Guide for the Process of Managing Risk on Rapid Renewal Projects (2012)

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226 A hypothetical case study has been developed and used throughout the guide to adequately illustrate the various steps of the risk management process. These steps (each related to a chapter in the guide) are discussed. A risk management plan (RMP) that contains the details of the process for this hypothetical case study is provided in Appendix E. RISK MANAGEMENT PROCESS FOR QDOT PROJECT QDOT is planning a significant highway reconstruction/expansion project. The objec- tives are to minimize cost, schedule, and disruption during construction and maximize longevity of the constructed facility after construction. Recognizing the uncertainty and risk inherent in this project, QDOT decided to conduct risk management plan- ning, followed by implementation of the resulting RMP, to optimize satisfaction of these objectives (as described in general terms in Chapter 2 of the guide and specifically for this application in Section 1 of the RMP in Appendix E; see Figure D.1. However, it was decided not to conduct quantitative risk analysis (e.g., to objectively establish contingencies) at this time. To accomplish this (as described in Chapter 10 of the guide and specifically for this application in Section 9 of the RMP in Appendix E), QDOT: • Convened a group of project team staff and independent subject-matter experts from the key project disciplines, facilitated by a qualified risk elicitor and analyst, to conduct risk assessment and risk management planning (consistent with the principles, processes, and guidance described throughout the guide). • Assigned a risk manager (with adequate authority and resources) to implement the resulting RMP. D HYPOTHETICAL RAPID RENEWAL CASE STUDY

227 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS HYPOTHETICAL RAPID RENEWAL CASE STUDY QDOT RAPID RENEWAL PROJECT QDOT is planning to reconstruct and expand segments of two existing (intersecting) highways, US-555 and SH-111, through a rapidly developing suburban area. The ex- isting highways are nearly 40 years old, have increasingly inadequate capacity, and are expensive to maintain. These facilities are the only viable east-west (US-555) and north-south (SH-111) routes for commercial traffic for several miles in either direc- tion. Therefore, it is imperative that the necessary improvements be made quickly and with minimal disruption. QDOT would also like to minimize construction costs and future repair cycles and maintenance requirements, as well as eventual replacement issues. To achieve these objectives, QDOT plans to encourage contractor innovation through the use of performance-based specifications and incentives, and to procure with an innovative project delivery method (i.e., design–build). It is expected that ac- celerated bridge construction techniques, minimally disruptive maintenance of traffic, and innovative pavement design, among other rapid renewal elements (as described in Appendix A; see Figure D.2), will be considered for this project. As described in Chapter 3, it is important that the project be adequately understood (and documented) before starting the risk management process. The project is described in Section 2 of the RMP (Appendix E). Figure D.1. Iterative risk management process. 4 2014.01.07 R09 01 Guide Exec Sum_final for composition.docx Figure ES.1. Iterative risk management process. Adequate direction is also provided to help ensure successful implementation of the risk management process described herein, which requires adequate planning and resources, especially qualified facilitators and experts. A course also has been developed to train department of transportation (DOT) staff to successfully imple ent this guide, focusing on training DOT facilitators to (a) implement the risk management process directly on relatively simple rapid ren wal (as well as non–rapid renewal) proj cts and (b) supervise the evaluation of more compl x projects and perform quantitative risk analysis. To help these facilitators, in addition to this training c ur e (which includes annotated PowerPoint slides and application to a hypothetical project), an overview presentation of the process and forms for documenting inputs (which are also available electronically in a Microsoft Excel workbook template that automates the necessary analyses) have been developed for relatively simple projects. The template and related training materials are available online at www.trb.org/Main/Blurbs.168369.aspx. Project Scope/Strategy/ Conditions Structuring Risk Identification Risk Assessment Risk Analysis Risk Management Planning Risk Management Implementation

