The cost of ignoring risk

Having followed the saga of the doomed insulation program, which culminated in the stepping down of Peter Garrett as Minister for the Environment, I couldn’t help but wonder, did the Opposition Leader and the media ask the right questions?

The debate that dominated the media and the political landscape centred on whether or not the Minister had or had not read the risk assessment report produced by the law firm Minter Ellison. The report, which assessed the program risk and included a ‘risk register’ and management plan warned of the occupational health and safety and training risks associated with the program and recommended the scheme be delayed by three months from its intended start date.

As a practising project manager, I found the debate to be tedious and highly focused on political pouncing without dealing with the issues at hand. There is no way that Ministers could (or should) read every report their departments receive. It would be all that she or he would do. In this case, the Department of Environment commissioned the risk assessment by Minter Ellison, received and read the report and used it to form their advice to the Minister; this is how the public sector works.

As Yes, Minister humorously put it: “Since Cabinet Ministers are incapable of understanding a paper more than three pages long, we put a one-page summary on the front.”

The question in my mind should not be if or if not Garrett had read the report, but whether or not an adequate risk mitigation strategy was put in place.

The $2.5 billion insulation program was a large program by any measure and as such required a structured risk management process. The risk management process may include:

• Setting key milestones at significant points during the project and at completion.
• Measurement of actual progress against planned milestones.
• Recording and reporting of major variances.
• Implementation of risk monitoring and control trigger mechanisms.
• Communication with stakeholders, dispute resolution, and modification procedures.
• Understanding current Occupation, Health and Safety issues.

It appears at face value that an initial risk assessment was undertaken and a risk register produced. It does appear though, that a continuous regulating process and monitoring of outcomes was not in place. Had such continuous process been implemented then when the Minister and department were warned (reportedly 16 times or more), timely and corrective actions and modifications would have been made in accordance with the risk management process.

Had the warnings from industry bodies and various other stakeholders of the ‘extreme’ safety risks that the program posed been factored into the risk management process as part of the early standard stakeholder involvement protocols and a comprehensive risk mitigation strategy devised, and the arising risks monitored, measured and controlled, then the four deaths, 93 house fires and thousands of alleged dodgy installations may have been prevented.

It is clear that the regulation of the program was insufficient, that continuous risk management processes have not been put in place and may potentially have not been understood. The commissioning of a risk assessment exercise and the development of a risk register has been conducted but it appears that no real mitigation strategy or ongoing monitoring and control protocols were set up.

It is also clear that speed was of essence in the implementation of the program and that standard project management processes had not been followed.

In the last few years the Defence Materiel Organisation (DMO) has made significant progress in the field of project management. Having monitored DMO’s programs and followed their declared objectives of being the best project managed organisation in government as well as growing the project management industry and improve its skills base, one could be forgiven in thinking that this kind of progress is being made across all government departments. Sadly it is not.

A lot of work has to be done to ensure that the project management principles and processes are understood and accepted as standard practice in whole of government and that the appropriate competency standards, developmental paths, training and support programs are in place to improve the skills of all staff whose jobs require the use of project management skills. Only then can we ensure the safe, efficient and on time, on budget delivery of taxpayer-funded programs.

This article first appeared in the June/July 2010 issue of The Project Manager, magazine of the AIPM (www.aipm.com.au)