Discuss about the potential risks and threats that are normally involved in large-scale infrastructure projects like the Victoria Desalination Project (VDP).
The Victorian Desalination Project supplies water to Melbourne, Geelong along with some other regional areas. It can supply high-quality water whenever required ( Partanen, 2014). Also, it has a life up to 100 years which will help it in supplementing the water needs of the people in times of drought in the future.
Some of the potential risk during the pre-construction phase of the project are as follows:
For a project of this scale which impacts local communities at least in the short run, lack of community involvement or support can pose significant risk to this project (Romer, 2011). If the local community needs, concerns, requirements are not taken into consideration, then their opposition to the project can be a potential threat/ risk to the project. Potential consequences of this risk for both the client and contractor include project delays, cost overruns threatening the financial viability of the project. Hence it becomes imperative for all stakeholders to come together and address the concerns of the local communities involved.
A potential risk of such a large scale project is that care is taken to ensure all the designs are compliant with industry standards and satisfy all technical and legal requirements as well. Any lapse or shortcomings in the design of the project can lead to disastrous environmental hazards, financial consequences which in turn will lead to failure of the stated objectives of the project. For the client, which is the Government of Victoria is this case, it would result in a loss of faith and trust that people have in government and for the contractor it will tarnish its image in the corporate world and will result in loss of future similar projects.
Some of the potential risks during the construction phase of the project are as follows:
Construction Traffic Management Plan is a comprehensive and detailed plan conceived for traffic management during construction of individual structures being built which may impact or cause inconvenience to users of roads, railways, public transport and emergency services. If this plan is not prepared adequately without involving the necessary stakeholders who are likely to be affected or is not adhered to during construction phase, it can cause significant problems for the overall public and make people turn against the project (Partanen , 2014).
Any absence of a comprehensive environment plan which fails to comply with the Environmental Protection Act 1970 and doesn’t have risk mitigation strategies for the environmental hazards detailed below has the potential to derail the project completely. Some of the environmental risks that need to be taken into consideration include but are not limited to the following:
The consequences of not handling these risk could lead to a significant loss of human life and property as well as impact flora and fauna in a negative manner (Dickinson, 2012). The possible consequences for the contractor could be financial penalties and levies, legal fees, time-consuming judicial court cases, loss of public support and damage to its reputation thereby impacting other similar projects of the company too.
Some of the potential risks during the operational phase of the project are as follows:
During the operational phase of the project it is important that the occupational safety of the employees
working in the plant is taken care of and risks to their health and life is minimized as far as possible. Any loss of human life and health during this phase will impact the contractor and show it in a poor light in front of public, government, legal fraternity etc. Also any impact on the health of the employees working in the plant can impact the running of the plant, thereby reducing its ability to supply water to the residents of Melbourne and Geelong.
Desalinated water from the VDP plant is piped to Melbourne via an 84 km underground pipeline. The pipe is of more than 6200 lengths of pipe with each pipe 1.93 m in diameter, 13.5 m long and weighing around 13 tonnes. This pipeline is capable of supplying up to 200 billion liters of water a year and connects into the existing water supply network at Berwick.An underground 220kV High Voltage Alternating Current (HVAC) power cable is also-located with the pipeline to power the plant. Any damages to the pipeline or the power cable can disrupt water supply to the residents of Melbourne, cause environmental damage and impact the lives and health of people working there as well as local communities staying nearby (Haakana, 2014). It can also impact nature, flora and fauna of the plant where the plant is located. Hence it becomes imperative to control this risk and ensure that the pipeline and power cable is always in good working condition.
Lack of Community Involvement risk
The best party to involve the community and get their buy-in would be the Government of Victoria. They can involve the community, explain its benefits to the local public and get their support (Del Pino Lopez, 2011). Having said that the contractor could also help to gain support from the community by sharing their plans, making plans for their relocation, impart relevant skills, give them employment and run community welfare initiatives.
