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OHIO PLANNING CONFERENCE 1 Florida Department of TRANSPORTATION Phillip “Greg” Davis, P.E. Specifications & Estimates Office State Estimates Engineer July.

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Presentation on theme: "OHIO PLANNING CONFERENCE 1 Florida Department of TRANSPORTATION Phillip “Greg” Davis, P.E. Specifications & Estimates Office State Estimates Engineer July."— Presentation transcript:

1 OHIO PLANNING CONFERENCE 1 Florida Department of TRANSPORTATION Phillip “Greg” Davis, P.E. Specifications & Estimates Office State Estimates Engineer July 16, 2014 Risk Analysis/Management during Project Development Ohio Department of Transportation Hyatt Regency Columbus Columbus, Ohio

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 What is Risk Analysis? Traditional Estimating u Contingency is intended to include all risk known/unknown u Little control of cost and schedule u Reactive Risk-Based Estimating u Risk are clearly identified and quantified in estimate u Reasonable control of cost and schedule u Proactive ContingencyContingency Threat 1, 2,3,etc Threat Opportunity 1, 2, 3, etc 1, 2, 3, etcOpportunity Florida Department of Transportation

4 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 PD&E Design Construction Actual Late Over Budget Cost Time Projected PD&E Design Construction (Nationwide Trend) Typical Project Scenario without Risk Analysis Florida Department of Transportation

6 Cost Time Projected PD&E DesignConstruction Typical Project Scenario with Risk Analysis PD&E DesignConstruction Actual On-time Within Budget (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. 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 – Construction – 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 AreaRisk Name Include Risk Comments 84 Contracting and Procurement Changes in Contract Packaging1 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 Protests1 Contracting and Procurement Lack of Qualified Bidders1 Contracting and Procurement Other construction projects in region limit supply of labor, bid costs are higher as a result 1Potential issue, $600 M in lets in D2, twice of normal Contracting and Procurement Contractor Non-Performance1 Contracting and Procurement Labor and/or Productivity Disruptions1probably 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.

16 Base Cost Variability Review Florida Department of Transportation

17 Project Schedule Review 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

23 Goal of Risk Management Probability of Occurrence Impact Initial Risk Managed Risk u Risk Assessment’s aim is to assess potential impact of various scope, event, and budget risks on the project’s cost and schedule. u 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

24 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

25 Florida Department of Transportation 25 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

26 Florida Department of Transportation 26 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

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 27

28 October 2013 R09 Awards 28 DOTProject DOT Contact FHWA Contact FloridaSR 40 from east of CR 314 to east of CR 314A Greg Davis Rafiq Darji MinnesotaReconstruction of I-35W from 46th St to I-94 Jenny Morris William Lohr OregonI-5 Bridge replacement over Columbia River Lea Ann Hart Chambers Mike Morrow PennsylvaniaSR 0322 Potters Mills Gap Transportation Project Selena Griffett Don Horne R09 Lead Adopter

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 Value of FHWA Services to DOT $43,500 Implementation Assistance Funding to DOT Up to $100,000 29

30 Florida Department of Transportation 30 Greg Davis, PE State Estimates Engineer

31 Florida Department of Transportation 31 Introduction o What is Risk Analysis/Management? o Why Risk Analysis/Management? o Risk Analysis Workshops o Project Case Studies o Risk Response Planning o Contingency Management o SHRP2 Implementation Assistance o Statewide Risk Management Team

32 Risk Modeling - Monte-Carlo Simulation y = f(x) or “y” is a function of “x” Outputs = f QtyUnit $RiskInflation % Random Number Inputs: Sampled Values Count Outputs: Binned Results R1R2R3R4R5 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 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 Sisters Creek Bridge Replacement

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

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

38 Florida Department of Transportation Sisters Creek Bridge Replacement

39 Florida Department of Transportation Sisters Creek Bridge Replacement

40 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 Sisters Creek Bridge Replacement

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

43 u 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 I-95 Overland Bridge

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

45 Florida Department of Transportation I-95 Overland Bridge

46 Florida Department of Transportation I-95 Overland Bridge

47 Risk Mitigation – 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 I-95 Overland Bridge

48 Risk Response Accept Mitigate / Enhance Avoid / Exploit Transfer /Share 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 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 PlanMonitoring & 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 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 54 Risk Workshops – Completed to Date o Consultant Contract (HDR) – 24 o In-house (District 4) - 8 o FHWA – 4 o SHRP2 - 1 o Conducted in 7 Districts


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