228 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS STRUCTURING QDOT PROJECT FOR RISK ASSESSMENT AND MANAGEMENT Following the principles outlined in Chapter 4 and as documented in Section 2 of the RMP (see Appendix E): 1. QDOT presented the project’s scope, strategy, status, key conditions and assump- tions, and associated cost, schedule, and disruption estimates to the combined group of key project team staff and independent subject-matter experts. 2. Facilitated by a “base lead,” the group reviewed, de-biased (i.e., removed any over- or underestimates), and validated the cost, schedule, and disruption estimates for the assumptions stated below. The results were base cost, schedule, and disrup- tion estimates, exclusive of risk and opportunity. Subsequently, a quantitative risk Figure D.2. Rapid renewal categories. Construction Structures Traffic Engineering/ Safety/ITS Innovative Contracting/ Financing Geotechnical Materials/ Advanced Testing • Closures • Preliminary Work/ Staging • Project Administration Streamlining • Construction Operations • Prefabrication • Component Reuse • High-Performance Materials • Integral Designs • Standardized Design • Construction Placement • Temporary Structures • Long-Life Structural Design • Advance Planning • Alternate Routes • Alternate Modes • Improved Physical Separation • Coordinated Emergency Response • Signage and Signalization • Closures • Work Zones • Alternative Financing • Project Delivery • Procurement • Contract Payment • Warranties • Alternative Insurance • Advance Contract Packaging • Bonding/ Performance Securities • Subsurface Exploration • Walls • Pavements • Alternative Materials • Intelligent Compaction • Material Testing Public Relations Environment Roadway/Geometric Design Right-of-Way/ Utilities/Railroad Coordination Long-Life Pavements/ Maintenance • Team Integration • Single-Point Communication • Additional Investment • Project Branding • Stakeholder Awareness • Performance Measurement • Master Planning • Context-Sensitive Solutions • Comprehensive Scoping • Advance Permitting • Alternate Access • Alternate Geometrics • Advance Roadwork • Advance Right-of- Way Planning • Early Utility Location • Common Utility Crossings • Early Railroad Coordination • Life-Cycle Design • Performance Indicators • Long-Life Materials • Maintenance Involvement Note: ITS = Intelligent Transportation Systems.

229 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS analysis was conducted, for which uncertainties in and correlations among the base costs, schedule, and disruption estimates were assessed (see RMP Adden- dum X in Appendix E). 3. Facilitated by a “risk lead,” the group adopted a design–build standard simpli- fied flowchart describing the sequence of major project activities (see Figure D.3). This simplified flowchart serves as the basis for subsequent risk identification and assessment, and then proactive individual risk reduction identification and evalu- ation. Note: Subsequently, a quantitative risk analysis was conducted, for which a more detailed flowchart was developed (see RMP Addendum X in Appendix E). 4. “Mean” (i.e., probability-weighted average) base project performance (i.e., sched- ule, uninflated and inflated cost, and disruption, both total for the project and by project activity) was then approximately calculated using an appropriate risk model (a Microsoft Excel workbook template). For subsequent risk and risk man- agement evaluations, QDOT-established trade-off values (which are policy rather than technical issues) that allowed the various project performance measures to be combined, for example, (a) combining postconstruction schedule, cost, and dis- ruption into longevity; and (b) combining schedule, cost, and disruption through construction with longevity into severity. Figure D.3. Standard simplified project flowchart for design–build for QDOT US-555/SH-111 Project. 