Environmental risk and compliance: Common pitfalls and opportunities

Sea cliff bridge along Australian Pacific ocean coast near Sydney, Australia

WolfPeak helps organisations manage their environmental risks and compliance requirements to avoid penalties and project delays.

Infrastructure; whether it be in energy, water, transport, health, educational or the arts; is critical to the prosperity of communities. And well-planned, appropriate and effective infrastructure can benefit the environment. 

But for all the benefits, there are impacts too. Projects of all sizes affect their local environments and communities in some way or form. That’s why Government agencies enforce strict regulatory requirements that, if complied with, control and mitigate the risks and impacts to an acceptable level.  

Managing environmental risks and achieving compliance can present significant challenges to organisations charged with delivering infrastructure projects. 

Derek Low, General Manager at WolfPeak, explains that strong risk and compliance processes are invaluable tools in a project’s success.   

“They are an important way to provide assurance to senior management and Boards, Government regulators and the community that the project is meeting its environmental requirements,” he says. “It’s also a mechanism delivery teams can use to identify and address compliance risks before they are realised, and drive continual improvement in their environmental performance.” 

There are consequences for non-compliance. Violations can attract penalties from $15,000 to $5 million, with criminal conviction possible for the most serious offences. There have been several significant and high-profile prosecutions over the last decade in NSW alone; spanning road projects, wastewater services, mining and chemical manufacturing. And Derek says that project delays due to compliance breaches can also pose significant costs that are often not talked about or quantified. 

“Fines and prosecutions are expensive and have serious implications for individuals and organisations (as they should). But beyond this, regulatory action attracts a significant burden on both the regulator and the delivery organisation. Investigations (whilst completely necessary) tie up resources that would otherwise be directed at project delivery or, in the regulator’s case, policy innovation.

“This negative effect is two-fold. Firstly, people are redirected from their normal work to conducting the investigations, compiling evidence, responding to regulator’s enquiries and implementing corrective actions and this creates a general drag on resourcing. Secondly, the redirection of these resources means that there are fewer resources available to focus on current activities or to look to the future. The inability to plan ahead, and monitor and manage works in real-time increases the risk of incidents or additional compliance issues down the track, and stifles progress.

“Most significant, however, is the burden of delay. Incidents and non-compliances can prevent works from commencing or proceeding,” he says. “Delays or operational downtime can easily blow out to the millions. Robust risk and compliance processes do attract costs, but these are minuscule when compared to the costs associated with actual incidents or regulatory breaches.”

There are three primary service areas that WolfPeak provides in this space – risk assessments, independent audits, and compliance support.

“We can provide an experienced team of specialists who can review the client’s risks and obligations, and recommend and support implement actions to appropriately address each,” Derek explains.  

WolfPeak is a leader in independent auditing, providing independent assessments of how a project is performing against the relevant criteria and delivering recommended actions to address any deficiencies. “We provide this service on some of the most important projects in NSW including Sydney Metro, Warringah Freeway Upgrade, M4 East, Sydney Gateway, Port Botany terminals, Moorebank Intermodal and scores of schools and hospitals to name a few. 

“Our risk, audit and compliance experience flows through the entire organisation. For projects where we are not fulfilling an independent expert role, we can help businesses navigate their often complex environmental and planning compliance obligations by embedding one of our compliance experts to work within the business,” Derek adds. “That means our expert is integrated into their teams, and can help to develop compliance processes on the front line from the moment the project contract is awarded or even during the tendering process.”

This service helps businesses avoid the common compliance pitfalls that can tend to lead to project delays and potential fines or other actions from regulators. Here, he sets out the two common compliance pitfalls that WolfPeak helps companies overcome:  

1. Compliance resourcing and maturity

Compliance is a complex process with many moving (and often mutually inconsistent) parts. It requires an organisation-wide approach to be effective, and satisfactorily fulfilling each step in the compliance process needs to be tightly managed. 

Large, mature organisations typically have several layers of assurance in place across departments. However, smaller, less mature businesses may not have the same layered commitment to assurance.  

“Smaller organisations tend to run with leaner teams, and some of the required assurances may not be given the adequate resources they require to ensure risks are managed and compliance is achieved,” Derek explains. “But with the significant infrastructure investment in Australia, these smaller organisations are winning larger, and more complex projects. So on these projects, it is not uncommon to find deficiencies in important processes or controls. We have seen this through the social infrastructure (schools and hospitals) and transport sectors and, more recently, in the renewable energy space. 

