Post on 01-Apr-2015
OHIO PLANNING CONFERENCE
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Florida Department ofTRANSPORTATION
Phillip “Greg” Davis, P.E. Specifications & Estimates Office State Estimates Engineer July 16, 2014
Risk Analysis/Management during Project Development
Ohio Department of TransportationHyatt Regency Columbus
Columbus, Ohio
What is Risk?
Project Management Institute (PMI) Says: “An uncertain event or condition that, if it occurs, has a positive or negative effect on the project’s objectives.”
Florida Department of Transportation
What is Risk Analysis?
Traditional Estimating Contingency is intended to include
all risk known/unknown
Little control of cost and schedule
Reactive
Risk-Based Estimating Risk are clearly identified and
quantified in estimate
Reasonable control of cost and schedule
Proactive
ContingencyContingency
Threat 1, 2,3,etcThreat
1, 2,3,etc
Opportunity 1, 2, 3, etcOpportunity 1, 2, 3, etc
Florida Department of Transportation
Why Risk Analysis?
• Support State Transportation Improvement Program with better cost estimates and schedules Validate cost & schedule for accurate project delivery Replace general project contingency with risk-based cost
• Enhance Risk Assessment/Mitigation activities in Project Management
• Support FHWA requirement for financial plans on major projects by providing risk-based cost estimates
Maximizes the Likelihood of Meeting Budget & Project Delivery Goals
Florida Department of Transportation
PD&E
Design
Construction
Actual
Late
Over
Budg
et
Cost
Time
Projected
PD&EDesign
Construction
(Nationwide Trend)
Typical Project Scenario without Risk Analysis
Florida Department of Transportation
Cost
Time
ProjectedPD&E
Design Construction
Typical Project Scenario with Risk Analysis
PD&E
Design Construction
Actual
On-time
Within Budget
(Nationwide Trend)
Florida Department of Transportation
Project Purpose & Needs
Risk Identification &
Assessment
Risk Response Mitigation Strategies
Risk Tracking & Monitoring
Risk Management Overview
Risk Management is the systematic processof identifying, assessing, and responding to risks in order to manage or reduce potential adverse effects on the achievement of project goals.
Continuous Iterative Process
Florida Department of Transportation
When to Use Risk Management
• Early planning and budgeting• Financial Planning Support• Evaluation of project delivery alternatives• Establishing Risk Allocation
between parties• Preparation of project contract documents• Throughout Project Delivery Lifecycle
Florida Department of Transportation
Benefits of Risk Management• Builds confidence and credibility in project’s estimates• Promotes pro-active practices and early planning to
meet project objectives • Facilitates development of response strategies for all
threats & opportunities• Better allocation of project risks • Facilitates tracking of risks throughout the life-cycle of
the project• Identification of best project delivery method
Florida Department of Transportation
Risk Analysis Workshops
• Collaborative team approach
• 2 to 3 day structured event• Identify and quantify
threats and opportunities• Identify risk management
strategies
Florida Department of Transportation
Who participates in a Risk Workshop
• Project Manager and Design Team
• External Subject Matter Experts
• Internal and External Stakeholders
• Disciplines – Construction– Bridge & Structures– Environmental– Right of Way– Geotechnical– Construction– Utilities– Local agencies– Others depending on
project scope
Florida Department of Transportation
Objectives of a Risk Workshop
• Identify project risk to account for uncertainty in scope, cost and schedule
• Assess project risks by quantifying impacts to cost and schedule:– Likelihood (probability) of occurrence– Impact (if it occurs)
• Analyze the project risks through modeling to develop a baseline risk assessment.
• Produce a Risk Register for future monitoring of identified project risks.
Florida Department of Transportation
Project Team Roles in Workshops
• Provide Project Information:– Project location maps, overheads, etc.– Project cost estimate and backup– Design and construction schedule or flow chart– Develop comprehensive list of risks, typically using
starter risk list• Workshop Support:
– Provide information on project history and key decisions as these items come up in discussion
– Provide input on risk identification, quantification and mitigation
Florida Department of Transportation
Workshop Preparation with Project Team
• Risk Analysis Process Overview• Project Overview & Identify Risk Areas• Develop Project Starter Risk List• Review Base Cost Estimate • Create a flowchart of the project schedule• Assign tasks to the project team members• Set the agenda for the workshop
Florida Department of Transportation
FDOT Risk Starter List
Florida Department of TransportationFlorida Department of Transportation
Functional Area Risk NameInclude Risk
Comments84
Contracting and Procurement Changes in Contract Packaging 1
Assumption is Segment 1 then separate contract for 2/3, low likelihood of change. Currently assuming a 2 month gap between projects, may reevaluate the staggering of projects based on estimated construction duration
Contracting and Procurement
Other Issues Related to Contract Language (Warranties, Liquidated Damages, DBE, Insurance/Bonding, etc.) 1
Contracting and Procurement Delays in Ad/Bid/Award Process due to Addenda or Bid Protests 1
Contracting and Procurement Lack of Qualified Bidders 1
Contracting and Procurement
Other construction projects in region limit supply of labor, bid costs are higher as a result 1 Potential issue, $600 M in lets in D2, twice of normal
Contracting and Procurement Contractor Non-Performance 1
Contracting and Procurement Labor and/or Productivity Disruptions 1 probably not a major concern - review vs. base schedule
Structures & Geotech Changing Geotechnical Conditions (Due to New Information) 1
Segment 1, all design geotech complete (Drilling complete, analysis is in and reports are being completed), very close to final in 90% submittal; Segment 2 not all borings are complete, have some issues accessing properties due to hunting season, there have been issues raised by one property owner about damage to property during drilling. Segment 3, have everything except for OH sign geotech and need some borings at north end for local access road.
