Description
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss (or impact) and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order.
Project Risk
Management
Guidance for WSDOT Projects
July 2010
Americans with Disabilities Act (ADA) Information
Materials can be provided in alternative formats by calling the ADA Compliance Manager
at 360-705-7097. Persons who are deaf or hard of hearing may contact that number via the
Washington Relay Service at 7-1-1.
Title VI Notice to Public
It is the Washington State Department of Transportation’s (WSDOT) policy to assure that
no person shall, on the grounds of race, color, national origin, or sex, as provided by Title VI
of the Civil Rights Act of 1964, be excluded from participation in, be denied the benefts of,
or be otherwise discriminated against under any of its federally funded programs and activities.
Any person who believes his/her Title VI protection has been violated, may fle a complaint
with WSDOT’s Offce of Equal Opportunity (OEO). For Title VI complaint forms and advice,
please contact OEO’s Title VI Coordinator at 360-705-7098 or 509-324-6018.
To get the latest information for WSDOT administrative and engineering manuals, sign up for in-
dividual manual e-mail updates at www.wsdot.wa.gov/publications/manuals.
Washington State Department of Transportation
Administrative and Engineering Publications
PO Box 47304
Olympia, WA 98504-7304
Phone: 360-705-7430
E-mail: [email protected]
Internet: www.wsdot.wa.gov/publications/manuals
Project Risk Management Guidance for WSDOT Projects Page iii
July 2010
Foreword
Inaccurate cost estimating has dogged transportation projects for years. B.
Flyvbjerg’s noted study on the results of transportation project estimating
found that for the past 70 years, the cost of transportation projects has
been consistently underestimated in many parts of the world, including
the U.S.
The future is uncertain, but it is certain that there are two questions
will be asked about our projects: (1) How much will it cost? (2) How
long will it take? And of course the obvious follow-up question: Why?
(Why that much and why that long?)
These questions are posed in the future tense, and we are being asked
to predict an uncertain future. Because the future is uncertain the
fundamental answers to these questions is that an estimate is more
accurately expressed not as a single number but as a range. To determine
an accurate estimate range for both cost and schedule, risk and uncertainty
must be quantifed.
Estimates are comprised of two components: the base cost component and
the risk (or uncertainty) component. Base cost is defned as the likely cost
of the planned project if no signifcant problems occur. Once the base cost
is established, a list of uncertainties is created of both opportunities and
threats, called a “risk register.” The risk assessment replaces general and
vaguely defned contingency with explicitly defned risk events and with
the probability of occurrence and the consequences of each potential risk
event. Scope control is of course necessary for project management and
estimating. Cost estimates are to be reviewed and validated, and a base
cost for the project is determined.
Project risk management is a scalable activity and should be
commensurate with the size and complexity of the project under
consideration. Simpler projects may utilize simple qualitative analysis as
found in the Project Management Online Guide in the Risk Management
Plan spreadsheet. Larger more complex projects may wish to use more
robust analysis techniques via Monte-Carlo simulation models.
This guidance has been developed by the Strategic Assessment and
Estimating Offce (SAEO) in alignment with the goals of the Statewide
Program Management Group (SPMG). This document would not have
been possible with the contributions of dozens of key WSDOT people
who participated in the development and review of these guidelines.
DRAFT
FirstName LastName
WSDOT State Design Engineer
“What gets us in trouble is
not what we don’t know. It’s
what we know for sure that
just ain’t so.” Mark Twain
Page iv Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page v
July 2010
Comment Form
NOTE: This document is a working draft – your feedback and input is greatly appreciate.
From: Date:
Phone:
To: WSDOT – Headquarters Design
Strategic Analysis and Estimating Offce Mailstop 47330
PO Box 47330
310 Maple Park AVE SE
Olympia WA 98501-7330
Subject: Project Risk Management Guide Comment
Preserve this original for future use submit copies only
Acknowledgement: Author/Editor Mark Gabel, P.E.
WSDOT Strategic Analysis Estimating Offce
Page vi Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page vii
July 2010
Contents
Foreword iii
Comment Form v
Purpose ix
Defnitions of Selected Terms xi
The Value of Risk Management xiii
Project Risk Management Process xvii
Maximum Effort = Reduced Risk xix
Statement of Policy xxi
Chapter 1 Risk Management Planning 1
Chapter 2 Risk Identifcation 11
Chapter 3 Qualitative Risk Analysis 23
Chapter 4 Quantitative Risk Analysis 33
Chapter 5 Risk Response 43
Chapter 6 Risk Monitoring and Control 53
Appendix A Project Risk Management Plan Template 63\
Page viii Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page ix
July 2010
Purpose
This document provides information to project managers and
project teams that will help with their risk management efforts in the
following ways:
• Provide a consistent methodology for performing project risk
management activities.
*
• Provide techniques and tools for project risk management.
• Identify data requirements for risk analysis input and for output
(CPMS data requirements).
• Provide information on how project risk management fits into the
overall project management process at WSDOT.
• Provide guidance on how to proactively respond to risks.
Understanding of project risks will better enable project teams to
contribute to the fulfllment of public service through assessing project
risk and uncertainty to aide in making decisions regarding project
development and delivery. These decisions contribute to public safety and
the projects we deliver add value to Washington State on many levels.
Estimating the cost of transportation projects is a fundamental
responsibility of the Washington State Department of Transportation
(WSDOT). In recognition of the fundamental and strategic importance
of cost estimating these guidelines provide consistent practices across
the agency to enhance methods for meeting this responsibility. These
guidelines were developed by the Strategic Analysis and Estimating Offce
with contributions from a number of specialists in cost estimating and
project development.
Estimators must be shielded from pressures to prepare estimates that
match some preconceived notion of what a project should cost. Estimators
need to prepare estimates based on the scope of the project, the schedule
of the project and the bidding conditions that are anticipated.
* The methodology is consistent with the Project Management Institute (PMI) per the Project
Management Body Of Knowledge (PMBOK).
“No construction project
is risk free. Risk can be
managed, minimized,
shared, transferred,
or accepted. It cannot be
ignored.”
Sir Michael Latham, 1994
Page x Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page xi
July 2010
Base Cost Estimate – The Base Cost represents the cost which can
reasonably be expected if the project materializes as planned. The base
cost estimate is ubbiased and neutral- it is not optimistic and it is not
conservative. The base cost estimate includes the standard WSDOT
4% construction contingency described in the Plans Preparation
Manual M 22-31. It dose not include any signifcant risks (threats or
opportunities).
Note:
1. refer to WSDOT Plans Preparation Manual M 22-31 Section
800.03(2)
“Contingency percentages’ are setup to handle unforeseen changes in a
project during construction, including additional work, quantity over-
runs, and additional items. Contingencies are currently limited to 4%
of the total contract amount for all WSDOT contracts.”
2. The Base Cost typically falls in the 20% to 40% confdence level in
the Risk Based.
Construction Phase (CN) – The activities associated with the
administration of a contract for specifed services and physical
infrastructure. Primarily, the construction phase includes change
management, assurance that safety and associated impacts to the traveling
public are mitigated, payment for work completed, and the documentation
of physically constructed elements, certifcation and documentation of
quality.
Estimator – “One who assesses the extent of work and/or components
of the work (i.e. materials, equipment and labor) to be done to complete
a project, or a strictly defned part of the project, and state a likely or
approximate quantity in generally accepted units of measurement and cost
for the project.”
Preliminary Engineering Phase (PE) – The effort (budget/cost) of taking
a project through the planning, scoping, and design phases. Planning
and scoping typically have separate budgets but are encompassed under
Preliminary Engineering. The terms “Design” or “Design Phase” are
sometimes used interchangeably with PE.
Project Cost Estimate – total project cost estimate includes
PE + RW + CN
Defnitions of Selected Terms
Page xii Project Risk Management Guidance for WSDOT Projects
July 2010
Right-Of-Way Phase (R/W) – This effort includes the revision of existing
plans or the preparation of new plans detailing the need for new Right
of Way defned during the design phase. It also includes the appraisal,
negotiation, and purchase of new Right of Way by the Real Estate Services
offce. The right-of-way phase can begin during scoping, after design
completion, or anytime in between. The phase end is when the RW is
certifed, but this may not have a direct relationship to the construction
phase, except that CN cannot begin unless the RW is certifed. Except
under rare circumstances, all new Right-of-Way must be acquired before
the project can go to Ad. NOTE: Preparation of R/W Plans is paid for
with PE dollars and is part of the design effort; Negotiation, Purchase and
Acquisition of R/W is performed by the Real Estate Services offce and
comprises the cost of R/W.
Risk – The combination of the probability of an uncertain event and its
consequences. A positive consequence presents an opportunity; a negative
consequence poses a threat.
Risk Management –Refers to the culture, processes, and structures that
are directed toward effective management of risks –including potential
opportunities and threats to project objectives.
Risk-Based Estimate – Involves simple or complex modeling based
on inferred and probabilistic relationships among cost, schedule, and
events related to the project. It uses the historical data and/or cost based
estimating techniques and the expert’s best judgment to develop a Base
Cost or the cost of the project if the project proceeds as planned. Risk
elements (opportunities or threats) are then defned and applied to the Base
Cost through modeling to provide a probable range for both project cost
and schedule.
A comprehensive glossary can be found at:http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/workshop.htm
Project Risk Management Guidance for WSDOT Projects Page xiii
July 2010
Project risk management delivers the following values:
• Contributes to project success;
• Recognizes uncertainty and provides forecasts of possible outcomes;
• Produces better business outcomes through more informed decision-
making;
• Is a positive influence on creative thinking and innovation;
• Offers better control –less overhead and less time wasted, greater focus
on benefits;
• Helps senior management to understand what is happening with the
project and the challenges the project has to overcome.
Project risk management is an integral component of project management
and found at the heart of WSDOT’s Project Management processes.
Risk management is also a key component of project cost estimating
and scheduling, as noted in the National Cooperative Highway Research
Program in NCHRP Report 574, which is available at the WSDOT
library along with other publications on project management and risk
management.
Figures 1 and 2, on the following pages, depict Project Risk Management
through Project Development and Balanced Risk Management.
“The problem with the
future is that more things
might happen than will
happen” (Plato). With
effective risk management,
as an integral and
required part of project
management, we can
not only predict possible
future outcomes, we can
take action to shift the
odds for project success
in our favor.
The Value of Risk Management
Page xiv Project Risk Management Guidance for WSDOT Projects
July 2010
P
r
o
j
e
c
t
R
i
s
k
M
a
n
a
g
e
m
e
n
t
t
h
r
o
u
g
h
P
r
o
j
e
c
t
D
e
v
e
l
o
p
m
e
n
t
a
n
d
C
o
n
s
t
r
u
c
t
i
o
n
F
i
g
u
r
e
1
H
ig
h
w
a
y
S
y
s
t
e
m
P
la
n
C
a
p
it
a
l
I
m
p
r
o
v
e
m
e
n
t
&
P
r
e
s
e
r
v
a
t
io
n
P
r
o
g
r
a
m
(
C
I
P
P
)
&
B
ie
n
n
ia
l
P
r
o
g
r
a
m
A
w
a
r
d
C
o
n
c
e
p
t
u
a
l
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
p
o
t
e
n
t
i
a
l
f
u
n
d
s
n
e
e
d
e
d
&
p
r
i
o
r
i
t
i
z
e
n
e
e
d
s
f
o
r
h
i
g
h
w
a
y
s
y
s
t
e
m
p
l
a
n
S
c
o
p
i
n
g
E
s
t
i
m
a
t
i
n
g
S
e
t
b
a
s
e
l
i
n
e
c
o
s
t
f
o
r
p
r
o
j
e
c
t
a
n
d
p
r
o
g
r
a
m
p
r
o
j
e
c
t
(
C
I
P
P
a
n
d
b
i
e
n
n
i
a
l
p
r
o
g
r
a
m
)
D
e
s
i
g
n
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
f
o
r
C
o
s
t
M
a
n
a
g
e
m
e
n
t
P
S
&
E
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
c
o
n
s
t
r
u
c
t
i
o
n
c
o
s
t
s
t
o
o
b
l
i
g
a
t
e
f
u
n
d
s
&
c
o
m
p
a
r
e
w
i
t
h
b
i
d
s
P
l
a
n
n
i
n
g
a
n
d
P
r
o
j
e
c
t
D
e
v
e
l
o
p
m
e
n
t
P
h
a
s
e
s
P
r
o
g
r
a
m
(
p
r
o
j
e
c
t
)
s
c
o
p
e
(
c
a
t
e
g
o
r
y
,
c
o
n
c
e
p
t
s
,
s
c
h
e
m
a
t
i
c
s
&
l
o
c
a
t
i
o
n
)
N
e
e
d
s
/
d
e
f
i
c
i
e
n
c
i
e
s
C
o
s
t
E
s
t
i
m
a
t
e
s
(
R
e
c
y
c
l
e
l
o
o
p
)
P
r
o
g
r
a
m
(
p
r
o
j
e
c
t
)
c
o
s
t
e
s
t
i
m
a
t
e
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
P
l
a
n
n
i
n
g
P
r
o
j
e
c
t
s
c
o
p
e
(
s
c
h
e
m
a
t
i
c
s
,
t
y
p
e
,
(
P
o
r
I
)
,
p
r
e
l
i
m
i
n
a
r
y
p
l
a
n
s
,
a
l
t
e
r
n
a
t
i
v
e
s
,
l
o
c
a
t
i
o
n
B
a
s
e
l
i
n
e
c
o
s
t
e
s
t
i
m
a
t
e
P
r
o
j
e
c
t
s
c
o
p
e
(
d
e
s
i
g
n
,
d
e
v
e
l
o
p
m
e
n
t
,
e
g
,
p
l
a
n
s
f
o
r
a
p
p
r
o
v
a
l
,
e
t
c
)
P
e
r
i
o
d
i
c
c
o
s
t
e
s
t
i
m
a
t
e
u
p
d
a
t
e
s
P
r
o
j
e
c
t
s
c
o
p
e
(
f
i
n
a
l
p
l
a
n
s
/
s
p
e
c
s
a
n
d
b
i
d
d
o
c
u
m
e
n
t
s
)
E
n
g
i
n
e
e
r
’
s
E
s
t
i
m
a
t
e
P
S
&
E
A
d
v
e
r
t
i
s
e
a
n
d
B
i
d
C
o
n
s
t
r
u
c
t
i
o
n
S
c
o
p
i
n
g
D
e
s
i
g
n
Pre - constructionphases
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
T
A
K
E
A
C
T
I
O
N
-
I
M
P
L
E
M
E
N
T
R
I
S
K
R
E
S
P
O
N
S
E
P
L
A
N
C
U
R
R
E
N
T
P
r
o
j
e
c
t
M
g
m
t
P
l
a
n
S
c
o
p
e
S
c
h
e
d
u
l
e
E
s
t
i
m
a
t
e
s
D
o
c
u
m
e
n
t
a
t
i
o
n
U
p
d
a
t
e
P
r
o
j
e
c
t
M
g
m
t
P
l
a
n
R
i
s
k
M
a
n
a
g
e
m
e
n
t
P
l
a
n
n
i
n
g
R
i
s
k
m
a
n
a
g
e
m
e
n
t
i
s
a
t
t
h
e
h
e
a
r
t
o
f
p
r
o
j
e
c
t
m
a
n
a
g
e
m
e
n
t
a
n
d
i
s
a
n
o
n
g
o
i
n
g
a
c
t
i
v
i
t
y
u
n
t
i
l
t
h
e
p
r
o
j
e
c
t
i
s
c
o
m
p
l
e
t
e
d
.