5 2014.01.14 R09 Guide Appendix D_Final For Composition.Docx CBaum 2/21/14 2:02 PM Deleted: 2013.12.17 Appendix D_Final For Composition.Docx [Captio ] Figure .3. tandard simplified project flowchart for design–build for QDOT US-555/SH- 111 Project. <H1>Risk Identification for QDOT Project Following the principles and process outlined in Chapter 5 and as documented in Section 3 of the RMP in Appendix E, the facilitated combined group of key project team staff and independent subject-matter experts identified, categorized, and documented in the project risk register nearly 60 current risks and opportunities (relative to the base) with potential cost, schedule, and/or disruption impacts (see Table D.1). The risks and opportunities (collectively termed risks) spanned all remaining phases of the project and were categorized by the project phase in which they were most likely to occur (and after which they could be retired”): for example, 4 planning risks, 7 scoping risks, 16 preliminary design or environmental process risks, 2 environmental permit risks, 8 procurement risks, 10 right-of- way/utilities risks, and 12 construction risks. At this point in the risk assessment, however, the group did not discuss the likelihood or severity of any of the risks. Initially, risks were simply brainstormed by the group and then categorized. Once the initial list of risks was categorized, the group added risks to complete each category, A  – lag  (remaining)  from  finish  of  Environmental  Permits   to  B  -­‐ lag  (remaining)  to  finish  of  Procurement C  – lag  (remaining)  from  finish  of  Environmental  Permits  to  D  -­‐ lag  (remaining)  to  finish  of  ROW/Util/RR G  -­‐ lag  (non-­‐overlap)  after  start  of  Final  Design  to  start  of  Construction  and  H   -­‐ lag   (remaining)  after  finish  of  Final  Design  to  finish  of  Construction I  -­‐ lag  (remaining)  after  finish  of  ROW/Util/RR  to  finish  of  Construction J  – lag  (remaining)  from  finish  of  ROW/Util/RR  to  K  -­‐ lag  (remaining)  to  finish  of   Procurement <D> Planning Scoping Enviro Proc,   Prelim Design D/B  Final Design Procure-­‐ ment D/B  Con-­‐ struction Opera-­‐ tions Replace-­‐ ment Enviro Permits ROW,   Util,  RR 4 5 2 3 1 Design/Build  (D/B) <E> <F> <K> <J> <I> <H><G><A><C> <B>Time è Notes:  1,2,3  =  funding 4  =  project  delivery 5  =  replacement Enviro Proc  =  Environmental  Process Util,  RR  =  Utilities,   Railroad Notes:    <x>  =  lag E  -­‐ lag  (remaining)  after  finish  of  ROW  Fund  to  finish   of  ROW/Utilities/RR F  -­‐ lag  (overlap)  from  finish  of  ROW/  Util/RR  to  start   of  Construction

230 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS RISK IDENTIFICATION FOR QDOT PROJECT Following the principles and process outlined in Chapter 5 and as documented in Sec- tion 3 of the RMP in Appendix E, the facilitated combined group of key project team staff and independent subject-matter experts identified, categorized, and documented in the project risk register nearly 60 current risks and opportunities (relative to the base) with potential cost, schedule, and/or disruption impacts (see Table D.1). The risks and opportunities (collectively termed risks) spanned all remaining phases of the project and were categorized by the project phase in which they were most likely to occur (and after which they could be retired): for example, 4 planning risks, 7 scoping risks, 16 preliminary design or environmental process risks, 2 environmental permit risks, 8 procurement risks, 10 right-of-way/utilities risks, and 12 construction risks. At this point in the risk assessment, however, the group did not discuss the likelihood or severity of any of the risks. Initially, risks were simply brainstormed by the group and then categorized. Once the initial list of risks was categorized, the group added risks to complete each cat- egory, finally referring to the checklists (Appendix B), and then edited the risks to eliminate any overlap. TABLE D.1. SELECT RAPID RENEWAL RISKS FOR QDOT US-555/SH-111 PROJECT Project Phase Risk ID Title of Risk or Opportunity Preliminary design/environmental process PD13 Change in environmental documentation Right-of-way, utilities, and railroad RU3 Unwilling sellers Procurement CP2 Uncertain design–build contracting market conditions at time of bid Construction CN3 Problems with planned accelerated bridge construction technique RISK ASSESSMENT FOR QDOT PROJECT QDOT initially decided that assessing the current risks in terms of mean-value rat- ings (e.g., L, M, and H) would be sufficient for its intended use of the risk assessment results (i.e., prioritizing the risks for proactive individual risk reduction). Following the principles and process outlined in Chapter 6 and as documented in Section 3 of the RMP in Appendix E, the group first defined mean-value rating scales for the various risk factors (see Table D.2): • Each of the three types (cost, schedule, and disruption) of impacts of occurrence (e.g., a medium [M] cost impact was defined to correspond to a value between 3% and 10% of the base project cost, in uninflated dollars). • The probability of occurrence (e.g., a medium [M] probability corresponded to a probability of occurrence between 0.2 and 0.4).

