- Leighton Contractors is one of Australia and New Zealand's largest contractors, operating across construction, resources, telecommunications and other industries. It has more than trebled in size in recent years to over $12.5 billion in work. - The company aims to implement an enterprise-wide approach to formalized risk and opportunity management to improve performance, develop a risk-aware culture, and provide additional value to clients. - It has rolled out a common risk management process and software system across its projects and operations to facilitate identification, assessment, and proactive management of risks and opportunities.

1. Karl Davey CEng CPRM FRMIA Leighton Contractors

2. Leighton Contractors Leighton Contractors was established in 1949 We are one of Australia’s and New Zealand's largest and most diverse contractors with operations spanning construction, resources & mining, telecommunications, industrial, energy, infrastructure investment and facility management In recent years, we have more than trebled in size, and grown our work in hand to over $12.5 billion

3. LCPL ERM Objectives Implement a robust formalised approach to risk and opportunity management Breakdown silos and improve operational performance Develop a proactive risk & opportunity aware culture Enable the business to retain and harness knowledge To use risk and opportunity management to re-enforce LCPL capabilities, creditability and provide addition value to our clients and stakeholders.

4. LCPL ERM Scope Organisation Wide Enterprise Risk (& Opportunity) Management Business Resilience Safety Essentials Catastrophic Risk Operational Review Project Safety Stakeholder Business Crisis Quality Environmental & & & & Management Operational Health Community Strategic

5. LCPL ERM VisionTo retain and utilise knowledge to the benefit of the business Tender and Tender and contingency contingency Risk analysis LHL and Board Knowledge Knowledge Contract valuation reports Knowledge Knowledge • Risks to the Risks to the • Risks/ Opps to the Risks/ Opps to the Risks & Opportunities Risks & Opportunities Tender. Tender. renewal/disposal renewal/disposal to Delivery requiring • Tender Risks • Tender Risks • Tender R&O • Tender R&O Management • External Risks • • SHE • • D&C Risks • D&C Risks • Operational risks • • Operational R&O • Operational R&O • D&C Risks • • Operational risks • Operational risks • SHE • SHE Operational R&O • SHE • SHE • LFE • LFE Crisis Management • Opportunities • Opportunities Closure/Renewal Closure/Renewal Execution/Operation Tender Tender Business and Strategic Risk and Opportunity Management Business and Strategic Risk and Opportunity Management Improving business decisions and maximising return for our stake holders Improving business decisions and maximising return for our stake holders

6. Original Status (April 2008) Risk and Opportunity Management Practice 9 Live Projects, 13 Tenders Active Community 10 to 15 regular practitioners General Usage Inconsistency approaches Lack of Analysis and Proactive Management skills

7. Issues identified Management system Material must reflect and support actual process and requirement References and templates inconsistent No true process Cost Risk Analysis Guidelines Process clarify required Inclusion of best practice Risk Management Lack of foundational knowledge Lack of support infrastructure Lack of Risk Manager/coordinators

8. LCPL ERM Implementation Strategy Develop common policy and process Develop Maturity and Culture Provide training and awareness Implement Standard Product Help Desk and SME network Combine ‘Top Down’ with a ‘Bottom Up’ approach Board Mandate Operational process quality

9. LCPL Risk & Opportunity Management Risk Management Mandatory on tenders and projects/operations in execution. Quantitative Analysis of risk and opportunity date is Mandatory on all tenders over AUD $10m. SHE and Crisis & Catastrophic Risk to be managed as part of the risk management process (Prevention) Use of standard system mandatory for all risk & opportunity management

10. Delivering LCPL ERM

11. Process: Standard Business Wide Process Comprehensive identification Objective &consistent assessment Understand and communicate the current position Effective strategies Prevention Control and Monitor Recovery To focus management attention The key to risk management is ‘Management’ Risks will not go away just because they have been identified

12. Process: Engine

13. Safety EssentialsChanging the way we do Business The Safety Essentials set the minimum and non-negotiable requirements that must be met to help keep our people and sites safe. The Essentials are tailored to suit each Divisions requirements and type of business. Essentials by identify where and how critical risk is managed in any business activity regardless of the type of operation.

