers after engineering sale to Acciona
52 Clean Energy Council, 2020. Clean Energy Australia Report 2021
22 IBIS World, 2021.Domestic price of iron and steel.
53 Clean Energy Council, 2020. Clean Energy Australia 2021 Fact Sheet.
23 Australian Financial Review, 2019. Infrastructure projects getting too risky for insurers: AECOM
54 Australian Institute of Health and Welfare, 2020. Health Expenditure
24 Infrastructure Australia, 2019. Australian Infrastructure Audit 2019 - May Update..
55 https://www.amansw.com.au/under-pressure-and-underfunded/
25 Centre for Population,2020. Insights from Australia’s first Population Statement
56 Department of Agriculture, Water and the Environment, 2018. National Waste Policy
26 Infrastructure Australia, 2019. Infrastructure beyond COVID-19
The Hon Paul Fletcher MP, 2021. $4.5 billion NBN investment to bring ultra-fast broadband to millions of families and businesses
27 ABS, 2020. Regional Population, 2019-20 Financial Year. 57 and create 25,000 jobs
28 Australian Institute of Landscape Architects, 2019. After the ribbon cutting: lessons learnt from Melbourne’s sky rail 58 Australian Renewable Energy Agency, 2021. Kwinana Waste to Energy ProjectKwinana Waste to Energy Project.

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59 Prime Minister of Australia, 2021. A Modern Digital Economy to Secure Australia’s Future
60 Telstra, 2020. Accelerating the Digital Economy in Australia
61 Deakin University, 2019. Why the NBN is already past its use by date
62 Infrastructure Australia, 2019. Infrastructure Audit 2019 - Telecommunications
63 Mckinsey and Company, 2020. The Road to 5G: The Inevitable Growth of Infrastructure Cost.

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6.2. Data Sources

6.2 - Data sources

In addition to Infrastructure Australia data, a number of databases 7 IBIS World, COVID-19 Impact COVID-19 is forcing businesses to quickly change their strategy to uncover new opportunities. To assist with
Tool decision making during the current crisis, IBISWorld created a tool to help you understand different industries'
were used in the preparation of this report. Although not explicitly levels of vulnerability to COVID-19 exposure factors.
referenced, a number of risks were identified and tested through an Within the tool you can easily identify an industry's exposure to:
analysis of these databases.
Working from home capabilities
Social distancing
Name Description Macroeconomic factors
Trade exposure
1 Oxford Economics, Australia Risk indicators for Australia by quarter
Labour intensity
Risk indicators
Supply chain exposure
2 Fitch Solutions, Infrastructure Includes data on 36,000+ projects globally. The Infrastructure Key Projects Data (KPD) is a comprehensive These factors can be supplemented with our industry research to help frame your decision making
Key Projects Data catalog of the largest construction projects around the world. Currently the database stores projects in over surrounding:
200 markets across the energy and transport infrastructure sectors, as well as the residential and non-
residential building sectors. It compiles data from a comprehensive list of national and international open Identifying new markets
sources and renders the information in an accessible, standardised and searchable format. Protecting your position
Developing and strengthening a strategic plan
3 Fitch Solutions, Australia infra Reward Index (RRI) quantifies and ranks a country’s attractiveness within the context of the Infrastructure
risk reward industry, based on the balance between the Risks and Rewards of entering and operating in different 15 BITRE, Australian Overview of statistics on infrastructure broken by transport, communications, energy and water.
countries. Infrastructure Statistics -
https://app.fitchconnect.com/libs/pdf-viewer/web/viewer.html?file=/excel-plugin/FS_RRI%20Meth%20Infra.pdf Yearbook 2020 Dashboard also available