P
r
o
j
e
c
t
R
i
s
k
M
a
n
a
g
e
m
e
n
t
D
o
c
u
m
e
n
t
a
n
d
r
e
c
o
r
d
C
h
a
n
g
e
O
r
d
e
r
s
a
n
d
t
h
e
e
f
f
e
c
t
o
n
p
r
o
j
e
c
t
s
c
o
p
e
,
s
c
h
e
d
u
l
e
a
n
d
c
o
s
t
.
R
i
s
k
A
n
a
l
y
s
i
s
R
i
s
k
I
d
e
n
t
i
f
i
c
a
t
i
o
n
(
d
e
t
e
r
m
i
n
e
a
n
d
d
o
c
u
m
e
n
t
r
i
s
k
c
h
a
r
a
c
t
e
r
i
s
t
i
c
s
P
r
o
d
u
c
e
P
r
e
l
i
m
i
n
a
r
y
R
i
s
k
R
e
g
i
s
t
e
r
)
Q
u
a
l
i
t
a
t
i
v
e
Q
u
a
n
t
i
t
a
t
i
v
e
P
r
e
-
R
e
s
p
o
n
s
e
A
n
a
l
y
s
i
s
R
i
s
k
R
e
s
p
o
n
s
e
P
l
a
n
n
i
n
g
P
o
s
t
-
r
e
s
p
o
n
s
e
A
n
a
l
y
s
i
s
R
e
s
u
l
t
s
O
f
R
i
s
k
R
e
s
p
o
n
s
e
A
c
t
i
o
n
s
R
i
s
k
M
o
n
i
t
o
r
i
n
g
a
n
d
C
o
n
t
r
o
l
c
d
ef
h
r
Project Risk Management Guidance for WSDOT Projects Page xv
July 2010
B
a
l
a
n
c
e
d
R
i
s
k
M
a
n
a
g
e
m
e
n
t
(
R
i
s
k
T
o
l
e
r
a
n
c
e
)
F
i
g
u
r
e
2
S
p
e
n
d
r
e
s
o
u
r
c
e
s
o
n
“
f
i
r
e
-
f
i
g
h
t
i
n
g
”
I
n
a
d
e
q
u
a
t
e
r
e
s
o
u
r
c
e
s
f
o
r
r
i
s
k
p
r
o
c
e
s
s
S
t
r
e
n
g
t
h
e
n
r
i
s
k
p
r
o
c
e
s
s
R
i
s
k
p
r
o
c
e
s
s
b
e
c
o
m
e
s
b
u
r
d
e
n
s
o
m
e
U
n
d
e
r
-
i
n
v
e
s
t
i
n
r
i
s
k
m
a
n
a
g
e
m
e
n
t
O
v
e
r
-
i
n
v
e
s
t
i
n
r
i
s
k
m
a
n
a
g
e
m
e
n
t
E
f
f
e
c
t
s
o
f
r
i
s
k
-
a
v
e
r
s
e
a
p
p
r
o
a
c
h
E
f
f
e
c
t
s
o
f
r
i
s
k
-
s
e
e
k
i
n
g
a
p
p
r
o
a
c
h
I
n
e
f
f
e
c
t
i
v
e
r
i
s
k
m
a
n
a
g
e
m
e
n
t
T
h
r
e
a
t
s
m
a
t
e
r
i
a
l
i
z
e
O
p
p
o
r
t
u
n
i
t
i
e
s
a
r
e
m
i
s
s
e
d
R
i
s
k
m
a
n
a
g
e
m
e
n
t
b
e
c
o
m
e
s
l
e
s
s
c
o
s
t
e
f
f
e
c
t
i
v
e
R
e
s
o
u
r
c
e
s
s
p
e
n
t
o
n
l
o
w
p
r
i
o
r
i
t
y
i
t
e
m
s
B
a
l
a
n
c
e
d
R
i
s
k
M
a
n
a
g
e
m
e
n
t
A
p
p
r
o
a
c
h
A
p
p
r
o
p
r
i
a
t
e
R
i
s
k
M
a
n
a
g
e
m
e
n
t
M
a
t
c
h
e
s
E
n
t
e
r
p
r
i
s
e
R
i
s
k
T
o
l
e
r
a
n
c
e
P
r
o
-
A
c
t
i
v
e
r
e
s
p
o
n
s
e
s
t
o
r
i
s
k
s
R
e
s
o
u
r
c
e
s
a
l
l
o
c
a
t
e
d
e
f
f
e
c
t
i
v
e
l
y
Page xvi Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page xvii
July 2010
Risk management, as an integral part of project management, occurs on
a daily basis. With pro-active risk management we look at projects in a
comprehensive manner and assess and document risks and uncertainty.
The steps for risk management are provided below.
Risk Management Steps
WSDOT Project Management Online Guide (PMOG) risk management
steps:
1) Risk
Management
Planning
Risk Management Planning is the systematic process
of deciding how to approach, plan, and execute risk
management activities throughout the life of a project.
It is intended to maximize the benefcial outcome of the
opportunities and minimize or eliminate the consequences
of adverse risk events. (WSDOT PMOG)
2) Identify Risk
Events
Risk identifcation involves determining which risks might
affect the project and documenting their characteristics. It
may be a simple risk assessment organized by the project
team, or an outcome of the CEVP®/CRA workshop process.
3) Qualitative
Risk Analysis
Qualitative risk analysis assesses the impact and likelihood
of the identifed risks and develops prioritized lists of these
risks for further analysis or direct mitigation. The team
assesses each identifed risk for its probability of occurrence
and its impact on project objectives. Project teams may elicit
assistance from subject matter experts or functional units to
assess the risks in their respective felds.
4) Quantitative
Risk Analysis
Quantitative risk analysis is a way of numerically estimating
the probability that a project will meet its cost and time
objectives. Quantitative analysis is based on a simultaneous
evaluation of the impacts of all identifed and quantifed risks.
5) Risk
Response
Planning
Risk response strategy is the process of developing options
and determining actions to enhance opportunities and reduce
threats to the project’s objectives. It identifes and assigns
parties to take responsibility for each risk response. This
process ensures that each risk requiring a response has an
“owner” . The Project Manager and the project team identify
which strategy is best for each risk, and then selects specifc
actions to implement that strategy.
6) Risk
Monitoring &
Control
Risk Monitoring and Control tracks identifed risks, monitors
residual risks, and identifes new risks—ensuring the
execution of risk plans, and evaluating their effectiveness
in reducing risk. Risk Monitoring and Control is an ongoing
process for the life of the project.
The remainder of this document includes more detail on the steps listed
above.
Project Risk Management Process
Page xviii Project Risk Management Guidance for WSDOT Projects
July 2010
Table 1 provides a helpful comparison between risk and objectives for
various types of risk management. For this document we are interested in
Project risk management.
Type of risk
management
Description Sample objectives
Generic Risk: any uncertainty that, if
it occurs, would affect one or
more objectives
-
Project risk
management
Project Risk: any
uncertainty that, if it occurs,
would affect one or more
project objectives
Time, cost, performance,
quality, scope, client
satisfaction.
Business risk
management
Business Risk: any
uncertainty that, if it occurs,
would affect one or more
business objectives
Proftability, market share,
competitiveness, Internal Rate
of Return (IRR), reputation,
repeat work, share price.
Safety risk
management
Safety Risk: any uncertainty
that, if it occurs, would affect
one or more safety objectives
Low accident rate, minimal
lost days, reduced insurance
premiums, regulatory
compliance.
Technical risk
management
Technical Risk: any
uncertainty that, if it occurs,
would affect one or more
technical objectives
Performance, functionality,
reliability, maintainability.
Security risk
management
Technical Risk: any
uncertainty that, if it occurs,
would affect one or more
security objectives
Information security, physical
security, asset security,
personnel security.
Credit: David Hillson, Effective Opportunity Management for Projects
Relationship between Risk and Objectives
Table 1
Project Risk Management Guidance for WSDOT Projects Page xix
July 2010
Description
The power of risk management is fully realized when a project manager
takes action to respond to identifed risks based on the risk analysis, with
effort being directed toward those risks that rank the highest in terms of
signifcant impact to project objectives.
Inputs
Project scope, schedule, and estimate package. The estimate package
should include the most current versions of the following items:
• Project Summary
• Detailed scope of work (commensurate to the level of development)
• Project Cost Estimate (with basis of cost estimate completed)
– PE cost estimate
– ROW cost estimate
– Construction cost estimate
• Previous risk analyses (if applicable)
• Project Management Plan
• Project Schedule
– Overall project schedule
– Detailed construction schedule (commensurate to the level
of development)
• Additional information as necessary
Techniques and Tools
WSDOT provides a number of techniques and tools to assist in project risk
management. These tools and techniques provide scalability and fexibility
so that project teams can match the tool with the specifc needs of their
projects. Often times the appropriate tool is determined by the size and
complexity of the project. These tools include:
• Project Management Online Guide (PMOG)
– Project Management Plan (fundamental for all project
management)
– The PMOG provides a risk matrix suitable for smaller simpler
projects
– Risk planning and risk management are an integral element
of project management
Maximum Effort = Reduced Risk
Page xx Project Risk Management Guidance for WSDOT Projects
July 2010
• Risk Management Plan spreadsheet template (found on
SAEO website)
• Self-Modeling tool for quantitative risk analysis
• CRA workshops for all projects between $25M and $100M
• CEVP workshops for all projects over $100M
Output
CPMS data requirements per in Instructional Letter (IL) 4071.00; Project
teams must provide specifc data to the region program management offce
for inclusion into CPMS and the Transportation Executive Information
System (TEIS). The required data is:
1. Project scheduling data for the following milestone dates:
• Project defnition completion date
• Date for the beginning of preliminary engineering
• Completion date for the environmental document
• Start date for the acquisition of right of way
• Date of right of way certifcation
• Project advertisement date
• Date project is operationally complete (substantially complete)
2. Estimated Project Cost Data (in Current Year Dollars, CY$)
• Date of estimate basis (i.e., “2007 $”)
• Design cost estimate
• Right of way cost estimate
• Construction cost estimate
3. Midpoint for construction phases using the project award date and the
operationally complete date.
Project Risk Management Guidance for WSDOT Projects Page xxi
July 2010
Project Risk Management and Risk Based Estimating
It is the policy of the Washington State Department of Transportation
(WSDOT) to conduct risk based estimating workshops for all projects over
$10 Million (PE, R/W and Const). These workshops provide information
to project managers that can help them control scope, cost, schedule, and
manage risks for all projects. This policy reaffrms the requirement that a
risk management plan is a component of every project management plan.
Levels of risk based estimating, in support of risk management (E 1053.00):
Project Size ($)
Required Process
(project managers can use a higher level process if desired)
Less than $10 M Qualitative Spreadsheet in the Project Management
Online Guide
1
$10 M to $25 M In-formal workshop using the Self-Modeling Spreadsheet
1, 3
$25 M to $100 M Cost Risk Assessment (CRA) Workshop
1, 2
Greater than
$100 M
Cost Estimate Validation Process (CEVP®) Workshop
2
1 In some cases it is acceptable to combine the Value Engineering Study and Risk
Based Estimating Workshop.
2 Projects $25 Million and over should use the self-modeling spreadsheet in the
scoping phase risk based estimating process, followed up by the more formal CRA
or CEVP® process during the design phase.
3 An informal workshop is comprised of the project team (or key project team
members), other participants may be included as the project manager/project team
deem necessary.
A general comparison of a few typical characteristics for CRA and CEVP®
CRA CEVP®
Workshop length 1 – 2 days 3 – 5 days
Subject Matter
Experts
Internal and local. Internal and external.
Timing (when to
hold workshop)
Anytime. Typically updated
when design changes or
other changes to the project
warrant an updated CRA.
Best to start early in the
process, major projects are
typically updated as needed.
General An assessment of risks with
an evaluation and update
of costs and schedule
estimates.
An intense workshop
that provides an external
validation of cost and
schedule estimates and
assesses risks.
Note: Workshops are orchestrated by the Cost Risk Estimating Management (CREM)
unit of the Strategic Analysis and Estimating Offce in HQ in collaboration with the
project manager. The project manager submits a workshop request and works with
the CREM unit to ascertain the type of workshop required and candidate participants.
See WSDOT Guidelines for CRA-CEVP workshops for more details.
Statement of Policy
Page xxii Project Risk Management Guidance for WSDOT Projects
July 2010
“It must be recognized that even the fnal construction estimate is of
limited accuracy and that it bears little resemblance to the advance
determination of the production costs of mass-produced goods.
