Guidebook on Risk Analysis Tools and Management Practices to Control Transportation Project Costs (2010) / Chapter Skim
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Pages 80-119
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From page 80... ...
In reviewing the situation, it became clear that market forces had a substantial impact on the bid prices, a much greater impact than anticipated by the project planners and estimators. The manner in which work is packaged into individual contracts affects contract prices and must be accounted for when estimating project cost.
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From page 81... ...
The contract packaging approach should be known when the baseline estimate is created. In some instances, contract packaging decisions will be made later in the design phase due to a change in scope or realization of a major risk.
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From page 82... ...
In cases of large projects, the decision may be made as early as the Planning Phase. Decisions regarding innovative procurement methods, such as best-value or qualifications-based procurements, should be made in the Programming Phase or very early in the Design Phase.
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From page 83... ...
Utah State University Innovative Contracting Website The FHWA sponsored the development of an innovative contracting website to provide decision support for innovative contracting methods. A screen clip of the website is provided in Figure D1.2.1.
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From page 84... ...
NCHRP 10-49 Improved Contracting Methods for Highway Construction Projects The project reviewed relevant domestic and foreign literature; surveyed the construction industry; identified and evaluated contracting practices with consideration to compatibility with the low-bid system, impact on SHA resources, product quality, and risk allocation; and developed guidelines for three nontraditional contracting methods: warrant, multi-parameter, and best value. The agency's final report that contains the findings of the literature review, discussions of current use, and analysis of survey results has been distributed to all state highway agencies.
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From page 85... ...
561: Best-Value Procurement Methods for Highway Construction Contracts. Transportation Research Board of the National Academies, Washington, DC.
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From page 86... ...
What does it do? Risk checklists serve as a final step in the risk identification process to ensure that common risks are not overlooked.
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From page 87... ...
resources affected • Project in the coastal zone • Project on a scenic highway • Project near a wild and scenic river • Project in a floodplain or a regulatory floodway • Project does not conform to the state implementation plan for air quality at the program and plan level • Water quality issues • Negative community impacts expected • Hazardous waste preliminary site investigation required • Growth inducement issues • Cumulative impact issues • Pressure to compress the environmental schedule Organizational Risks • inexperienced staff assigned • losing critical staff at crucial point of the project • insufficient time to plan • unanticipated project manger workload • internal "red tape" causes delay getting approvals, decisions • functional units not available, overloaded • lack of understanding of complex internal funding procedures • not enough time to plan • priorities change on existing program • new priority project inserted into program • inconsistent cost, time, scope and quality objectives Project Management Risks • Project purpose and need is poorly defined • Project scope definition is poor or incomplete • Project scope, schedule, objectives, cost, and deliverables are not clearly defined or understood • No control over staff priorities • Too many projects • Consultant or contractor delays • Estimating and/or scheduling errors • Unplanned work that must be accommodated • Communication breakdown with project team • Pressure to deliver project on an accelerated schedule • Lack of coordination/communication • Lack of upper management support • Change in key staffing throughout the project • Inexperienced workforce/inadequate staff/resource availability • Local agency issues • Public awareness/support • Agreements Right-of-Way Risks • Utility relocation may not happen in time • Freeway agreements • Railroad involvement • Objections to Right-of-Way appraisal takes more time and/or money Construction Risks • Inaccurate contract time estimates • Permit work windows • Utility • Surveys • Buried man-made objects/unidentified hazardous waste Regulatory Risks • Water quality regulations change • New permits or new information required • Reviewing agency requires higher-level review than assumed Sample Risk Checklist from the Minnesota DOT: No. of lanes • Traffic volumes • Level of Service (LOS)
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From page 88... ...
