Guidelines for Managing Geotechnical Risks in Design–Build Projects (2018)

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22 This chapter focuses on the qualitative analysis of geotechnical risk for the typical DB project. It provides a methodology for assessing the magnitude of the risks identified using the tools found in the previous chapter. The objective of the qualitative risk analysis is to determine the scope of the preliminary geotechnical investigation that will be included in the DB RFP. Finally, it will furnish a mechanism to identify risks that could potentially be showstoppers so that the agency can validate its decision to select DB project delivery. That mechanism will be assembled around the results of the practitioner survey, which asked for data regarding the specific risks that might cause either an industry respondent to not bid or a DOT geotechnical engineer to recommend a full GBR before contract award. The chapter proposes a simple method for estimating the magnitude of the geotechnical risk at a conceptual level to assist the agency in developing appropriate contingencies at early stages of project development. 3.1 Risk Assessment Given the nature of the DB projects and the fact that geotechnical design is one of the earliest design components undertaken, it is imperative that the risk analysis activity starts as early as possible. Figure 3.1 gives a project timeline with the proposed plan for the risk analysis. While this timeline works for risk planning for the whole project, it is equally applicable if the geotech- nical risk analysis is to be conducted. If geotechnical risk analysis is to be conducted exclusively, then this activity should take place prior to the general risk assessment. After the project team identifies the risks, the project team needs to quantify their impact. Several methods are available for quantifying the risk impacts. These methods are divided into two groups: qualitative and quantitative (Figure 3.2). Risk assessments conducted at the conceptual design level generally involve a qualitative risk assessment, in which major risks are identified and ranked. At this stage, because of the preliminary nature of investigations and uncertainty with geotechnical data, accurate estimates of cost or schedule impact may not be feasible. Because of these concerns, risk impacts are estimated qualitatively. Risk assessments conducted in the later design phases require a higher level of detail, and the risk analysis team quantifies the risks. Detailed descriptions of risk assessment procedures are described in several sources, including state DOT risk manuals (Washington State DOT 2014, Virginia DOT 2015). These approaches are well established and have been working well. In this section, the approaches will be applied to geotechnical risk analysis. It is generally understood that collecting the data needed for quantitative risk analysis can be costly and may not be justifiable for smaller projects. Because of this cost concern, many DOTs prescribe quantitative risk analysis only for projects that exceed certain financial amounts. As an example, Washington State DOT suggests C H A P T E R 3 Qualitative Geotechnical Risk Analysis

Qualitative Geotechnical Risk Analysis 23 a qualitative analysis for projects smaller than $10 million, although the agency does not dis- courage the use of quantitative approach for such projects (Washington State DOT 2014). 3.2 Qualitative Approach A qualitative approach measures the impact and likelihood of the identified risks and ranks the risks in a risk register for mitigation analysis. The qualitative approach is quite subjective and based on the perception of the project development team regarding the type of risks to be encountered and their impact on the project. At the early stages of development, the scope is not clear and data are not available. The best that the team can do is to identify some potential risks on the basis of their knowledge of the site and conditions and maybe some indication that the risk is a major or a minor one. With more data becoming available and the scope becom- ing clearer, the project team might be in a position to rate the risk in terms of frequency and its impact. At this early stage, it may not be possible to put a dollar value or delay time on the risk factor so a rating similar to Likert scale (e.g., from 1 to 5 for frequency and impact) is assigned to each risk factor. A risk score is calculated on the basis of these two factors. This risk score is the expected magnitude of the identified risk (Equation 3.1). = ×risk score risk frequency risk impact (3.1) Preliminary risk (qualitative) assessment based on preliminary site investigation and conceptual cost/schedule Full-fledged risk assessment (quantitative) based on the detailed information collected up to the point of analysis Construction Working Drawings Design Development Preliminary EngineeringConceptual Design Figure 3.1. Timing of risk analysis for DB projects. Quantification Approaches Qualitative Approach Subjective Risk Ranking Probability of Risk Occurrence Risk Factor Expected Delay Risk Factor Expected Cost Impact Rating Frequency Rating Quantitative Approach Figure 3.2. Risk quantification approaches.

