Due Diligence Essentials for Engineers - R2A's New Booklet

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis discuss the new booklet titled "Due Diligence Essentials for Engineers" being authored by Richard Robinson and Gaye Francis. 

They talk about the need for the booklet being that Engineers are becoming more involved in the governance process in providing information to boards, directors and senior people. Engineers are ones aware of the critical things that can go wrong and what boards need to know about for their due diligence obligations under the WHS/OHS legislation.

Other areas of discussion include:

• Whilst most engineers aren't directors and, therefore, don't have the due diligence obligations as spelt out by the WHS legislation, the legislation is specific about duties of designers.
• Engineers can not rely on Standards or Codes of Practice to absolve themselves of liability.
• When should engineers elevate issues to higher levels of decision-makers, and the importance of transparency in their decision-making process.
• Engineers can't be right all the time, but can be diligent. And with Registration of Engineers, due diligence provides a tool to be able to say they’ve done everything that is reasonable in the circumstances to make whatever they’re working on safe.

For more information about Richard and Gaye’s consulting work, head to https://www.r2a.com.au/

The books mentioned in this episode can be found at https://www.r2a.com.au/store

If you’d like to be kept up-to-date with R2A news, including the launch of “Due Diligence Essentials for Engineers”, sign up at https://www.r2a.com.au/newsletter 

Transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss their new booklet Due Diligence Essentials for Engineers.

(00:15):

We hope you enjoy their chat. If you do, please give us a rating and subscribe on your favourite podcast platform. If you'd like to be notified when the booklet is launched, please subscribe to the R2A newsletter. The details can be found in this episode's description or head to www.r2a.com.au.

Gaye Francis (00:38):

Hi Richard, welcome to another podcast session.

Richard Robinson (00:40):

Hi Gaye. Good to be here again.

Gaye Francis (00:43):

Today we're going to talk about our new booklet that we're currently working on "Due Diligence Essentials for Engineers". I guess in the past we've always focused at that director level where the WHS/OHS legislations, in particular, are aimed.

Richard Robinson (00:59):

Yeah, that's right. And that was partly because, in a sense, we were aimed at directors and in fact, the reason why we wrote the little book "Criminal Manslaughter - How Not To Do It" was because getting directors to read a large book (text: Engineering Due Diligence) was an unlikely process.

Gaye Francis (01:11):

That's very true. But I guess in the last little bit we've seen that engineers are becoming more involved in that governance process and providing the information to the directors and the senior people to be able to make those decisions.

Richard Robinson (01:26):

Well, that's simply because the engineers are the ones aware of the critical things can go wrong and just how bad it could be. And they're the ones that they boards need to know about from their due diligence obligations on the WHS/OHS legislation. But as we pointed out, and this is partly what we've been doing it for Engineers Australia because they asked us to sort of follow through on a couple of things, is that whilst most engineers aren't actually directors, so they don't have the due diligence obligations as spelt out by the WHS legislation, the legislation is quite specific about duties of designers. And I'm not entirely sure what engineers do a lot of the time, but much of the time or perhaps most of the time they ought to be designing.

(02:02):

In that regard. I just got a couple of quotes. I've just got the one, I just pulled it out of one of their presentations. It's the duty holder stamp from the Queensland version. Although so far as I know the words are virtually identical everywhere. It's not that I've gone around and compared them all and it is consistent with the Victorian OHS Act, which came in 2004, even though most of the other acts sort of commenced from the Model Act of 2011/12.

(02:25):

But I'll just spell it out: That the duty holder, designers of plant structures or substances, Section 22. A PCBU, that's the person conducting the business, undertaking the legal entity, who is a designer for a plant structural substance that is to be used or could reasonably expect it to be used at a workplace must ensure that all workplace activity relating to the plant structure or substance, including its handling construction, storage, dismantling and disposal, is designed to be without risks to health and safety.

(02:53):

And then the designer has got a duty to test with all those things without risks to health and safety. And then the designer also has a duty to provide the information to the users of whatever they've designed, again to ensure that it is safe to use without risks to health and safety.

(03:10):

So this is a pretty onerous duty and it presumably just applies to the engineers in particular, even though I don't actually see the engineers talking that much about it. Although you and I know that we've actually hammered engineers. You might recall the first time the WHS Act came in in Queensland, it came in the 1st of January, 2012, and we were reviewing doing a SIL study on a ventilation system for a tunnel. And we sort of told the engineers on, I think in November/December, you could do it the old way using target levels of risk and safety before the Act commenced. But if you hadn't decided by the 1st of January and signed off on it, the lawyers would have us all back here in the new year doing it all again. And the engineer said, that can't be right.