Construction estimating is a relatively crude process. The absence of any
appreciable standardization together with a myriad of unique site and
project conditions make the advance computation of exact construction
expenditures a mater more of accident than design. Nevertheless, a skilled
and experienced estimator, using cost accounting information gleaned
from previous construction work of a similar nature, can do a credible job
of predicting construction disbursements despite the project imponderables
normally involved. The character of location of a construction project
sometimes presents unique problems, but some basic principle for which
there is precedent almost always apply.”
Construction Project Management 5th Edition, Sears and Clough 2008
Project Risk Management Guidance for WSDOT Projects Page 1
July 2010
Chapter 1 Risk Management Planning
Good risk management planning begins with sound project management
practices including review of organizational policies and guidance, Project
Initiation and Team Alignment, and Project Planning steps as provided
for in the WSDOT Project Management Online Guide. Risk Management
must commence early in the project development process and proceed as
project knowledge evolves and project information increases in quantity
and quality. Monitoring project development and risk exposure continues
formal risk assessments of risk may occur several times through the
life of the project. People and resources involved in the project, project
management plan development, and risk management plan development
must consider the resources needed for project risk management and build
it into their project development budget and schedule. Risk management
activities, including risk workshops (such as CRA, CEVP or other
meetings) should be part of the Project Workplan and built into the project
schedule and budget.
As the project develops and moves through scoping and early design
phases, more knowledge about the project becomes available, see
Figure 1-1. With the rising knowledge about a project’s scope comes an
understanding that contending with some elements of the project will
require signifcant additional resources. Such elements could be related
to scope, environmental mitigation and permitting, rising cost of right-of-
way as corridors develop in advance of the project, utilities, seismic and
other considerations. Traditional estimating practices tend to produce “the
number” for a project. But the single number masks the critical uncertainty
inherent in a particular project. It implies a sense of precision beyond what
can be achieved during planning, scoping or early design phases. WSDOT
has come to the understanding that an estimate is more accurately
expressed not as a single number but as a range.
To determine an accurate estimate range for both cost and schedule,
risk must be measured. Formerly, WSDOT measured risk based on the
estimator’s experience and best judgment, without explicitly identifying
the project’s uncertainties and risks. That has changed. Estimates now
comprise two components: the base cost component and the risk (or
uncertainty) component. The Base Cost represents the cost which
can reasonably be expected if the project materializes as planned. .
The base cost does not include contingencies. Once the base cost is
established, a list of risks is created of both opportunities and threats,
called a “risk register.” The risk assessment replaces general and vaguely
defned contingency with explicitly defned risk events. Risk events are
characterized in terms of probability of occurrence and the consequences
of each potential risk event.
Page 2 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
In Executive Order E 1038.00 WSDOT establishes, as policy, to
proactively assess and respond to any risks that may affect the
achievement of WSDOT’s strategic performance based objectives and
their intended outcomes. It further goes on to direct employees to support
the department’s efforts to identify, share and manage risk across all
organizations and functions. Risk reviews are an integral part of budget
development, and the intent is for the department to make informed
decisions about risk tolerance. In can be inferred that determined
Enterprise Risk Management will require comprehensive Project Risk
Management, and Project Risk Management is also a key component of a
Project Management Plan, which is required for all WSDOT projects.
We then, as stewards of the public trust, must endeavour to inform
decision-makers of the uncertainty and risk associated with the projects we
develop. We must understand risk tolerance and we must weigh the value
of project decisions with risks associated with the project.
WSDOT Project Risk Management – “How to guide” 1 Risk Management Planning rev 2009-April
2 of 9
Chapter 1 Risk Management Planning
We then, as stewards of the public trust, must endeavour to inform decision-makers of the
uncertainty and risk associated with the projects we develop. We must understand risk tolerance
and we must weigh the value of project decisions with risks associated with the project.
Figure 1-1 Evolution of Project Knowledge through Project Development
In Chapter 5 of the book “Risk, Uncertainty and Government”, it notes “…lawyers and
economists are accustomed to think of contracts for future performance as devices for allocating
risks of future events”. In order for us to understand this allocation of risk -projects must be
examined and the uncertainty and risks must be documented and characterized.
Components of Uncertainty
P
o
r
t
i
o
n
o
f
P
r
o
j
e
c
t
C
o
s
t
(
w
h
a
t
i
s
k
n
o
w
n
a
n
d
u
n
k
n
o
w
n
?
)
Unrecognized
Unknown - Unknowns
Known but not Quantified
Known - Unknowns
Known and Quantifiable
Known - Knowns
Conservative Estimate w/Allowance
Deterministic Estimate
(conservative est. w/allowance + contingency)
Contingency
Project Development Phase
Planning Programming Scoping Design/P&E Ad/Bid/Award Construct
D
e
s
ig
n
A
llo
w
a
n
c
e
s
Engineer’s
Estimate at Ad
Components of Uncertainty
P
o
r
t
i
o
n
o
f
P
r
o
j
e
c
t
C
o
s
t
(
w
h
a
t
i
s
k
n
o
w
n
a
n
d
u
n
k
n
o
w
n
?
)
Unrecognized
Unknown - Unknowns
Known but not Quantified
Known - Unknowns
Known and Quantifiable
Known - Knowns
Conservative Estimate w/Allowance
Deterministic Estimate
(conservative est. w/allowance + contingency)
Contingency
Project Development Phase
Planning Programming Scoping Design/P&E Ad/Bid/Award Construct
D
e
s
ig
n
A
llo
w
a
n
c
e
s
Engineer’s
Estimate at Ad
Evolution of Project Knowledge through Project Development
Figure 1-1
In Chapter 5 of the book “Risk, Uncertainty and Government”, it notes
“…lawyers and economists are accustomed to think of contracts for future
performance as devices for allocating risks of future events”. In order for
us to understand this allocation of risk -projects must be examined and the
uncertainty and risks must be documented and characterized.
Project Risk Management Guidance for WSDOT Projects Page 3
July 2010
Chapter 1 Risk Management Planning
WSDOT Project Risk Management – “How to guide” 1 Risk Management Planning rev 2009-April
3 of 9
Chapter 1 Risk Management Planning
We can think of risk management as depicted above, the two pillars of risk management are
“IDENTIFY and ANALYZE” the risks then, as depicted in the second pillar “RESPOND,
MONITOR and CONTROL” project risk.
Unless we incorporate the second pillar we are not realizing the full value of risk management.
When preparing our project management plan and work activities for our project, we must
include both pillars of risk management in our plan.
Risk Management
Identify
Analyze
Respond
Monitor/Control
Risk Management
Identify
Analyze
Respond
Monitor/Control
We can think of risk management as depicted above, the two pillars of risk
management are “IDENTIFY and ANALYZE” the risks then, as depicted
in the second pillar “RESPOND, MONITOR and CONTROL” project
risk.
Unless we incorporate the second pillar we are not realizing the full
value of risk management. When preparing our project management plan
and work activities for our project, we must include both pillars of risk
management in our plan.
Page 4 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Risk Management Planning
“ How to”
Project Risk Management Guidance for WSDOT Projects Page 5
July 2010
Chapter 1 Risk Management Planning
How to Plan for Project Risk Management
Do you plan to manage risk for your project? YES! Then include risk
management in your project management plan.
#1 Determine the Level of Risk Assessment for your Project (see Table
1.1).
#2 Incorporate risk management activities into the project schedule (see
Table 1.2 and Figures).
#3 Make Risk Management an agenda item for regularly scheduled
project meetings.
#4 Communicate the importance of risk management to the entire project
team.
#5 Establish the expectation that risk will be managed, documented and
reported.
Helpful Hints for Risk Management Planning
• Risk assessment should begin early, but there must be enough known
about the project to understand what is being assessed. This will
of course be to varying levels of detail depending on the point in
project development at which the risk assessment is conducted
(planning, scoping, design/ps&e) –hence schedule risk assessments
at appropriate times.
• Allow time in the schedule for prep activities, this includes review and
QA/QC of project schedules and cost estimates at appropriate times.
• Allow budget for risk assessment, risk management and risk response
activities.
• Report on status of Project Risk in regularly scheduled project
meetings.
• Know the organization’s tolerance for risk. –are project managers (and
upper management) risk averse or risk seeking? How much risk is the
organization will to accept? Knowing the answers to these questions
will help with risk management and contribute to the decision-making
process when determining risk-response actions.
Page 6 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Project
Size ($M)
Risk Assessment Level Notes
L
e
s
s
F
o
r
m
a
l
R
i
s
k
A
s
s
e
s
s
m
e
n
t
0 to 10
Project Team Risk Assessment
Project Management
Online Guide (PMOG) Risk
Management Plan
Qualitative Tool
The Project team assesses each identifed
risk for its probability of occurrence and its
impact on project objectives. Project teams
may request assistance from subject matter
experts or functional units to assess the risks
in their respective felds. The self-modeling
spreadsheet can be used for any project.
10 to 25
Project Team Risk Assessment
Self-Modeling Spreadsheet
Quantitative Tool
M
o
r
e
F
o
r
m
a
l
R
i
s
k
A
s
s
e
s
s
m
e
n
t
(
W
o
r
k
s
h
o
p
s
)
25 to 100
Cost Risk Assessment
(CRA) Workshop
Quantitative Tool
The team, working collaboratively with
independent subject matter experts, reviews
and/or validates cost and schedule estimating
and identifes, characterizes and analyzes
risks. Accomplished in a structured workshop
setting. Modeling can be accomplished with off
the shelf software or using the self-modeling
spreadsheet.
Over 100
Cost Estimate Validation
Process (CEVP) Workshop
Quantitative Tool
Determine the Level of Risk Assessment
Table 1-1
Less Formal Risk Assessment
(does not require a Formal Workshop)
Milestones include:
Formal Workshop (CRA/CEVP)
Milestones include:
• Project Scope, Schedule and Estimate are
complete (apt for the level of development)
• Prep meeting (initial review of areas of
concern, determine tool qualitative or self-
modeling)
• Risk Meeting (risks are identifed and
characterized)
• Risk Response Actions Developed
• Risk Response Actions Implemented
• Workshop Request Form submitted
• Project Scope, Schedule and Estimate are
complete (apt for the level of development)
• Prep Session (fowchart project; determine
subject matter experts; additional prep items)
• Workshop
• Preliminary Results Presented
• Draft Report
• Final Report
Include Risk Management Milestones in the project schedule.
Table 1-2
Project Risk Management Guidance for WSDOT Projects Page 7
July 2010
Chapter 1 Risk Management Planning
S
i
m
p
l
i
f
e
d
W
o
r
k
s
h
o
p
T
i
m
e
l
i
n
e
F
i
g
u
r
e
1
-
2
Page 8 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Project Risk Management Guidance for WSDOT Projects Page 9
July 2010
Risk Management Schedule
(with workshop activities and post workshop activities)
Figure 1-3
WSDOT Project RiskManagement – “How to guide” 1 Risk Management Planning rev 2009-April
8 of 9
Chapter 1RiskManagement Planning
Figure1-3 Risk Management Schedule(with workshop activities and post workshop activities)
Page 10 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page 11
July 2010
Chapter 2 Risk Identifcation
Risk identifcation occurs through each of the four phases of project
development:
1. Planning
2. Scoping
3. Design/Plans, Specifcations and Estimate (Engineer’s Estimate)
4. Construction
As projects evolve through project development so too the risk profle
evolves project knowledge and understanding grows; hence previously
identifed risks may change and new risks identifed throughout the life of
the project.
Risk Identifcation: Inputs, Tools and Techniques, Outputs
Risk Identifcation Inputs
The frst and most important input is a defned project. In order to
fully understand and assess the risks that our projects are exposed to
we must frst insure that there is a mutual understanding of the project
under evaluation. This means that when we embark to meaningfully and
deliberately focus on the risks and uncertainties our project will face, we
must frst be able to defne the project in terms of scope, schedule and
estimate -commensurate with the level of project development at the time
of risk analysis.
Projects tend to develop in small steps; this incremental process of project
development is termed, by some, progressive elaboration. “Progressive
elaboration means developing in steps, and continuing by increments. For
example, the project scope will be broadly described early in the project
and made more explicit and detailed as the project team develops a better
and more complete understanding of the objectives and deliverables.
Progressive elaboration should not be confused with scope creep.”
PMBOK
Risk Identifcation Tools and Techniques
Try to identify as many risks as possible that may affect project objectives.
State the assumptions for risk identifcation and analysis and delineate
thresholds for risks. For example a project team may want to describe
all cost risks below $100,000 as minor and all schedule risks less than
2 weeks as minor thereby not spending inordinate amounts of time
on those risks and allowing them to focus on more signifcant risks
(assumptions and thresholds for risk assessment will be infuenced by the
size and complexity of the project, project environment, and the owners’
Page 12 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
tolerance for risk). There are a wide variety of techniques used for risk
identifcation. Some common techniques, used at WSDOT are provided
below.
Documentation Reviews
Peer level reviews of project documentation, studies, reports, preliminary
plans, estimates and schedules are a common and early method to help
identify risks that may affect project objectives.
Information Gathering
• Brainstorming Formal and informal brainstorming sessions with
project team members and extended project team members such as
specialty groups, stakeholders and regulatory agency representatives
is a technique for risk identification.. This technique can be scaled
for use on the simplest to the most complex projects. This technique
can also be tailored to specific areas of interest for the project risk,
for example if a project manager is most concerned about Geotech
conditions a brainstorming session on Geotech can be convened, and
so forth.
• Lessons Learned Database Searching for lessons learned using key-
words in the WSDOT lessons learned database that are relevant to
your project can provide an abundance of information on projects that
may have faced similar risks.
• Other methods There are many techniques, some common techniques
include: questionnaires and surveys, interviewing, checklists, and
examination of the Work Breakdown Structure for the project with
appropriate specialty groups, asking “what-if’ questions, for example
“what-if we miss the fsh window?” or “what-if our environmental
documentation is challenged and we have to prepare an EIS?” etc.