24 Guidelines for Managing Geotechnical Risks in Design–Build Projects The results of the NCHRP Project 24-44 survey of various DOTs showed that in almost all cases, geotechnical risk assessment is performed as part of the overall project risk assessment. In other words, no independent formal geotechnical risk assessment is conducted. This approach may work well as long as the geotechnical risk assessment results are highlighted and used in the decision regarding establishing the level of geotechnical design requirements. In fact, there is no reason not to use the traditional risk assessment methods for quantifying and remediating the geotechnical risks. The project risk score can be used as a decision gate to decide if the project can be executed using a DB approach. The results of both survey and interviews showed that in almost all cases, the DOTs do not make the decision to go DB or DBB on the basis of geotechnical considerations. This decision has usually been based on project schedule constraints and political considerations, such as availability of incentives for using alternative delivery methods. However, some conditions such as active seismic zones and potential for liquefaction or a strong possibility of encountering contaminated material were cited as reasons for eliminating the DB alternative. 3.3 Risk Matrix One common method for ranking the identified risks is to use a simple risk matrix and rate each major risk according to its likelihood and impact using a 1 to 5 Likert scale. Figure 3.3 shows a simple example. The zones of high, medium, and low risk in the matrix are based on several manuals and resources from various DOTs and authors (Washington State DOT 2014, Clayton 2001). The score boundaries are decided based on these sources; these boundaries can be fine-tuned by an agency depending on local practice. For example, Washington State DOT considers every risk factor with very high impact as a high risk and that approach is followed in the following sections. The ratings for likelihood and impact are subjective, and some users have suggested numerical equivalents for each scale value. Table 3.1 shows the numerical values suggested by Washington State DOT. Washington State DOT suggests that each agency calibrate the numerical values that they deem appropriate based on their experience. Descriptions and synonyms of various ratings (e.g., very high, high, and medium) listed in Table 3.1 can be useful during elicitation process for risk ranking. 3.3.1 The Process of Risk Ranking In the qualitative approach, subject matter experts (SMEs) evaluate the risk score through a group workshop. As the emphasis is on geotechnical risks, the persons participating in the pro- cess should be selected from the geotechnical (and possibly geoenvironmental) design specialties. Likelihood 5 4 3 2 1 1 2 3 4 5 Impact High Risk Medium Risk Low Risk 5 10 15 20 25 4 8 12 16 20 3 6 9 12 15 2 4 6 8 10 1 2 3 4 5 Figure 3.3. Risk matrix indicating risk scores.

Qualitative Geotechnical Risk Analysis 25 If any other person deals with issues directly relevant to geotechnical design and construction (such as utility relocation or in some cases structures), that person should be invited to the risk assessment workshop also. A person should be designated risk facilitator and charged with eliciting the opinions and views of the participants. 3.3.2 The Risk Identification Process The risks that have been identified during the risk identification process (see Chapter 2) are evaluated by asking the opinions of the participants regarding the likelihood of each and their consequences. For example, the risk facilitator can ask the participants about the likelihood that an identified risk may occur. One common and effective method is to poll the research team for rating the likelihood of risk factors. If there is no consensus on the perceived likelihood, an average rating based on responses can be calculated and documented. After each risk item has been rated and scored, a ranked listing of risk items is prepared and docu- mented. This register of scored risks will be the basis of geotechnical decision making in a particular project. 3.4 Two-Step Approach for Evaluating the Project for Design–Build Delivery A key question in the research is to decide if a project is too risky for DB delivery from a geotechnical perspective. A simple approach is developed to help the agency assess the level of geotechnical risk in the project and to determine the approximate cost of developing the geo- technical design document to the level that can be put up for DB bidding. On the basis of this analysis, the project team will be able to assess geotechnical risk picture very early in the project development phase and even decide if the DB approach is advisable. This analysis can be per- formed during the latter part of conceptual design or the early part of preliminary engineering (see Figure 3.1). The NCHRP research team has developed a method for calculating the project risk score by combining a preliminary risk assessment with a conceptual cost estimate (Figure 3.4). The process for calculating the project risk score can be classified as a semi-quantitative approach because it uses a qualitative approach for rating and scoring the risk and then attempts to esti- mate the cost and schedule impacts approximately. The purpose here is twofold: (1) to assess a preliminary risk score for a project to be able to classify the project as high risk, medium risk, or low risk, all in the context of geotechnical risks, and (2) to evaluate the identified risks in terms of their potential impact on the cost and time of required geotechnical investigation. Probability (Likelihood) Synonyms Approximate % of Occurrence Very High Almost Certain Very Sure > 90 High Likely Pretty Sure 80 Medium Possible Maybe 50 Low Unlikely Seldom 20 Very Low Rare Improbable < 10 Impact (Consequence) Synonyms Approximate % of Occurrence Very High Very Critical Very Strong > 10 High Critical Strong 8 Medium Moderate Average 4 Low Mild Minor 2 Very Low Very Mild Very Little < 1 Source: Washington State DOT (2014). Table 3.1. Qualitative terms and transition to a numeric judgment.

