10250 project risk assessment and management (ellegood) · 2016-08-18 · psmj public works project...
TRANSCRIPT
APWA 2016 PWX 8/18/2016
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Risk Management
Risk Recognition, Analysis and Management of Public Projects
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About the Speaker: Michael S. Ellegood, P.E.
• 50‐years experience in civil engineering
• Held senior management positions with leading consulting engineering firms and public sector agencies.
• Former Director of Public Works for Maricopa County (Phoenix), Arizona
• Consultant for PSMJ’s Public Works Project Management public and in‐house programs
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PSMJ Resources, Inc.• World’s leading authority,
publisher, and consultant on the effective management in the A/E/C industry
• PSMJ offers over 150 titles in book, audio, and video format.
• PSMJ publishes several monthly periodicals and delivers dozens of seminars, roundtables, conferences, webinars, and in‐house training sessions every year for A/E/C professionals around the world.
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Learning Objectives
You will learn the following:• Why public projects often are delayed and exceed their budgets.
• Common causes for projects to exceed budget and become delayed.
• How to analyze project risk and develop a plan to avoid the risk and to mitigate its impacts.
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Some Recent Headlines
• May 25th 2016: Boston Globe “Massive Delays to Memorial Bridge”
• March 22nd 2016: LA Times, “Huge Cost Overruns on HSR”
• May 14th, 2014, Wash Post, “Delays and Cost Overruns on Metro Silver Line and other regional projects”
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How Well Do You Think We Are We Doing at Managing Public Works Projects?
According to a 2007 AASHTO report:54% of projects exceeded the original bid 19% exceeded the original bid by >10%
On larger projects (>$5M)82% exceeded the original bid30% exceeded the original bid by >10%
53% of all projects were delivered on time
On larger projects (>$5M), 35% of projects were delivered on time.
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But This Isn’t Only In The U. S.
Researchers in Denmark found:– 9/10 transportation projects over budget– Cost escalation exists in 20 nations spanning 5
continents– Cost escalation is historic (Erie Canal over budget
and late!)– No learning from past history
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Why Do Projects Fail?
Over ½ blamed on “construction surprises”
• Sub‐surface conditions
• Utility relocations
• Environmental Issues
Lack of regularly scheduled oversight procedures
• Scope
• Budget & Schedule
• Risk
Lack of Planning
Lack of Clear Roles &
Responsibilities
Lack of a Change & Risk Management
Plan
Poor Budgeting
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Risk Management Is A Fundamental Function Of The Project Manager
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Functions of the Project Manager
• Scoping the project• Scheduling the project• Budgeting the project• Controlling progress and performance• Reporting progress and status• Maintaining quality • Taking corrective action as required• Closing-out the project• Managing change and risk
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When Do You Do A Risk Analysis?
• As the project begins
• At the end of the planning phase
• During the design phase
• At the start of construction
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Donald Rumsfeld on Risk Management
There are known “known’s”. These are things we know that we know.
There are known “unknowns”. That is to say, there are things that we know we don't know.
But there are also unknown “unknowns”. There are things we don't know we don't know.
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Types of Risk
• Known: You know what the risk is
– Example: Unknown underground utilities
• Known ‐ Unknown: You know that you don’t know what the risk might be
– Example: Public acceptance of a project
• Unknown – unknown:
– Example: Sudden departure of the project manager
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When Design Is Not the Problem…What is?
Usually, as a general rule, most of the time, generally speaking, the design is not the problem.
Right‐of‐Way
UtilitiesPermits
Political/Public AcceptanceUnderground Surprises
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Manage These Activities As You Would the Design
Put these activities on your critical path and monitor progress as you monitor design.
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Right of Way
Governed by “Uniform Act”
Prescriptive
Takes time
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Utilities
Utilities are never where their supposed to be
Find them – potholing
Develop strong relations with utility companies
If a railroad is involved – add 18 months to the schedule
Never shortchange the underground investigation
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Permits
Permitting agencies are not motivated by your sense of urgency!
Get to know agency personnel before you need a permit
Know their processes
Follow their processes
Follow up (3P’s)
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Political and Public Acceptance
The “NIMBY” Syndrome
“Just one more review”
“We need our bite of the apple”
“We changed our mind”
“We’ll sue”
“As long as we are in there…..”
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Underground Surprises
Mike’s Rule #1: “Never shortchange the underground investigation even if you (think) you know what’s there!!!”
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Change Management – Risk Management’s Sister
If You Don’t Effectively Manage Change –
You Are Taking a Huge Risk
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Recognize the Causes of Change
• Changes in IT requirements
• Changes in codes
• Security concerns
• Adjacency (land use, tenants, etc.)
