1. OHIO PLANNING CONFERENCE
Florida Department of
TRANSPORTATION
OHIO PLANNING CONFERENCE
Risk Analysis/Management
during Project Development
Ohio Department of Transportation
Hyatt Regency Columbus
Columbus, Ohio
Similar to Ohio DOT, Florida DOT has also investigated ways to improve the quality of cost estimates especially at the early stages of project development.
After attending a FHWA-TRB sponsored pilot training course on risk management, FDOT decided to begin developing a formal risk management process.
FDOT began with conducting risk management workshops on projects with a total costs of more than $100 million including major projects (greater than $500 million) which requires a FHWA Cost Estimate Review.
Efforts continue by FDOT to expand risk management practices to smaller projects as well.
Today, I will provide you with a synopsis of FDOT efforts
Phillip “Greg” Davis, P.E Specifications & Estimates Office State Estimates Engineer July 16, 2014

2. 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

3. Traditional Estimating Risk-Based Estimating
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
Threat
1, 2,3,etc
Contingency
Opportunity
1, 2, 3, etc
Florida Department of Transportation

4. Maximizes the Likelihood of Meeting Budget & Project Delivery Goals
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

5. Typical Project Scenario without Risk Analysis
Cost
Time
Projected
PD&E
Design
Construction
PD&E
Design
Construction
Actual
Late
Over Budget
Why Risk Management - Let’s look at a typical project scenario
A project is programmed at a certain cost (including inflation) & schedule for delivery
During project development, cost increases and schedule slips due to various risk issues
Lack of clear project requirements
Underestimated quantities and/or initial pricing
Changes in project scope…(political reasons)
Unanticipated events (to name a few):
material supplies
environmental constraints
unknown subsurface conditions
Forecasting errors (techniques, data, honest mistakes) not supported by data
The results are a project that is over-budget and not delivered on time
Lack of risk management is the primary reason
(Nationwide Trend)
Florida Department of Transportation

6. Typical Project Scenario with Risk Analysis
Cost
Time
Projected
PD&E
Design
Construction
PD&E
Design
Construction
Actual
On-time
Within Budget
What is the desired outcome?
When a project is programmed at a certain cost & schedule for delivery, that it is delivered within budget and on time.
Proactive and early risk identification, assessment and mitigation will allow better management of the project within budget and on-time.
(Nationwide Trend)
Florida Department of Transportation

7. 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
Risk Tracking & Monitoring
Continuous Iterative
Process
Florida Department of Transportation

8. 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

9. 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

10. 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

11. 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
Utilities
Local agencies
Others depending on project scope
Florida Department of Transportation

12. 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

13. 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

14. 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

15. FDOT Risk Starter List Florida Department of Transportation
Functional Area
Risk Name
Include Risk
Comments 84
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
Other Issues Related to Contract Language (Warranties, Liquidated Damages, DBE, Insurance/Bonding, etc.)
Delays in Ad/Bid/Award Process due to Addenda or Bid Protests
Lack of Qualified Bidders
Other construction projects in region limit supply of labor, bid costs are higher as a result
Potential issue, $600 M in lets in D2, twice of normal
Contractor Non-Performance
Labor and/or Productivity Disruptions
probably not a major concern - review vs. base schedule
Structures & Geotech
Changing Geotechnical Conditions (Due to New Information)
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.
Florida Department of Transportation
Florida Department of Transportation

16. Base Cost Variability Review
Florida Department of Transportation

17. Project Schedule Review
Florida Department of Transportation
Florida Department of Transportation

18. 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

19. Baseline Risk Assessment Results
$650.0
Contingency
$ $605.3 = $44.7
Florida Department of Transportation

20. Baseline Risk Assessment Results
Florida Department of Transportation

21. Risk Register: Risk Identification
Florida Department of Transportation

22. Risk Register: Risk Quantification
Florida Department of Transportation

23. 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.
Probability of Occurrence
Impact
Initial Risk
Managed Risk
Florida Department of Transportation

24. 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
Florida Department of Transportation

25. Regional Risk Management Teams
Identify Projects for Workshops
Support Workshops with Staff & Facilities
Change culture by promoting risk
Monthly teleconferences with SRM Team
Membership in each District consists of :
District Value Engineer
District Estimates Engineer
Design Project Manager
Construction Project Manager
Florida Department of Transportation

26. Project Selection Guidelines – Risk Analysis
Complex project or total project cost greater than $500 Million – Consultant-led Independent Risk Analysis Workshop
Total project cost between $100 - $500 million - Risk Analysis Workshop using commercial risk modeling program
Projects not requiring a formal workshop - Risk Analysis Modeling Tool by HDR
Qualitative Risk Analysis - Risk Based Graded Approach Worksheet
Florida Department of Transportation

