RP2.3-06 Risk Governance for Procurement in Future Fuels

Executive Summary

For all major infrastructure projects, one key issue is successful supply chain management. Late delivery of procured items, potential safety risks as a result of counterfeit items, and failure to meet expectations for levels of service are among the common issues which result in cost and schedule blowouts and significant reputation damage, potentially affecting the development of the entire industry sector.

For the speedy development of a future fuels sector in Australia, it is important that early projects are successfully executed. A key issue for all major infrastructure projects is successful supply chain management. This research project aims to support risk management in procurement in the context of future fuels. The central research questions are:

  • Why have recent significant procurement failures in the gas industry and elsewhere occurred? What can be learned from them?
  • What are the risks associated with the procurement process in the gas industry and what risk governance practices can be used to prevent the recurrence of procurement failures in the context of future fuels?

The following research activities were carried out to develop recommendations and practical guidance for member companies involved in development of pipelines, hydrogen generation and storage, production of biogas and renewable power generation:

  • Literature review, focused on lessons learned from procurement failures. A booklet on failure cases and procurement lessons has also been produced (click on the green text to access this resource);
  • Study of current procurement practices used in the gas sector via fieldwork (e.g. interview research) and the development of process maps which show the typical procurement processes that are used; and
  • Development of a best practice risk governance framework for procurement which takes into account the new and novel aspects of future fuels project activity.

Download project summary

Download procurement lessons learned booklet

Download procurement risk governance framework booklet

Further information:

Webinar – 17 April 2023

While procurement risk is generally well managed in the gas sector, there is always room for improvement and value in reflecting on procurement issues posed by future fuels projects linked to hydrogen, biogas and other possible fuels. Join Prof Jan Hayes of RMIT and a panel of industry experts to understand how their latest research has developed an understanding of these practices to improve risk governance in the gas sector and across the energy sector more broadly.

The outputs from this project have been made available to all/any interested parties (i.e. both within and outside the CRC community):

Login Full project details are available to participants of the CRC, please login or contact us to create your account.
Commencement / End Date May 2021 to December 2022
Outcomes / Impact

The intended outcomes from this project are an understanding of critical gateway points in the procurement process and the practices that can be implemented to improve risk governance in the gas pipeline sector. These aims will be achieved by development of a risk governance framework for procurement of materials, equipment and services particularly in the context of future fuels projects.

Such understanding will encourage the diligent and established application of risk mitigation measures in the procurement practices implemented for future fuels infrastructure and technology development. Risk management in procurement in the context of future fuels will help to ensure that societal expectations for safety are met and that the reputation of organisations and new technologies are protected.

Partners RMIT University, Metcalfe Engineering, JP&A, OSD Pipelines, APA Group, Jemena, Woodside, Enscope, Momentum Engineering, Spiecapag Lucas, Edgen Murray, Beach Energy, Nacap, SA Department of Energy and Mining
Research Contact

Dr Stephen McGrail

Research and Education Program Coordinator