• Utilities • Staging/detour • Bridge approach costs • Temps and shoefly Retaining walls • Type • Cross sections • Aesthetics • Drainage • Right-of-way impacts • Utilities • Soils/foundations Traffic • Design speed • Functional classification • Roadway type • Access locations • Traffic movements • Traffic volumes • LOS analysis • Signal warrant analysis • Crash data • Safety systems • Lighting warrants • Signing • Striping determination • Airports • Foundation analysis Water Resources Engineering (WRE) • Alignments • Profiles • Cross sections • Drainage areas • Existing conditions • Impervious areas • Banking • Waterway analysis • DNR • Corps • Watersheds/WCA/BWSR • NPDES/PCA/MS4 • City/county coordination 88
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From page 89... ...
maps • Plats • Site plans • Coordinate with city/county • Permits • Alignments • Profiles • Cross sections • Drainage elements • Retaining walls • Noise walls • Bridges • Construction staging Railroad • Aerial photos • Alignments • Profiles • Cross sections • Drainage • Retaining walls • Noise walls • Bridges • R/W maps • Plats • Railroad office coordination • Construction staging Earthwork • Alignments • Profiles • Soil borings • Intersections • Drainage elements • Subsurface drains • Foundation analysis • Contaminated soils – remediation Noise walls • Alignments • Profiles • Land use maps • Traffic volumes • LOS • Traffic classifications • Utilities • R/W impacts • Municipal consent • Historic property review • Drainage elements • Airports • Aesthetics • Wall type • Foundation analysis Maintenance • Maintenance elements/issues • Drain tile • Anti-icing • HOV bypass • Snow storage • Snow control Transportation Management System • Traffic Management System (TMS) , Intelligent Transportation System (ITS)
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From page 90... ...
When to use it? Use assumption analysis during the risk identification process.
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From page 91... ...
Experts can be utilized during risk identification, risk assessment, planning, or any other point where the project team would appreciate additional opinions.
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From page 92... ...
The SWOT analysis can be used to begin brainstorming, but can also be used to supplement existing risk identification.
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From page 93... ...
Figure I2.7-1. SWOT analysis example.
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From page 94... ...
Risk management planning involves the thoughtful development, implementation, and monitoring of appropriate risk response strategies. It is the process to develop and document an organized, comprehensive, and interactive risk management strategy; determine the methods to be used to execute a risk management strategy; and plan for adequate resources.
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From page 95... ...
Risk mitigation and planning 9. Risk allocation 10.
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From page 96... ...
While estimators must include a contingency with each estimate, noncomplex projects do not warrant a detailed risk analysis and contingency development. However, estimators should clearly document the contingency percentage.
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The contingency percentage is intended to include both the known but not quantified and the unknown costs. What does it do?
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From page 98... ...
The Caltrans Project Risk Management Handbook will be utilized as primary reference and guideline. Approved By: ____________________________ ________________ Project Manager Date Roles and Responsibilities Project Manager responsibilities include: • Incorporate the resources and time required to execute the Risk Management Plan in the project budget and schedule • Develop, distribute and implement this Risk Management Plan • Develop and update the Risk Register with the support of the Project Team and incorporate it into the work plan • Coordinate with the risk owners to monitor risks and implement risk response strategies Project Manager Support or Risk Officer responsibilities include: • Support the Project Manager in developing and updating the Risk Management Plan and the Risk Register • Maintain updates to the Risk Management Plan and the Risk Register • Maintain a list of risk and response strategies of all the projects in the district • Update the Sample Risk List and the lessons learned database (http://pd.dot.ca.gov/pm/PMPI/LessonsLearned/index.asp)
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From page 99... ...
. This project will will not use quantitative cost risk analysis This project will will not use quantitative schedule risk analysis This project will will not use decision tree analysis This project will will not use other quantitative methods Period of Risk Management Meetings and Full Review of Project Risk Meetings for the purpose of discussing and making decisions on Project risk will be held: Weekly ________ Bi-Weekly _________ Monthly __________Other____________ The risk management identification, analysis and response planning process shall occur during project initiation document (PID)
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From page 100... ...