231 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS TABLE D.2. RISK FACTOR RATING SCALE DEFINITIONS FOR QDOT US-555/SH-111 PROJECT • The severity of combined impacts (considering the probability of occurrence and trade-offs) [e.g., a medium (M) severity was defined to correspond to a value between 3% and 10% of the base combined performance, in equivalent inflated dollars]. The group then discussed each of the identified risks in the risk register and quanti- fied (by consensus) each of them in terms of mean-value ratings (or sometimes directly in terms of mean values) for the following, before any additional mitigation: (a) the cost, schedule, and/or disruption impacts (and the affected activity) if the risk occurs; and (b) the probability that the risk (as defined by its impacts) will occur (during the particular project phase under which it is categorized) (see Table D.3). Note: Sub- sequently, a quantitative risk analysis was conducted, for which these unmitigated assessments were refined; see RMP Addendum X in Appendix E. Using an appropriate risk model, for example, the Microsoft Excel workbook tem- plate that incorporates the algorithms presented in Chapter 6 (see Table D.4), QDOT used the assessments to determine: (a) the approximate unmitigated mean-value con- tribution of each risk to the project objectives of cost, schedule, and disruption; and (b) by combining with QDOT’s established “value trade-offs” among the objectives, an unmitigated mean-value longevity and then severity for each risk, based on which the risks were ranked. Note: Subsequently, a quantitative risk analysis was conducted, for which the contribution of each risk and other uncertainty to the potential budget, before any additional mitigation, was determined more accurately; see RMP Adden- dum X in Appendix E.

232 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS TABLE D.3. UNMITIGATED RISK FACTOR ASSESSMENTS FOR SELECT RAPID RENEWAL RISKS FOR QDOT US-555/ SH-111 PROJECT Project Phase Example Risk or Opportunity Probability of Occurrence Mean Value or Ratingsa to Affected Activity Mean Cost Change if Occurs Mean Duration Change if Occurs Mean Disruption Change if Occurs Preliminary design/ environmental process PD13. Change in environmental documentation L +M to preliminary design/ environmental process +H to preliminary design/ environmental process 0 Right-of-way, utilities, and railroad RU3. Unwilling sellers H +M to ROW/ utilities/railroad 0 0 Procurement CP2. Uncertain design– build contracting market conditions at time of bid 25% +$1.2M to construction +1 month to procurement 0 Construction CN3. Problems with planned accelerated bridge construction technique H +L to construction +L to construction +L to construction a See definitions in Table D.2. TABLE D.4. UNMITIGATED RISK SEVERITY DETERMINATION AND RANKING FOR SELECT RAPID RENEWAL RISKS FOR QDOT US-555/SH-111 PROJECT Project Phase Example Risk or Opportunity Mean Severity (equivalent YOE$M or rating)a Rank Preliminary design/ environmental process PD13. Change in environmental documentation L 11 Right-of-way, utilities, and railroad RU3. Unwilling sellers M 3/4 Procurement CP2. Uncertain design-build contracting market condition at time of bid 0.38 9 Construction CN3. Problems with planned accelerated bridge construction technique L 12 a See definitions in Table D.2; YOE$M = year-of-expenditure in millions of dollars.

