1
CDOT/FHWA Peer Exchange
Florida Department ofTRANSPORTATION
Phillip “Greg” Davis, P.E. Program Management Office
State Estimates Engineer May 10-11, 2016
Risk Based Cost Estimation
in Florida DOT
Double Tree Denver-Aurora
13696 East Iliff Place
Aurora, Colorado
1
Florida Department of Transportation
FDOT Organization
2
2
Florida Department of Transportation
Estimating Systems
3
Design Quantities and Estimatesfor Final Design Cost Estimates
Long Range Estimating Systemfor Conceptual Cost Estimates
Traditional vs Risk-Based
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
Contingency
Threat
1, 2,3,etc
Threat
1, 2,3,etc
Opportunity
1, 2, 3, etc
Florida Department of Transportation
3
Florida Department of Transportation
FDOT History
5
o Major Project Cost Estimate Review
o FHWA Risk Management Training
o Pilot Projects
o Risk Management Practice
o State Risk Management Team
Florida Department of Transportation
Statewide Risk Management Team
6
Greg Davis, PE
State Estimates Engineer
Kurt Lieblong, PE, CVS
State Value Engineer
Tim Brock
District VE/Utilities
Administrator
Frank Chupka, PE
District Court Engineer
Rob Quigley, PE
State Project Management
Engineer
4
Florida Department of Transportation
Regional Risk Management Teams
7
o Membership in each District consists of :
• District Value Engineer
• District Estimates Engineer
• Design Project Manager
• Construction Project Manager
o Monthly Teleconferences with SRM Team
o Identify Projects for Workshops
o Support Workshops with Staff & Facilities
o Change Culture by Promoting Risk Management
Florida Department of Transportation
Project Selection Guidelines – Risk Analysis
8
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
5
Florida Department of Transportation
Tools & Strategies
9
o Risk Analysis Self-Modeling Software
• Project Manager at their desk
• Consult with SME as needed
• Project – 95% / Cost – 45%
o Risk Analysis Workshops
• Consultant Led
• Regional Team Support
• Commercial Software
• Projects – 5% / Cost – 55%
Florida Department of Transportation
Performance Measures
10
-50.00%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2011 2012 2013 2014 2015
Statewide
LB vs OE (+/-10%) LB vs AD (+/-15%) Ph 2 vs IE (+/-15%) AD vs IE (+/-25%)
6
Florida Department of Transportation
Monthly Bid Analysis
11
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
7
Risk Analysis Workshops
• 2 to 3 day structured event
• Identify and quantify
threats and opportunities
• Identify risk management
strategies
• Collaborative team
approach!
Florida Department of Transportation
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
8
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, drawings, 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
9
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
Florida Department of TransportationFlorida Department of Transportation
Functional Area Risk NameInclude Risk
Comments84
Contracting and
ProcurementChanges 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
Contracting and
Procurement
Other Issues Related to Contract Language (Warranties, Liquidated
Damages, DBE, Insurance/Bonding, etc.)1
Contracting and
ProcurementDelays in Ad/Bid/Award Process due to Addenda or Bid Protests 1
Contracting and
ProcurementLack of Qualified Bidders 1
Contracting and
Procurement
Other construction projects in region limit supply of labor, bid costs
are higher as a result1 Potential issue, $600 M in lets in D2, twice of normal
Contracting and
ProcurementContractor Non-Performance 1
Contracting and
ProcurementLabor and/or Productivity Disruptions 1 probably not a major concern - review vs. base schedule
Structures &
GeotechChanging 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.
10
Base Cost Variability Review
Florida Department of Transportation
Project Schedule Review
Florida Department of TransportationFlorida Department of Transportation
11
$533.2
$605.3
$674.4
$360
.7
$452
.10%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$250.0 $350.0 $450.0 $550.0 $650.0 $750.0
Pro
bab
ility
of N
ot E
xcee
din
g
Project Cost, Millions of Dollars
Alternative 1 - Risk-Based Total Cost
(Pre-Response)
Alternative 1 - Base Cost Estimate
(mean value, 2010 $)
Alternative 1 - Base Cost Estimate
(mean value, escalated)
Baseline Risk Assessment Results
$650.0
Contingency
$650.0 - $605.3 = $44.7
$658
.9
$652.2
$739.5
$775.7
$829.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$500 $550 $600 $650 $700 $750 $800 $850 $900 $950
Pro
bab
ility
of
No
t Ex
ceed
ing
Cost, Millions of Dollars
Non-Escalated Design-Build
Contract Base Cost, Program
Non Escalated Design-Build
Contract Risk-Adjusted Total Cost,
Program
Florida Department of Transportation
Baseline Risk Assessment Results
$1.4
$1.5
$1.7
$1.9
$2.3
$2.3
$3.8
$3.8
$25.5
$51.0
$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00
MGT 900.03 - Loss of Toll Revenue due to complex MOT
ENV 30.01a12 - Expected Controversy on Environmental Grounds - Alt
1/2
RR 20 .01 - Cost for Railroad Flaggers
ENV 80.01 - New Storm water Rule - Water quantity and quality
issues
ENV 60.06a1 - Development of mitigation plan to offset impacts to
public lands - Alt 1
STG 10.01 - Design Changes on Bridge or Overpass
ENV 10.01a1 - Determination of Significance Requiring EIS - Alt 1
CNS 30.01 - Excavation impacts during construction due to weather
ENV 20.04a1 - Determination of indirect impacts to wetlands - Alt 1
ENV 20.03a1 - Determination of direct impacts to wetlands - Alt 1
Expected Value Cost Impact ($ millions)
Based on Risks that Impact Alternative 1 Activities
Alternative 1 - Cost EV ($M) (Pre-Response)
Florida Department of Transportation
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Risk Register
Florida Department of Transportation
�The Risk Register is the single most powerful Control Tool
�Incorporate it in your Progress Reports!
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
13
Risk Management – Outcomes
Florida Department of Transportation
o Validate project cost & schedule
o Replace project contingency with risk-based estimate
o Create a risk Response plan
• Identify high cost and schedule risk drivers
• Develop mitigation strategies
o Manage contingency
• Reduce contingency as project evolves
• Allocate excess funds to other projects
Risk Response
Florida Department of Transportation
14
Risk Management
“Hope is not a Strategy”Florida Department of Transportation
Florida Department of Transportation
General Lessons Learned
28
o Challenges
o Strengths
o Lessons Learned
o Best Practices
15
Florida Department of Transportation
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7/18/2014
Greg Davis, PE
State Estimates Engineer
850-414-4170