Gaye Francis (03:51):

I think we were back in the middle of February, weren't we? <laughs>

Richard Robinson (03:55):

It was quite peculiar because the lawyers said so and it was the duty of designers.

(04:01):

The other points which we need to make, which we actually make in all our presentations, and we're actually doing Expert Witness matter in Queensland, which we better not say too much about because of the confidentiality agreements and so forth. But one of the real problems is that the people against the complaints being made, the engineers, have been using Standards as a design tool and WHS legislation is pretty clear about this. But rather than me sort of saying, and I'll just quote some lawyers in this regard.

(04:34):

Now, the first one is from a fellow called Paul Wentworth, a partner at Minter Ellison, he's commenting on AS7000, which is the high voltage distribution network standard for conductors and so forth. And he's commenting on this just after the Model Act comes in and he says (this is 2011).

(04:52):

"Engineers should remember that in the eyes of the court, in the absence of any legislative or contractual requirement, an Australian Standard amounts only to an expert opinion about usual or recommended practice. In the performance of any design reliance on an Australian standard does not relieve an engineer from a duty to exercise his or her skill and expertise. If you can do better than the Standard and it's reasonable to do so. The legislation mandates that you must."

Gaye Francis (05:18):

And I think we've covered that in a number of podcasts, that Standards are lagging indicators, not lead indicators.

Richard Robinson (05:25):

Well the next one is from Baker & McKenzie from 2009. So this is when it's all being put together. And this is the world's largest law firm at the time - I don't know if they still are - from the Melbourne office. "Engineers cannot avoid liability in negligence or for trade practices at contravention by simply relying on a current or published Standard or Code" That was published in the Engineers Australia magazine.

(05:47):

Now this is kind of odd because we just keep coming across Engineers saying: We've done it to the Standard, it's fine. No it's not. I mean I keep giving that example, the bane of electrical regulators - the home handyman getting the roof space filling with wires and doing themselves in. Well the technology's been moving along, fabulously. Power over ethernet LEDs can run a 25 watt lumineer these days. They're building them into industry. I dunno if you've been in some of these fancy hotels now you push the button, there's a click inside the box and it's actually switching it remotely. That'll be an LED being powered over ethernet meaning it's 48 volts or less extra low voltage wiring. It's very hard to electrocute yourself on 48 volts. I mean, it's possible if you sort of do some weird things, but just touching it wouldn't never do it to you. That's the same voltage that Telstra used to provide to ring phones around the place. So there's 48 volts everywhere with the Telstra network.

(06:47):

Now the problem they've got is AS7000 came out, it's been updated, it doesn't talk about any of this sort of thing that you could put extra low voltage wiring in the roof space and make it completely safe and put all the 240 volts in the wall. And the problem with that is duty to design. If you haven't followed the criteria and a new house is built after all this technology is available and it's not an AS 3000 and you didn't consider the possibility and explain why it was or was not reasonable to put extra low voltage wiring in the roof space and somebody dies, the engineer will be out for a Criminal Manslaughter charge. That's what the legislation says.

Gaye Francis (07:20):

And I think that's one of the purposes of putting this "Due Diligence Essentials" booklet together for engineers. I think the engineers are finding themselves in the middle of the corporate soup. They're dealing with the senior decision makers and the directors. They're dealing with the people that are actually doing the jobs.

Richard Robinson (07:36):

Well the other matter we just did in Queensland, which we better not talk about either. Remember the underwriter and the committee and the lawyers are present and there's a problem with what's got to be done and the two sets of fire engineers can't sign off. And we just turned up with the provisions of the WHS legislation and used it to cut the gordian knot.

Gaye Francis (07:57):

And we've said this on a number of occasions as well. Engineers can't be right all the time, but you can be diligent. So it doesn't say that bad things aren't going to happen. But what we hope with this booklet is it gives the engineers the context in which they find themselves. And I think some of the liabilities that are starting to come to engineers, especially around registration of engineers, potentially, and the due diligence really gives them a tool to be able to say hand on heart stuff: I've done everything that I can that is reasonable in the circumstances to make whatever I'm working on safe.

Richard Robinson (08:32):

Correct.