Risk Identifcation Outputs
An expected deliverable from Risk Identifcation includes a preliminary
“risk register” which documents the following information:
Identifcation # for each risk identifed
A unique number is assigned to each risk for tracking purposes. If
available this can be done utilizing an established Risk Breakdown
Structure (RBS); the WSDOT RBS is provided in the appendix of this
document.
Date and phase of project development when risk was identifed
Document the date the risk was identifed and which project development
phase (planning, scoping, design/PS&E, construction).
Project Risk Management Guidance for WSDOT Projects Page 13
July 2010
Chapter 2 Risk Identifcation
Name of Risk (does the risk pose a threat or present an opportunity?)
Each identifed risk should have an appropriate name, for example
“NEPA Delay” or “Reduction in Condemnation”; the nature of the risk
with respect to project objectives (threat or opportunity) should also be
documented. This can be done using the Risk Breakdown Structure (RBS)
for naming conventions.
Detailed Description of Risk Event
The detailed description of the identifed risk; the description must be
provide information that is Specifc, Measurable, Attributable (a cause is
indicated), Relevant, and Time bound (SMART). The description must
be clear enough and thorough enough so that others reading about the
description of the risk will understand what it means.
Risk Trigger
Each identifed risk must include the risk trigger(s). Risks rarely just
suddenly occur; usually there is some warning of imminent threat
or opportunity. These warning signs should be clearly described and
information about the risk trigger should be documented. For example
“NEPA Approval Date” may be considered a risk trigger on a project that
has a risk of a legal challenge, or other as appropriate.
Risk Type
Does the identifed risk affect project schedule, cost, or both?
Potential Responses to Identifed Risk
Document, if known, possible response actions to the identifed risk
–can the identifed threat be avoided, transferred, mitigated or is it to
be accepted? Can the identifed opportunity be exploited, shared or
enhanced?
Comments about Risk Identifcation
Risk Management is an iterative process; risks should be reviewed
regularly and as new risks are identifed they should be documented and
assessed. The resulting risk register should only be considered preliminary
until the completion of additional and appropriate activities that may
include any or all of the techniques listed above and/or more robust
processes such as Cost Risk Assessment and Cost Estimate Validation
Process (CRA/CEVP) workshops. More detail about the WSDOT
workshops for CRA/CEVP is offered later in this document, and at: http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/
Page 14 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Identify Risk Events
How to Identify Risk
#1 Determine risk thresholds for the project (establish a minimum dollar
amount and time duration considered signifcant for the project under
evaluation).
#2 Focus on identifying large signifcant risks which affect project
objectives.
#3 Carefully document and describe risks in a risk register.
HELPFUL HINTS FOR RISK IDENTIFICATION
• Determine, for your project, what constitutes “significant” risk.
• Thoroughly describe the risk – there is a form in the following pages
to help with this or you may create your own.
• Include specialty groups and/or other persons who may have
meaningful input regarding the challenges the project may face.
• Determine who “owns” the risk and who will develop a response.
Brainstorming - is an effective method. Brainstorming can range from a small informal project team
effort for simpler projects to a full-blown CEVP workshop. Effective brainstorming requires a skilled
facilitator, working together with the project team and specialists who can bring additional expertise.
Checklists and/or Questionnaires to `specialty groups - checklists/questionnaires are a quick
and easy-to-use technique but limited in nature; they only deal with the items on the list. Each project
is unique; hence a standard list will often not capture the project specifc risks of most concern.
Nonetheless a checklist/questionnaire can spark thinking prior to a more formal brainstorming process.
Examination of past similar projects - lessons learned from past projects help us to avoid repeating
mistakes; using past examples requires prudent and objective judgment, since a previous project may
be similar but is nonetheless different because each new project has unique requirements and features,
including uncertainties and risks.
WSDOT Lessons Learned website:http://eefmapps.wsdot.wa.gov/fmi/xsl/Lessons/Main.xsl?-db=DebriefReport&-lay=LessonWebForm&Mo
nthlyHighlight=Yes&-fnd
Combination of above methods and/or others - It is quite likely that for most projects a combination
of the above methods will be used to identify risks. The important thing is that once identifed the risks
are properly documented.
Figure 2-1 Blank template for documenting identifed risks (tailor to your needs).
Figure 2-2 Example of how template is used.
Figure 2-3 Risk Breakdown Structure for categorizing and organizing risks.
Figure 2-4 Example of risk identifcation using spreadsheet from Project Management Online
Guide found at:http://www.wsdot.wa.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-
Construction/Pre-Construction_fles/slide0001.htm
Risk Identifcation
Table 2.1
Project Risk Management Guidance for WSDOT Projects Page 15
July 2010
Chapter 2 Risk Identifcation
P
r
e
-
m
i
t
i
g
a
t
e
d
E
X
A
M
P
L
E
O
N
L
Y
R i s k #
S t a t u s
D e p e n d e n c y
P r o j e c t P h a s e
S
u
m
m
a
r
y
D
e
s
c
r
i
p
t
i
o
n
T
h
r
e
a
t
a
n
d
/
o
r
O
p
p
o
r
t
u
n
i
t
y
D
e
t
a
i
l
e
d
D
e
s
c
r
i
p
t
i
o
n
o
f
R
i
s
k
E
v
e
n
t
(
S
p
e
c
i
f
ic
,
M
e
a
s
u
r
a
b
l
e
,
A
t
t
r
i
b
u
t
a
b
le
,
R
e
le
v
a
n
t
,
T
im
e
b
o
u
n
d
)
[
S
M
A
R
T
]
R
i
s
k
T
r
i
g
g
e
r
T y p e
P r o b a b i l i t y
C o r r e l a t i o n
(
1
)
(
2
)
(
3
)
(
5
)
(
6
)
(
7
)
(
8
)
(
9
)
(
1
0
)
[
1
0
a
]
(
1
1
)
T
h
r
e
a
t
M
I
N
0
.
5
0
$
M
M
A
X
7
.
0
0
$
M
M
o
s
t
L
ik
e
l
y
1
.
5
0
$
M
0
M
a
s
t
e
r
D
u
r
a
t
i
o
n
R
i
s
k
M
I
N
1
.
0
M
o
M
A
X
6
.
0
M
o
T
h
r
e
a
t
M
o
s
t
L
ik
e
l
y
2
.
0
M
o
R
i
s
k
I
m
p
a
c
t
(
$
M
o
r
M
o
)
A c t i v e
C o n s t r u c t i o n
A
l
t
h
o
u
g
h
s
i
g
n
i
f
i
c
a
n
t
p
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
s
a
r
e
t
o
b
e
c
o
n
d
u
c
t
e
d
t
h
e
r
e
i
s
s
t
i
l
l
s
o
m
e
r
i
s
k
o
f
u
n
d
i
s
c
o
v
e
r
e
d
s
u
b
s
u
r
f
a
c
e
c
o
n
t
a
m
i
n
a
n
t
s
i
n
t
h
i
s
p
r
o
j
e
c
t
.
I
f
t
h
e
s
e
c
o
n
t
a
m
i
n
a
n
t
s
a
r
e
d
i
s
c
o
v
e
r
e
d
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
i
t
c
a
n
i
m
p
a
c
t
b
o
t
h
c
o
s
t
a
n
d
s
c
h
e
d
u
l
e
.
B
e
c
a
u
s
e
o
f
t
h
e
n
a
t
u
r
e
o
f
t
h
e
p
r
o
j
e
c
t
c
o
r
r
i
d
o
r
t
h
e
a
r
e
a
o
f
g
r
e
a
t
e
s
t
c
o
n
c
e
r
n
i
s
i
n
t
h
e
l
a
t
t
e
r
h
a
l
f
o
f
t
h
e
p
r
o
j
e
c
t
,
h
e
n
c
e
o
u
r
e
x
p
o
s
u
r
e
i
s
p
r
i
m
a
r
i
l
y
d
u
r
i
n
g
t
h
e
s
e
c
o
n
d
y
e
a
r
o
f
c
o
n
s
t
r
u
c
t
i
o
n
.
D
u
r
i
n
g
C
o
n
s
t
r
u
c
t
i
o
n
-
d
i
s
c
o
v
e
r
y
o
f
s
u
b
s
u
r
f
a
c
e
H
a
z
a
r
d
o
u
s
M
a
t
e
r
i
a
l
s
S c h e d u l e
R
I
S
K
T
R
I
G
G
E
R
D
e
t
a
i
l
s
(
a
n
d
d
u
r
a
t
i
o
n
o
f
e
x
p
o
s
u
r
e
t
o
t
h
i
s
r
i
s
k
)
:
T
h
e
t
r
i
g
g
e
r
f
o
r
t
h
i
s
r
i
s
k
i
s
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
u
c
t
i
o
n
.
O
u
r
p
r
o
j
e
c
t
i
s
o
v
e
r
4
m
i
l
e
s
i
n
l
e
n
g
t
h
,
t
h
e
a
r
e
a
o
f
m
o
s
t
c
o
n
c
e
r
n
,
f
o
r
e
x
p
o
s
u
r
e
t
o
u
n
k
n
o
w
n
s
u
b
s
u
r
f
a
c
e
m
a
t
e
r
i
a
l
s
,
i
s
i
n
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
;
t
h
i
s
c
o
n
s
t
r
u
c
t
i
o
n
i
s
e
x
p
e
c
t
e
d
t
o
o
c
c
u
r
i
n
t
h
e
f
i
n
a
l
1
2
m
o
n
t
h
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
(
~
M
a
r
c
h
2
0
1
5
t
o
M
a
r
c
h
2
0
1
6
)
.
R
i
s
k
M
a
t
r
i
x
N
O
T
E
S
:
T
h
i
s
r
i
s
k
h
a
s
b
e
e
n
d
i
s
c
u
s
s
e
d
f
o
r
s
o
m
e
t
i
m
e
a
n
d
o
u
r
c
o
n
c
e
r
n
s
a
r
e
k
n
o
w
n
b
y
m
a
n
a
g
e
m
e
n
t
a
n
d
r
e
g
i
o
n
a
l
s
t
a
k
e
h
o
l
d
e
r
s
.
P
O
S
S
I
B
L
E
R
E
S
P
O
N
S
E
S
T
R
A
T
E
G
I
E
S
T
O
E
X
P
L
O
R
E
:
(
1
)
e
v
e
n
t
h
o
u
g
h
a
t
h
o
r
o
u
g
h
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
i
s
p
l
a
n
n
e
d
w
e
m
a
y
w
a
n
t
t
o
g
o
a
b
o
v
e
a
n
d
b
e
y
o
n
d
,
p
a
r
t
i
c
u
l
a
r
l
y
w
h
e
n
i
n
v
e
s
t
i
g
a
t
i
n
g
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
t
h
i
s
p
r
o
j
e
c
t
;
(
2
)
i
n
v
e
s
t
i
g
a
t
e
t
h
e
u
s
e
o
f
G
r
o
u
n
d
P
e
n
e
t
r
a
t
i
o
n
R
a
d
a
r
;
(
3
)
l
o
o
k
a
t
s
t
r
a
t
e
g
i
e
s
f
o
r
r
e
d
u
c
i
n
g
p
r
o
j
e
c
t
f
o
o
t
p
r
i
n
t
s
o
a
s
t
o
m
i
n
i
m
i
z
e
a
r
e
a
w
e
a
r
e
d
i
s
t
u
r
b
i
n
g
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
.
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
C o s t
3
0
%
C N S 4 0
V
H
HML
V
L
V
L
L
M
H
V
H
I
m
p
a
c
t
P r o b a b i l i t y
S
Þ
L
C
I
I
I
C
Þ
r
o
v
l
d
e
a
w
e
l
l
w
r
l
L
L
e
n
d
e
L
a
l
l
e
d
d
e
s
c
r
l
p
L
l
o
n
o
f
L
h
e
8
l
s
k
L
v
e
n
L
.
W
h
a
L
l
s
L
h
e
s
p
e
c
l
f
l
c
l
s
s
u
e
o
f
c
o
n
c
e
r
n
?
M
L
A
S
U
k
A
8
L
L
Þ
r
o
b
a
b
l
l
l
L
y
o
f
8
l
s
k
L
v
e
n
L
C
c
c
u
r
l
n
g
?
C
o
n
s
e
q
u
n
c
e
l
f
l
L
d
o
e
s
C
c
c
u
r
?
(
l
m
p
a
c
L
L
o
c
o
s
L
a
n
d
s
c
h
e
d
u
l
e
)
A
1
1
k
I
8
U
1
A
8
L
L
W
h
a
L
w
l
l
l
L
r
l
g
g
e
r
(
c
a
u
s
e
)
L
h
l
s
r
l
s
k
?
P
o
w
d
o
w
e
k
n
o
w
?
W
h
o
o
w
n
s
L
h
l
s
r
l
s
k
?
k
L
L
L
V
A
N
1
W
h
y
l
s
L
h
l
s
r
l
s
k
l
m
p
o
r
L
a
n
L
L
o
o
u
r
p
r
o
[
e
c
L
?
W
l
l
l
l
L
l
m
p
a
c
L
p
r
o
[
e
c
L
o
b
[
e
c
L
l
v
e
s
?
l
s
l
L
c
r
l
L
l
c
a
l
?
1
I
M
L
8
C
U
N
D
8
l
s
k
s
h
a
v
e
a
"
s
h
e
l
f
l
l
f
e
"
-
L
h
a
L
l
s
o
u
r
p
r
o
[
e
c
L
l
s
n
o
L
e
x
p
o
s
e
d
L
o
s
p
e
c
l
f
l
c
r
l
s
k
e
v
e
n
L
s
l
n
d
e
f
l
n
L
e
l
y
-
w
h
e
n
a
r
e
w
e
a
L
r
l
s
k
?