4 Fitch Solutions, Australia infra The Index assesses the risks on a country-by-country basis; it does not evaluate specific projects. The tool is 16 Marsh & McLennan, Global Listed here are key markets and their top-ranked risks, as per the WEF‘s
project risk applicable to all types of infrastructure projects, including transport, energy and utilities, and social Risks for Infrastructure Executive Opinion Survey (EOS) of 12,879 business executives from 133 economies. This survey
infrastructure, and looks across the life cycle of a project, from financing through to tendering, construction and was completed in 2019. The WEF dataset omits data for China, Georgia, Honduras, Mauritania,
operation. Nicaragua and Saudi Arabia. The EOS 2019 was not conducted in Belgium and Norway
https://app.fitchconnect.com/libs/pdf-viewer/web/viewer.html?file=/excel-
20 WA Water, Flood data - WA Spatial data on flood plains in WA. Note: Datasource was not downloadable.
plugin/FS_Project%20Risk%20Index%20Methodology.pdf
21 Flood data - QLD Spatial data on flood plains in QLD. 1 layer without detail on levels, likelihood, etc
5 Global Infrastructure Hub, PPP The PPP Risk Allocation Tool serves as a reference guide for governments and other relevant stakeholders in
Risk Allocation Tool deciding on the appropriate allocation of project risks in a given PPP project, as well as potential risk 22 DataVic, Flood data - Vic Has details on likelihood, Extent_{n}y_ARI, where n = 5,10,20,30,50,100,200,500,1000 year intervals Modelled
mitigation measures. The guide is made up of 18 annotated risk allocation matrices each specifically tailored Flood Contours: Contour_{n}y_ARI, where n = 5,10,20,50,100,200 year intervals Other flood datasets:
to a given project type (such as a road, airport, solar plants or hospital project). The tool is downloadable in Floodway, Historic_extents, Historic_height_pt, Historic_contours, Flow_direction, Flood_structure, Levee,
PDF in English and Portuguese. Levee_spotheight, Running_distance.

6 S&P Global, Trucost Physical Trucost's Physical Risk dataset assesses company exposure to physical risk at the asset-level based on a
Risk database of over 500,000 assets mapped to 15,000+ listed companies in the S&P Market Intelligence 23 Water Connect SA, Flood data Spatial data on flood plains in SA. Note; datasource was not downloadable
NOTE: A sample dataset was database. The dataset includes: - SA
explored - Seven climate change physical risk indicators including heatwaves, cold waves, water stress, hurricanes,
24 Department of Environment, Spatial data on flood plains in SA. Note; datasource was not downloadable
wildfires, flood and sea level rise
Parks and Water Security,
- Low, moderate and high future climate change scenarios based on the Intergovernmental Panel on Climate
Flood data - NT
Change (IPCC) Representative Concentration Pathways (RCP)
- Estimates of climate change physical impacts in 2020, 2030 and 2050 25 Flood data - NSW Spatial data on flood plains in NSW. Note; datasource was not downloadable

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Methodology - Approach to Risk Assessment

6.3 Risk taxonomy

The following is a description of the terms that will be utilised in the risk assessment framework. Having a common taxonomy in place will assist with ensuring
consistency in the application of risk identification, assessment and treatment processes. It will also assist with normalising risk data that will be sourced from the
different state based I-bodies and delivery agencies.
Term Definition

Asset type The type of asset that the risk relates to (e.g. roads, universities, hospitals, fuel connections / gas pipelines, irrigation systems / schemes, NBN,
disaster resilience - flood mitigation).
Funding model (e.g. PPP) The funding model used to support/resource the project that the risk relates to (e.g. public-private partnership).

Geographic location The geographic location/area where the risk / project exists.

Issue A risk that has eventuated / occurred and now has a negative impact.

Macro or project level risk Whether the risk is categorised as a macro or project level risk. Macro risks are those associated with wider environmental factors impacting the
delivery of project outcomes. Project level risks are those specific to the project and may impact the achievement of planned outcomes.
Public / private sector Whether the project that the risk relates to is owned by the public or private sector.

Response event timing When the risk event occured in the project lifecycle.

Risk Risk is the effect of uncertainty on objectives.

● Risk is often characterised by reference to potential events and consequences, or a combination of these
● Risk is often expressed in terms of a combination of the consequences of an event (including changes to circumstances) and the associated
likelihood of occurrence.
Risk category A more detailed classification of the category that the risk falls under. This sits under the risk class as a second level of detail. Like the risk class,
these categories should be decided by Infrastructure Australia to reflect the nature of the projects / risks.
Risk class A high level classification of the type of risk. Risk classes should be decided by Infrastructure Australia to reflect the nature of the project / risks.

