Risk Management for Project Development –The Pennsylvania Approach

Managing Risk in Rapid Renewal Projects (R09) Implementation

July 2017

PennDOT’s Risk Management Background

IMPLEMENTATION OVERVIEWTHE ROAD TO RISK MANAGEMENT

• Why implement Risk Management?• Is PennDOT the only state

considering Risk Management?• How do we develop a Risk

Management policy?• How do we get by-in? • How do we get a successful

implementation?

Key Questions to Answer

Historically, many complex projectsexperience poor “performance”

Exceed cost and schedule estimates

More disruption and less longevity than planned

Due to anticipated and unanticipated issues

including invalid assumptions which possibly could have been identified and planned

Why Implement Risk Management?

- Statewide Value• Integrates risk identification with initial project planning

(early is better principle!)

• Strengthens risk-related communication between planning partners and Districts

• Helps set appropriate project level budgets, milestones, and contingencies

• Allows better cash flow needs predictability, balance of let dates, and maintenance of TIP

• Enhances fiscal management

Why Implement Risk Management?

• Very proactive (enhances communication)

• Puts project manager in control

• Has been shown to:

- Decrease majority of project issues

- Recognize substantial project cost savings

• Is “best practice”

• Is applicable to all projects and phases

• Expands project team understanding with fewer surprises

• Forces project team and management to consider reality

Why Implement Risk Management?

- Project Value

Is PennDOT the only state considering Risk Management?

Is PennDOT the only state considering Risk Management?

Click to edit Master title styleReceive R09 AwardInitial Train the Facilitator Training

Pilot 1 – District-2 Potters Mills Gap ProjectFormation of Statewide Team

Statewide Team Facilitator TrainingDevelop Draft Policy Framework and Implementation Strategy

Executive BriefingPilot 2 – District-5 Cementon Bridge Replacement Project

Finalize PolicyFinalize Implementation Strategy

Develop Training MaterialConduct Initial Training Session

Project ApproachHow do we develop a Risk

Management policy?

• Create a Statewide team (Success and Failure Factors)

• Train the Statewide team in risk management

• Develop policy to incorporate risk management into project delivery process

• Determine success andfailure factors

How do we develop a Risk Management policy?

• Every District - Portfolio Manager, ROW and Utilities Engineer,

Design Services Engineer, Liaison Engineers, Roadway Design Engineers, Bridge Design Engineers, Planner

• Highway Administration and Planning

• FHWA

Diverse Team

Risk Management Project Success FactorsCommunication at every stage of development to ensure buy-in, benefits; talking to stakeholdersShow that the value of the benefits more than offsets the extra work put into risk managementProject team participation/ownershipPromote organization/thoroughness through risk management; can help make sure we don’t overlook steps or stakeholders on a project (e.g., emergency services)Useable final products of risk management (templates/tools/policies/procedures): ease of applicationTraining

Team Input

Risk Management Project Failure FactorsNo implementation plan/approach

Policy fails to clarify the benefits at District level; not just an exercise, but make risk management an integral part of project managementNeed top-down buy-in and follow through (staying power); failure to “stick with it”Products / tools / process are not scaled to project types

No support for initial risk management (identify risks) to start a list and build throughout project development

Team Input

Train the Facilitator Training for Managing Risk in Rapid Renewal Projects (R09 Template) – 2-days

Pilot 2 – District-5 CementonBridge Replacement Project - 1-hour premeeting conference call- 3-hour premeeting webinar- 2.5-day Risk Management

session

Train the Team

• Scalable Approach• Team• Risk Manager• Ownership of Risks and Responsibilities• Risk-Based Decision‐Making

PennDOT Approach and Features

Overcome Risk Management Perceptions

• A time-consuming process • Requires greater resources and commitment • Benefits may not be obvious • Checklist overload• “We already do this”

How do we get by-in?

How do we get by-in?