Þ
C
1
L
N
1
I
A
L
k
L
S
Þ
C
N
S
L
A
C
1
I
C
N
S
?
l
f
p
o
L
e
n
L
l
a
l
m
l
L
l
g
a
L
l
o
n
s
L
r
a
L
e
g
l
e
s
a
r
e
m
e
n
L
l
o
n
e
d
b
e
s
u
r
e
L
o
c
a
p
L
u
r
e
L
h
e
m
s
o
L
h
e
y
c
a
n
b
e
m
o
r
e
f
u
l
l
y
e
x
p
l
o
r
e
d
l
a
L
e
r
.
Page 16 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
?
?
P
r
e
-
m
i
t
i
g
a
t
e
d
E
X
A
M
P
L
E
O
N
L
Y
R i s k #
S t a t u s
D e p e n d e n c y
P r o j e c t P h a s e
S
u
m
m
a
r
y
D
e
s
c
r
i
p
t
i
o
n
T
h
r
e
a
t
a
n
d
/
o
r
O
p
p
o
r
t
u
n
i
t
y
D
e
t
a
i
l
e
d
D
e
s
c
r
i
p
t
i
o
n
o
f
R
i
s
k
E
v
e
n
t
(
S
p
e
c
i
f
i
c
,
M
e
a
s
u
r
a
b
l
e
,
A
t
t
r
i
b
u
t
a
b
l
e
,
R
e
l
e
v
a
n
t
,
T
i
m
e
b
o
u
n
d
)
[
S
M
A
R
T
]
R
i
s
k
T
r
i
g
g
e
r
T y p e
P r o b a b i l i t y
C o r r e l a t i o n
(
1
)
(
2
)
(
3
)
(
5
)
(
6
)
(
7
)
(
8
)
(
9
)
(
1
0
)
[
1
0
a
]
(
1
1
)
T
h
r
e
a
t
M
I
N
0
.
5
0
$
M
M
A
X
7
.
0
0
$
M
M
o
s
t
L
i
k
e
l
y
1
.
5
0
$
M
0
M
a
s
t
e
r
D
u
r
a
t
i
o
n
R
i
s
k
M
I
N
1
.
0
M
o
M
A
X
6
.
0
M
o
T
h
r
e
a
t
M
o
s
t
L
i
k
e
l
y
2
.
0
M
o
R
I
S
K
T
R
I
G
G
E
R
D
e
t
a
i
l
s
(
a
n
d
d
u
r
a
t
i
o
n
o
f
e
x
p
o
s
u
r
e
t
o
t
h
i
s
r
i
s
k
)
:
T
h
e
t
r
i
g
g
e
r
f
o
r
t
h
i
s
r
i
s
k
i
s
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
u
c
t
i
o
n
.
O
u
r
p
r
o
j
e
c
t
i
s
o
v
e
r
4
m
i
l
e
s
i
n
l
e
n
g
t
h
,
t
h
e
a
r
e
a
o
f
m
o
s
t
c
o
n
c
e
r
n
,
f
o
r
e
x
p
o
s
u
r
e
t
o
u
n
k
n
o
w
n
s
u
b
s
u
r
f
a
c
e
m
a
t
e
r
i
a
l
s
,
i
s
i
n
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
;
t
h
i
s
c
o
n
s
t
r
u
c
t
i
o
n
i
s
e
x
p
e
c
t
e
d
t
o
o
c
c
u
r
i
n
t
h
e
f
i
n
a
l
1
2
m
o
n
t
h
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
(
~
M
a
r
c
h
2
0
1
5
t
o
M
a
r
c
h
2
0
1
6
)
.
R
i
s
k
M
a
t
r
i
x
N
O
T
E
S
:
T
h
i
s
r
i
s
k
h
a
s
b
e
e
n
d
i
s
c
u
s
s
e
d
f
o
r
s
o
m
e
t
i
m
e
a
n
d
o
u
r
c
o
n
c
e
r
n
s
a
r
e
k
n
o
w
n
b
y
m
a
n
a
g
e
m
e
n
t
a
n
d
r
e
g
i
o
n
a
l
s
t
a
k
e
h
o
l
d
e
r
s
.
P
O
S
S
I
B
L
E
R
E
S
P
O
N
S
E
S
T
R
A
T
E
G
I
E
S
T
O
E
X
P
L
O
R
E
:
(
1
)
e
v
e
n
t
h
o
u
g
h
a
t
h
o
r
o
u
g
h
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
i
s
p
l
a
n
n
e
d
w
e
m
a
y
w
a
n
t
t
o
g
o
a
b
o
v
e
a
n
d
b
e
y
o
n
d
,
p
a
r
t
i
c
u
l
a
r
l
y
w
h
e
n
i
n
v
e
s
t
i
g
a
t
i
n
g
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
t
h
i
s
p
r
o
j
e
c
t
;
(
2
)
i
n
v
e
s
t
i
g
a
t
e
t
h
e
u
s
e
o
f
G
r
o
u
n
d
P
e
n
e
t
r
a
t
i
o
n
R
a
d
a
r
;
(
3
)
l
o
o
k
a
t
s
t
r
a
t
e
g
i
e
s
f
o
r
r
e
d
u
c
i
n
g
p
r
o
j
e
c
t
f
o
o
t
p
r
i
n
t
s
o
a
s
t
o
m
i
n
i
m
i
z
e
a
r
e
a
w
e
a
r
e
d
i
s
t
u
r
b
i
n
g
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
.
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
C o s t
3
0
%
C N S 4 0
S c h e d u l e
A c t i v e
C o n s t r u c t i o n
A
l
t
h
o
u
g
h
s
i
g
n
i
f
i
c
a
n
t
p
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
s
a
r
e
t
o
b
e
c
o
n
d
u
c
t
e
d
t
h
e
r
e
i
s
s
t
i
l
l
s
o
m
e
r
i
s
k
o
f
u
n
d
i
s
c
o
v
e
r
e
d
s
u
b
s
u
r
f
a
c
e
c
o
n
t
a
m
i
n
a
n
t
s
i
n
t
h
i
s
p
r
o
j
e
c
t
.
I
f
t
h
e
s
e
c
o
n
t
a
m
i
n
a
n
t
s
a
r
e
d
i
s
c
o
v
e
r
e
d
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
i
t
c
a
n
i
m
p
a
c
t
b
o
t
h
c
o
s
t
a
n
d
s
c
h
e
d
u
l
e
.
B
e
c
a
u
s
e
o
f
t
h
e
n
a
t
u
r
e
o
f
t
h
e
p
r
o
j
e
c
t
c
o
r
r
i
d
o
r
t
h
e
a
r
e
a
o
f
g
r
e
a
t
e
s
t
c
o
n
c
e
r
n
i
s
i
n
t
h
e
l
a
t
t
e
r
h
a
l
f
o
f
t
h
e
p
r
o
j
e
c
t
,
h
e
n
c
e
o
u
r
e
x
p
o
s
u
r
e
i
s
p
r
i
m
a
r
i
l
y
d
u
r
i
n
g
t
h
e
s
e
c
o
n
d
y
e
a
r
o
f
c
o
n
s
t
r
u
c
t
i
o
n
.
D
u
r
i
n
g
C
o
n
s
t
r
u
c
t
i
o
n
-
d
i
s
c
o
v
e
r
y
o
f
s
u
b
s
u
r
f
a
c
e
H
a
z
a
r
d
o
u
s
M
a
t
e
r
i
a
l
s
R
i
s
k
I
m
p
a
c
t
(
$
M
o
r
M
o
)
V
H
HM
L
V
L
V
L
L
M
H
V
H
I
m
p
a
c
t
P r o b a b i l i t y
Project Risk Management Guidance for WSDOT Projects Page 17
July 2010
Chapter 2 Risk Identifcation
Blank Template For Documenting Identifed Risks (Tailor to Your Needs)
Figure 2-1
Project Title: CN Duration Estimate Risk ID Sheets.xls
Project Manager: PE Estimate
Date Risk Identified: RW Estimate
CN Estimate
Parameters for
Pre-mitigated or Post mitigated ? Monte-Carlo Modeling
R
i
s
k
#
S
t
a
t
u
s
D
e
p
e
n
d
e
n
c
y
P
r
o
j
e
c
t
P
h
a
s
e
Summary
Description
Threat and/or
Opportunity
Detailed Description of Risk Event
(Specific, Measurable, Attributable, Relevant,
Timebound) [SMART]
Risk Trigger
T
y
p
e
P
r
o
b
a
b
i
l
i
t
y
C
o
r
r
e
l
a
t
i
o
n
(1) (2) (3) (5) (6) (7) (8) (9) (10) [10a] (11)
Threat MIN
MAX
Most Likely
0Master Duration Risk
MIN
MAX
Threat Most Likely
Supplemental notes about this risk event
Risk Trigger Details: Risk Matrix
Risk Owner:
Risk Breakdown Structure # (RBS#)
Work Breakdown Stucture # (WBS#)
Critical Path (yes or no)
Response Actions (action to be taken)
Action by date:
Status review date:
Status review date:
ADDITIONAL NOTES:
Actions to implement strategy:
What needs to be done? Who will do it? Due date?
Risk Impact
($M or Mo)
1
R
e
t
i
r
e
d
S
c
h
e
d
u
l
e
C
o
n
s
t
r
u
c
t
i
o
n
C
o
s
t
VH
H
M
L
VL
VL L M H VH
P
r
o
b
a
b
i
l
i
t
y
Impact
Page 18 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Example of How Template is Used
Figure 2-2
Project Title: Risk Management Guide Example CN Duration Estimate 10.0Mo Risk ID Sheets.xls
Project Manager: Scott Adams PE Estimate 2.0 $M
Date Risk Identified: 1-Feb-29 RW Estimate 8.0 $M
CN Estimate 30.0 $M
Parameters for
Pre-mitigated or Post mitigated ? Monte-Carlo Modeling
R
i
s
k
#
S
t
a
t
u
s
D
e
p
e
n
d
e
n
c
y
P
r
o
j
e
c
t
P
h
a
s
e
Summary
Description
Threat and/or
Opportunity
Detailed Description of Risk Event
(Specific, Measurable, Attributable, Relevant,
Timebound) [SMART]
Risk Trigger
T
y
p
e
P
r
o
b
a
b
i
l
i
t
y
C
o
r
r
e
l
a
t
i
o
n
(1) (2) (3) (5) (6) (7) (8) (9) (10) [10a] (11)
Threat MIN 0.25$M
MAX 2.00$M
Most Likely 0.50$M
0Master Duration Risk
MIN 1.0Mo
MAX 8.0Mo
Threat Most Likely 5.0Mo
Supplemental notes about this risk event
Risk Trigger Details: Should know by the ides of March. Risk Matrix
Risk Owner: Mr. Ule Givens
Risk Breakdown Structure # (RBS#) ENV 30.1
Work Breakdown Stucture # (WBS#) PC-18
Critical Path (yes or no) yes
Response Actions (action to be taken)
One of the best tools we have to avoid this risk is a concerted, committed & sustained effort
to address env. permits upfront & thoroughly. Including verification of jurisdictions
and parties of concern and clarify understanding and expectations of all parties.
To this end we will form a team to puruse this effort with appropriate representatives from
each permitting authority with review dates and commitments.
Action by date: February 30, 2929
Status review date: March 32, 2929
Status review date: April 31, 2929
ADDITIONAL NOTES:
Actions to implement strategy:
What needs to be done? Who will do it? Due date?
Communication with parties. Project Mgr NOW
Succession plan for staff changes. Business Mgr 2929-Feb
Decisions ASAP on design elements. Executive Oversight 2929-March
Risk Impact
($M or Mo)
1
R
e
t
i
r
e
d
70%
Permits and
Permit Appeals
S
c
h
e
d
u
l
e
P
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
Complex project, might require additional time (longer than
average) to review. Potential agency staff changes. Tribal
issues includefishingrights, effects on fish and habitat, and
other environmental concerns.
Appeals can bemadeon any of themajor permits, whether
based on actual issues with thepermits or not. Thefollowing
specific issues werehighlighted:
• Shoreline permits from various jurisdictions are of particular
concern shorelinepermits areeasy to challengeand typically
result in significant delays. Thereis aprocess to weed out
frivolous appeals.
• New NPDES outfalls (appealable)
• HPA issues with WDFW
Coast Guard permits for THE channel.
Determination
decisions by several
agencies.
Revisions to our
estimated areas of
impact.
C
o
s
t
VH
H $,Mo
M
L
VL
VL L M H VH
Impact
P
r
o
b
a
b
i
l
i
t
y
Project Risk Management Guidance for WSDOT Projects Page 19
July 2010
Chapter 2 Risk Identifcation
Risk Breakdown Structure
Figure 2-3a
Level 1 Project Risk
--------------------
----
Level 2
Environmental &
Hydraulics
Structures & Geotech Design / PS&E Right-of-Way (including
Access and Acquisition)
Utilities Railroad Partnerships and
Stakeholders
Management / Funding Contracting and
Procurement
Construction
ENV STG DES ROW UTL RR PSP MGT CTR CNS
--------------------
----------
ENV 10
NEPA/SEPA Documentation
Completion (incl. Section 4f,
etc.)
----------------
NEPA/SEPA Challenges
STG 10
Potential Changes to
Structures Design (Bridge
Superstructure, Retaining
Walls)
DES 10
Potential Changes to roadway design
(including vertical and/or horizontal
alignment, earthwork, pavement,
etc.)
ROW 10
Issues Associated with
Development of ROW Plan
UTL 10
Utility Design Coordination
and Agreements
RR 10
Railroad Design
Coordination and
Agreements
PSP 10
Tribal Issues
MGT 10
Change in Project Managers
and/or other key Leadership
CTR 10
Change in Project Delivery
Method
CNS 10
Traffic Control and Staging
Issues (MOT/WZTC)
ENV 20
ESA Issues (incl.
consultation, Biologic
Assessments/Biological
Opinions, Fish Passage)
STG 20
Potential Changes to
Geotechnical Design
Foundations, Liquefaction,
Mitigation, etc.
------------------ Challenging
Geotech Conditions
DES 20
Approval of Design Deviations
----------------
Changes to roadway design criteria
(i.e. shoulder width, sight distance,
etc.)
