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

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42 Up to this point in the guidelines, the focus has been on preparing to manage geotechnical and subsurface risks. This chapter provides guidance on the practices for monitoring geo- technical risks after the DB contract has been awarded and during construction. Monitoring geotechnical risks after the DB contract has been awarded and during construction are practices based on the premise that geotechnical risks will be realized in early stages of construction and have the potential to generate substantial cost and time impacts when they are encountered. The chapter also holds that geotechnical and subsurface risks are among the first that can be retired and that by recognizing that characteristic, the agency can release unused contingencies as these risks are retired to potentially enhance the remaining scope of work. 6.1 Post-Award Geotechnical Risk Register The process of implementing the project geotechnical risk management plan begins with a joint post-award risk workshop to align the perceptions of subsurface risk of the agency and the winning DB team. Experience has shown that often the two perceptions are different and if aligned at an early point, the post-award management of geotechnical risk can be optimized through mutually agreed sharing of specific risks. Additionally, the pre-award formal risk analy- sis process should have identified opportunities to avoid risk, and it is incumbent upon the agency to not only review those possibilities but also to determine if the design–builder’s geo- technical design and construction staff may have identified new opportunities during proposal preparation. 6.1.1 Geotechnical Risk Register Update with Design–Builder In Chapter 4, Figure 4.2 shows a simple example of the pre-award geotechnical/subsurface components of the DB project’s risk register. The risk register is then updated with input from the design–builder. The update process has the following steps: 1. Review each risk, providing the DB team the agency’s rationale for the probability and impact. 2. Validate that the design–builder recognized each specific risk and accounted for it in its pro- posal. Discuss those that it did not previously identify and determine what effect, if any, that risk may have on the proposed design and construction approach. 3. Ask the DB team to contribute risks it identified that were not on the agency’s pre-award risk register, discussing their potential effects on the project’s budget and schedule. 4. Once a conformed set of project risks are agreed, validate the probabilities of occurrence and average impact costs to result in a conformed risk assessment. (Steps 1–4 apply to all the risks. The remaining steps will only relate to the geotechnical/subsurface risks.) C H A P T E R 6 Geotechnical Risk Monitoring, Control, and Retirement

Geotechnical Risk Monitoring, Control, and Retirement 43 5. Extract the geotechnical/subsurface risks from the register and assemble the appropriate members of both the design–builder’s and the agency’s project delivery teams to conduct a separate assessment for those features of work with geotechnical/subsurface aspects. 6. Determine the appropriate risk response method and the impact on cost and time should the given risk be realized. 7. Jointly complete the residual risk assessment and evaluate the result to determine if the outcome seems reasonable. Evaluate alternative risk responses, if the outcome is not acceptable. Figure 6.1 is an example of the result of the above steps. For example, the group chose to engage an SUE consultant to mitigate Risk 1 at an expected cost of $50,000 to the project. The result was a reduction in probability of occurrence from 50% to 10%. If the design–builder had included this risk response in its proposal, no financial transaction would have needed to take place. If this was a suggestion, the agency must now decide either whether to expend some of its contingency to hire the SUE consultant, whether it will modify the contract to permit the design–builder to hire the SUE consultant or choose to accept the risk of unidentified utility disruptions during construction. The point to remember is it is not the decision that is important to the process but rather the dialog that stimulates the ultimate decision at a time when the DB project is in its earliest stage and at which the maximum amount of financial and schedule flexibility is present. 6.1.2 Geotechnical Design Decision Register Once the overall geotechnical risk register and risk management plan are complete, the next step is to parse those technical features of work that have geotechnical design aspects associated with them. The idea is to identify those geotechnical design decisions that will need to be made early in the DB project’s design phase and give them visibility to expedite the activities necessary to make them. Once that is completed, those key decisions are assigned milestones based on the design–builder’s schedule and managed accordingly. Figure 6.2 is an example of the design decision register in which the “associated risk” numbers correlate with the risks shown in Figure 6.1. The ultimate goal of this exercise is to give visibility again to critical design decisions that may need to be made earlier in the design development process than usual. It also helps the RISK REGISTER PROJECT # EXAMPLE Date Geotechnical Extract RESIDUAL RISK ASSESSMENT No. Risk Factor RISK ASSESSMENT RISK RESPONSE (AFTER APPLIED STRATEGY) Geotechnical/Subsurface Risks Prob- ability Impact Probability Impact Responsible Team Member Method Time/ Budget Impact Prob- ability Impact Probability Impact 1 Unidentified utilities causing delays during construction 50% $250,000 $125,000 Utility SUE $50,000 10% $100,000 $10,000 2 Damage caused by differential settlements within bridge footprint after construction 20% $125,000 $25,000 Geotech Additional testing $10,000 10% $50,000 $5,000 3 Unknown groundwater flow direction 5% $58,333 $2,917 Site Team Accept 5% $58,333 $2,917 4 Damage to neighboring properties by heave due to excavation 10% $166,667 $16,667 Geotech Transfer $20,000 10% TOTALS $ 169,583 $ 80,000 $ 17,917 Figure 6.1. Post-award risk register with identified geotechnical risk factors.