PROJECT RISK

Project Manager/ Risk Manager

Project Team Members

Risk Owners

LEADERSHIP

Chief Highway Delivery Division District

Executive

ADE’s

SUPPORT

District Risk Management Coordinator

District Design

Manager

Leadership Support is Key to Success

CASE STUDIESTHE ROAD TO RISK MANAGEMENT

R09 Demonstration Workshop Project

Case Study 1: Potters Mills GapUS 322, Sections B04, 05, & 06Potter Township, Centre County

Click to edit Master title style• Project Background Widen/divide 3.8 miles of 2-lane rural highway to limited

access w/ parallel local road Steep slopes, potential acid rock, wetlands/streams,

sensitive lands (state/farm) & species, moderate traffic, high crash locations

Extensive excavation/fill, retaining walls, bridges, construction phasing/detours, ROW

Workshop conducted @ 15% design w/o FONSI Originally envisioned as single D-B-B contract

Case Study 1 - Potters Mills Gap

Risk Analysis

1.5-day facilitated workshop with 15 people 35 risks and all factor mean values assessed One under Preliminary Design/Environmental

Process, Two under Environmental Permit, Two under ROW/Utility/RR, Seven under Final Design, Four under Procurement, and 19 under Construction.

Proactive action plans for top 9 risks & opportunities

Base vs. Unmitigated vs. Mitigated Performance:

Risk Analysis Results

Potential Savings $4.3 million, and 0.5 months of traffic disruption

Project Status

• Project Split into three construction projects

Section - B04 Bridge over SR 322Contractor Notice to Proceed:

December 8, 2014Contract Cost: $1,944,805.00% Complete: 100%Prime Contractor: Jay Fulkroad & Sons

Section B05 -Sand Mountain Road Interchange

Contractor Notice to Proceed:August 8, 2016

Contract Cost: $8,676,545.00% Complete: 60%Prime Contractor:

Glenn O. Hawbaker, Inc.

Section B06 - 4-Lane Extension and Western Interchange

Contractor Notice to Proceed:Anticipated January 2018

Contract Cost: TBD% Complete: 0%Prime Contractor: TBD

Case Study 2: Cementon Bridge ProjectSR 0329, Section 01BWhitehall Township, Lehigh CountyNorthampton Borough, Northampton County

Project Description

SR 0329 over Lehigh River between Cementon and Northampton Borough

D&L Trail link Two traffic lanes + sidewalk ADT = 16,300 vehicles (6% Trucks) (2012) Load postingo 25 tonso 30 tons combinations

Constructed 1933 4-spans, 575’ total lengtho 3 - Pratt thru-truss spans (160’)o 1 - thru-girder span (84’) 22’ curb-to-curb width 5’-6” sidewalk Vertical clearance - 13’-6” actual

Structurally Deficient Functionally Obsolete

Bridge Description

Lehigh Canal

Northampton Historic District

Lehigh Valley Railroad

Whitehall Cement Manufacturing Company

Colonel John Siegfried Tavern

Siegfried Train Station

Norfolk Southern Railroad

Siegfried Cemetery

D&L Trail – Laurys Station-Northampton

4(f) Challenges

Utility Challenges

PPL transmission and distribution lines Spread network and

RNC telecom fiber optic lines Verizon Pennsylvania Northampton Borough water line

ALTERNATIVES STUDY RECAPAlternatives Analysis Complete Replacement on-line – Alt. #1 Replacement upstream – Alt. #2 Replacement downstream – Alt. #3

Factors Examined Construction Cost, Right-of-Way impacts, Environmental/Cultural

impacts, Traffic impacts, and Utility impacts

Alternatives Study Conclusion

Replacement online using Accelerated Bridge Construction (ABC) methods

- More utility impacts- Less traffic, environmental/cultural and right-of-way impacts- Short closure and Detour duration- Innovative Replacement

• Project Status/Constructability Meeting at District 5-0 – May, 2016- Concerns over contractor risk utilizing the superstructure

slide-in method Traffic Impacts Utility impacts Impacts to bidding

prices- District request to re-visit project alternates. - SHRP2 R09 – Risk Management Workshop Recommended Evaluate On-Line ABC and Downstream Replacement