Risk conversion to issue (Y/N) A “Yes” or “No” response on whether the risk has developed into an issue (i.e. has the risk eventuated / occured?).

Risk description A description of the risk giving context and a high level explanation of the impacts / consequences of the risk, should it occur.

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Risk taxonomy (cont.)

Term Definition

Risk event An occurrence or change of a particular set of circumstances. An event can sometimes be referred to an “incident” or “accident”.
Risk event timing (project The stage of the project lifecycle in which the risk event would occur (e.g. the risk would eventuate in the planning / design / operations phase).
lifecycle stage)
Risk management The coordinated activities to ensure that risk is identified and analysed to inform decision making.
Risk management framework The set of components that provide the foundations and organisational arrangements for designing, implementing, monitoring, reviewing and
continually improving risk management throughout the organisation
Risk rating The overall risk assessment and RAG status, determined through the likelihood and risk impact assessments. This is measured using the risk
assessment matrix (refer to page 13).
Risk root cause The element which alone, or in combination, has the intrinsic potential to give rise to risk.
Risk/issue impact category A detailed classification of the impact of a risk (or issue). Like the risk category, these categories should be decided by Infrastructure Australia to
reflect the nature of the projects / risks. Risk categories should include financial, safety (life and limb), customer service, staffing and culture,
compliance with regulation / law and reputation (refer to page 12 for further details).
Sector The area of work that the risk relates to (i.e. transport, social infrastructure, energy, water, telecommunications project or other).
Stage in project lifecycle The stage of the project lifecycle that the risk is relevant to (i.e. planning, design, engineering, construction, handover, operations, maintenance
or disposal).
$ size of project The monetary size of the project.

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Risk assessment matrix - Likelihood definitions

Effective risk identification and management includes an assessment of risks based on the likelihood and impact/severity of the risk eventuating. Below
are the risk likelihood scores and criteria to guide Infrastructure Australia’s risk management.

Score Probability Description

1. Rare <=10% Risk may occur only in exceptional circumstances during the life of the project or phase.

2 . Unlikely >10% - 30% Risk is not generally expected, but could occur during the life of the project or phase.

3. Possible >30% - 50% Risk might not, but is likely to occur at some time during the life of the project or phase.

4. Likely >50% - 75% Risk will probably occur in most circumstances during the life of the project or phase.

5. Almost certain >75% Risk or issue is occurring now, or expected to occur during the life of the project or phase.

96
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Methodology - Approach to Risk Assessment

Risk assessment matrix - Impact definitions

Effective risk identification and management includes an assessment of risks based on the likelihood and impact/severity of the risk eventuating. Below
are the risk impact/severity assessments and risk impact scores to guide Infrastructure Australia’s risk management.

Risk impact/severity
Score
Cost /
Schedule Sustainability/ environment Reputation Quality Safety
Financial
<=2% of Schedule delay Temporary contamination (days) to land, air, Local complaint, no media coverage. Requires minor Slight and recoverable
project budget < 1 month or groundwater or surface water environment to Quickly forgotten with freedom to operate improvements, injury or discomfort requiring
/ benefits <5% of total immediate area around asset or activity. No lasting unaffected. however within quality first aid response with no
1 Insignificant
schedule impact (days) on species, habitat, community thresholds. No impact follow up required if any
amenity or heritage sites. Self reporting or on project success. employee, visitor or
notification to relevant regulatory bodies. contractor.
>2 - 5% of Schedule delay Minor contamination to land, air, groundwater or Localised complaints that can be managed Project outputs are Event resulting in injury or
project budget >1 month - 2 surface water environment (clean up / recovery of a to achieve an effective outcome. Limited, outside of quality disease that resulted in a
/ benefits months or >5 - localised event within weeks). Minor impact on adverse local media attention (single thresholds, and may treatment given by a
10% of total species, habitat, community amenity or heritage instance). Negligible impact to reputation impact the medical practitioner but
2 Minor schedule sites (restoration within weeks). Enforcement action with freedom to operate unaffected. achievability of an without permanent disability
undertaken by relevant regulatory bodies in the form objective requirement. of any employee, visitor or
of a warning contractor.