ROW 20
Uncertainty in Future ROW
Escalation Rate (Project-
Specific, including change in
land use, urbanization, etc.)
UTL 20
Utility relocations and
conflicts
RR 20
Railroad Coordination during
construction (flagging, work
restrictions, work windows,
etc.)
PSP 20
Public Involvement Issues
-------------------------
Other Interagency
Agreements (i.e. Sound
Transit, USFS, cities,
counties, etc.)
MGT 20
Delayed Decision Making
CTR 20
Issues Related to Contract
Language (Contract
Packaging, Warranties,
Liquidated Damages, DBE,
Insurance/Bonding, etc.)
CNS 20
Construction Permitting
Issues (incl. work
restrictions)
ENV 30
Environmental Permitting
(incl. Appeals)
STG 30
Changes to Structural
Design Criteria (e.g.,
seismic)
DES 30
Changes to Architectural, CSS,
Landscape Design
ROW 30
Limited Access (Interchange
Justification Report - IJR,
Access Hearing, etc.)
RR 30
Contractor Right of Entry
Requirements
PSP 30
Additional Scope in
Response to Third Party
Concerns (e.g., artwork,
shared-use pathways,
intersection improvements,
etc.)
MGT 30
Availability of Funding / Cash
Flow Restrictions
CTR 30
Delays in Ad/Bid/Award
Process (Addenda, Protests,
etc.)
CNS 30
Work Windows (Weather,
Fish, etc.)
ENV 40
Archaeological/Cultural
Discoveries, historic property
impacts & mitigation
(Section 106)
DES 40
Projects by other agencies affected
by or affecting this project (design
coordination)
ROW 40
Managed Access (Appeal
Hearing, etc.)
MGT 40
Political/Policy Changes
CTR 40
Market Conditions (non-
competitive bidding
environment)
Lack of Qualified Bidders
CNS 40
Construction Schedule
Uncertainty (general,
including timing of award)
ENV 50
Hazardous Materials
Groundwater and Soil
Contamination (PE,
RW, CN)
DES 50
Potential Changes to Design of
Permanent Traffic Items (ITS,
Illumination, Intersection, etc.)
ROW 50
ROW Acquisition Issues
(condemnation, relocations,
demolitions, etc.)
MGT 50
State Workforce Limitations
CTR 50
Delays in Procurement of
Specialty Materials or
Equipment and associated
cost premiums
CNS 50
Marine/ Over Water
Construction Issues
ENV 60
Wetlands / Stream / Habitat
Mitigation
DES 60
Design / PS&E Reviews
----------------
Additional Scope Driven by Internal
Considerations (e.g., Maintenance,
Traffic Projections, Tolling, extend
project terminii, change to purpose
and need, etc.)
ROW 60
Additional ROW is required
(including full vs partial
takes): Temporary and
Permanent Access Breaks -
FHWA approval
-----------------
Construction / Subterranean
Easements
CTR 60
Contractor Non-
Performance
CNS 70
Earthwork Issues (re-use,
haul, disposal, etc.)
ENV 70
Stormwater, Potential
Changes to Flow Control or
Runoff Treatment/Hydraulic
Requirements
CTR 70
Availability of Specialty
Labor/Labor and/or
Productivity Disruptions
CNS 80
Coordination with Adjacent
Projects During Construction
ENV 80 Environmental
Impacts during Construction
(includng water quality,
TESC etc.)
CNS 90
Contractor Access / Staging
Coordination and
Constructability Issues
ENV 90
Permanent Noise Mitigation
CNS 100
Construction Accidents
ENV 900
Other Environmental Issues
STR 900
Other STR Issues
DES 900 Other
Design Issues
ROW 900
Other ROW Issues
UTL 900
Other UTL Issues
RR 900
Other RR Issues
PSP 900
Other PSP Issues
MGT 900
Other MGT Issues
CTR 900
Other CTR Issues
CNS 900
Other Construction Issues
(including unanticipated
change orders/claims)
-------------
L
e
v
e
l 3
Page 20 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Risk Breakdown Structure (Example of use)
Figure 2-3b
The RBS provides several functions and benefits to the project team and to management, including:
1) Consistency with taxonomy (wording);
2) Organizes risk events into common categories;
3) Helps to identify trends with respect to common usage of risk event categories & event types along with their probability and impact values;
4) Helps to identify common risk events among projects that the Region and HQ offices should be aware of due to their potential cumulative effects; e.g. negotiating agreements with agencies or other municipalities;
5) Provides a basis to work from for risk elicitors during CEVP workshops;
6) Provides a basis for development of independent risk surveys for those that are unable to attend a CEVP workshop.
This RBS serves as a starting point in assessing project risks in CEVP and CRA workshops; and also for smaller projects that may not conduct a formal workshop.
RBS CODE PROBABILITY
IMPACT
($) (TIME)
ENV 10.01 As a result of… 70% Ï$5M 8 weeks
ENV 10.02 Because of… 10% Ï$0.1M 6 months
ENV 10.03 Due to… 10% Ï$0.1M 4 months
public pressure and internal reviews
a challenge to the level of environmental documentation may
occur,
resulting in the need to prepare an EIS, adding scope and
cost and lengthening the schedule.
reviews by WSDOT Environmental
the design information may be deemed inadequate for
NEPA/SEPA approval
leading to additional design work, added cost, and schedule
delays.
the public involvement process a challenge to the NEPA/SEPA document may occur which would delay delivery of the EA document.
RISK TRIGGER
(CAUSE or PRECIPITATING EVENT)
RISK EVENT
CONSEQUENCE
(effect on project objectives)
Project Risk Management Guidance for WSDOT Projects Page 21
July 2010
Chapter 2 Risk Identifcation
Spreadsheet from Project Management Online Guide
Figure 2-4
Page 22 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Project Risk Management Guidance for WSDOT Projects Page 23
July 2010
Chapter 3 Qualitative Risk Analysis
Qualitative Risk Analysis assesses the impact and likelihood of the
identifed risks and develops prioritized lists of these risks for further
analysis or direct mitigation.
The team assesses each identifed risk for its probability of occurrence
and its impact on project objectives. Project teams may elicit assistance
from subject matter experts or functional units to assess the risks in their
respective felds. (WSDOT PMOG)
Qualitative analysis is often used as…
• an initial screening or review of project risks;
• when a quick assessment is desired;
• the preferred approach for some simpler and smaller projects where
robust and/or lengthy quantitative analysis is not necessary.
Qualitative - observations that do not involve measurements and numbers.
EXAMPLE the risk of a heavy rainstorm affecting our erosion control is
“Very High”.
Qualitative assessment - An assessment of risk relating to the qualities and
subjective elements of the risk –those that cannot be quantifed accurately.
Qualitative techniques include the defnition of risk, the recording of risk details
and relationships, and the categorization and prioritization of risk relative to
each other. SOURCE: Project Risk Analysis and Management Guide, 2004
APM Publishing
Qualitative analysis provides a convenient and “user-friendly” way to
identify, describe and characterize project risks.
Risk identifcation, as mentioned in the previous chapter, results in the
generation of a risk register. The risk register can be sizeable and it is
necessary to evaluate and prioritize the risk events identifed in the risk
register. Evaluation and prioritization is typically an iterative process and
can take place at various points in project development.
A thoroughly developed register of risks, that may affect project
objectives, is helpful. We sometimes fnd ourselves in situations where
moving forward is diffcult because of indecision. Identifying, describing,
and assessing project risks allow us to prioritize risks. Prioritization can
free us from indecision by providing specifc, documented risk events that
we can act on to shift the odds in favor of project success. Prioritizing
risks, which present the highest potential for signifcantly affecting project
objectives, gives project managers the information necessary to focus
project resources. Prioritization helps us make decisions in an uncertain
environment and address project risk in a direct and deliberate manner.
Page 24 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
Qualitative analysis utilizes relative degrees of probability and
consequence of each identifed project risk event in descriptive non-
numeric terms; see Figure 3-1 and Figure 3-2 for examples of qualitative
risk matrices. Qualitative analysis can provide a prioritized list of risks to
work on.
Project Risk Management Guidance for WSDOT Projects Page 25
July 2010
Chapter 3 Qualitative Risk Analysis
Qualitative Risk
Analysis
“ How to”
Page 26 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
How to perform Qualitative Risk Analysis
Once a risk is identifed, including a thorough description of the risk and
risk triggers, it can be characterized in terms of probability of occurrence
and the consequence if it does occur.
#1 Gather the project team and appropriate persons to discuss project
risk. Establish which of the qualitative risk matrices you intend to
use, defne the terms you plan to use (Very High, High, Medium,
Low…. Etc.).
#2 Review the risk information from the risk identifcation step.
#3 Discuss the risk with the group.
#4 Evaluate the likelihood of the risk occurring by asking the group “How
likely is it that this risk will occur?” Record the result that the group
agrees on.
#5 Evaluate the consequences if the risk does occur by asking the group
“What will be the impacts if this risk does occur?” Record the result
that the group agrees on.
#6 Prioritize the risks based on the results of the qualitative analysis.
If it is desirable the risks can also be group by category (i.e.
Environmental, Structures/Geotech) and ranked within each category.
HELPFUL HINTS FOR QUALITATIVE RISK ANALYSIS
• Invite appropriate participants (not too many not too few).
• Define terms.
• Stay focused – put a time limit on discussion if necessary.
• Record the results.
• Prioritize the risks based on the results.
Something to consider: those relatively new to risk analysis sometimes
claim, in exasperation, “This is nothing more than guessing”. This does
not represent the full actuality that assigning values for probability and
impact relies on the expertise and professional judgment of experienced
participants.
The determination of a value for the probability of occurrence and its
consequence to project objectives, if it occurs, is for many a new activity
and can seem strange at frst. In any feld, with experience, professionals
develop intuition and an ability to understand projects to a greater degree
than those not involved with project development and delivery. This
experience and intuition is extremely valuable –in a risk workshop forum
we surround ourselves with “wise counsel” to seriously and thoroughly
discuss the project. It might be helpful to examine the word “guess” and
compare it to other words such as ‘discernment’ and ‘judgment’ that more
appropriately describe risk assessment. The defnitions in the following
table come from the Merriam-Webster Online Dictionary/Thesaurus (with
edits).
Project Risk Management Guidance for WSDOT Projects Page 27
July 2010
Chapter 3 Qualitative Risk Analysis
Discernment
1: The quality of being able to grasp and comprehend what is obscure
: skill in discerning (insight and understanding); the process of
forming an opinion or evaluation by discerning and comparing
b: an opinion or estimate so formed; the capacity for judging;
the exercise of this capacity.
Synonyms Perception, Penetration, Insight, Acumen, Perception,
Penetration, Insight, and Acumen mean a power to see what is not
evident to the average mind. DISCERNMENT stresses accuracy;
PERCEPTION implies quick discernment; PENETRATION implies
a searching mind that goes beyond what is obvious or superfcial;
INSIGHT suggests depth of discernment coupled with understanding;
ACUMEN implies characteristic penetration combined with keen
practical judgment.
Judgment
a: The process of forming an opinion or evaluation by discerning and
comparing
b: An opinion or estimate so formed; a formal utterance of an
authoritative opinion; a position arrived at after consideration; an
idea that is believed to be true or valid without positive knowledge;
an opinion on the nature, character, or quality of something
Guess
To form an opinion from little or no evidence
Synonyms assume, conjecture, presume, speculate, suppose, surmise,
suspect, suspicion
Related Words gather, infer; hypothesize, theorize; believe, conceive,
expect, imagine, reckon
Decision
The act or process of deciding b: a determination arrived at after
consideration : ; report of a conclusion
A position arrived at after consideration
Synonyms conclusion, determination, diagnosis, judgment, resolution,
verdict.
Related Words mandate, fnding, ruling, sentence; choice, option,
selection
Page 28 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
EXAMPLES
ONLY
EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively)
Qualitative Risk List
count T/O RBS # Risk Title Probability Impact
a T ENV 30.1 Permits and Permit Appeals Medium High
b T UTL 20.1 Unidentifed Utility Conficts High Very High
c T STG 20.4 Change to Substructure Assumptions Very Low Low
d T ROW 40.1 Managed Access challenge Very High Low
WSDOT Project Risk Management – “How to guide” 3 Qualitative Risk Analysis rev 2009-April
6 of 10
Chapter 3 Qualitative Risk Analysis
EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively)
Qualitative Risk List
count
T/O RBS # Risk Title Probability Impact
a T ENV 30.1 Permits and Permit Appeals Medium High
b T UTL 20.1 Unidentified Utility Conflicts High Very High
c T STG 20.4 Change to Substructure Assumptions Very Low Low
d T ROW 40.1 Managed Access challenge Very High Low
Probability
(Likelihood)
Synonyms
Approximate
%
Very high Almost certain Very Sure >90%
High Likely Pretty Sure 70% - 90%
Medium Possible Maybe 30% - 70%
Low Unlikely Seldom 10% - 30%
Very Low Rare Improbable 90%
High Critical Strong 70% - 90%
Medium Moderate Average 30% - 70%
Low Slight Mild 10% - 30%
VH
H
M
L
VL
VL L M H VH
Impact
Probability and Impact Matrix
Very Low Very Little Very Mild 90%
High Likely Pretty Sure 80%
Medium Possible Maybe 50%
Low Unlikely Seldom 20%
Very Low Rare Improbable 10%
High Critical Strong 8%
Medium Moderate Average 4%
Low Slight Mild 2%
Very Low Very Little Very Mild
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss (or impact) and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order.
Project Risk
Management
Guidance for WSDOT Projects
July 2010
Americans with Disabilities Act (ADA) Information
Materials can be provided in alternative formats by calling the ADA Compliance Manager
at 360-705-7097. Persons who are deaf or hard of hearing may contact that number via the
Washington Relay Service at 7-1-1.
Title VI Notice to Public
It is the Washington State Department of Transportation’s (WSDOT) policy to assure that
no person shall, on the grounds of race, color, national origin, or sex, as provided by Title VI
of the Civil Rights Act of 1964, be excluded from participation in, be denied the benefts of,
or be otherwise discriminated against under any of its federally funded programs and activities.