44 Guidelines for Managing Geotechnical Risks in Design–Build Projects agency to build the geotechnical risk mitigation actions into the design process itself, leveraging the design–builder’s staff with that of the agency to minimize subsurface uncertainties before construction starts. 6.1.3 Translating Risks to Early Mitigation Actions Completing a specific geotechnical/subsurface risk analysis provides the information neces- sary to begin mitigating risks at the earliest opportunity. An example of an early mitigation action shown in the above figures is the decision to bring an SUE consultant to the project to mitigate the risk of unforeseen utility conflicts found during construction. Another example would be to authorize the DB contractor to conduct preliminary excavations and test holes on portions of the project site where the greatest subsurface uncertainty exists. If the agency chooses to apply the scope validation period tool (see Table 5.1, No. 16) to the project, the act of scope validation is itself an early mitigation action. The result is that the design–builder undertakes that necessary investigations required to uncover any DSC before construction commences, mitigating schedule delays during full-scale construction. Additionally, Tools 18 and 19, contractor-produced GBR-C and negotiated GBR interpretation, are early miti- gation actions in that they force the design–builder and the agency to identify conditions that potentially affect project cost and time at a point in the process in which the maximum flexibility in both budget and schedule is present. 6.2 Retiring Geotechnical Risks Risk retirement is the final act in the risk management plan and often overlooked. Once again, since the geotechnical/subsurface risks are the first risks to be encountered, with a few exceptions, they are normally the first to be eligible to be retired. It is also not uncommon to find large contin- gencies in both the agency’s and the design–builder’s budgets to cover geotechnical risks, which Geotechnical Design Decision Register - (EXAMPLE) Decision Milestones Category No. Design Package Key Decision Associated Risk Alts Considered Activity Early Start Date Activity Late Finish Date Decision Milestone Date Remarks General Concern 1 ROW Validate ROW adequate 1, 4 No MMDDYY MMDDYY MMDDYY Utility 2 Utility Procure SUE consultant 1 Yes MMDDYY MMDDYY MMDDYY Include in DB contract— no modification 3 Utility Protect or relocate gas line? 1 Yes MMDDYY MMDDYY MMDDYY Priced alts needed Environmental 4 Drainage Dewatering trench depth 3 MMDDYY MMDDYY MMDDYY Geotechnical 5 Foundations Piles or caissons? 2 Yes MMDDYY MMDDYY MMDDYY Priced alts needed 6 Roadway Stabilize subgrade under pavement-lime or Portland cement? Yes MMDDYY MMDDYY MMDDYY Priced alts needed Construction 7 Earthwork Suitability of in situ soil for structural fill 4 No MMDDYY MMDDYY MMDDYY Add permeability testing to DB contract— modification required 8 Earthwork Over-excavation required? 4 Yes MMDDYY MMDDYY MMDDYY Figure 6.2. Geotechnical design decision register (alts = alternatives).