26 Guidelines for Managing Geotechnical Risks in Design–Build Projects The “effort to mitigate risk” is the third factor for rating a major risk factor, beyond the likeli- hood of occurrence and the cost/schedule impact of risk, if it occurs. It allows the analyst to assess the cost and time impact of rectifying any major geotechnical risk. This came from the Missouri DOT practice. In the Missouri DOT approach, the effort to mitigate risk is rated by using the Likert scale (Missouri DOT 2010). The project team thought that a dollar estimate, even if at the concep- tual level of detail, could be an effective planning and decision-making tool at this stage. The team suggested that the risk analysis group estimate the cost and duration of each mitigation effort. As an alternative, a project team could use the dollar estimate to assess the exposure to budget and schedule if further geotechnical investigation is not carried out before finalizing the DB contract. In the first step, the project team focuses on identified geotechnical risks and assigns a Likert score of 1 (low) to 5 (high) to the risk likelihood and risk impact. The product of these two ratings (a score between 1 and 25) is the risk score for that specific risk factor. At this stage, the total project risk is calculated and the project is rated as to its geotechnical risk exposure. A set of guidelines is suggested in Figure 3.4 to help the risk assessment group rate the project as high, Two-step procedure STEP 1 First start with a two-dimensional matrix. Consider all risks with impact of 5 as high risk. High Risk scores of 15 or higher will be considered high risk. High Risks with likelihood of 5 are rated as at least medium. Medium Risk scores of 8 to 12 are considered medium. Medium Risk scores of 6 or less are considered low unless the likelihood is 5. Low Likelihood 5 5 10 15 20 25 4 4 8 12 16 20 3 3 6 9 12 15 2 2 4 6 8 10 1 1 2 3 4 5 Impact 1 2 3 4 5 Step 1 Example Risk Like- lihood (1–5) Impact (1–5) Risk score (1–25) Liquefaction 1 2 2 Scour of bridge piers 2 2 4 Settlement 2 2 4 Rock and boulders 4 4 16 Contaminated materials 2 4 8 0 0 SUM 34 Rate Overall Project Geotechnical Risk If the total project risk score is 40 or bigger, the project is classified as high risk. If the total project risk score is between 20 and 39, the project is classified as medium risk. If the total project risk score is less than 20, the project is classified as low risk. Figure 3.4. Step 1 of qualitative geotechnical risk assessment.

Qualitative Geotechnical Risk Analysis 27 medium, or low risk. The threshold values for distinguishing between these levels are somewhat arbitrary and can be calibrated by a specific agency on the basis of their experience and as they use the approach in several projects. In the second step (Figure 3.5), those risk factors with a risk score of higher than the desired threshold will be investigated as to the level of effort and cost needed to obtain more geo- technical data and testing before the project can be put up for DB bidding. In the example of Figure 3.4, the second step is applied to risk items that scored either high or medium. The risk assessment team may elect to perform Step 2 on all identified risks, including those with a low score. This two-step process may be repeated after new information and data become available for geotechnical design. The process is complete when the total project risk score falls below an established threshold. The two-step process described in Figures 3.4 and 3.5 should be sufficient for dealing with geotechnical risks in routine projects with limited size and scope or to assess the level of risk at early stages of project development to identify any potential red flags for the DB project. The cost and schedule impact thus estimated are approximate, and the agency may decide to use reasonable ranges for cost and schedule estimates rather than single-value estimates. The mathematics of combining the ranges will be described in Chapter 4. The value of cost and schedule impact of geotechnical investigation can be used as a decision tool to determine if the project is a good candidate for DB delivery and to determine if the risks can be effectively mitigated. As a starting point in evaluating the impact of geotechnical testing and investigation, it would be reasonable to review the cost of geotechnical investigations. The research collected data on the cost of geotechnical investigations for 11 DB projects in nine state DOTs. The range was reported to be between 0.25% to 0.5% of the total project budget. Generally, these efforts resulted in preparation of the geotechnical data report (GDR), which contains the test data without detailed interpretation. Probably more important was the time impact. Duration of investigations varied between 6 months to 1.5 years depending on the size and scope of the project and the level of effort. A more detailed description of these interviews is provided in the NCHRP Project 24-44 final report. Risk Risk Score Effort to Mitigate Risk ($) Effort to Mitigate Risk (duration) Rock and boulders 16 $50,000 2 months Contaminated materials 8 $190,000 3 months 0 Total $240,000 3 months* * The total duration impact will be the largest of individual mitigation durations assuming concurrent investigation. STEP 2 In this case, the most important risks are identified first. Only those significant risks will be evaluated for the potential DSC cost. This potential cost can be estimated either as a $ value or as a percentage of project cost. This potential cost is the cost of further geotechnical investigations before letting the DB contract. Step 2 Example Figure 3.5. Step 2 of qualitative geotechnical risk assessment.