Outline of Presentation

1. Thiess

2. Remediation in Australia

3. Management of uncertainty

4. Allocating risk

5. Stakeholder management

Thiess Services

• Australia’s oldest and largest

remediation contractor

• owned by Leighton Holdings

• core businesses

– Env. & Engineering Services

• Remediation design & delivery

• Environmental monitoring

• Occ. Health & Hygiene

– Asset & Infrastructure

– Energy

• first remediation project in 1984 – Rum Jungle

• successfully remediated over 130 sites

• remediation projects values at av $60M /yr

Remediation history

• 1980’s

– US Firms (e.g. GTA) kick-start local expertise

– Initial development of awareness due to Lednez dioxins in the late 80s

• 1990’s

– Armidale in NSW and Ardeer in Victoria bring focus locally, following

trend set by Love Canal (US).

– Olympics clean up in Sydney.

– Audit system begins and NEPM (99) introduced.

• Noughties

– Union Carbide and Lednez in Sydney and West Melbourne Gasworks.

– Evolution and leapfrog of State regulations.

– Spotless dispute and court case (2004-2007)

• Now

– Orica Carpark, Hunter River Remediation, HMAS Platypus, RAAF Pt

Cook.

– NEPM amendment 2013

Technology development

• Simple bio in 90s, engineered cell mid to late 90s, complex in

noughties

• Thermal develops from simple DTD early 90s → ITD late 90s,

→ batch conductive early noughties,→ complex DTD mid

noughties

• Simple immobilisation (cement) mid 90s → chemical fixation

late 90s → complex (tar etc.) early noughties.

• Soil washing. Earl attempts fail – late attempts fail.

• Insitu technologies emerging late noughties. Chemox

forerunner. Thermal yet to be taken up.

• Soil treatment facilities – only VIC approval so far. Watch this

space

Some large projects ($20M +)

• Others?– Sydney

Olympics

($60m x 17

sites)

– Pasminco

($30m?)

– Barangaroo

– Brooklands

Green

– BHP

Newcastle

– Orica

Southlands

– ADI

• St Marys

• Footscray

Project Type

Value

($M) Contractor

Hunter River Remediation Project (sediment) Industrial Facility 405 Thiess

Former Union Carbide Site, (Lednez) Rhodes Chem Facility 81 Thiess

Penny's Bay Remediation, Hong Kong Industrial Facility 65 Thiess

West Melbourne Gasworks Gasworks 63 Enterra (JV)

Orica Car park Waste Encapsulation Chem Facility 63 Thiess

Dandenong Waste Treatment Plant Landfill & Hazwaste 50 Goldsmith

AGL Mortlake Gasworks Gasworks 47 Thiess

Allied Feeds Site, Rhodes Chem Facility 47 Thiess

Varsity Lakes Creek Station Landfill & Hazwaste 44 Thiess

Newstead RiverPark Gasworks 38 Thiess

Cape Lambert Landfill Relocation Landfill & Hazwaste 31 Thiess

RANAD Newington, Silverwater Landfill & Hazwaste 27 Thiess

RAAF Point Cook FTA Defence 27 EPS

HMAS Platypus Gasworks 24 Thiess

Homebush Bay Dioxin Remediation Chem Facility 22 Thiess

Key issues with remediation

• Uncertainty

• Risk management

• Contract type

• Stakeholder

management

The Age. 1 November 2012

The US approach…

“ There are known knowns; there

are things we know that we

know. There are known

unknowns; that is to say, there

are things that we now know we

don't know. But there are also

unknown unknowns – there are

things we do not know we don’t

know. ”

Describes remediation projects

perfectly!

Characterisation of Uncertainty

• Improper site characterisation is

generally cause of much uncertainty.

• Consultant is not contractor and does

not view data in same way.

• Design out the uncertainty through

remediation site characterisation.

Remediation design – A process

Environmental Investigation

• Does a problem exist that requires active remediation ?

• Basis of Design

– what, where, when, why, who, how much, from and to

• Screening of options - short list

Remediation data - data gaps for short list

• Concept and Preliminary designs –

– Feasibility analysis - inputs, outputs, cost, schedule

• Detailed design for Selected Option

– 50%, 80%, 95%

Remediation Design – Who does it?

Consultant Contractor

Investigation data **********

Basis of Design ******* ***

Screening of options ******* ***

Remediation data *** *******

Concept / preliminary

design and feasibility

study

*** *******

Detailed design ** ********

Investigation data

• Found in investigation reports / RAP / tender

– Location, zoning, landuses, history

– Geology, hydrogeology, hydrology, geotechnical

• Soil types, porosity, water saturation, particle size, density

• Groundwater depth, flow, composition

• Soil, fill, thickness and structure maps, groundwater maps

• Soil and groundwater contaminants and concentrations

– Footprints and depths

– Volume and mass

– Contaminant concentrations and mass

– Concentration maps, soil and groundwater

• Uncertainty and Data Gaps

Investigation data – volume & mass

• Most investigation sampling is biased

• All volume estimates are wrong

• All cost estimates are wrong

• Many uncertainty estimates are wrong

• Uncertainty = contingency

• Remediation sampling seeks to be

representative

Many types of risk…

ITRC – Project Risk Management for Remediation. March 2011

Risk management

• Contracting/delivery strategy sets the stage for how risks are managed

• Key risks when remediating complex sites include– scope and nature of contamination (driven largely by criteria)

– regulatory requirements (Can they be satisfied? At what cost?)