Geotechnical Risk Monitoring, Control, and Retirement 45 if not realized can be released for other purposes. In keeping with Risk Mitigation Strategy 3, one way to monitor effectively geotechnical risks is to put them on the schedule. 6.2.1 Putting Geotechnical Risks on the Project Schedule This process flows out of the risk and decision registers previously discussed. The design milestones are added to the project’s schedule and then extended into the construction schedule. Figure 6.3 shows a risk exposure section added to the risk register. RISK EXPOSURE (MILESTONES) Date Exposed to Risk Date Risk Exposure is Passed Date Risk Retired RISK REGISTER PROJECT # EXAMPLE Date Geotechnical Extract RESIDUAL RISK ASSESSMENT No. Risk Factor RISK ASSESSMENT RISK RESPONSE (AFTER APPLIEDSTRATEGY) Geotechnical/Subsurface Risks Prob- ability Impact Probability Impact Responsible Team Member Method Time/ Budget Impact Prob- ability Impact Probability Impact 1 Unidentified utilities causing delays during construction 50% $250,000 $125,000 Utility SUE $50,000 $100,000 $10,000 MMDDYY 2 Damage caused by differential settlementswithinbridge footprintafter construction 20% $125,000 $25,000 Geotech Additional testing $10,000 $50,000 $5,000 MMDDYY 3 Unknown groundwater flow direction 5% $58,333 $2,917 Site Team Accept $58,333 $2,917 MMDDYY 4 Damage to neighboring properties by heave due to excavation 10% $166,667 $16,667 Geotech Transfer $20,000 10% 10% 5% 10% MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY TOTALS $169,583 $80,000 $17,917 RISK EXPOSURE (MILESTONES) Date Exposed to Risk Date Risk Exposure is Passed Date Risk Retired MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY MMDDYY Figure 6.3. Geotechnical risk exposure matrix section to risk register.

46 Guidelines for Managing Geotechnical Risks in Design–Build Projects The dates shown in Figure 6.3 come from the design–builder’s schedule. For example, the first day that excavation commences would correlate to the exposure dates for Risks 1, 2, and 4 shown in Figure 6.1. The date that all excavation is scheduled to be completed would correspond to the “risk exposure is passed” date for Risk 1. In theory, if no more excavation is required, then that would be the date Risk 1 is eligible to be retired. However, in practice, the risk would probably not be retired until after its retirement was discussed and agreed upon by both parties. 6.2.2 Geotechnical Risk Retirement Conferences These events are not stand-alone meetings, though they could be if the situation and the proj- ect warranted the commitment of time and resources. Normally, the events would be merely an agenda item that is part of a regular project progress meeting or some other appropriate gathering. As risk management practice requires that the project delivery team meet regularly and update the risk register, the retirement of geotechnical risk is one of the many risks that can be retired once the project is no longer exposed to adverse impacts from unexpected subsurface sources. That being said, geotechnical risks such as long-term subsidence, differential settlement, and the like are not easily retired, requiring monitoring for periods of time that usually run past construction completion. The major reason for regularly reviewing the potential retirement of geotechnical risk is to be able to release any contingencies that are contained in the budget for other purposes rather than retaining them until the project is complete. 6.2.3 Releasing Geotechnical Risk Contingencies In standard lump sum DB contracts, geotechnical contingencies in the agency and design– builder’s budgets will not be visible to the other party. Nevertheless, mutual agreement that a specific risk can be retired will result in increased financial and schedule flexibility as risks go unrealized. That provides opportunities for both parties to consider alternatives to enhance the project if the released contingency funding can be cross-leveled to another feature of work. For example, a DB bridge project may include a contingency is maintained to cover the cost of a deep foundation. Once the geotechnical investigations are complete and they support the use of a shallow foundation, the contingency funding may be released to cover the cost of a desired alternative that had been dropped from the scope of work out of fear that the budget would not be sufficient. The supporting research found that agencies typically roll contingency savings back into the project in the form of scope increases, whereas design–builders use released contingency funding to cover the increased costs of other features of work that were underestimated in the proposal. Tool 8 is the use of progressive design–builder procurement. In this variation, the construction price is negotiated in much the same manner as it is in construction manager/general contrac- tor projects. As a result, an open book pricing system is used, in which contingencies are jointly allocated during the price negotiations. One common method is to create two contingency pools whereby the agency’s pool generally covers risks to which it would usually be exposed like DSC and owner-directed scope changes. The design–builder’s pool covers its typical risks like material escalation and rework. In the case of PDB, the release of contingencies can play a big part in maximizing the efficient use of available funding, especially if design packages are released for construction as soon as they are approved.