Base Cost Variability Review
Florida Department of Transportation
Project Schedule Review
Florida Department of TransportationFlorida Department of Transportation
Workshop Deliverables
• Final report detailing the results of the workshop• Final Risk Register for Project Manager to use
managing the identified risks
Florida Department of Transportation
$533.2
$605.3
$674.4
$360
.7
$452
.1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$250.0 $350.0 $450.0 $550.0 $650.0 $750.0
Pro
bab
ility
of N
ot E
xcee
din
g
Project Cost, Millions of Dollars
Alternative 1 - Risk-Based Total Cost (Pre-Response)
Alternative 1 - Base Cost Estimate (mean value, 2010 $)
Alternative 1 - Base Cost Estimate (mean value, escalated)
Baseline Risk Assessment Results
$650.0
Contingency$650.0 - $605.3 = $44.7
$658
.9
$652.2
$739.5
$775.7
$829.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$500 $550 $600 $650 $700 $750 $800 $850 $900 $950
Pro
bab
ility
of
No
t Ex
ceed
ing
Cost, Millions of Dollars
Non-Escalated Design-BuildContract Base Cost, Program
Non Escalated Design-BuildContract Risk-Adjusted Total Cost,Program
Florida Department of Transportation
Baseline Risk Assessment Results
$1.4
$1.5
$1.7
$1.9
$2.3
$2.3
$3.8
$3.8
$25.5
$51.0
$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00
MGT 900.03 - Loss of Toll Revenue due to complex MOT
ENV 30.01a12 - Expected Controversy on Environmental Grounds - Alt 1/2
RR 20 .01 - Cost for Railroad Flaggers
ENV 80.01 - New Storm water Rule - Water quantity and quality issues
ENV 60.06a1 - Development of mitigation plan to offset impacts to public lands - Alt 1
STG 10.01 - Design Changes on Bridge or Overpass
ENV 10.01a1 - Determination of Significance Requiring EIS - Alt 1
CNS 30.01 - Excavation impacts during construction due to weather
ENV 20.04a1 - Determination of indirect impacts to wetlands - Alt 1
ENV 20.03a1 - Determination of direct impacts to wetlands - Alt 1
Expected Value Cost Impact ($ millions)
Based on Risks that Impact Alternative 1 Activities
Alternative 1 - Cost EV ($M) (Pre-Response)
Florida Department of Transportation
Risk Register: Risk Identification
Florida Department of Transportation
Florida Department of Transportation
Risk Register: Risk Quantification
Goal of Risk Management
Probability of Occurrence
Impact Initial Risk
Managed Risk
Risk Assessment’s aim is to assess potential impact of various scope, event, and budget risks on the project’s cost and schedule.
Risk Management’s aim is to identify opportunities and mitigation strategies to reduce both the likelihood of an event occurrence and the potential effect if it occurs.
Florida Department of Transportation
Florida Department of Transportation
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Statewide Risk Management Team
Greg Davis, PEState Estimates Engineer
Kurt Lieblong, PE, CVSState Project Review Administrator
Tim BrockDistrict VE/Utilities Administrator
Jose Theiler, AVSDistrict Program Services Administrator
Rob Quigley, PEState Project Management Engineer
Alan AutryState Alternative Contracting Administrator
Florida Department of Transportation
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Regional Risk Management Teamso Identify Projects for Workshops
o Support Workshops with Staff & Facilities
o Change culture by promoting risk
o Monthly teleconferences with SRM Team
o Membership in each District consists of :• District Value Engineer• District Estimates Engineer• Design Project Manager• Construction Project Manager
Florida Department of Transportation
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Project Selection Guidelines – Risk Analysis
o Complex project or total project cost greater than $500 Million – Consultant-led Independent Risk Analysis Workshop
o Total project cost between $100 - $500 million - Risk Analysis Workshop using commercial risk modeling program
o Projects not requiring a formal workshop - Risk Analysis Modeling Tool by HDR
o Qualitative Risk Analysis - Risk Based Graded Approach Worksheet
Implementation AssistanceLevels of Engagement
Proof of Concept Pilot • Funds for piloting products to evaluate readiness for implementation• Contractor support to collect data and evaluate the application
Lead Adopter Incentive• Funds for early adopters to offset implementation cost and mitigate risks• Recipients required to provide specific deliverables designed to further
refine the product
User Incentive • Funds for implementation support activities after early adopter use• Used to conduct internal assessments, build capacity, implement system
process changes, organize peer exchanges, or offset other implementation costs
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October 2013 R09 Awards
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DOT Project DOTContact
FHWA Contact
Florida SR 40 from east of CR 314 to east of CR 314A
Greg Davis
Rafiq Darji
Minnesota Reconstruction of I-35W from 46th St to I-94
Jenny Morris
William Lohr
Oregon I-5 Bridge replacement over Columbia River
Lea Ann Hart Chambers
Mike Morrow
Pennsylvania SR 0322 Potters Mills Gap Transportation Project
Selena Griffett
Don Horne
R09 Lead Adopter
R09 Lead Adopter Incentives
R09 implementation services provided by FHWA contractor resources Training Course Demonstration Workshop Peer Exchange Synthesis Report Technical Assistance
FHWA Up to $100,000 per DOT to perform
implementation activities such as: Training Courses Demonstration Workshops Peer Exchanges Technical Assistance Project Development Manual Updates Other activities as determined by the
State
STATE DOT
Value of FHWA Services to DOT
$43,500
Implementation Assistance Funding to DOTUp to $100,000
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30Florida Department of Transportation
Greg Davis, PEState Estimates Engineergreg.davis@dot.state.fl.us850-414-4170