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Risks and Opportunities in Irrigation Infrastructure Development Stephen McNally INZ Conference, Hawkes Bay, 2014.

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Presentation on theme: "Risks and Opportunities in Irrigation Infrastructure Development Stephen McNally INZ Conference, Hawkes Bay, 2014."— Presentation transcript:

1 Risks and Opportunities in Irrigation Infrastructure Development Stephen McNally INZ Conference, Hawkes Bay, 2014

2 What is risk? Something that may inhibit your ability to meet your objectives Is that anything and everything? Probably, YES!!

3 Why Opportunities? Can adverse situations be turned into positive outcomes? Taking a long term view Sometimes, YES!!

4 How big is the ring fence? Is it within your ability to manage and influence? What can you do about it? Can apply to a Scheme Development or an on Farm Irrigation System decision But ≠ same complexity of process

5 How far ahead do you look? Over what timeframe do you assess risk? Will short term decisions affect long-term outcomes? How will risk and opportunities be traced through decision making processes?

6 Prosperity, Resilience, Growth SMART Irrigated farming provides a core economic base underpinning NZ’s economy and community Addresses the management of reliable and resilient water resources Meets the needs of rural and non-rural communities Process of collaborative decision making

7 Reliable water supplies Making water available to professional farming operators …. Provides enhanced land management tools Improves decision making around water use, and nutrient management Irrigation provides flexibility for future options for land management.

8 Making the right call All activities of an organisation’s development aspirations involve risk and opportunities An investor needs to be well informed to make a confident decision to commit funding to a project

9 Levels of Service (LoS) Critical element of any infrastructure development is determining the Levels of Service Both in short and long term timeframes Appropriate to needs and desires of water users Not so high as to cut deep into scheme unaffordable

10 Level of service criteria … Reliability of water supply high on the list – Hydrological reliability, and – System maintenance downtime Ease of managing individual water takes Timeliness of information – Planned and unplanned supply disruption Frequency and accuracy of billing information

11 Hand in hand Risk management and level of service go hand in hand within an irrigation infrastructure development One informs the other in a cyclic pattern Across the life of the scheme Maximises the opportunity for efficiency and effectiveness Target Service Level Gather Data Analyse Risks Manage Opportunities Reflect and Review

12 You are not Eeyore Not about being risk averse or a doomsayer Adopting good risk management process allows organisations to better understand and accommodate risk within their development Able to determine the risks to success (= LoS) What expertise should be addressed to those risks and at what stage Where stakeholders should focus their efforts to the greatest effect

13 Risk register can be substantial! Business case drivers – local affordability, international markets Political environment – policy and regulations Funding – timing, availability and due diligence, NPV, ROI Technical risks – source to demand, design, construction Operational risks – uptake, levels of service, $ sensitivity, skills Natural environment risks – baselines and extreme events Organisational risks – governance and management skills External stakeholders – supporters and antagonists Communication – internal and external Legal – structure and statutory Health and Safety – own and third party …

14 Risk Assessment Be structured in how you assess and deal with risk Consider – Significance – Likelihood – Timeframe for incidence – Management strategy – Fair and appropriate allocation – Direct cost – Indirect cost – Monitoring, Review and Decision documentation

15 Risk allocation Making sure risk is correctly allocated between parties Those affected by and who can influence the outcomes Essential element of organisational behaviour Accepting a fair apportionment of risk Using that knowledge to make decisions about future provisions Weighing up the costs and benefits

16 Multi-criteria decisions Of course it is not simple!!! Early output needed is a decision criteria matrix What is important and when in the timeframe A clear set of priorities Helps organisation evaluate each opportunity or risk that it encounters Even if they are future events

17 Lots to think about

18 Whole of life consideration

19 A Typical Scenario – Upper Waitaki Scheme Existing scheme established in 1960’s Facing significant change to consent conditions annual volume allocation Consideration of scheme governance and relationships to others in catchment Impact of change of irrigation system on land use, water bodies and environment Improvement to water and power infrastructure and technical challenges Altered level of service, flow, pressure, reliability Affordability and funding Community stakeholder support and communication Outcome  structured decision support

20 Applied at farm level decsions Droughts and floods Combination of light sandy and variable peat soils Existing drainage infrastructure Limited power supply in district Complex consent conditions for water extraction Change of ownership pending including corporate and iwi Multiple funding sources with implications on business case Sensitive environment and heritage values Limited local equipment services Outcome  supportable progress

21 What Opus can do to help Engineers, scientists, planners and project managers providing independent, technically- focused services … Irrigation developments – schemes and on-farm systems Technical risk assessments – multi criteria analysis Dairy farm engineering – effluent ponds, structures Water Resources Sciences – hydrological modelling and catchment management Hydraulic Engineering – rivers and open channel flow management Flood Management – flood bank design and emergency planning Farm environment /nutrient plans – riparian and wetland design Environmental Assessment – Ecology and biodiversity Maori Business Services – consultation and cultural assessments Rural planning – resource consents and planning advice (esp. NPS rule changes)

22 Who to Contact Renee Murphy, Hawkes Bay 027 436 1706 Stephen McNally, Wellington 027 687 5299 John Leatherbarrow, Canterbury Projects 027 612 7313 Ian Walsh, Otago 027 626 0666

23 Thank you

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