27. 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
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 (Round 4- Coming soon Summer or Fall 2014)
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

28. October 2013 R09 Awards R09 Lead Adopter DOT Project Contact
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
Reconstruction of I-35W from 46th St to I-94 (Minneapolis-St. Paul)
SR 0322 Potters Mills Gap Transportation Project

29. 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
Two pieces of the technical assistance: (under ARA contract)
1. Basic Level of Assistance: One Training course, One demo workshop, One Peer Exchange, One Synthesis Report (ARA will write this report), and 8 hours of technical assistance.
2. In addition to the basic activities, they get $100k to use it on training courses, demo workshops, peer exchanges which can be done by either FHWA services or the states can hire their own consultant.
Example: $50k for training and workshops through FHWA’s contractor + $50k for development of State DOT’s Project Development Manual or any other related document to project management.
Note: The funding has to be used to implement R10 (specialized training to complete a project management manual or procedures for example)
Value of FHWA Services to DOT $43,500
Implementation Assistance Funding to DOT
Up to $100,000

30. State Estimates Engineer greg.davis@dot.state.fl.us 850-414-4170
Greg Davis, PE
State Estimates Engineer
Florida Department of Transportation

31. Introduction What is Risk Analysis/Management?
Why Risk Analysis/Management?
Risk Analysis Workshops
Project Case Studies
Risk Response Planning
Contingency Management
SHRP2 Implementation Assistance
Statewide Risk Management Team
Cost Estimate Review on Major Project – FHWA made a point of assessing risk
FHWA conducted training in Orlando in Spring of 2007
Pilot Projects (to try risk assessment process) – Golder Associates
I-4 Connector to Tampa Port/Lee Selman Expressway – Aug 2007
I-595 P3 Project in Ft Lauderdale – Dec 2007
First Coast Outer Beltway P3 in Jacksonville - Jan 2008
Risk Management Policy
Projects with total estimated costs greater than $100 million should perform a formal quantitative risk analysis workshop.
Projects with total estimated costs greater than $500 million, the risk analysis will be facilitated by a consultant with expertise in risk management.
Formed Statewide Risk Team – Goal is to implement quantitative risk analysis/management at the project level during project development.
Florida Department of Transportation

32. Risk Modeling - Monte-Carlo Simulation
y = f(x) or “y” is a function of “x”
Outputs = f
Qty
Unit $
Risk
Inflation %
Random Number
Inputs: Sampled Values
Count
Outputs: Binned Results R1 R2 R3 R4 R5
Source: FHWA
Florida Department of Transportation

33. Project Case Studies Sisters Creek Bridge Replacement
I-95 Overland Bridge
Florida Department of Transportation

34. Sisters Creek Bridge Replacement
Project Overview
Located on SR 105, northeast of Jacksonville
The proposed project will:
Replace a movable bridge with a fixed span, high level bridge
Be built offset to existing bridge, on a new alignment, and tie into existing roadway
Use existing FDOT right-of-way for new alignment
Florida Department of Transportation

35. Sisters Creek Bridge Replacement
Objectives
Validated Cost Estimate
Identify and quantify risks to project cost and schedule
Assess likelihood of meeting aggressive delivery schedule
Estimate implications of potential funding delay on project costs
Identified and quantified critical cost items not listed in LRE
Developed a risk management plan for project team
Quantified cost of funding delay to inform FDOT management decision making
Florida Department of Transportation

36. Sisters Creek Bridge Replacement
Cost Estimate
Base Cost (inflated) = $69.7M
Risk-based Cost (70%) = $77.0M
Cost Range = $63.6 M- $82.7M
Florida Department of Transportation

37. Sisters Creek Bridge Replacement
Schedule
Base Time = Apr 2016
Risk-based Time (70%) = Mar 2017)
Time Range = Mar 2017 – Mar 2017
Florida Department of Transportation

38. Sisters Creek Bridge Replacement
Florida Department of Transportation

39. Sisters Creek Bridge Replacement
Florida Department of Transportation

40. Sisters Creek Bridge Replacement
Risk Mitigation
Extensive Geotech Survey in RFP
Bathometric survey of river bottom debris & composition
Maximum budget requirement
Procurement Information
Award Cost = $44.2M (Dec 13)
Bid Range = $39.0M -$45.9M
Awarded Time = 800 days
Completion Date = Apr 2016
Time Range = days
Florida Department of Transportation

