Risky Decisions Creating Better Infrastructure Outcomes

J. Preston & D. Alexander (Beca HunterH2O, Newcastle, Australia)

When projected future growth is pushing hard up against system capacity, how do you justify moving away from long held water storage requirements? How do you defend a treatment plant upgrade to a questioning regulator when a warming climate is wreaking havoc with water quality?

These are just two examples of situations where risk-based processes were used to support infrastructure decisions in a logical, structured and repeatable manner. In collaboration with water utility staff, major capital upgrades have been deferred or rescoped and defensible justification for decisions recorded for stakeholder scrutiny.

When defining a problem, a risk-based approach encourages consideration of four elements – the event itself, the ways in which it could occur, the consequences if it does and the likelihood of those impacts being felt. Recognising the wealth of knowledge that resides within a water utility, operational experiences and system performance are explored to identify known and reasonably foreseeable disruptive events. Building on this information, failure scenarios are jointly developed and the outcomes modelled to replicate the system and customer impacts. Risk ratings are agreed and the results compared to service level requirements or risk appetite expectations, with any gaps clearly identified.

These gap identification outcomes vary between utilities. The desire to take or avoid risk is influenced by the utility’s capacity, operational resilience, stakeholder requirements and community expectations. Breaking a situation down into its components and comparing these to the agreed risk targets enables deliberate and objective decision making, thus avoiding blanket risk aversion or unsubstantiated risk taking.

Understanding the drivers to a risk event paves the way to identifying what levers can be pulled when crafting a solution and closing the identified gap. Capital investment isn’t always the best answer; changes to network operation practices or strengthened contingency planning could achieve the desired future state with a fraction of the cost outlay. The value of this risk-based approach will be demonstrated in case studies that resulted in:
• The deferral of a $10M reservoir based on the customer impacts experienced from 32 failure scenarios
• A 50% reduction in size of a clear water reservoir after examining network supply interruption risk levels
• Justified support for a treatment plant upgrade to provide capacity to treat the impacts of bushfire and algal contamination risks via a process that took current and future risk into account.

Adopting a risk-based approach not only provides a structured methodology for addressing a specific issue, but it also establishes a level playing field that enables equitable comparison across a range of diverse infrastructure challenges. Collaboration with water utility staff builds robust understanding of the drivers for change, establishes clear links between operational management and future planning decisions, and provides objective and defensible justification for investment decision outcomes. 

Embracing risk aware processes in the formation of the new water entities under the Three Waters Reform Programme also provides a unique opportunity to embed a positive risk culture from the outset – it simply becomes the way you work.