Integrated project risk management for residential recycled water schemes

Abstract

In Australia, recycled water schemes have been implemented in residential developments to contribute to sustainable urban development, enhance water supply security and reduce pollutant discharges to the environment. However, a proportion of schemes have been delayed in commissioning, placed on stand-by or prematurely decommissioned well before the end of the scheme design life. Subsequently, the Australian Productivity Commission has questioned the robustness of the project assessment and decision-making practices adopted by the urban water sector. Despite considerable research on recycled water schemes, few attempts have been made to characterise the complex array of risks to the long-term viability of schemes or to define critical risk factors for which targeted management measures may be developed. To date, the risk assessment and management practices for recycled water schemes have pertained to environmental and public health risk only, with limited attention provided to the broader array of project risks. Consequently, the overarching aim of this thesis is to establish an integrated project assessment framework which incorporates critical risks to the long-term viability of residential recycled water schemes in an integrated manner. The study was based on a pragmatist philosophical foundation where practical outcomes and real effects were considered vital components of the research. A mixed method design was applied, where qualitative and quantitative methods were used to enable complementary and convergent research findings. The nature of the risk knowledge being sought was the construction of critical risk factors, with recognition that these constructions are subject to on-going revision as contextual conditions change. Through a case-study analysis of 21 residential recycled water schemes in Australia, 34 risk factors arising from six sources - physical, social, political and regulatory, implementation and operation, financial and economic and legal and contractual – were identified and characterised. The critical risks to the long-term viability of residential recycled water schemes, based on historical occurrence, comprised: unanticipated operational costs, legal and contractual arrangements, regulatory requirements and approval process and customer complaints and customer expectations not met. Despite continued concern pertaining to the public health risk of recycled water, the research findings concluded that public health impacts have been low to date. A national survey, developed on the basis of the defined risk factors, enabled the collection of complementary data to refine and verify the critical risk factors. At present, the inability to demonstrate an incontestable business case is posing a significant risk to the long-term viability of residential recycled water schemes. Political, regulatory, organisational and financial factors were also rated as critical risks, in addition to community risk perception and fall in demand. The survey results shed further light on the regulatory environment of residential recycled water schemes, with regulatory participants rating public health risk, assessment and design, environmental value and environmental health risk substantially higher than other participant groups. Through practice-oriented case studies, an integrated project assessment and risk management framework was developed for residential recycled water schemes. Three key areas of prioritisation for project risk management were identified as: • Organisational and stakeholder risk management: early engagement and collaboration; alignment of project objectives; allocation of benefit, cost and risk between stakeholders; • Robust data collection, management and dissemination practices: improved processes for capturing benefit, cost and risk; performing uncertainty analysis and enabling informed and consistent economic evaluation; and • Development of competencies in both project management and change management: contingency planning and enhanced attention to the human and behavioural aspects of project management. The integrated project assessment and risk management framework developed through this research study provides purposeful measures for managing the critical risks to the long-term viability of residential recycled water schemes. While the integrated framework will not solve the immediate challenge of demonstrating an incontestable business case for residential recycled water schemes, it provides an informed starting point. Improved organisational and stakeholder risk management; robust data collection, management and dissemination practices; and the procurement of competencies in change management, will significantly aid progress towards the development of a robust, transparent and incontestable business case for residential recycled water schemes.