Fauna-sensitive road design (FSRD) seeks to reduce the ecological impacts of transport infrastructure, yet its application in Australia remains inconsistent and context-dependent. This study examines how FSRD is shaped by policy and institutional settings in Queensland and Victoria, combining Institutional Grammar Tool (IGT) analysis of key guidance documents with interviews from 22 practitioners. Results revealed a strong reliance on non-binding language, with guidance framed as recommendations rather than enforceable requirements. Practitioners identified barriers including unclear legislation, poor data access, fragmented responsibilities, and limited influence during early project design. Suggested improvements focused on clearer specifications, stronger legislative mandates, improved interagency coordination, and national standardisation. The findings highlight that FSRD is as much a governance challenge as a technical one. This study provides a timely baseline for assessing reforms such as Queensland’s 2024 Fauna Sensitive Transport Infrastructure Delivery (FSTID) Manual and underscores the need to further embed ecological priorities into infrastructure planning.