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From page 49... ... 47 INTRODUCTION After identifying risks and opportunities as described in Chapter 5, the next step is to understand the importance that each risk and opportunity has on the project's performance measures. Assessing the severity of each risk and opportunity allows the DOT to better plan risk management actions and make better project decisions. Read the entire page →
From page 50... ... 48 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Philosophy and Concepts There are several important concepts regarding risk assessment that affect the accuracy and defensibility of the results, as well as the effort, including • Implicit versus explicit rankings; • Qualitative versus quantitative assessments; • Subjective versus objective assessments; and • Level of detail. Implicit Versus Explicit Rankings The significance of a risk or opportunity is defined in terms of its severity, or likely effect on project performance. Read the entire page →
From page 51... ... 49 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS can interpret qualitative ratings in different ways, which might lead to inaccuracies or problems in developing consensus. • If the ratings (e.g., for likelihood and consequence) Read the entire page →
From page 52... ... 50 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS The benefits of quantitative assessments can include the following: • There is no ambiguity in values. • Risk-factor assessments can be meaningfully combined (analytically rather than subjectively) Read the entire page →
From page 53... ... 51 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS The drawbacks of quantitative assessments can include the following: • Additional effort is required to adequately -- Assess the risk factors more precisely and achieve consensus among a broad group of experts. This is especially true if full uncertainty in conditional consequences of risks, as well as in base cost and schedule factors, is assessed, in which case correlations and dependencies must also be considered. Read the entire page →
From page 54... ... 52 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS However, when statistical information or appropriate analytical methods are not available, the opinion of subject-matter experts, based on all available information, can be elicited, de-biased, and quantified in the form of subjective assessments. Because most transportation projects -- and particularly rapid renewal projects -- are relatively unique, adequate data generally are not available, and properly obtained subjective assessments usually are required to develop risk-factor assessments. Read the entire page →
From page 55... ... 53 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS time) , which are combined appropriately (analytically) Read the entire page →
From page 56... ... 54 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS automatic analyses of risk severity and mean base + risk performance) , appropriately considering risks and opportunities, as well as the performance measures and activities for rapid renewal, especially for simple projects. Read the entire page →
From page 57... ... 55 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS 1. An approach that first converts the individual ratings into their equivalent mean values (e.g., middle of the range) Read the entire page →
From page 58... ... 56 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Example of a Quantitative Mean-Value Assessment (this is not the hypothetical case study) For a project, the base performance has been established and a set of risks (relative to that base) Read the entire page →
From page 59... ... 57 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS • Longevity change is determined (see Chapter 4) based on changes in cost and disruption associated with operations and maintenance and replacement, as well as schedule of replacement, and various trade-offs, but is zero in this case and not shown. Read the entire page →
From page 60... ... 58 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Example of Quantitative Mean-Value Rating Assessment (this is not the hypothetical case study) Similar to the previous example, the base performance for a project has been established and a set of risks (relative to that base) Read the entire page →
From page 61... ... 59 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Other Methods The qualitative red/yellow/green method is essentially the same as the quantitative mean-value rating method, except that • The ratings involve only three categories (H, M, L) , which are quick and colorcoded (and thus visual) Read the entire page →
From page 62... ... 60 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS • Risks are only roughly categorized (e.g., as High) without any ranking within categories. Read the entire page →
From page 63... ... 61 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Guidance This chapter has introduced a number of concepts and methods related to risk assessment. Although this guide is not meant to be a how-to document (the companion Simplified Risk Management Training course materials address implementation) Read the entire page →
From page 64... ... 62 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS defining a realistic risk scenario that pairs consistent likelihood and consequence values. Note that from a mean-value perspective, it is the combination of riskfactor values (i.e., the mean risk) Read the entire page →
From page 65... ... 63 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS other common pitfalls (which a qualified facilitator should also help with) can mitigate bias: -- Poor problem structure (e.g., ambiguous definition of what is to be assessed, such as an average value or a random value) Read the entire page →
From page 66... ... 64 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS the nature of the risk-factor assessments. Within this context, the analysis of severity should adequately consider (a) Read the entire page →
From page 67... ... 65 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS QDOT initially decided that assessing the current risks in terms of mean-value ratings (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) Read the entire page →
From page 68... ... 66 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS and then severity for each risk, based on which the risks were ranked. 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 Appendix E, RMP, Addendum X Read the entire page →

From page 49...

... 47 INTRODUCTION After identifying risks and opportunities as described in Chapter 5, the next step is to understand the importance that each risk and opportunity has on the project's performance measures. Assessing the severity of each risk and opportunity allows the DOT to better plan risk management actions and make better project decisions.