“These deficiencies can arise from the delivery team not having the adequate capacity, knowledge or experience in the relevant compliance framework; or simply from program pressures, which has become increasingly true with the number of projects being delivered in parallel and without sufficient staffing to do this effectively. 

“This resourcing/capability shortfall has spiked in 2021 – 2022 and is expected to persist through to the end of 2024. And whilst the shortfalls are widely known; regulatory requirements, client and community expectations remain unchanged (as they should) and project programs are not being relaxed. So, managing risk and compliance remains critical, but it’s getting harder for (smaller organisations in particular) to achieve.”

WolfPeak helps businesses overcome this problem with expert compliance advice through a project’s life cycle.   

2. Interfacing and compliance on mega projects

Struggling to manage risks and compliance is not confined to smaller organisations though. Large and complex organisations working on mega projects also face challenges. 

“On these mega projects, there are a number of organisations involved in the project’s delivery. Each operates under their own systems (as well as the system of its parent). For each organisation, there may be hundreds of people with different or overlapping responsibilities and skill sets. Thousands of people (across these organisations) are required in all, and all (regardless of their role or organisation) are working under a single approval,” he explains. 

“The scale and complexity of these projects mean risks or compliance issues can be missed, or repeated.

“Having well-organised responsibility and compliance matrices, that are committed to at the senior management level, communicated downwards through project team and understood by the responsible people, and (most importantly) actively managed both within and across project teams so that a compliance culture is promoted is just so valuable. 

“Once teams are clear on their role and responsibilities for certain risks or compliance obligations they can plan and implement actions accordingly. Teams may require inputs or help from others in the organisation to fulfil compliance obligations, but if each person is clear on their responsibilities, and the right culture is developed, then compliance can be achieved without unnecessary pain.” 

Derek has noticed that some project approval compliance requirements get pushed onto environment teams, and this can be misplaced, exasperate resourcing issues and cause compliance bottlenecks.     

“Environment teams have historically had the closest relationship with the regulators and are typically the ‘custodians’ of the project approval. Further, project approval conditions can sometimes be poorly structured or worded. The outcome of these starting points is that a number of compliance requirements – even those that have little to no relation to the environment – often end up becoming the responsibility of environment teams,” he says. 

“A classic example is conditions requiring that the Environmental Management Plan (EMP) include sub-plans and procedures relating to traffic and access. Whilst it’s true that project traffic and changes to access do pose amenity impacts on the local environment and community they are not well placed in an EMP. And what ends up happening is that (because it a project approval requirement under the EMP) these plans are allocated to the environment teams for delivery.  The problem with that is environment teams (even with inputs from traffic experts) are not be appropriately resourced or suitability trained to deal with some of those issues. This can cause delays, mismatches in documentation compared to physical works, or missed opportunities to implement best practice or innovation.

“Another common issue we see is the allocation of site or design compliance requirements solely to environment teams. Effective environmental compliance (and innovation) is best achieved when those in control of design, construction and operation have full buy-in on the requirements. For example, a construction site can only comply with water quality requirements if sufficient funding, plant, equipment and construction methodologies are applied. Infrastructure design that complies with approval conditions can only happen when design teams understand the relevant requirements and they are incorporated early in the design development process. The environment teams can add value, for sure, but full compliance can only occur when each relevant person or team understands their responsibilities and have sufficient support (whether it be financial, physical, technical etc) to make it happen.  

“Safety systems and safety compliance culture have had a generation’s head start in this process and have done well in embedding safety compliance in everything we do. Environmental compliance has advanced significantly over the last two decades but still has room for improvement. Highly skilled compliance professionals who understand complex requirements and can communicate these effectively are invaluable to a project’s success.”

WolfPeak has skilled experts that can help project teams establish compliance frameworks and drive capability and culture to minimise the compliance burden and risk. But Derek says it’s critical for development and project delivery companies to seek compliance support early. 

“We can be most effective when we’re brought in as early as possible in the project lifecycle,” he concludes. “We can help develop and implement compliance processes and procedures to keep the project on track, and even help companies understand compliance costs and resource demand to include in project scope and tender documents. Early compliance planning can help avoid unexpected roadblocks and project delays down the track when they are most expensive.”     


Need expert compliance support to keep your project on track? Get in touch to find out how WolfPeak can help prevent non-compliance penalties and project delays. 

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