41. I-95 Overland Bridge The proposed project will:
Replace the single bridge with two shorter bridges and a fill section of MSE in between the two
Widen southbound mainline of I-95 to create 3 continuous travel lanes to improve traffic flow and eliminate dangerous weaving.
Modify and widen the southbound collector/ distributor road
Build a new northbound collector/distributor road Modify Atlantic Blvd and Philips Hwy areas for additional access points to I-95.
Florida Department of Transportation

42. Summary of Key Findings
I-95 Overland Bridge
Summary of Key Findings
Conducted risk assessment prior to RFP development
Identified critical elements to include and specify within the RFP
Identified need for railroad agreement in CRA workshop – critical element needed for a utility relocation
Determined need for contractor to provide temporary drainage to assure that the project didn’t case any extra water runoff
Florida Department of Transportation

43. I-95 Overland Bridge Cost Estimate
Base Cost (inflated) = $257.0 million
Risk-based Cost (70%) = $254.9 million
Cost Range = $254.9-$319.3 million
Florida Department of Transportation

44. I-95 Overland Bridge Schedule Base Time = Dec 2015
Risk-based Time (70%) = May 2016
Time Range = Jan Sep 2016
Florida Department of Transportation

45. I-95 Overland Bridge
Florida Department of Transportation

46. I-95 Overland Bridge
Florida Department of Transportation

47. I-95 Overland Bridge Risk Mitigation Procurement Information
RFP eliminated access areas
VE Study on draft RFP
Design Build Team proposed alternative alignment
Procurement Information
Award Cost = $148.8M (May 2012)
Bid Range = $148.8M -$156.7M
Awarded Time = 1,165 days
Completion Date = Oct 2015
Time Range = 1,085-1,165 days
Florida Department of Transportation

48. Risk Response Mitigate / Enhance Transfer /Share Accept
Avoid / Exploit
Accept
Florida Department of Transportation

49. Risk Response Strategies
Threats
Risk Factors that Increase Cost or Schedule
Opportunities
Risk Factors that Reduce Cost or Schedule
Avoid: Change the project scope to eliminate the impact of a risk.
Exploit: To make a proactive decision to take action to show that an opportunity is realized.
Transfer: Move a risk to another party who is more capable at handling the risk (such as the developer or insurance company).
Share: Assigning ownership of the opportunity to a third-party who is best able to capture the benefit for the project.
Mitigate: The project team may seek to lessen the impact of a specific risk item, which may involve the consumption of additional time and/or money. Mitigation usually requires positive action and has a cost.
Enhance: Take action to increase the probability and/or impact of the opportunity for the benefit of the project; seeking to facilitate or strengthen the cause of the opportunity, and proactively targeting and reinforcing its trigger conditions.
Accept: To take no action when a response may be too costly to be effective or when the risks are uncontrollable and no practical action may be taken to specifically address it. In active acceptance, the project team sets up a contingency reserve fund to account for the residual expected value of the remaining risks.
Florida Department of Transportation

50. “Hope is not a Strategy”
Risk Management
“Hope is not a Strategy”
Florida Department of Transportation

51. Risk Response Planning
Risk Response Plan – A plan of action designed to reduce the impact once a risk event has occurred
Planning – Prior to the risk event occurring as though it will occur
Trigger – Identifies that the risk event has occurred and notifies the team to implement the risk response plan
Implementation – Actions to take after the risk event has occurred
Florida Department of Transportation

52. Tracking, Monitoring & Control
Development of Risk Management Plan involves:
Identifying Risk Owners to take responsibility for key risk factors and associated risk response strategies
Identifying Monitoring Frequency for risk updates and feedback on the effectiveness of risk response strategies
Updates to the Risk Model and results at key milestones and when baseline cost and schedules are updated
Update Risk Management Plan continuously to document and report progress
Florida Department of Transportation

53. Tracking, Monitoring & Control
Risk Response Plan
Monitoring & Control
Strategy
Action To Be Taken (response actions including advantages and disadvantages. Specify the time frame
Risk Owner
Risk Review Dates
Date, Status & Review Comments (to show the history of risks monitoring, do not delete previous comments)
Mitigation
Finalize design to identify all wetlands that are impacted. Early coordination with the outside agencies to determine mitigation ratio
Design Leader / Environ. Mgr.
2008-Dec Jan-2
As of Nov. 15, 2008 there are only two potential areas where there could be additional wetland impacts. As of De. 2, 2008 agency has initially determined that mitigation ratio would be 4:1.
Florida Department of Transportation

54. Risk Workshops – Completed to Date
Consultant Contract (HDR) – 24
In-house (District 4) - 8
FHWA – 4
SHRP2 - 1
Conducted in 7 Districts
Florida Department of Transportation