Ensuring effective quality and risk management to drive performance

Quality management oversees all activities and tasks that must be accomplished to maintain excellence. It is not just about process, audit, compliance and checking things. Quality management must be holistic, system-based and proactive, to ensure the desired outcomes are met. To achieve this, quality management must integrate effectively with other systems. 

Navigating energy transition and resource allocation  

Let’s take the challenge of renewable energy transition. Carbon dioxide levels are at a 500,000-year high, now breaking through 420 ppm in the atmosphere. To address the energy transition, the global budget over the next 30 years could exceed $25 trillion of capital expenditure.  

However, project performance is getting worse leading to a doubling of unit costs on new assets over the past 25 years, and the average project overruns stretching from just 10% in 1997 to over 35% today. A third of all projects exceed their budgets by 50% with several exceeding by 100%. How can this be acceptable? This is not the right level of excellence for success. 

When we compare project success to global risks, economies in positions of strength have access to finance and resources – materials and people – and are the most critical risks. These risks pose a challenge in achieving the level of excellence required to deliver capital projects in the timeframe and with the right investment.

These projects are essential to decarbonise the world over the next 30 years to maintain sustainability, supply security and affordability. Crucially, we need to adapt to the world’s constant, unpredictable change, often known as VUCA (volatile, uncertain, complex and ambiguous).  

This requires us to think beyond protecting value today and change our mindset about how things might change in the future, which could adversely affect our delivery and quest for excellence.

Christopher Bird, Chair, Riskwell Ltd 

Driving excellence through integrated skills and systems  

When we look at capital development, we must integrate project management, quality management and risk management so they work as one. Not just considering quality or risk as additional disciplines, or at worse a tick box exercise, but skills that integrate to ensure excellence today but more importantly, excellence tomorrow. 

When I consider past projects, quality management has always ensured:   

• continuous improvement  
• organisations’ compliance with process 
• equipment and materials compliance to standards

In the future that we face, these three strands alone are not sufficient. We need to start looking at the risks and challenges ahead, in some cases five years or even 10 years ahead, and create strategies today that deliver the excellence required for tomorrow.

Quality management must have a clear vision of what future excellence looks like. It is critical to understand the challenges that could impact excellence, have sufficient clarity on what future initiatives need to be implemented, and maintain a degree of agility to navigate the threats and opportunities ahead.

Futureproofing excellence   

Quality management and risk management must work effectively together to deliver project management excellence. While quality management still requires protecting value and improving excellence today through statistical control, audit and compliance, it needs to become more proactive to meet tomorrow’s expectations. Afterall, decisions made today, affect subsequent years' performance.  

The question for a quality manager, is not what affects excellence today, but what will affect excellence in one year, five years and even 10 years’, and then develop transformational initiatives to maintain excellence, and ensure a sustainable future for the generations to come.

Christopher Bird, Chair, Riskwell Ltd 

When risk management is robust, it focuses activities to review controls ensuring value protection aligns with the project’s objectives and expectations. But more importantly, it supports the development of strategies and improvement initiatives – beyond the non-compliances from audits – to mitigate risks, secure opportunities and drive future performance.  

With respect to energy transition, we must get better at project delivery excellence. Just imagine, a 20% improvement could release $5 trillion for additional energy transition projects, so net zero, sustainability and affordability become a reality. Quality management is not a nice to have or an extra service but an essential part of future success.