Florida Department of
TRANSPORTATION
OHIO PLANNING CONFERENCE
Risk Analysis/Management
during Project Development
Ohio Department of Transportation
Hyatt Regency Columbus
Columbus, Ohio
Phillip “Greg” Davis, P.E.
State Estimates Engineer
Specifications & Estimates Office
July 16, 2014
1
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
Risk-Based Estimating

Contingency is intended to include
all risk known/unknown

Risk are clearly identified and
quantified in estimate

Little control of cost and schedule

Reasonable control of cost and
schedule

Reactive

Proactive
Threat
1, 2,3,etc
Contingency
Opportunity
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
Typical Project Scenario without Risk Analysis
Over Budget
Construction
Cost
Design
PD&E
PD&E
Construction
Design
(Nationwide Trend)
Time
Florida Department of Transportation
Late
Cost
Typical Project Scenario with Risk Analysis
Design
Construction
Actual
Design
Construction
(Nationwide Trend)
Time
Florida Department of Transportation
Within
Budget
On-time
Risk Management Overview
Risk Management is the systematic process
of identifying, assessing, and responding to risks
in order to manage or reduce potential adverse
effects on the achievement of project goals.
Project
Purpose
& Needs
Risk
Identification
& Assessment
Risk Response
Mitigation
Strategies
Continuous Iterative
Process
Florida Department of Transportation
Risk
Tracking &
Monitoring
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
Florida Department of Transportation
• Disciplines
– Construction
– Bridge & Structures
– Environmental
– Right of Way
– Geotechnical
– Construction
– Utilities
– Local agencies
– Others depending on
project scope
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
Functional Area
Risk Name
Include Risk
Comments
84
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
Changes in Contract Packaging
1
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
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
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.
Structures &
Geotech
Changing Geotechnical Conditions (Due to New Information)
Florida Department of Transportation
Potential issue, $600 M in lets in D2, twice of normal
Base Cost Variability Review
Florida Department of Transportation
Project Schedule Review
Florida 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
Baseline Risk Assessment Results
60%
50%
40%
80%
Probability of Not Exceeding
Probability of Not Exceeding
80%
$360.7
90%
Contingency
$650.0 - $605.3 = $44.7
$775.7
60%
50%
$605.3
40%
Alternative 1 - Risk-Based Total Cost
$739.5
(Pre-Response)
30%
Alternative 1 - Base Cost Estimate
(mean value, 2010 $)
20%
$533.2
Non-Escalated Design-Build
Contract Base Cost, Program
Alternative 1 - Base Cost Estimate
(mean value, escalated)
0%
$250.0
$350.0
$450.0
20%
$550.0
$650.0
$750.0
Project Cost, Millions of Dollars
Non Escalated Design-Build
Contract Risk-Adjusted Total Cost,
Program
$652.2
10%
0%
$500
$674.4
70%
10%
30%
$650.0
$829.5
$452.1
100%
90%
70%
$658.9
100%
$550
$600
$650
$700
$750
Cost, Millions of Dollars
Florida Department of Transportation
$800
$850
$900
$950
Baseline Risk Assessment Results
$51.0
ENV 20.03a1 - Determination of direct impacts to wetlands - Alt 1
$25.5
ENV 20.04a1 - Determination of indirect impacts to wetlands - Alt 1
CNS 30.01 - Excavation impacts during construction due to weather
$3.8
ENV 10.01a1 - Determination of Significance Requiring EIS - Alt 1
$3.8
STG 10.01 - Design Changes on Bridge or Overpass
$2.3
ENV 60.06a1 - Development of mitigation plan to offset impacts to
public lands - Alt 1
$2.3
ENV 80.01 - New Storm water Rule - Water quantity and quality
issues
$1.9
RR 20 .01 - Cost for Railroad Flaggers
$1.7
ENV 30.01a12 - Expected Controversy on Environmental Grounds - Alt
1/2
$1.5
MGT 900.03 - Loss of Toll Revenue due to complex MOT
$1.4
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
Expected Value Cost Impact ($ millions)
Alternative 1 - Cost EV ($M) (Pre-Response)
Based on Risks that Impact Alternative 1 Activities
Florida Department of Transportation
$60.00
Risk Register: Risk Identification
Florida Department of Transportation
Risk Register: Risk Quantification
Florida Department of Transportation
Goal of Risk Management


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
Impact
Initial Risk
Managed Risk
Probability of Occurrence
Statewide Risk Management Team
Greg Davis, PE
State Estimates Engineer
Kurt Lieblong, PE, CVS
State Project Review
Administrator
Tim Brock
District VE/Utilities
Administrator
Jose Theiler, AVS
District Program Services
Administrator
Rob Quigley, PE
State Project Management
Engineer
Alan Autry
State Alternative
Contracting Administrator
24
Florida Department of Transportation
Regional Risk Management Teams
o 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
25
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
26
Florida Department of Transportation
Implementation Assistance
Levels 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
R09
Lead
Adopter
DOT
Project
DOT
FHWA
Contact Contact
Florida
SR 40 from east of CR
314 to east of CR 314A
Minnesota
Reconstruction of I-35W Jenny
from 46th St to I-94
Morris
William
Lohr
Oregon
I-5 Bridge replacement
over Columbia River
Lea Ann
Hart
Chambers
Mike
Morrow
Selena
Griffett
Don
Horne
Pennsylvania SR 0322 Potters Mills
Gap Transportation
Project
Greg
Davis
Rafiq
Darji
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R09 Lead Adopter Incentives
FHWA
 R09 implementation services provided
by FHWA contractor resources
 Training Course
 Demonstration Workshop
 Peer Exchange
 Synthesis Report
 Technical Assistance
Value of FHWA
Services to DOT
$43,500
STATE DOT
 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
Implementation Assistance
Funding to DOT
Up to $100,000
29
Greg Davis, PE
State Estimates Engineer
[email protected]
850-414-4170
Florida Department of Transportation
30