• “NFW” changes desired by the client
• Underground conditions
• Environmental and permitting changes
• Political / Public Acceptance
• Change in Key Personnel
Change Is A Risk
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Steps in Risk Management
1. Identify the Risk (Known & Unknown)
2. Assess the impacts on CSF’s
3. Develop means of eliminating the risk
4. Develop means of mitigating the risk
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Risk Management Plan
What Risks May Affect Our Critical Success Factors?
What Are the Potential Impacts of These Risks?
What Can We Do to Eliminate These
Risks?
What Can We Do to Mitigate These
Risks?
1. Delays in obtaining easements and ROWs
Delay completion date
Update approval status of each parcel every week
Contact owners as soon as delays are anticipated
2. Conflicts with existing utilities
Delay construction
Increase traffic disruptions
Increase costs
Pothole congested areas
Use unit prices in bid
Include allowances for utility relocation
3. Old pipelines may not withstand extra pressure
Unexpected “geysers”
Flooded basements
Water outages
Pressure test existing lines
Repair crews on 24‐hour notice during hydro‐testing
Example: Design and construction of a new water distribution system.
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Risk Matrix
Consequence Severity
Insignificant Minor Moderate Major Catastrophic
EventProbability
Rare Low Low Low Medium Medium
Unlikely Low Low Medium Medium High
Possible Low Medium Medium High High
Likely Medium Medium High High Very High
Frequent Medium High High Very High Extreme
Priority = Severity x Probability
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What Are the Highest Priority Risks on Your Project?
Risks (Internal & External) Severity x Probability = Priority
Legend:1 = lowest 5 = highest
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Example Risk Management Plan for Usery Park Water Line (Partial)
Risk Severity(1‐10)
Probability(1‐5)
Priority(S x P)
Mitigation Measures
Delays in obtaining permits from City
7 4 28 Update approval status every 2 weeks
Conflicts with existing utilities may delay construction
5 3 15 Pothole congested areasUse unit prices in tenderInclude allowances for utility relocation
Construction during monsoon may cause storm water issues
6 2 12 Constant weather check. Leave construction site
free draining at all times. Clean-up crews on 24-
hour notice
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Be Sure Everyone UnderstandsWho Owns the Risks
Project : Applegate Bridge
RiskRisk Owner
Owner Designer Contractor
Traffic forecasts
Accuracy of record drawings
Conforming with laws and regulations
Conforming to industry standard design practices
Unanticipated field conditions
Failure to comply with plans & specs
Failure to meet industry standard construction practices
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What Typically Happens Just Before A Project Is Set For Construction?
Consultant is out of budgetSchedule is against the wireEverybody wants to review the design and commentStakeholders come out of the woodworkSite conditions change
Project success is in jeopardy!
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Release For Construction Protocol− A Best Practice
• In what phase of the project does the highest risk occur?
– Planning
– Design
– Construction
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“Release for Construction” Verification
Based on your agency projects
Modify as necessary for specific projects
Use past data on “things that bite us”
Monitor improvement and change/add as necessary
Make this a “must use” protocol.
Release for Construction Checklist• Plans have been checked by design team in the field within the previous thirty (30) calendar days and any resulting issues have been resolved.
• Design and construction references have been checked, are appropriate and are specifically identified by date and/or edition number.
• The spatial datum (benchmark) has been identified, properly referenced and located in the field, and adjacent existing improvements are referenced to the same datum.
• Specifications are not in conflict with the plans. In those instances where plans need to contain specifications for clarification of the design, the PM will verify that the reference is identified with the specifications.
• There is a set of check prints on file verifying that the plans have been checked
• Issues raised and errors found in the review processes (40%, 70%, etc.) are reconciled and/or corrected in the final documents.
• Pavement design has been reviewed and approved.
• The IGA, if any, has been fully executed.
• Environmental issues have been resolved.
• Utility issues have been resolved.
• Right of Way has been acquired and issues resolved.
• Possible need for updated public notice or involvement has been evaluated.
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Six Risk Management Rules
1. Risk Recognition and Management are part of your PMP
2. Go to the field, early and often and LOOK
3. Identify risks often – what are the “known unknowns?”
4. Identify risk elimination and mitigation strategies
5. Identify who “owns” the risk
6. Prioritize, first things first
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Take Away
• Risk Management is a fundamental function of the Project Manager
• Risk Analysis must be part of your PM protocol
• Consider risk potential, impact and means of elimination and mitigation
• Some risk must be accepted
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PSMJ Public Works Project Management
• Public Works Project Management Bootcamp
This interactive, two-day seminar is extremely useful for those who are looking for all levels of project management.
Visit our website at: PSMJ.com
• If you have any questions for the speaker, please do not hesitate to contact me.
Michael S. Ellegood, P.E.
PSMJ Resources, Inc.
Phone: (602) 690‐1428
E‐mail: [email protected]