>5 - 10% of Schedule delay Serious contamination to land, air, groundwater or Public outcry (sustained and numerous Project outputs are Event causing a serious or
project budget >2 months - 6 surface water environment (clean up / recovery customer complaints including online). outside of quality permanent injury or long-
/ benefits months or >10 within 1 year). Moderate impact on species, habitat, Adverse state media coverage (1 to 2 thresholds and require term illness with immediate
- 20% of total community amenity or heritage sites (restoration days). Limited, repairable damage to moderate changes. At admission to hospital of any
schedule within 1 year). Enforcement action undertaken by reputation. Some concern on relations with least one project employee, visitor or
3 Moderate relevant regulatory bodies in the form of a Penalty key stakeholders (explanation required). objective is at risk. contractor.
Infringement Notice (or similar)

>10 - 20% of Schedule delay Very serious contamination to land, air, groundwater Serious public outcry (community action or Project outputs are Event causing single fatality
budget / >6 months to or surface water environment (clean up / recovery 1 protests, including online) (2 to 3 days). unacceptable. and/ or total and permanent
benefits 1 year or 20 - to 4 years). Major impact on species, habitat, Adverse state media coverage (2 to 3 Significant changes are disability of any employee,
30% of total community amenity or heritage sites (restoration days). Negative impact to reputation but required, and several visitor or contractor.
4 Major schedule period 1 to 4 years). Enforcement action undertaken repairable (within 1 year). Adverse impact project objectives are
by relevant regulatory bodies in the form of an on relations with key stakeholders at risk.
enforceable undertaking or court prosecution (expressed displeasure)

>20% of Schedule delay Permanent, widespread and irreversible Very serious public outcry (community The project outputs Event causing two or more
project budget >1 year or contamination to land, air, groundwater or surface action or protests, including online) (3+ are not fit for purpose fatalities and/ or permanent
/ benefits >25% of total water environment. Permanent loss of species, days). Sustained negative media coverage and will not deliver the total disability of any
5 Extreme schedule habitat, community amenity or heritage sites at state or national level (3+ days). planned employee, visitor or
Enforcement action undertaken by relevant Lasting impact to reputation (1+ year). benefits/outcomes. contractor.
regulatory bodies. Critical impact on relations with key
stakeholders (loss of support) 97
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Market Soundings - Survey Results

Overview of the market sounding survey

40
● 40 market participants across government,
contractors, debt and equity funds participated
in a market sounding survey designed to
understand how market participants view:
○ the risk profile associated with the
future infrastructure pipeline;
○ the most critical risks associated with
the future pipeline and the party more 40 market participants responded to the
appropriately positioned to take on market sounding survey.
these risks; and
○ the confidence in the market to adapt to

6yrs
a sudden increase in infrastructure
projects.
● 93% of participants had over 6 years of
experience in infrastructure with over 35%

>
having national coverage.

All participants were executives or

managers in their respective sectors
and 93% had more than 6 years of
experience in Australian Infrastructure.
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Market Soundings

Overview of the market sounding interviews

● Critical Risk Assessment: What are the critical risks to the financing, development and delivery of infrastructure? How do these vary across
asset class (transport/health/energy), project types and project size?
● Changing risk dynamics: How are these risks evolving, and are they different today than they were 2-3 years ago? What is the future risk
landscape?
● Which projects are most risky / least risky? Please compare across sectors and geographical locations
● Risk sharing: Considering the most critical risks, who is best placed to bear these? Are these typically properly priced?
● Risk contracting: What is your current appetite to lend into infrastructure PPPs and other privately financed projects? Are there impediments?
● Recent risk performance: How have recent PPPs performed, in transport and social infrastructure, from financing to full operation PPPs?
Which have been most prominent in recently completed projects?
o Utilities / in ground risks
o Interface risks (third parties) - in construction
o Tunnelling (ground conditions) - generally not financed
o Patronage/demand - WestConnex; transferred on toll road;
o Activity based prices (health)
● Mitigations: How well are risks understood and mitigated in Australia/Northern Australia, relative to practices elsewhere?

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