A Lesson from Risk Management of the Jindalee Operational Radar Network (JORN)

Mayor (Tek) Jon K. Ginting, Perwira TNI AU, sedang tugas belajar di University of New South Wales at the Australian Defence Force Academy, Anggota Dewan Penasehat Harian TANDEF

Abstract

The Jindalee Operational Radar Network (JORN) is aimed to enhance the Australian Defence Force (ADF)’s capability of the northern sea and air approaches to Australia. It is basically an expansion of the previously existing Jindalee Radar Facility Alice Springs (JFAS) which uses over-the-horizon-radar (OTHR). The existence and operation of JFAS appeared to contribute Defence’s confidence to apply similar operational concept in a larger scale. For this need, Defence appointed Telstra Corporation Ltd (Telstra) as the prime contractor, responsible for providing two sky-wave OTHRs.

In the progress of this huge project, risks were not properly managed. In spite of Telstra’s annual risk management plans, the application of risk management seemed to be inappropriate and not as required by the project situation. The Jindalee Project Office (JPO) acting on behalf of the Defence to manage the project also failed to follow-up Telstra’s incapability in handling the risks. JPO had actually criticised the risk management plan, however, no further formal follow-up was made afterwards. The risks appeared to be bigger and more difficult to handle, resulting in significant delay and budget overrun of the project. The Australian National Audit Office (ANAO) concluded this project to be the failure of both the Government (Defence) and the prime contractor (Telstra).

Introduction
As a part of Australian maritime surveillance capability portfolio, the Government decided to develop a capable radar network to ensure Australia’s maritime security from any incoming threat from the sea. This radar network is expected to provide significant strategic advantages for the country, primarily in the perspective of Defence. The Defence then took initiative to develop a network named Jindalee Operational Radar Network (JORN). It was based on the experience gained from the existing Jindalee over-the-horizon-radar (OTHR) at Alice Springs. Defence appointed Telstra to deliver this capability from designing, developing, installing up to presenting phase of the new capability. The overall cost of this project reached AU$1.1 billion.

Notwithstanding Defence’s confidence from the previous OTHR, it was found that several arising risks could not be well-managed by stakeholders involved. The project failed to meet the completion schedule set up at the initiation of the project, resulting in increasing cost of the overall project development. In spite of Telstra-provided risk management plan, the project encountered significant delay, budget overrun, and finally a handover to another contractor. This failure has appeared to be a priceless lesson for the Government, particularly Defence in making more careful conceptions of its capability development in the future.

The genesis of JORN
RADAR, abbreviated form of RAdio Detection And Ranging, works by transmitting frequency energy to a particular, “distant” target and receiving a part of those scattered energy returned to its origin. Hence, the direction and range of the target can be determined. Sinnott (1988) suggests subsequently that, to improve the radar height, the ionosphere layer of the atmosphere can be used. It serves to reflect and bounce the radar signal.

Therefore, it is not surprising that Australia used this advantage of OTHR to establish JORN. JORN is basically an expansion of the previous Jindalee Facility Alice Springs (JFAS)’s OTHR, operated by RAAF’s No.1 Radar Surveillance Unit (1 RSU). The idea was to manage the use of two OTHRs. Radar 1 is operated from Longreach (QLD) with 90° coverage, whereas Radar 2 is operated from Laverton (WA) with 180° coverage. The expansion and improvement were found necessary as JFAS’s OTHR suffers from degraded performance at night, dusk and dawn resulted from ionospheric disruption. Also, it was found inaccurate in providing necessary resolution to vector fighter aircraft onto air and naval target (ANAO Report 1996).

The risks of the project
The project was organised and managed under Defence’s Jindalee Project Office (JPO). JPO was responsible to deliver the project’s primary objectives:

• to provide the Australian Defence Force (ADF) with broad-area surveillance of aircraft and ships in Australia’s northern approaches, at ranges of 1000 to 3000 kilometers, and
• to develop Australian industry capability to support OTHR operations, maintenance and evolutionary development.

In signing the procurement contract with Telstra in November 1991, the risks of the project were realised by the Government, particularly Defence. These included:

• extensive local development of an unproven design and operational concept entailing a high level of technological complexity, dependent on leading edge computer software;
• a difficult system integration task, compounded by geographic dispersal of system design and development activity;
• exposure to the vagaries of the ionosphere;
• the prime contractor’s inexperience with OTHR.

