Engineering Governance

PRESS RELEASE

"At a function held yesterday in Wellington, the Institution of Professional Engineers New Zealand (IPENZ) launched a new guideline for the management of engineering activities in public and private organisations.

Speaking at the launch, IPENZ President Sir Ron Carter said "in today's intensely competitive environment enterprises and organisations are demanding more from their assets and personnel. This makes the management of risk exceedingly important".

A major group of risks in many organisations relates to their engineering and technological activities yet he added "many organisations do not realise this. They have good systems to identify things such as foreign exchange or political risks but not engineering or technological risks"

The globally competitive business environment has had the effect of lowering costs, improving services and empowering consumers. It has, however, forced companies " to gnaw away at the comfort zones which, in a less competitive world, gave them some protection from ignorance" said Sir Ron. He added "margins of safety are reduced, quality requirements are enhanced, social values are involved and duty of care is owed to a much wider audience".

Back-grounding the development of the document, IPENZ CEO Mr. Warwick Bishop said, "IPENZ has decided to produce this policy that would allow organisations to have a reference point against which they can measure their own processes for managing these engineering risks".

In his concluding remarks, Sir Ron said, "prudence is a word that all those with governance responsibilities have in their vocabulary and it is now enshrined in legislation such as with the Companies Act. What IPENZ is merely doing is showing that to be prudent, organisations have to apply that simple word in an engineering as much as in a financial sense".

The policy reads:

RISK and PRUDENCE

ENGINEERING GOVERNANCE IN PUBLIC AND PRIVATE ORGANISATIONS

IPENZ Recommendations for the Prudent Management of Engineering Activities
in Public Companies, Local Authorities and Crown Agencies

Introduction

The Institution of Professional Engineers New Zealand (IPENZ) is the
professional body representing engineers and technologists in New Zealand.
It has produced these guidelines to assist directors, councillors, and
executive managers in public companies, crown agencies and territorial local
authorities with the prudent management of their engineering assets and
operations.

Rationale

Adherence with this policy will assist directors and executive management,
and those with statutory responsibilities for compliance with the
legislative requirements, to show that they have acted prudently and have
followed "best practice" in setting up appropriate processes and
accountabilities. Compliance with this policy will also assist in ensuring
that engineering activities are managed in support of the broader business
activities.
Applicability

These guidelines are designed for public companies, crown entities,
government bodies and territorial local authorities which either

(i) Rely intensively on engineering and technology to deliver or produce
their services and products.
Or
(ii) Engineering-related risks are a significant proportion of the total
business risk.

Board Positions

Organisations should ideally have at least one Board Member with a
recognised professional engineering background. That person will, in
addition to their normal Board responsibilities, be expected to add an
engineering and technology perspective to Board policy making. The Board
should also recognise that it may need to take advice on engineering matters
from both within the company and from external sources.

Executive Management

Such organisations should have: -

(i) A person or persons (as appropriate) with clear responsibility and
accountability for engineering and technology matters. This person should
be eligible for professional membership of a recognised engineering
institution.
The position description should include responsibility for ensuring that: -
(i) The engineering and technology policies are embodied within the business
policy and strategies.
(ii) Engineering risks are properly evaluated and considered in evaluating
business risk.
(iii) The engineering and technology applied in the businesses meet `best
practice' guidelines.

Business Processes

The organisation should have within its strategic business processes: -

(i) A regular performance audit of its engineering policies (including human
resource policies applying to engineering personnel) against industry `best
practice'.
(ii) an engineering risk evaluation programme

Conclusion
Adherence to this policy will assist those with governance responsibilities
to show that they have acted prudently in managing the engineering resources
entrusted to them.

R P CARTER KNZM

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