Gaye Francis (08:33):

So in our booklet, we're sort of going through that combination of the legal context and the way where the engineers find themselves in the environment that they have to work in, but also the tools and techniques that they can use to apply to the different circumstances. And I think as part of this (podcast's) season, we're sort of going through some of the different applications. Due diligence can be applied to any industry, any problem.

Richard Robinson (09:00):

Well, correct, it's a design issue as we keep pointing out. Post event, it's a retrospective design review, it's not a retrospective risk assessment.

Gaye Francis (09:06):

So it doesn't matter whether it's industry based, doesn't matter whether it's a safety and integrity level or a project issue or a safety issue. Due diligence can be applied to all of these things.

Richard Robinson (09:17):

Well, the other problem I've got too, and this is the case, the engineers have to know when to elevate the problem to the next level. If you don't have the resources, I mean sometimes the design engineers, it's within their apparent resources to make it happen. And the legislation's in two parts. First is you obviously can't be pinged if you don't have control. And then to the extent that you do have control, you've done everything you can. Now from the point of view of a design engineer, they might have the resources all have control of the funds to actually make whatever it is they think that needs to happen happen. But they need to elevate that in a way that the senior decision makers, the people who do have the duty to demonstrate due diligence and the criminal manslaughter aspects of that, get it right. And we tend to see a lot of engineers hanging on to the decision making in a way that is quite inappropriate.

Gaye Francis (10:02):

So it's all about that transparency of arguments, isn't it?

Richard Robinson (10:06):

Correct.

Gaye Francis (10:07):

So yeah, being able to elevate it to the right person. And it might even have to go outside the organisation. Like a lot of the government projects that we see in the infrastructure projects, there's so many stakeholders involved that often even the tenderer or the person building the infrastructure doesn't necessarily have the means to determine whether it's reasonably practicable or not.

Richard Robinson (10:29):

I don't want to drag you back into history, but you may recall we have in confidence work where we killed of a major infrastructure project in Victoria and we're still not allowed to speak about it until, what is it, 30 years is up, for the simple reason that if the prime tenderer's find out how much money they spent for something which wasn't possible, the government will not be forgiven.

Gaye Francis (10:49):

I don't know where to go after that comment, Richard!

(10:55):

The booklet that's coming out and we're hoping it'll come out in Spring this year, will be that in between book between our really detailed "Engineering Due Diligence" text and the "Criminal Manslaughter" booklet aimed the directors.

Richard Robinson (11:10):

And that's why it's "Due Diligence Essentials for Engineers" because it's not obviously aimed at the senior decision maker. It's aimed at the engineers who are doing the design process and have to provide the right information the way in which the senior decision maker can actually make a proper defensible decision.

Gaye Francis (11:25):

So it has to be in the context in which they find themselves. And I think sometimes engineers believe that stuff's not applicable to me or doesn't apply to me, and then they just go about doing their things.

Richard Robinson (11:37):

Well, as you said, we're just about to do that expert witness matter in Queensland. And I'm afraid we're probably going to give the engineers involved a particularly hard time because they simply designed to the standard and to the HIPAP guidelines, neither of which will survive the scrutiny under the WHS legislation since it's going to before a judge would probably be held up, we suspect.

Gaye Francis (12:01):

I think some of it, and we talked about this in other podcast sessions, is the confusion of where the WHS and OHS legislation actually sits in relation to other legislation. Like we're talking about planning legislation and other types of legislation. But I mean our experience has been the WHS legislation sits above all of those things and it's the leading legislation and if you take that sort of thinking of how they deal with it, then all the other legislation just sort of falls away.

Richard Robinson (12:33):

You might recall before we started the hazard risk analysis for the Western Sydney Airport for the EOS, we made very sure that the Australian government solicitor agreed with our understanding and that's written up on the first page of that report saying; when the airport, the accredited airport operator and an aircraft and everything else has to be done consistent with the WHS legislation. There's a whole lot other aviation safety legislation has to comply with too. But the overarching one is the WHS legislation. And we don't quite understand why this comprehension, because it's not as though we don't keep talking about it endlessly!

Gaye Francis (13:10):

(Why) it isn't widely known in industry?

Richard Robinson (13:13):

No. Well, we'll see how we go with the next expert witness job in Brisbane. That'll be really quite interesting.

Gaye Francis (13:21):

Alright, so I think we might leave it there today. So watch out for our new "Due Diligence Essentials for Engineers" booklet and we hope you can join us next time. Have a great day.

Richard Robinson (13:32):

Thanks Gaye.