233 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS RISK ANALYSIS FOR QDOT PROJECT QDOT used the mean base and unmitigated risk assessments to determine (using the Microsoft Excel workbook template) the approximate mean unmitigated project per- formance (i.e., schedule, uninflated and inflated cost, and disruption, both total for the project and by project activity) in the same way as for base project performance. Although these results were very approximate (because of simplifications in the analy- sis), they provided insight into the collective effect of the risks, before any additional mitigation. This information and these tools were also used to determine the mean severity of each risk, in terms of how much the combined performance measure is af- fected by that risk. Note: Subsequently, a quantitative risk analysis was conducted (see RMP Adden- dum X in Appendix E), for which • A detailed flowchart was developed (by consensus) by the facilitated group (see Figure D.4). • Uncertainties in the unmitigated base cost estimate and schedule were assessed (by consensus) by the facilitated group; for example, bridge structure cost ranges (10th to 90th percentile) from −20% to +20%, and is moderately correlated (coefficient of 0.75) with other construction cost items. • Unmitigated risk factor assessments were refined (by consensus) by the facilitated group (e.g., see Table D.5). Figure D.4. Detailed flowchart developed by the facilitated group. Preliminary Design (to 30%) 1 Draf t Environmental Assessment (EA) 2 Prepare / Issue RFP 4 Remaining as of 12/1/2009 Finalize EA / Approval 3 DB Response / Review / Selection / Negotiate 8 Complete 136 months 6 months 6 months 2 months 6 months Notes: 1. Single Design/Build contract. 2. Advance Right-of-Way (ROW) Acquisition includes appraisals, offers, acquisition, relocation, and demolition for parcels that QDOT anticipates will be critical to early construction by the Design/Builder. 3. Advance Utility Relocations includes coordination, approvals, and relocations of utilities that QDOT anticipates will be critical to early construction by the Design/Builder. Additional relocations that might be required will be the responsibility of the Design/Builder during construction. Assumes minimal new ROW required for utility relocations. 4. QDOT will complete the Environmental Assessment (EA) and obtain all environmental permits before Notice to Proceed (NTP). 5. Construction duration includes typical winter shut-down period from November 15th through March 15th. 6. Construction includes construction permits, remaining utility relocations, and all construction-related effort. Remaining ROW acquisition by QDOT also occurs during this timeframe. QDOT’s US 555 / SH 111 Expansion Project Simplified Risk Assessment Flow Chart December 1, 2009 Rapid Renewal Delivery / Schedule Base Schedule (excluding risk): • Pre-Construction (up to NTP): 18 months • Construction (af ter NTP): 17 months • Total duration: 35 months Environmental Permitting 7 6 months Notice to Proceed 10 Funding 9 12 months Advance ROW Acquisition 6 9 months Advance Utility Relocations 5 Design/Builder Design 11 Design/Builder Construction 12 16 months 6 months S + 1 month 6 months remain 14 months remain Base date: 6/1/2011 Base date: 11/1/2012 VERSION 2: CONSERVATIVE PRE-CONSTRUCTION

234 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS • A more sophisticated, probabilistic (via Monte Carlo simulation) integrated cost and schedule model was developed to represent the more detailed flowchart and implemented with the more refined unmitigated base and risk assessments. • Uncertainties in unmitigated project performance (i.e., project completion date and cost through construction, both unescalated and escalated) were determined (e.g., see Figure D.5). • Contributions of each risk and base uncertainty toward the target (80th percentile) escalated cost through construction and project completion date were determined; for example, PD13 contributes $0.2 million to 80th percentile of escalated project cost, and ranks 13th. RISK MANAGEMENT PLANNING FOR QDOT PROJECT After risk assessment and prioritization, QDOT followed the principles and process outlined in Chapter 8 of the guide to identify and plan specific risk management actions to