Any person who believes his/her Title VI protection has been violated, may fle a complaint
with WSDOT’s Offce of Equal Opportunity (OEO). For Title VI complaint forms and advice,
please contact OEO’s Title VI Coordinator at 360-705-7098 or 509-324-6018.
To get the latest information for WSDOT administrative and engineering manuals, sign up for in-
dividual manual e-mail updates at www.wsdot.wa.gov/publications/manuals.
Washington State Department of Transportation
Administrative and Engineering Publications
PO Box 47304
Olympia, WA 98504-7304
Phone: 360-705-7430
E-mail: [email protected]
Internet: www.wsdot.wa.gov/publications/manuals
Project Risk Management Guidance for WSDOT Projects Page iii
July 2010
Foreword
Inaccurate cost estimating has dogged transportation projects for years. B.
Flyvbjerg’s noted study on the results of transportation project estimating
found that for the past 70 years, the cost of transportation projects has
been consistently underestimated in many parts of the world, including
the U.S.
The future is uncertain, but it is certain that there are two questions
will be asked about our projects: (1) How much will it cost? (2) How
long will it take? And of course the obvious follow-up question: Why?
(Why that much and why that long?)
These questions are posed in the future tense, and we are being asked
to predict an uncertain future. Because the future is uncertain the
fundamental answers to these questions is that an estimate is more
accurately expressed not as a single number but as a range. To determine
an accurate estimate range for both cost and schedule, risk and uncertainty
must be quantifed.
Estimates are comprised of two components: the base cost component and
the risk (or uncertainty) component. Base cost is defned as the likely cost
of the planned project if no signifcant problems occur. Once the base cost
is established, a list of uncertainties is created of both opportunities and
threats, called a “risk register.” The risk assessment replaces general and
vaguely defned contingency with explicitly defned risk events and with
the probability of occurrence and the consequences of each potential risk
event. Scope control is of course necessary for project management and
estimating. Cost estimates are to be reviewed and validated, and a base
cost for the project is determined.
Project risk management is a scalable activity and should be
commensurate with the size and complexity of the project under
consideration. Simpler projects may utilize simple qualitative analysis as
found in the Project Management Online Guide in the Risk Management
Plan spreadsheet. Larger more complex projects may wish to use more
robust analysis techniques via Monte-Carlo simulation models.
This guidance has been developed by the Strategic Assessment and
Estimating Offce (SAEO) in alignment with the goals of the Statewide
Program Management Group (SPMG). This document would not have
been possible with the contributions of dozens of key WSDOT people
who participated in the development and review of these guidelines.
DRAFT
FirstName LastName
WSDOT State Design Engineer
“What gets us in trouble is
not what we don’t know. It’s
what we know for sure that
just ain’t so.” Mark Twain
Page iv Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page v
July 2010
Comment Form
NOTE: This document is a working draft – your feedback and input is greatly appreciate.
From: Date:
Phone:
To: WSDOT – Headquarters Design
Strategic Analysis and Estimating Offce Mailstop 47330
PO Box 47330
310 Maple Park AVE SE
Olympia WA 98501-7330
Subject: Project Risk Management Guide Comment
Preserve this original for future use submit copies only
Acknowledgement: Author/Editor Mark Gabel, P.E.
WSDOT Strategic Analysis Estimating Offce
Page vi Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page vii
July 2010
Contents
Foreword iii
Comment Form v
Purpose ix
Defnitions of Selected Terms xi
The Value of Risk Management xiii
Project Risk Management Process xvii
Maximum Effort = Reduced Risk xix
Statement of Policy xxi
Chapter 1 Risk Management Planning 1
Chapter 2 Risk Identifcation 11
Chapter 3 Qualitative Risk Analysis 23
Chapter 4 Quantitative Risk Analysis 33
Chapter 5 Risk Response 43
Chapter 6 Risk Monitoring and Control 53
Appendix A Project Risk Management Plan Template 63\
Page viii Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page ix
July 2010
Purpose
This document provides information to project managers and
project teams that will help with their risk management efforts in the
following ways:
• Provide a consistent methodology for performing project risk
management activities.
*
• Provide techniques and tools for project risk management.
• Identify data requirements for risk analysis input and for output
(CPMS data requirements).
• Provide information on how project risk management fits into the
overall project management process at WSDOT.
• Provide guidance on how to proactively respond to risks.
Understanding of project risks will better enable project teams to
contribute to the fulfllment of public service through assessing project
risk and uncertainty to aide in making decisions regarding project
development and delivery. These decisions contribute to public safety and
the projects we deliver add value to Washington State on many levels.
Estimating the cost of transportation projects is a fundamental
responsibility of the Washington State Department of Transportation
(WSDOT). In recognition of the fundamental and strategic importance
of cost estimating these guidelines provide consistent practices across
the agency to enhance methods for meeting this responsibility. These
guidelines were developed by the Strategic Analysis and Estimating Offce
with contributions from a number of specialists in cost estimating and
project development.
Estimators must be shielded from pressures to prepare estimates that
match some preconceived notion of what a project should cost. Estimators
need to prepare estimates based on the scope of the project, the schedule
of the project and the bidding conditions that are anticipated.
* The methodology is consistent with the Project Management Institute (PMI) per the Project
Management Body Of Knowledge (PMBOK).
“No construction project
is risk free. Risk can be
managed, minimized,
shared, transferred,
or accepted. It cannot be
ignored.”
Sir Michael Latham, 1994
Page x Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page xi
July 2010
Base Cost Estimate – The Base Cost represents the cost which can
reasonably be expected if the project materializes as planned. The base
cost estimate is ubbiased and neutral- it is not optimistic and it is not
conservative. The base cost estimate includes the standard WSDOT
4% construction contingency described in the Plans Preparation
Manual M 22-31. It dose not include any signifcant risks (threats or
opportunities).
Note:
1. refer to WSDOT Plans Preparation Manual M 22-31 Section
800.03(2)
“Contingency percentages’ are setup to handle unforeseen changes in a
project during construction, including additional work, quantity over-
runs, and additional items. Contingencies are currently limited to 4%
of the total contract amount for all WSDOT contracts.”
2. The Base Cost typically falls in the 20% to 40% confdence level in
the Risk Based.
Construction Phase (CN) – The activities associated with the
administration of a contract for specifed services and physical
infrastructure. Primarily, the construction phase includes change
management, assurance that safety and associated impacts to the traveling
public are mitigated, payment for work completed, and the documentation
of physically constructed elements, certifcation and documentation of
quality.
Estimator – “One who assesses the extent of work and/or components
of the work (i.e. materials, equipment and labor) to be done to complete
a project, or a strictly defned part of the project, and state a likely or
approximate quantity in generally accepted units of measurement and cost
for the project.”
Preliminary Engineering Phase (PE) – The effort (budget/cost) of taking
a project through the planning, scoping, and design phases. Planning
and scoping typically have separate budgets but are encompassed under
Preliminary Engineering. The terms “Design” or “Design Phase” are
sometimes used interchangeably with PE.
Project Cost Estimate – total project cost estimate includes
PE + RW + CN
Defnitions of Selected Terms
Page xii Project Risk Management Guidance for WSDOT Projects
July 2010
Right-Of-Way Phase (R/W) – This effort includes the revision of existing
plans or the preparation of new plans detailing the need for new Right
of Way defned during the design phase. It also includes the appraisal,
negotiation, and purchase of new Right of Way by the Real Estate Services
offce. The right-of-way phase can begin during scoping, after design
completion, or anytime in between. The phase end is when the RW is
certifed, but this may not have a direct relationship to the construction
phase, except that CN cannot begin unless the RW is certifed. Except
under rare circumstances, all new Right-of-Way must be acquired before
the project can go to Ad. NOTE: Preparation of R/W Plans is paid for
with PE dollars and is part of the design effort; Negotiation, Purchase and
Acquisition of R/W is performed by the Real Estate Services offce and
comprises the cost of R/W.
Risk – The combination of the probability of an uncertain event and its
consequences. A positive consequence presents an opportunity; a negative
consequence poses a threat.
Risk Management –Refers to the culture, processes, and structures that
are directed toward effective management of risks –including potential
opportunities and threats to project objectives.
Risk-Based Estimate – Involves simple or complex modeling based
on inferred and probabilistic relationships among cost, schedule, and
events related to the project. It uses the historical data and/or cost based
estimating techniques and the expert’s best judgment to develop a Base
Cost or the cost of the project if the project proceeds as planned. Risk
elements (opportunities or threats) are then defned and applied to the Base
Cost through modeling to provide a probable range for both project cost
and schedule.
A comprehensive glossary can be found at:http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/workshop.htm
Project Risk Management Guidance for WSDOT Projects Page xiii
July 2010
Project risk management delivers the following values:
• Contributes to project success;
• Recognizes uncertainty and provides forecasts of possible outcomes;
• Produces better business outcomes through more informed decision-
making;
• Is a positive influence on creative thinking and innovation;
• Offers better control –less overhead and less time wasted, greater focus
on benefits;
• Helps senior management to understand what is happening with the
project and the challenges the project has to overcome.
Project risk management is an integral component of project management
and found at the heart of WSDOT’s Project Management processes.
Risk management is also a key component of project cost estimating
and scheduling, as noted in the National Cooperative Highway Research
Program in NCHRP Report 574, which is available at the WSDOT
library along with other publications on project management and risk
management.
Figures 1 and 2, on the following pages, depict Project Risk Management
through Project Development and Balanced Risk Management.
“The problem with the
future is that more things
might happen than will
happen” (Plato). With
effective risk management,
as an integral and
required part of project
management, we can
not only predict possible
future outcomes, we can
take action to shift the
odds for project success
in our favor.
The Value of Risk Management
Page xiv Project Risk Management Guidance for WSDOT Projects
July 2010
P
r
o
j
e
c
t
R
i
s
k
M
a
n
a
g
e
m
e
n
t
t
h
r
o
u
g
h
P
r
o
j
e
c
t
D
e
v
e
l
o
p
m
e
n
t
a
n
d
C
o
n
s
t
r
u
c
t
i
o
n
F
i
g
u
r
e
1
H
ig
h
w
a
y
S
y
s
t
e
m
P
la
n
C
a
p
it
a
l
I
m
p
r
o
v
e
m
e
n
t
&
P
r
e
s
e
r
v
a
t
io
n
P
r
o
g
r
a
m
(
C
I
P
P
)
&
B
ie
n
n
ia
l
P
r
o
g
r
a
m
A
w
a
r
d
C
o
n
c
e
p
t
u
a
l
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
p
o
t
e
n
t
i
a
l
f
u
n
d
s
n
e
e
d
e
d
&
p
r
i
o
r
i
t
i
z
e
n
e
e
d
s
f
o
r
h
i
g
h
w
a
y
s
y
s
t
e
m
p
l
a
n
S
c
o
p
i
n
g
E
s
t
i
m
a
t
i
n
g
S
e
t
b
a
s
e
l
i
n
e
c
o
s
t
f
o
r
p
r
o
j
e
c
t
a
n
d
p
r
o
g
r
a
m
p
r
o
j
e
c
t
(
C
I
P
P
a
n
d
b
i
e
n
n
i
a
l
p
r
o
g
r
a
m
)
D
e
s
i
g
n
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
f
o
r
C
o
s
t
M
a
n
a
g
e
m
e
n
t
P
S
&
E
E
s
t
i
m
a
t
i
n
g
E
s
t
i
m
a
t
e
c
o
n
s
t
r
u
c
t
i
o
n
c
o
s
t
s
t
o
o
b
l
i
g
a
t
e
f
u
n
d
s
&
c
o
m
p
a
r
e
w
i
t
h
b
i
d
s
P
l
a
n
n
i
n
g
a
n
d
P
r
o
j
e
c
t
D
e
v
e
l
o
p
m
e
n
t
P
h
a
s
e
s
P
r
o
g
r
a
m
(
p
r
o
j
e
c
t
)
s
c
o
p
e
(
c
a
t
e
g
o
r
y
,
c
o
n
c
e
p
t
s
,
s
c
h
e
m
a
t
i
c
s
&
l
o
c
a
t
i
o
n
)
N
e
e
d
s
/
d
e
f
i
c
i
e
n
c
i
e
s
C
o
s
t
E
s
t
i
m
a
t
e
s
(
R
e
c
y
c
l
e
l
o
o
p
)
P
r
o
g
r
a
m
(
p
r
o
j
e
c
t
)
c
o
s
t
e
s
t
i
m
a
t
e
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
P
l
a
n
n
i
n
g
P
r
o
j
e
c
t
s
c
o
p
e
(
s
c
h
e
m
a
t
i
c
s
,
t
y
p
e
,
(
P
o
r
I
)
,
p
r
e
l
i
m
i
n
a
r
y
p
l
a
n
s
,
a
l
t
e
r
n
a
t
i
v
e
s
,
l
o
c
a
t
i
o
n
B
a
s
e
l
i
n
e
c
o
s
t
e
s
t
i
m
a
t
e
P
r
o
j
e
c
t
s
c
o
p
e
(
d
e
s
i
g
n
,
d
e
v
e
l
o
p
m
e
n
t
,
e
g
,
p
l
a
n
s
f
o
r
a
p
p
r
o
v
a
l
,
e
t
c
)
P
e
r
i
o
d
i
c
c
o
s
t
e
s
t
i
m
a
t
e
u
p
d
a
t
e
s
P
r
o
j
e
c
t
s
c
o
p
e
(
f
i
n
a
l
p
l
a
n
s
/
s
p
e
c
s
a
n
d
b
i
d
d
o
c
u
m
e
n
t
s
)
E
n
g
i
n
e
e
r
’
s
E
s
t
i
m
a
t
e
P
S
&
E
A
d
v
e
r
t
i
s
e
a
n
d
B
i
d
C
o
n
s
t
r
u
c
t
i
o
n
S
c
o
p
i
n
g
D
e
s
i
g
n
Pre - constructionphases
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
C
o
s
t
E
s
t
i
m
a
t
i
n
g
T
A
K
E
A
C
T
I
O
N
-
I
M
P
L
E
M
E
N
T
R
I
S
K
R
E
S
P
O
N
S
E
P
L
A
N
C
U
R
R
E
N
T
P
r
o
j
e
c
t
M
g
m
t
P
l
a
n
S
c
o
p
e
S
c
h
e
d
u
l
e
E
s
t
i
m
a
t
e
s
D
o
c
u
m
e
n
t
a
t
i
o
n
U
p
d
a
t
e
P
r
o
j
e
c
t
M
g
m
t
P
l
a
n
R
i
s
k
M
a
n
a
g
e
m
e
n
t
P
l
a
n
n
i
n
g
R
i
s
k
m
a
n
a
g
e
m
e
n
t
i
s
a
t
t
h
e
h
e
a
r
t
o
f
p
r
o
j
e
c
t
m
a
n
a
g
e
m
e
n
t
a
n
d
i
s
a
n
o
n
g
o
i
n
g
a
c
t
i
v
i
t
y
u
n
t
i
l
t
h
e
p
r
o
j
e
c
t
i
s
c
o
m
p
l
e
t
e
d
.