– technology cost and performance

– offsite impacts of remediation works

– residual liability

• Comprehensive investigation targeted to remediation outcomes is a must– Contractor involvement early when scoping investigations

essential

– Contractors should be given opportunity to undertake independent sampling and treatability testing

• Contractor involvement in design/permitting phase is a must for large & complex sites (maximises flexibility, reduced risks)

Risk management (cont.)

• Residual liability risks:

– ownership of onsite containment

– ongoing site management/restrictions

– groundwater remediation invariably not

comprehensive

– validation sampling and analysis is performed on a

statistical basis (pockets of contamination may

remain)

– Such risks most commonly reside with site

owner/developer

• Prices quoted reflect degree of risk the Contractor is

asked to bear (in some cases risks cannot be priced!)

Risk vs Price

Final Price

Overhead &

Margin

Contingencies

Estimated

Direct Costs

Lower Risk = Lower Price Higher Risk = Higher Price

Alternative Project Delivery Systems

ProjectPhases

Alt

ern

ativ

e D

eliv

ery

Sys

tem

s Project Management

BOOT,Alliancing,Mang. Contr.

Design & Construction

Document & Construction

Construction Management

Traditional Contract

Key

Op

era

tio

ns

Co

ns

tru

cti

on

Pro

cu

rem

en

t

Do

cu

me

nta

tio

n

Des

ign

Deve

lop

me

nt

Co

nc

ep

tD

eve

lop

me

nt

Pro

jec

t D

efi

nit

ion

Inc

ep

tio

n,

Fea

sib

ilit

y &

Q

ua

lifi

ca

tio

n

Submission Phases

Contract Design/ Construction Phases

Tender, Negotiation and Award

Client Activities With/Without D&C Adviser or Consultants

Co

mm

iss

ion

ing

Payment mechanism extreme #1 - Lump sum

Goal:

Reduce Costs

Limit Liability

Contractor services to Client:• Provide guaranteed fixed remediation price

•Specified Plans, Costs, Schedules with

Guaranteed Outcomes

• Obtain Regulatory Closure of the property

Contractor

as

Guaranteed Fixed

Price Contractor

Associated

Environmental

Remediation

Liability (ERL)

Client

Sites

Contractor

as

Incentive Fee or Target PriceContractor

Associated

Environmental

Remediation

Liability (ERL)

Payment mechanism extreme #2 –

Incentive based cost reimbursable

Goal:Reduce CostsAlign Incentives

Contractor services to Client:Contract is negotiated and open-book.

Incentive plan based upon milestones and

performance measures.

Fee subject to meeting objectives with

Contractor margin at risk vs goals.

Client

Sites

Cost Reduction Opportunities for Traditional Contracts

Time

Ability to Influence

Performance/Results Cost to Change

Initiation & Concept

Design

Construction

Completion

Types of contracts (Thiess EcoForum 2012)

0

10

20

30

40

50

60

1990 - 1994 1995 - 1999 2000-2004 2005 -2009 2010-now

Nu

mer

of

Pro

jects

Contracting through the last 20 years

LS+SOR+Risk ShareLump Sum & Schedule of RatesSchedule of Rates & AllianceSchedule of Rates

Lump Sum

• It looks like there’s a trend towards more of a risk sharing model.

• Smarter clients, smarter contractors and smarter regulators means it is cheaper, better and faster.

• Mostly SOR due to issues with Lump Sum

Thiess’ Experience

• Thiess takes

community

consultation

seriously– It can make or

break a project

• Consultation

models– Consultant, Client

or Contractor?

• Best result if party

in control of

impacts is involved

Case Study – Rhodes Peninsula

• Dioxin Remediation Projects

– 22 Ha in suburban Sydney

– Excavation of 600,000 m3 soil / sediment

– 10 years duration

Consultation Stakeholders

• Approvals Phase 2002 – 2004

– CRG (Community Reference Group)

– Residents, peak groups, others• Execution Phase 2005 – 2010

– RCCC (Rhodes Community Consultative Cte)

– RCRG (Rhodes Community Reference Group)

– Residents, peak groups, councils, developers

• Greenpeace June 2002

– an incinerator masking as a

– remediation technology.• Greenpeace May 2004

– Incineration threat in Homebush• Greenpeace Feb 2005

– How far are you from.......?

Community Engagement Strategy

Development Consent

• Participation in the RCCC –

Rhodes Community Consultative Committee

• Contact Database and Complaints Register

• 24-hour toll-free Community Contact Line

• E-mail & postal addresses

• Funding for RCCC to “obtain independent technical advice from a suitably qualified person”

Additional

• Quarterly Community Newsletter – 19,000 households

• Monthly Stakeholder Update

• Monthly OH&S Manager Notification

• Project Website

• Site Tours

• Special Presentations eg. “Odour & Health”

Conclusion

"For truly successful companies, the traditional master-servant relationship of project owner and project contractor is becoming obsolete. We have learnt that by sharing the risks, we share the rewards. By getting the fundamentals right, and the client-contractor relationship is the most fundamental of all..."

J Akehurst, Managing Director,

Woodside Petroleum Ltd

• Delivery strategy must suit the project

• Site characterisation must meet needs of remediation

• Improved risk management strategies

– Manage risks through a more co-operative approach

• Align client and contractor goals

• Take the community with you.

Thank you.