14. Proactive Management Proactive = Manage the Risk or Opportunity Identify ownership of mitigation actions The right person in the right place to pursue action The person with the necessary skills to make it work Schedule and review action progress Action start date Action deadline Report on the effectiveness of actions Prioritise

15. Risk Recovery & Crisis mgt Assume Risk may happen Identify controls To monitor and keep a working watch should the situation change Early warning and situation control Identify Contingencies Responses If the risk occurs, what now Damage Limitation Identify Recovery Plan Alternative strategies Return to business

16. People: Support Infrastructure Governance, Risk and ComplianceGroup Risk Management Team Regional / Business Unit Champions Functional Champions Safety & Health Construction Governance Team Operational Review Team Environmental Resources Group IT Controls & Planning Engineering Investment & Facilities Mgt LCPL Service Desk IT Industrial, Energy & Telecommunication Business Planning Crisis Mgt Business Planning Vendor Service Desk 15

17. People Expand involvement (Joint Risk Management) For a risk aware culture, identification should include all perspectives

18. People: Training Risk Management Foundations Induction awareness What is risk Company procedures and requirements Quantitative Analysis Developing internal capabilities Cost and Schedule Analysis Understanding risk drivers Risk Management Software Solution Training Getting the best from the system Highlighting benefits to the project/business

19. Support InfrastructureOnline Knowledge and Advice

20. Product Risk management needs be supported like any other business critical system. Common System Allows common training, process and consistency Distribution and reporting packs Supports the full risk management process Grows as the teams maturity grows From Qualitative to Estimating and Quantitative Analysis Reflects International Best Practice But aligned to the business fit Project area specify scoring, terminology criteria Yet enables roll up and consolidation Multi level security Risk, Project, Organisational, Area Role/Function Based (System Functionality) To meet the requirement Leighton Contractors selected ‘Active Risk Manager’ a web based enterprise risk management solution.

22. Identify key risks & opportunities Assess Risks & Opportunities identify/review controls and actions Visibility, Understanding, Management Manage & Focus Review & Repeat Implement actions, controls and recoveries. Review effectiveness & Monitor performance

23. LCPL Risk and Opportunity Management & Active Risk Manager (ARM) Status Current Practice Standard Qualitative & Quantitative R&O approach R&O Process & Software 284 Live Registers (115 Execution/Operation, 169 Pre-contract) 160+ Historical areas Usage Over 546 + regular unique users (last 30 days April-May) Scope covers, Project, Operational, Business, Strategic, Preventative Crisis & Catastrophic Risk Management Safety, Health Environmental Risk Management Usage for internal operations eg: Group IT, Business Continuity

24. Risk Management in Action

25. ARM ERM Configuration System Aligned to the organisation and reporting structure. All LCPL Staff see full structure Allow limited access to Third Parties

26. Delivery Phase Risk Management Proactive preventative actions and controls

27. Delivery Phase Risk Management

28. Delivery Phase Risk Management

29. Using Information

30. Business Unit Portfolio Analysis Business & Strategic Risks Portfolio Analysis of Tenders and Operations Risk Roll up: Understanding and consolidate exposure across Projects, Knowledge Sharing Risk Escalation of common risks.

31. Corporate Reporting Business & Strategic Risks Risk Escalation of Critical & Key Issues

32. Where Next Business Performance and Maturity Dashboards Ensuring we practice what we preach Early warning of issues

33. Business Benefits Consistency Common proactive risk & opportunity built around enabling consistent support and understanding Knowledge Database Retained risk and opportunity intelligence available across the organisation Understanding Allows function to view most relevant content GM can look at top critical items in their business Creditability Demonstrates importance of Risk and Opportunity Management to Clients, Regulators.

35. Enables defined accountabilities for individual risk management actions

36. Provides great resilience to the management process.

38. Greater visibility of key risks.

39. Increased client understanding

40. Ability to share best practice and reduce spend

42. Sharing best practice

43. Wider focus on potential impacts to Environment/Safety/Reputation

44. Demonstrate understanding and innovation

46. Ability to escalate issues

47. Enables Proactive Management

48. Normalisation

49. Consistency

50. Common understanding

51. Process Application

52. Process adherence

53. Process effectiveness

54. Retained Knowledge

55. Lessons Leant

56. Knowledge base

58. Karl Davey CEng CPRM FRIMAManager, Risk Management Governance Risk and AssuranceLEIGHTON CONTRACTORS PTY LIMITED ABN 98 000 893 667Level 8, Tower 1, 495 Victoria Avenue, Chatswood NSW 2067T +61 (0)2 8668 6896 F +61 (0)2 8668 6666 M + 61 (0) 409366868E Karl.Davey@leicon.com.auwww.leightoncontractors.com.au