address the key risks to its project objectives, both individually and collectively, as documented in the RMP (Appendix E). The complete project RMP consisted of (1) proactive risk reduction plans (Section 5 of the RMP), (2) contingency management actions per QDOT procedure (by project phase) (Section 7 of the RMP), and (3) recov- ery plans (by project phase) (Section 8 of the RMP). Figure D.5. Unmitigated project performance (cost) uncertainty. TABLE D.5. QUANTITATIVE ASSESSMENT FOR A SELECT RAPID RENEWAL RISK FOR QDOT US-555/SH-111 PROJECT Risk or Opportunity Probability of Occurrence Cost Change if Occurs (2009 $ million) Duration Change if Occurs (months) PD13. Change in environmental documentation Mutually exclusive scenarios: A. 50% (base) B. 40% C. 8% D. 2% A. 0 (base) B. +0.1 to Activity 2 C. +0.5 to Activity 2 D. +0.5 to Activity 2 and +1.0 to Activity 12 A. 0 (base) B. +1.0 to Activity 2 C. +6.0 to Activity 2 D. +6.0 to Activity 2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10 15 20 25 30 35 Total Project Cost (millions) Cu mu lat ive Pr ob ab ilit y (P erc en tile , C on fid en ce ) 2009 $ Year-of-Expenditure $ Figure D.5. Unmitigated project performance (cost) uncertainty.

235 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS QDOT first focused on identifying cost-effective actions for the highest-rated (i.e., highest-priority) risks, considering synergy among risk management actions as appro- priate. For each of the high-ranking risks, the following was done (see Table D.6): (a) possible proactive risk management actions were identified; (b) the estimated mean cost, schedule, and/or disruption (by activity) to implement each action was assessed; (c) the anticipated mean effectiveness regarding reducing the various risk factors from each action was assessed; and (d) the overall cost-effectiveness (in terms of reduction in severity) for each action was calculated (using the Microsoft Excel workbook tem- plate). Cost-effective actions were then selected, and responsibility and schedule for implementing those actions were established (see Table D.7). TABLE D.6. RISK REDUCTION ACTION EVALUATION FOR SELECT RAPID RENEWAL RISK FOR QDOT US-555/SH-111 PROJECT Risk or Opportunity Addresseda Potential Risk Management Actionsb Change in Base Factors Change in Risk Factors RU3. Unwilling sellers QDOT’s principal risk from unwilling sellers is increased right- of-way (ROW) acquisition cost. Hence, QDOT could take the following actions to reduce this risk (see Table B.11): • Make reasonable, early offers: Conduct thorough research on the values of these properties and present reasonable offers to the property owners. Do this early to provide more time to reach negotiated settlements (and therefore avoid court proceedings). This action would likely reduce the probability of cost increase, but not the magnitude of a cost increase if it occurs. +$0.05M To ROW; minor delay and disruption Reduce Probability of occurrence cut in half (from H to M); minor change in impacts Note: Cost-effectiveness of this action was determined to be a net savings of about $250,000 (regarding change in severity, in equivalent YOE), which was the fourth highest of the actions identified. a See risk register for description. b Proactive actions: mitigate, avoid, allocate. TABLE D.7. RISK REDUCTION PLAN FOR SELECT RAPID RENEWAL RISK FOR QDOT US-555/SH-111 PROJECT Risk or Opportunity Addresseda Potential Risk Management Actions Responsibility Schedule RU3. Unwilling sellers QDOT’s principal risk from unwilling sellers is increased right- of-way (ROW) acquisition cost. Hence, QDOT could take the following actions to reduce this risk (see Table B.11): • Make reasonable, early offers: Conduct thorough research on the values of these properties and present reasonable offers to the property owners. Do this early to provide more time to reach negotiated settlements (and therefore avoid court. proceedings). This action would likely reduce the probability of cost increase, but not the magnitude of a cost increase if it occurs. Project engineer – design manager (design) and ROW manager (public outreach) Midway through ROW/utilities/ railroad, implement now; check by end of 30% design a See risk register for description. b Proactive actions: mitigate, avoid, allocate.