Example Figure R3.3-2 and Table R3.3.1 illustrate the contingency percentages used by the Ohio and California state DOTs, respectively. Tips When using a contingency percentage, two steps are needed to make the process work effectively: 1)
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When choosing the appropriate contingency percentage in a Type II risk analysis, consult the range of contingency from the percentage contingency tool and then review the top 20 percent of the prioritized risks to ensure that the contingency is adequate. Use an expected value estimate for estimating the 101
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From page 102... ...
. Tips To successfully confront the effects of project risk, risk analysis must be applied with a broad view of risk; concentration on the technical risks can lead to oversights in other project dimensions.
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The use of Monte Carlo analysis is typically facilitated by experts in this field who work closely with estimators, project team members, and subject matter experts. 103 Pr ob ab ili ty Cost Most Probable Cost (m)
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From page 104... ...
Monte Carlo analysis can explicitly incorporate the risk knowledge and judgment of the estimators, project team, and subject matter experts for both cost and schedule risk events. The technique can reveal, through sensitivity analysis, the impact of specific risk events on the project cost and schedule.
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From page 105... ...
In addition to the total cost ranges shown in Figure R3.5-1, an additional output of a Monte Carlo analysis is a tornado diagram. The tornado diagram is a graphic depiction of a sensitivity analysis.
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From page 106... ...
In the earliest phases, they benefit risk identification, and in the latest stages they benefit risk management. When used, the workshops must be conducted well in advance of finalizing the cost estimate because project managers and cost estimators need sufficient time to incorporate the findings into the project plans and estimates.
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From page 107... ...
Risk identification and quantification are typically the primary objectives of the workshops. Without proper facilitation, participants can deviate from these objectives to risk mitigation, value engineering, or issue solving rather than identifying and quantifying them for later mitigation efforts.
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From page 108... ...
Project Info such as: Cost Estimate (in Excel Spreadsheet) Environmental Documents R/W Parcels Information R/W Cost Estimate Other pertinent information 7 PROJECT TEAM Hosts Workshop CREM and Region Coordinators DIRECT WORKSHOP 12 PROJECT TEAM RISK MONITORING AND CONTROL Track identified risks, monitor residual risks, identify new risks, execute risk response plans, and evaluate effectiveness throughout the project life cycle and maintains Risk Mgmt.
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From page 109... ...
• YELLOW: Indicates that the activity is moderate risk. Moderate risk events are either high likelihood/low consequence events, or they are low likelihood/high consequence events.
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From page 110... ...
In a quantitative risk analysis, the P × I matrix can be used for an initial assessment of risks before a more precise measure of probability and impact is made for probabilistic calculations.
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The end result is a scrutinized list of risks in order of their potential impact to project objectives.
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From page 112... ...
It can then be used as a communication tool or as a tool for risk planning.
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What is it? A risk breakdown structure is an extension of a risk register that is typically used to document, evaluate, and allocate risks.
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From page 114... ...
The risk register documents the identified risks, the assessment of their root causes, the areas of the project affected (e.g., work breakdown structure elements) , the analysis of their likelihood of occurring, their impact should they occur, the criteria used to make those assessments, and the overall risk rating of each identified risk by objective (e.g., cost, time, scope, and quality)
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From page 115... ...
Sample risk register (Caltrans)
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454-5454 (212) 121-2121 Risk Owner@dot.ca.gov AVOIDRisk Trigger(s)
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From page 117... ...
It serves as a database of all the project risks and is used especially during risk identification and documentation of risks. It is also used to generate standard reports such as the top 20 risks by cost; top 20 risks by delay; top five risks by project, qualitative analysis, and quantitative analysis; and custom reports such as new or retired risk entities.
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From page 118... ...
Thus, the tool can be used during identification, assessment, analysis, planning, and control. The tool also includes a way to retire risks after they no longer pose a threat to project objectives.
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From page 119... ...
119 Figure 3.13-2. Risk data in the risk management information system.
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