Sub optimal Design Risk
For this kind of a risk, the contractor is responsible, but the government is accountable to the people. Hence Government should be able to control this risk by laying down proper standards and guidelines for the contractor to adhere to and comply with (Dickinson, 2012). This risk can be mitigated by explicitly laying down the design standards to be adhered to in the contract document itself
Construction Traffic Management Plan
The contractor is best suited to control this risk and make proper plans in advance to mitigate the negative impact of the same. Government can check the plans and monitor whether the plans are being adhered to or not and levy penalties, fines if required ( Haakana, 2014).
Lack of Environmental Legal Compliance
Both the client and contractor are responsible that the environmental standards are taken care of during the construction phase, and there is no loss of human life or damage to health, flora and fauna due to non-compliance of environmental regulations.
Occupational and Safety risks to human life and health.
The contractor is best positioned to ensure that there is minimal impact to human health and life due to occupational hazards and safety standards are not compromised with once the project is up and running.
Government can conduct third-party audits to ensure the same.
Damages to Pipelines and underground power cable.
The contractor is best positioned to ensure that the underground pipeline supplying water to public and well as the underground power cable are well maintained and are in a good condition. Care should be taken to ensure that any repairs required to upkeep the pipelines and power cable are done on time to prevent any damage in these assets ( Bicen, 2017).
Of late, world over a lot of alternative dispute resolution ( ADR) processes have come into existence which is cost effective, less time consuming and often beneficial for both the parties involved in PPP ( i.e. Public Private Partnership) infrastructure projects (Dickinson, 2012). The Two ADR processes discussed in brief here are as follows:
Arbitration
Arbitration is today one of the most viable means of dispute resolution, especially for PPP projects. The procurement or concession agreement itself should include provisions for arbitration because of its advantages in speedy resolution of disputes. In this process both the parties to a dispute can choose a neutral and an independent third body known as arbitrator to decide on the dispute as a judge. Both the parties present their cases and arguments to the arbitrator who then in turn takes an informed decision based on the evidence and facts presented before him. This process is similar to going through the formal judicial process but not the same. The advantage of arbitration is that it is less costly and less time to consume to both the parties ( Haakana, 2014). That is why arbitration is a preferred and a good alternative to the conventional court-based dispute resolution process globally in the modern world today. A lot of countries have also codified the best practices and regulations for arbitration process to be as smooth, cost effective and time bound as possible for all parties involved in such disputes.
Expert Adjudication
Adjudication by quasi-judicial bodies having the necessary legal, functional and technical experts with an option to appeal to a multi-disciplinary tribunal body in case either of the parties is not satisfied with the decision is also becoming a preferred method of alternative dispute resolution for infrastructure projects these days ( Dickinson, 2012). This method has many advantages over the conventional court based judicial process. Existence of a sectoral regulator with the necessary sector specific, technical and legal knowledge can prove to be an added advantage for the dispute resolution process. In several countries of the world, there is a statutory time frame within which the adjudicating body has to give its verdict in the dispute. This also helps to speed up the dispute resolution process in infrastructure projects like VDP ( Bicen, 2017).
For infrastructure projects to be successful, countries need to formulate a legal framework which defines the overall broad framework, rules, standards, regulations for PPP projects, the roles and responsibilities of the contracting party (i.e. Govt) and the concessionaire and how they will be discharged and monitored.
Some of the best practices and principals that should be taken care of while drafting of contracts to minimize the occurrence and impact of disputes include but are not limited to the following aspects:
References
Bicen, Y. (2017). Trend adjusted lifetime monitoring of underground power cable. Electric Power Systems Research, 143, pp.189-196.
Bicen, Y. (2017). Trend adjusted lifetime monitoring of underground power cable. Electric Power Systems Research, 143, pp.189-196.
Bicen, Y. (2017). Trend adjusted lifetime monitoring of underground power cable. Electric Power Systems Research, 143, pp.189-196.
Davidson Frame, J. (2014). Reconstructing Project Management. Project Management Journal, 45(1), pp.e2-e2.
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Dickinson, E. (2012). Addressing Environmental Racism Through Storytelling: Toward an Environmental Justice Narrative Framework. Communication, Culture & Critique, 5(1), pp.57-74.
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Haakana, J., Kaipia, T., Lassila, J. and Partanen, J. (2014). Reserve Power Arrangements in Rural Area Underground Cable Networks. IEEE Transactions on Power Delivery, 29(2), pp.589-597.
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