236 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS QDOT then determined the revised base and residual risks (assuming the selected risk reduction actions were actually implemented), from which they determined approximate mitigated mean project performance (i.e., for completion date and esca- lated cost) in the same way (using the Microsoft Excel workbook template) as for unmitigated mean project performance (as documented in Section 6 of the RMP in Appendix E). On the basis of this information, in conjunction with industry guidance, QDOT used judgment to establish appropriate contingency requirements (as docu- mented in Section 7 of the RMP) and recovery requirements (as documented in Section 8 of the RMP). Note: Subsequently, a quantitative risk analysis was conducted, which objectively determined the values for the specific QDOT-established target percen- tiles of 80% and 95% confidence of the mitigated project performance (i.e., comple- tion date and escalated cost) for establishing contingency and recovery requirements, respectively; this was done in the same way as for unmitigated project performance (see RMP Addendum X in Appendix E). RISK MANAGEMENT IMPLEMENTATION FOR QDOT PROJECT After QDOT developed the RMP (see Appendix E), its implementation was adequately supported by management and adequately resourced (according to the principles out- lined in Chapter 9 of the guide and as documented in Section 9 of the RMP). The RMP included an organizational structure with specified responsibility and authority (i.e., the project manager served as the risk manager) to implement that RMP throughout project development. The project’s designated risk manager then successfully imple- mented that RMP, including (see Figure D.6) • Proactively and cost-effectively reducing individual risks that were within QDOT’s control, including monitoring and updating the risks and the RMP as time pro- gressed—several large risks were successfully reduced. • Using established protocols for contingency control, including monitoring and periodic updating of contingency status (expended to date and capacity required for completion) and recommending contingency expenditure (to cover actual risk Figure D.6. Contingency and recovery management. for Phase A for Phase A for Phase A for Phase B for Phase B for Phase B for Phase C for Phase C for Phase C 0 1 2 3 4 5 6 7 A B C Project Phase C on tin ge nc y ($ M ) cumulativetriggerrecovery

237 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS occurrences as needed) and releasing excess contingency (when no longer needed)— the initially established contingency was adequate throughout the project, with the unused contingency subsequently released. • Using established protocols for recovery decisions, including monitoring and periodic updating of recovery status (achieved to date and capacity required for completion) and recommending recovery actions as needed when remaining con- tingency was not sufficient—no recovery actions were necessary. IMPLEMENTING RISK MANAGEMENT PROCESS FOR QDOT PROJECT To implement the risk management process on this project (as described in Chap- ters 2–9 of the guide and adopted in the RMP in Appendix E), QDOT did the follow- ing (as described in Chapter 10 and documented in the RMP): • Assembled relevant project information (i.e., regarding scope, strategy/status, conditions/assumptions, cost estimate, schedule). • Convened a group of key project team staff and independent subject-matter experts from the key project disciplines, facilitated by a qualified risk elicitor/analyst, to conduct risk assessment and risk management planning (consistent with the prin- ciples, processes, and guidance described throughout the guide), culminating in an RMP (including the risk register). • Assigned a risk manager (with appropriate authority and resources) to implement the resulting RMP, including monitoring, updating, and/or recommending project risks, risk reduction plans, contingency, and recovery. This process was well planned, supported by management, and adequately resourced. Adequate support and resources (including an organizational structure) were then pro- vided to implement that plan throughout project development. Construction of the QDOT project was successfully completed on January 31, 2013, at an inflated cost of $22.0 million (with $2.0 million remaining cost contin- gency and 2.0 months remaining schedule contingency), with few unanticipated prob- lems and no recovery actions (see Table D.8). TABLE D.8. PERFORMANCE OF QDOT US-555/SH-111 PROJECT Project Performance Base Base + Contingency Actual Excess Contingency Cost (YOE$M) 17.0 24.0 22.0 +$2.0 Schedule (months) 35.0 40.0 38.0 +2.0