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57 6.4.3 Programming Phase Risk Mitigation 6.4.5 Programming Phase Risk Mitigation and Planning Outputs and Planning Tips The outputs of the risk mitigation and planning step are an Project cost is subject to many variables but actions to mit- organized, comprehensive, and interactive risk management igate the impacts of risks can have a significant effect in con- strategy and a plan for adequate resources. The Risk Manage- trolling cost. ment Plan (R3.1) tool in Appendix A provides a good example of this output from Caltrans. The example risk management Begin risk planning efforts early. Formal risk management plan from Caltrans describes a clear approach to the assign- plans can begin concurrently with risk identification and ment of responsibility. It also provides items that require re- analysis steps. source investment and a method for calculating their costs. Clearly assign responsibility for risk ownership. Individ- Risk mitigation and planning is iterative and includes de- uals responsible for managing risks should be informed scribing and scheduling the activities and processes to assess on the costs of mitigation efforts and which risks must be (identify and analyze), mitigate, monitor, and document the resolved. risk associated with a project. For minor or moderately com- When planning for risk responses, keep in mind the com- plex projects, the result should be a Risk Register (R3.12). For mon strategies of avoidance, transference, mitigation, or major projects or moderately complex projects with a high acceptance. degree of uncertainty, the result should be a formal Risk Risk mitigation and planning efforts may necessitate that Management Plan (R3.1). agencies set policies, procedures, goals, and responsibility standards. 6.4.4 Programming Phase Risk Mitigation Document the risk mitigation and planning efforts at a and Planning Relationship level of detail appropriate for the project complexity and to Project Complexity resources available to management. The risk mitigation and planning effort should be congruent with project complexity. Each risk plan should be documented, 6.5 Programming Phase but the degree of documentation will vary with project com- Risk Allocation plexity. Not all projects will require a comprehensive and quan- titative risk management process. The simplest minor projects The goal of risk allocation is to minimize the total cost of risk may only require a Red Flag Items (I2.1) tool to manage the on a project, not necessarily the costs to each party separately. most important risks. The list can be reviewed at key project Risk allocation begins in the Programming Phase with the milestones to ensure that the key risks are being managed. project delivery decision. The identified project risks should The creation of a Risk Register (R3.12) is a more formal align with the selected project delivery method to provide an identification of risks than the simple Red Flag Items (I2.1). optimal allocation of risk to minimize the total cost or meet A risk register is highly recommended for all projects; it pro- other project objectives. The traditional design-bid-build de- vides project managers with a listing of significant risks and livery system is most commonly used by SHAs and its risk includes information about the cost and schedule impacts of allocation tenets are well understood in the industry. However, each risk. It supports the contingency resolution process by alternatives to the traditional delivery method exist. Design- tracking changes as a result of actual cost and schedule risk build, construction management at risk, and publicprivate impacts, as the project progresses through the development partnerships are among the alternative delivery options that process and the risks are resolved. can benefit from innovative risk allocation opportunities. The level of detail in the register will vary with project com- plexity. Registers can be applied to minor projects and the ef- 6.5.1 Programming Phase Risk fort to create and maintain them can be relatively minimal. Allocation Inputs All moderately complex projects should use a register; it cre- ates a concise tool to manage the risks and the individuals as- Risk allocation inputs at the Programming Phase include signed to each risk. Major projects or moderately complex the outputs from the first three steps in the risk management projects with high levels of uncertainty will benefit from hav- process plus an examination of the available/allowable proj- ing a detailed and formal Risk Management Plan (R3.1) that ect delivery options for the project. The decision makers who records all aspects of risk identification; risk assessment; risk will determine the project delivery method should be aware analysis; risk planning; risk allocation; and risk information of the most critical risks that could impact project delivery systems, documentation, and reports. Major projects should performance. For example, if the design-build delivery method use a register that is integrated into the formal Risk Manage- is being considered to save time, the decision makers should ment Plan (R3.1). review all identified risks concerning schedule and examine