Alternatives Study Follow-up

On-Line ABC Replacement- 44 Potential Risks- 3 Potential Opportunities

Downstream Replacement- 34 Potential Risks- 7 Potential Opportunities

Risks Identified

Top 3 Risks – Unmitigated Register

On-Line ABC Replacement1. Preferred Alternate proves

unfeasible due to constructability concerns

2. High bid price due to risky construction (slide-in)

3. DEP does not issue waterway permit due to extensive causeway

Potential Impacts of NOT Mitigating Riskso $6.53 M increase in costso 21 month delay in Contractor

Notice to Proceedo 23 month delay in Construction

Completion

Downstream Replacement1. Supplement to re-boot design 2. Preliminary Engineering

additional time to design schedule

3. Impacts to potential cemetery sites

Potential Impacts of NOT Mitigating Riskso $3.27 M increase in costso 15 month delay in Contractor

Notice to Proceedo 15 month delay in

Construction Completion

Risk Analysis – After Mitigation

R09 Template used to apply assessment evaluation of mitigation strategies on project cost and schedule

Follow through!o Assign responsibility to individuals to implement strategieso Monitor mitigation action throughout project lifecycle

Next Stepso Re-examine Alternate Analysis – freshen up costso Conduct subsurface Archaeological investigations at “cemetery” site

(mitigation strategy!!!)o Move forward with Upstream or Downstream replacement

Risk Management Plan Implementation

POLICY COMPONENTSTHE ROAD TO RISK MANAGEMENT

Integration = Efficiency

How it Works

Project Concept/Planning (w/ Planning Partner)TIP Development (w/ Planning Partner)

Environmental ScopingDesign Field View

Constructability MeetingValue Engineering Meeting (if required)

Final Design Office MeetingPS&E

Construction Kick-off Meeting

How it Works

Project Concept / Planning

TIP Development

Environmental Scoping

Design Field View

Constructability Meeting

Value Engineering Meeting (if required)

Final Design Office Meeting PS&E Construction

Planning PartnerProject StakeholdersPennDOT Planning and Programing EngineerPennDOT Portfolio ManagerProject Manager Design teamBridge EngineerRight of Way EngineerUtilities EngineerGeotechnical EngineerStorm Water Management EngineerTraffic EngineerConstruction EngineerConstruction ACEOther Specialists as Required

TEAM APPROACH

How it Works

SCALABLE

Risk Mgt Level Complexity*

Project Cost (all phases) Risk Strategy and Tools Risk Manager

1

Non-complex <=$5M Level 1 Register

Recommended Project Manager

$5M-10M Level 1 Register Project Manager

Moderately Complex <=$10M Register, Qualitative Analysis, Risk Response Project Manager

Resurfacing or preventive maintenance

<=$30M Level 1 Register Recommended Project Manager

>$30M Level 1 Register Project Manager

2 Non-complex >=$10M

Register, Qualitative w/ Impacts Analysis, Risk Response

Project Manager

Moderately Complex >$10M to $100M

Register, Quantitative Analysis, Risk Response Project Manager

3 Most Complex

<=$25M

Register, Quantitative Analysis, Risk Response Risk Management Plan (recommended)

Project Manager

>$25M to $100M

Register, Quantitative Analysis, Risk Response Risk Management Plan

Assign a Risk Manager or establish assistance within project team

>$100M

Conduct Risk Workshop Register, Quantitative Analysis, Risk Response Risk Management Plan

-Assign Risk Manager

-Consider scope of work for consultant to conduct the risk management workshop

-Establish Risk Management Team

How it Works

Project Name: MPMS No: Project Manager:

Status ID # Type Category Title Risk Statement Current status/assumptions Probability Cost Impact Cost Score Time Impact Time Score Rationale Strategy Response Actions Risk Owner Updated

Active 160 Threat Design Survey FileInaccuracies or incomplete information in the survey file could lead to rework of the design.

3-Moderate 2 -Low 6 4 -Moderate 12 MitigateVerify that the survey file is accurate and complete Sam Owner 10/12/2015

Active 161 Threat Environmental Challenge to EIR

Potential lawsuits may challenge the environmental report, delaying the start of construction or threatening loss of funding.