Financially, the ceiling/cost incentive contract between Defence and Telstra provided for:

• a target price of $685.5 million (April 1991 price);
• a maximum (ceiling) price payable by Defence equal to the target price plus 60% of any cost overruns up to a maximum of 10% above the target price—yielding a ceiling price of $754.1 million (April 1991 prices);
• a financial risk share where Telstra was responsible for 40% of any cost overrun up to the ceiling price and for 100% of all costs that exceeded the ceiling price;
• a savings share provision that entitled Telstra to 40% of the savings if JORN
  was completed for less than the target price.

Management of the risks
In Uncertainty, risk, and their management, “risk” is defined as “the implications of uncertainty about the level of project management achievable”. It suggests that the more uncertainty in a project, the greater the risk will be. Risk management is also about the good business practise of making decisions based on the structured collection and analysis of information. Consequently, there must be a proper and well-structured risk management plan for such a big project like JORN. The inexperienced prime contractor in OTHR provided a considerable uncertainty, thus a serious set of risks.

With regards to the risks, Telstra Corporation Ltd through its Applied Technology
Division provided its annual Risk Management Plans. These had been criticised by the JPO, however, it didn’t make any follow-up. This lack of formal action to insist on full-compliance to the risks management appeared to be one of JPO’s performance drawbacks. It was so because there was little evidence that the risk management process was working, and the JPO should have followed that up to make sure it worked better. Despite Telstra’s risk management revision in April 1996 (upon Defence’s advise), ANAO found the failure of the prime contractor to provide the Risk Abatement Plan1 capable of providing information such as:

• a statement of risk, consequences of failure, recommended risk abatement method; and
• risk-reduction implementation impact statements for cost, schedule and technical impact.

On the other hand, the JPO as the primary entity in managing this project failed to apply a formalised and systematic risk management approach. This resulted in the failure of converting the JORN risk management information into Risk Abatement Plan. In fact, it became worse as the JPO didn’t raise this as an issue. Subsequently, it seemed that the JPO had treated the JORN’s risk with standard reactive management practices (although it was understood that Telstra was inexperienced in OTHR technology). Of all the JORN medium and major risks, only three were treated by formal Risk Abatement Plans provided to Defence(1) in accordance with the JORN contract (ANAO Report 1996). For a $1.1 billion project like JORN, this is obviously unreasonable.

A significant "milestone" resulted from this poor risk management was the rescheduling of JORN’s completion from June 1997 to 1999, and proposing another revised completion date of June 2000. In February 1997 Telstra relinquished its JORN project management role to RLM Management Pty Ltd (RLM). After some due diligence studies and contract negotiations, RLM managed to deliver JORN’s capability to Defence in May 2003 Final Acceptance. ANAO Report 1996 concludes that "the project has achieved its major objectives, namely: to provide the ADF with broad area surveillance of aircraft and sea-going vessels in Australia’s northern approaches; and to develop Australian industry capability to support OTHR operations, maintenance and evolutionary development."

Conclusion
JORN is a very big project aimed to deliver a new capability for Australia’s maritime surveillance system. In spite of successful operation of the previously existing OTHR in JFAS, when deciding the expansion of JFAS into JORN, the Commonwealth of Australia realised some risks would arise. Telstra as the prime contractor was inexperienced in OTHR technology. It provided its risk management plans, however, it was not consistent and didn’t meet contract requirement. On the other hand, JPO as the primary entity on Defence’s behalf responsible to deliver JORN’s capability, failed to make formalised and organised follow-up with regard to Telstra’s unsatisfactory risk management plans. In this huge project, it had been found that the two parties (the Government, particularly Defence, and Telstra) have failed in managing the risks, resulting in many consequences such as budget overruns and significant delay.

Reference List
Anonymous, n.d., Uncertainty, risk, and their management.

Mabbs, S., Graham, J., Pollock, J., and Rodert, J., n.d., Demystifying Over the Horizon Radar (OTHR) through Effective Training Aids, Permian Defence Systems.

McNally, Ray, 1996, ‘Jindalee Operational Radar Network Department of Defence’, in The Auditor-General Performance Audit: Audit Report No.28 1995-96, Australian National Audit Office, Canberra.

Sinnott, D.H, 1988, The Development of Over-the-Horizon Radar in Australia, Defence Science and Technology Organisation.

Wylie, Bob n.d., Managing risk in public projects: A Case Study of Jindalee Operational Radar Network, UNSW@ADFA, Canberra.

---Footnote:
(1) In fact, Risk Abatement Plan summaries are issued by Telstra since March 1993. However, it is not consistent and not as required by the contract (ANAO 1996).