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44 CHAPTER 5 Guide to the Planning Phase 5.1 Introduction planning phase. Planning level cost estimates can have a sig- nificant effect on the overall transportation program and on This chapter presents guidance for risk management in the the ability of the SHA and MTO to meet their area trans- planning phase. The Planning Phase is defined in terms of its portation needs. The level of effort regarding cost estimating relevance to cost estimating and risk management. Each of and risk management is limited due to a lack of detailed proj- the risk management steps is discussed in detail, including in- ect definition and the type of estimate techniques available to puts, outputs, and tools used in the risk management process. prepare a planning phase cost estimate (e.g., lane mile, etc.). Tips for tool application and how project complexity impacts The expectations for accuracy must be realistic in an estimate risk management tools and practices are also discussed for for a project that may be 25 years in the future and is only each step. defined by project limits (e.g., point A to point B). Proper application of cost estimating and risk management tools will result in the generation of credible ranges of costs and risk 5.1.1 Planning Phase Overview management plans to meet these cost estimates. The purpose of transportation planning for both states and regional areas is to identify a set of the most cost effective ap- 5.1.2 Planning Phase Risk proaches that achieve their stated system goals. Federal law Management Emphasis requires that SHAs develop a statewide transportation plan and that MPOs develop a regional transportation plan (RTP). The risk management process begins during the planning The horizon year for these long-range plans is usually 20 to phase. As shown by the shading in Figure 5.1, risk identifica- 25 years into the future. tion is the primary focus of the risk management process dur- Approaches, or at least terminology, for statewide trans- ing the planning phase. Detailed risk identification is useful in portation planning vary across the country. While some states the preparation of planning documents, particularly in the do identify major or even unique minor projects, most state- RTP. Risk assessment and risk mitigation and planning can be wide transportation plans do not identify specific projects, conducted on the most complex projects when they are iden- but rather establish strategic directions for state investment tified in the RTP. However, risk assessment and mitigation are in the transportation system and present future challenges limited in the planning phase due to a lack of project defini- that could constrain the ability of the SHAs to improve the tion. Similarly, detailed risk management plans can be devel- performance of their systems. oped for identified major projects and groups of minor or The metropolitan RTP is very different. The RTP identifies moderately complex projects, but they are limited as tools to specific projects that are to be implemented over the next assist in cost control (again due to the lack of individual proj- 25 years. Federal law requires the RTP to be fiscally con- ect definition). Although risk allocation and risk monitoring strained, that is, the sum of the total project costs in the plan and control are not the focuses of the planning phase, they cannot exceed the amount of funding that is expected over the should be considered when major projects are identified. next 25 years. This places great importance on having valid The remainder of this chapter describes tools and manage- and realistic cost estimates for the projects in the MPO's plan. ment practices suggested for use during the planning phase of The term "conceptual estimating" is often used to describe project development. A discussion of how project complexity the general method of estimating project costs during the impacts risk management tools and practices is also provided.