1-Very Low 4 -Moderate 4 8 -High 8 Mitigate Address concerns of stakeholders and public during environmental process

EIR Person 11/23/2015

Active 162 Threat ROW Delay of ROW Acquisition

Due to the large number of parcels and businesses, may have to use the condemnation process to acquire R/W, which could delay start of construction by up to one year, increasing construction costs and extend the time for COS.

3-Moderate 4 -Moderate 12 8 -High 24 Accept ROW Person 11/23/2015

Active 163 Threat Construction Buried Objects

Unanticipated buried man-made objects uncovered during construction require removal and disposal resulting in additional costs.

3-Moderate 4 -Moderate 12 4 -Moderate 12 Accept Include a Supplemental Work item to cover this risk.

PM 11/24/2015

Active 164 Threat Design Supplemental Environmental Review

A design change that is outside of the parameters contemplated in the Environmental Document triggers a additional review which causes a delay due to the public comment period.

3-Moderate 4 -Moderate 12 8 -High 24 AvoidMonitor design changes against ED to avoid reassessment of ED unless the opportunity outweighs the threat

Design Manager 11/24/2015

Active 165 Threat Environmental Nesting birdsNesting birds, protected from harassment, may delay construction during the nesting season.

2-Low 2 -Low 4 8 -High 16 MitigateSchedule contract work to avoid the nesting season or remove nesting habitat before starting work.

PM/RE 11/24/2015

Active 166 Threat ROW Additional ROW

Due to the complex nature of the staging, additional right of way or construction easements may be required to complete the work as contemplated, resulting in additional cost to the project.

3-Moderate 8 -High 24 8 -High 24 Mitigate Re-sequence the work to enable ROW Certification

ROW Person 11/24/2015

Active 167 Threat Construction Hazardous Materials

Hazardous materials encountered during construction will require an on-site storage area and potential additional costs to dispose

2-Low 2 -Low 4 1 -Very Low 2 Accept Ensure storage space will be available PM 11/24/2015

Risk AssessmentRisk Identification

Example Project PM Person

Risk Response

LEVEL 2 - RISK REGISTERQualitative, w Impacts

TOOL

Benefits

• Integrated into existing PennDOT process• Promotes a proactive “thinking ahead”

culture• Reinforces teamwork and communication• Makes individuals accountable for managing

specific risks• Provides an easy to use tool

IMPLEMENTATIONTHE ROAD TO RISK MANAGEMENT

How do we get a successful implementation?

Project Concept / Planning

TIP Development

Environmental Scoping

Design Field View

Constructability Meeting

Value Engineering Meeting (if required)

Final Design Office Meeting PS&E Construction

Planning PartnerProject StakeholdersPennDOT Planning and Programing EngineerPennDOT Portfolio ManagerProject Manager Design teamBridge EngineerRight of Way EngineerUtilities EngineerGeotechnical EngineerStorm Water Management EngineerTraffic EngineerConstruction EngineerConstruction ACEOther Specialists as Required

Design

Phase 1 – 2017-18

Planning

Phase 2 –2018-19

Construction

As Projects Move Here

from Phase 1

Phased Roll-Out

How do we get a successful implementation?

How do we get a successful implementation?

Project Roll-Out

Project Roll-Out

Initial ProjectsDistrict Projects of

SignificanceCO lead/assist w/risk

identification and evaluation

CO assist w/ follow-up

Expand to Moderately Complex and Complex

ProjectsCO assist w/risk identification and

evaluationAssist w/ follow-up

Expand to All ProjectsCO part of project team

for risk identification and evaluation; and

follow-up

CO lead/assist w/ FHWA risk mgt tool

CO lead/assist w/ FHWA risk mgt tool

Risk!!! What’s ahead?

PennDOT Risk Management Contact Information

Brian E. Shunk, P.E. Project Development Engineer

PennDOT - Bureau of Project DeliveryP.O. Box 3161Harrisburg, PA 17105-3161

Phone: 717.214.1276 bshunk@pa.gov