## 5 Discussion of the Australian HSR Risks
### Concept Phase Risks Preventing Realisation
#### 5.2.2 Construction Risks Transfer  
Mega projects are also mega in risk, so planning to manage and mitigate risks from the inception of the project is vital to its success. _\"These mega projects have huge, huge risks\"_ says P5.  
As noted in the literature review, risk allocation is one of the most critical factors for managing large-scale projects. This is also seconded by this P2, who recommends _\"find out what risk allocation is viable\"_. [PERSON], the leading scholar on megaprojects, recommends a 50-60% risk contingency to cover potential cost blowouts. This is echoed by [PERSON], who anecdotally shared,  
_\"I had a conversation with a counterpart in Victoria several years ago now, and his assessment was whatever the cost estimate is, you need 60% of that in contingency. That's an ungodly number that no treasury would ever invest in. But you have a look historically and a lot of like [PERSON]'s insights, and yes, 60% is probably not bad\"._  
The survey participants in this research also identified a greater-than-average risk contingency as a top priority, a conclusion supported by the AHP analysis. This ranked in the top 3 percentile amongst the other questions. P4 agrees, adding, _\"In the UK now, they've realised that typically the contingencies are 50%, not 5%\"_. This highlights the widespread understanding of needing larger contingencies for complex projects [71]. [PERSON], however opposes this idea, stating, _\"I don't think 60% is the right answer\"_, claiming that you would never build anything otherwise.  
[PERSON] further explains that the challenge is that no project would move forward with a 60% risk contingency, as it is far too large for approval. Instead of a fixed percentage, [PERSON] advocates for a probabilistic approach to risk estimation. A lower contingency is appropriate for more predictable greenfield projects, whereas brownfield projects--especially tunnelling--may require up to 100% contingency due to their _\"surprise package\"_ nature.  
_\"If we look at New South Wales rail projects in general, and Victorian ones and Queensland ones, they consume, anecdotally, I would say, at least a third of their contingency by the time they get through tunnelling\"_, [PERSON] observes.  
The issue of risk allocation between the government and contractors is further exacerbated by the onerous contracts imposed on contractors.  
_\"The government's passing a significant amount of risk to the contractors, and the contractors are having to swallow that risk\"_, says [PERSON].  
_\"Contracts are too onerous\"_. Furthermore, as [PERSON] points out, _\"Government by de facto takes on, takes back risk it has contracted out\"_, because _\"it's not like government can use itself\"_.  
An example of this dynamic is the Sydney Light Rail project, where Acciona sued the NSW government for $1.1 billion due to misleading or deceptive conduct related to unmapped utilities under George Street. The contract did not account for such unknown risks, and the government ultimately bore the responsibility [33].  
_\"Oftentimes, in a lot of cases like [utilities], they don't have sophisticated BIM models for their entire network. And so inevitably, you start on a bit of a back foot because you go to market for your tunnelling packages and government, the client, ends up on risk for so much because the tunnelling contracts, like, you give us a guarantee that this is all the utilities and you can't\"_, explains [PERSON].  
He further notes the additional complications surrounding heritage and archaeological concerns. _\"For heritage, for archaeological, we've got really wonderful but stringent rules around heritage finds, both European and Indigenous. And so, tunnelling contractors are just like, you've given me the crappiest, you know, bit of Geotech investigations. We've got no idea where the utilities are. Government, you're 100% on risk\"._  
These examples highlight the complexity of managing risk in Australian megaprojects, especially when it comes to the unknown factors that arise during construction.