Learn and apply good practice from other capital-intensive industries

Australia's governments can learn from other countries and capital-intensive industries that apply best practice due diligence through front-end engineering and design (FEED) processes.53

Changes in scope, incorrect and incomplete designs, unforeseen conditions and weak interface management are a major cause of variations, claims and disputes for Australian infrastructure projects.

Application of FEED can counter these challenges and improve outcomes by enhancing project definition, costings and scheduling. This makes projects less risky, encourages lower bids and results in fewer variations during delivery.54 Everyone benefits, including the taxpayers that ultimately wear the cost of poor project conception and delivery, and the associated risk and uncertainty.55

Pivotal FEED activities may be conducted in current business case development, reference design creation or assurance processes. The critical difference between these current processes and FEED is that FEED applies a comprehensive and systematic bottom-up approach that focuses on knowledge gaps and their direct influence on outcomes.

It is an exercise in understanding more rather than progressing with the minimum required to satisfy assurance activities.56

Realising the benefits of FEED requires systems, capability and commitment early in project planning and development (see Figure 3.3). Leadership and support across governments is required to ensure the benefits are protected against early project or delivery announcements, premature budget estimates or design solutions without appropriate scoping.

The 2021 Plan recommends best practice due diligence through FEED processes be incorporated into existing processes.57

Implementing FEED will ensure the wider community, including diverse users, will benefit from better-planned, fit-for-purpose infrastructure. For more information on community access to infrastructure, see the Transport chapter.

Figure 3.3: Effective due diligence through FEED delivers better project outcomes

Source: Adapted from Office of Projects Victoria (2019)58