P
r
o
j
e
c
t
R
i
s
k
M
a
n
a
g
e
m
e
n
t
D
o
c
u
m
e
n
t
a
n
d
r
e
c
o
r
d
C
h
a
n
g
e
O
r
d
e
r
s
a
n
d
t
h
e
e
f
f
e
c
t
o
n
p
r
o
j
e
c
t
s
c
o
p
e
,
s
c
h
e
d
u
l
e
a
n
d
c
o
s
t
.
R
i
s
k
A
n
a
l
y
s
i
s
R
i
s
k
I
d
e
n
t
i
f
i
c
a
t
i
o
n
(
d
e
t
e
r
m
i
n
e
a
n
d
d
o
c
u
m
e
n
t
r
i
s
k
c
h
a
r
a
c
t
e
r
i
s
t
i
c
s
P
r
o
d
u
c
e
P
r
e
l
i
m
i
n
a
r
y
R
i
s
k
R
e
g
i
s
t
e
r
)
Q
u
a
l
i
t
a
t
i
v
e
Q
u
a
n
t
i
t
a
t
i
v
e
P
r
e
-
R
e
s
p
o
n
s
e
A
n
a
l
y
s
i
s
R
i
s
k
R
e
s
p
o
n
s
e
P
l
a
n
n
i
n
g
P
o
s
t
-
r
e
s
p
o
n
s
e
A
n
a
l
y
s
i
s
R
e
s
u
l
t
s
O
f
R
i
s
k
R
e
s
p
o
n
s
e
A
c
t
i
o
n
s
R
i
s
k
M
o
n
i
t
o
r
i
n
g
a
n
d
C
o
n
t
r
o
l
c
d
ef
h
r
Project Risk Management Guidance for WSDOT Projects Page xv
July 2010
B
a
l
a
n
c
e
d
R
i
s
k
M
a
n
a
g
e
m
e
n
t
(
R
i
s
k
T
o
l
e
r
a
n
c
e
)
F
i
g
u
r
e
2
S
p
e
n
d
r
e
s
o
u
r
c
e
s
o
n
“
f
i
r
e
-
f
i
g
h
t
i
n
g
”
I
n
a
d
e
q
u
a
t
e
r
e
s
o
u
r
c
e
s
f
o
r
r
i
s
k
p
r
o
c
e
s
s
S
t
r
e
n
g
t
h
e
n
r
i
s
k
p
r
o
c
e
s
s
R
i
s
k
p
r
o
c
e
s
s
b
e
c
o
m
e
s
b
u
r
d
e
n
s
o
m
e
U
n
d
e
r
-
i
n
v
e
s
t
i
n
r
i
s
k
m
a
n
a
g
e
m
e
n
t
O
v
e
r
-
i
n
v
e
s
t
i
n
r
i
s
k
m
a
n
a
g
e
m
e
n
t
E
f
f
e
c
t
s
o
f
r
i
s
k
-
a
v
e
r
s
e
a
p
p
r
o
a
c
h
E
f
f
e
c
t
s
o
f
r
i
s
k
-
s
e
e
k
i
n
g
a
p
p
r
o
a
c
h
I
n
e
f
f
e
c
t
i
v
e
r
i
s
k
m
a
n
a
g
e
m
e
n
t
T
h
r
e
a
t
s
m
a
t
e
r
i
a
l
i
z
e
O
p
p
o
r
t
u
n
i
t
i
e
s
a
r
e
m
i
s
s
e
d
R
i
s
k
m
a
n
a
g
e
m
e
n
t
b
e
c
o
m
e
s
l
e
s
s
c
o
s
t
e
f
f
e
c
t
i
v
e
R
e
s
o
u
r
c
e
s
s
p
e
n
t
o
n
l
o
w
p
r
i
o
r
i
t
y
i
t
e
m
s
B
a
l
a
n
c
e
d
R
i
s
k
M
a
n
a
g
e
m
e
n
t
A
p
p
r
o
a
c
h
A
p
p
r
o
p
r
i
a
t
e
R
i
s
k
M
a
n
a
g
e
m
e
n
t
M
a
t
c
h
e
s
E
n
t
e
r
p
r
i
s
e
R
i
s
k
T
o
l
e
r
a
n
c
e
P
r
o
-
A
c
t
i
v
e
r
e
s
p
o
n
s
e
s
t
o
r
i
s
k
s
R
e
s
o
u
r
c
e
s
a
l
l
o
c
a
t
e
d
e
f
f
e
c
t
i
v
e
l
y
Page xvi Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page xvii
July 2010
Risk management, as an integral part of project management, occurs on
a daily basis. With pro-active risk management we look at projects in a
comprehensive manner and assess and document risks and uncertainty.
The steps for risk management are provided below.
Risk Management Steps
WSDOT Project Management Online Guide (PMOG) risk management
steps:
1) Risk
Management
Planning
Risk Management Planning is the systematic process
of deciding how to approach, plan, and execute risk
management activities throughout the life of a project.
It is intended to maximize the benefcial outcome of the
opportunities and minimize or eliminate the consequences
of adverse risk events. (WSDOT PMOG)
2) Identify Risk
Events
Risk identifcation involves determining which risks might
affect the project and documenting their characteristics. It
may be a simple risk assessment organized by the project
team, or an outcome of the CEVP®/CRA workshop process.
3) Qualitative
Risk Analysis
Qualitative risk analysis assesses the impact and likelihood
of the identifed risks and develops prioritized lists of these
risks for further analysis or direct mitigation. The team
assesses each identifed risk for its probability of occurrence
and its impact on project objectives. Project teams may elicit
assistance from subject matter experts or functional units to
assess the risks in their respective felds.
4) Quantitative
Risk Analysis
Quantitative risk analysis is a way of numerically estimating
the probability that a project will meet its cost and time
objectives. Quantitative analysis is based on a simultaneous
evaluation of the impacts of all identifed and quantifed risks.
5) Risk
Response
Planning
Risk response strategy is the process of developing options
and determining actions to enhance opportunities and reduce
threats to the project’s objectives. It identifes and assigns
parties to take responsibility for each risk response. This
process ensures that each risk requiring a response has an
“owner” . The Project Manager and the project team identify
which strategy is best for each risk, and then selects specifc
actions to implement that strategy.
6) Risk
Monitoring &
Control
Risk Monitoring and Control tracks identifed risks, monitors
residual risks, and identifes new risks—ensuring the
execution of risk plans, and evaluating their effectiveness
in reducing risk. Risk Monitoring and Control is an ongoing
process for the life of the project.
The remainder of this document includes more detail on the steps listed
above.
Project Risk Management Process
Page xviii Project Risk Management Guidance for WSDOT Projects
July 2010
Table 1 provides a helpful comparison between risk and objectives for
various types of risk management. For this document we are interested in
Project risk management.
Type of risk
management
Description Sample objectives
Generic Risk: any uncertainty that, if
it occurs, would affect one or
more objectives
-
Project risk
management
Project Risk: any
uncertainty that, if it occurs,
would affect one or more
project objectives
Time, cost, performance,
quality, scope, client
satisfaction.
Business risk
management
Business Risk: any
uncertainty that, if it occurs,
would affect one or more
business objectives
Proftability, market share,
competitiveness, Internal Rate
of Return (IRR), reputation,
repeat work, share price.
Safety risk
management
Safety Risk: any uncertainty
that, if it occurs, would affect
one or more safety objectives
Low accident rate, minimal
lost days, reduced insurance
premiums, regulatory
compliance.
Technical risk
management
Technical Risk: any
uncertainty that, if it occurs,
would affect one or more
technical objectives
Performance, functionality,
reliability, maintainability.
Security risk
management
Technical Risk: any
uncertainty that, if it occurs,
would affect one or more
security objectives
Information security, physical
security, asset security,
personnel security.
Credit: David Hillson, Effective Opportunity Management for Projects
Relationship between Risk and Objectives
Table 1
Project Risk Management Guidance for WSDOT Projects Page xix
July 2010
Description
The power of risk management is fully realized when a project manager
takes action to respond to identifed risks based on the risk analysis, with
effort being directed toward those risks that rank the highest in terms of
signifcant impact to project objectives.
Inputs
Project scope, schedule, and estimate package. The estimate package
should include the most current versions of the following items:
• Project Summary
• Detailed scope of work (commensurate to the level of development)
• Project Cost Estimate (with basis of cost estimate completed)
– PE cost estimate
– ROW cost estimate
– Construction cost estimate
• Previous risk analyses (if applicable)
• Project Management Plan
• Project Schedule
– Overall project schedule
– Detailed construction schedule (commensurate to the level
of development)
• Additional information as necessary
Techniques and Tools
WSDOT provides a number of techniques and tools to assist in project risk
management. These tools and techniques provide scalability and fexibility
so that project teams can match the tool with the specifc needs of their
projects. Often times the appropriate tool is determined by the size and
complexity of the project. These tools include:
• Project Management Online Guide (PMOG)
– Project Management Plan (fundamental for all project
management)
– The PMOG provides a risk matrix suitable for smaller simpler
projects
– Risk planning and risk management are an integral element
of project management
Maximum Effort = Reduced Risk
Page xx Project Risk Management Guidance for WSDOT Projects
July 2010
• Risk Management Plan spreadsheet template (found on
SAEO website)
• Self-Modeling tool for quantitative risk analysis
• CRA workshops for all projects between $25M and $100M
• CEVP workshops for all projects over $100M
Output
CPMS data requirements per in Instructional Letter (IL) 4071.00; Project
teams must provide specifc data to the region program management offce
for inclusion into CPMS and the Transportation Executive Information
System (TEIS). The required data is:
1. Project scheduling data for the following milestone dates:
• Project defnition completion date
• Date for the beginning of preliminary engineering
• Completion date for the environmental document
• Start date for the acquisition of right of way
• Date of right of way certifcation
• Project advertisement date
• Date project is operationally complete (substantially complete)
2. Estimated Project Cost Data (in Current Year Dollars, CY$)
• Date of estimate basis (i.e., “2007 $”)
• Design cost estimate
• Right of way cost estimate
• Construction cost estimate
3. Midpoint for construction phases using the project award date and the
operationally complete date.
Project Risk Management Guidance for WSDOT Projects Page xxi
July 2010
Project Risk Management and Risk Based Estimating
It is the policy of the Washington State Department of Transportation
(WSDOT) to conduct risk based estimating workshops for all projects over
$10 Million (PE, R/W and Const). These workshops provide information
to project managers that can help them control scope, cost, schedule, and
manage risks for all projects. This policy reaffrms the requirement that a
risk management plan is a component of every project management plan.
Levels of risk based estimating, in support of risk management (E 1053.00):
Project Size ($)
Required Process
(project managers can use a higher level process if desired)
Less than $10 M Qualitative Spreadsheet in the Project Management
Online Guide
1
$10 M to $25 M In-formal workshop using the Self-Modeling Spreadsheet
1, 3
$25 M to $100 M Cost Risk Assessment (CRA) Workshop
1, 2
Greater than
$100 M
Cost Estimate Validation Process (CEVP®) Workshop
2
1 In some cases it is acceptable to combine the Value Engineering Study and Risk
Based Estimating Workshop.
2 Projects $25 Million and over should use the self-modeling spreadsheet in the
scoping phase risk based estimating process, followed up by the more formal CRA
or CEVP® process during the design phase.
3 An informal workshop is comprised of the project team (or key project team
members), other participants may be included as the project manager/project team
deem necessary.
A general comparison of a few typical characteristics for CRA and CEVP®
CRA CEVP®
Workshop length 1 – 2 days 3 – 5 days
Subject Matter
Experts
Internal and local. Internal and external.
Timing (when to
hold workshop)
Anytime. Typically updated
when design changes or
other changes to the project
warrant an updated CRA.
Best to start early in the
process, major projects are
typically updated as needed.
General An assessment of risks with
an evaluation and update
of costs and schedule
estimates.
An intense workshop
that provides an external
validation of cost and
schedule estimates and
assesses risks.
Note: Workshops are orchestrated by the Cost Risk Estimating Management (CREM)
unit of the Strategic Analysis and Estimating Offce in HQ in collaboration with the
project manager. The project manager submits a workshop request and works with
the CREM unit to ascertain the type of workshop required and candidate participants.
See WSDOT Guidelines for CRA-CEVP workshops for more details.
Statement of Policy
Page xxii Project Risk Management Guidance for WSDOT Projects
July 2010
“It must be recognized that even the fnal construction estimate is of
limited accuracy and that it bears little resemblance to the advance
determination of the production costs of mass-produced goods.
Construction estimating is a relatively crude process. The absence of any
appreciable standardization together with a myriad of unique site and
project conditions make the advance computation of exact construction
expenditures a mater more of accident than design. Nevertheless, a skilled
and experienced estimator, using cost accounting information gleaned
from previous construction work of a similar nature, can do a credible job
of predicting construction disbursements despite the project imponderables
normally involved. The character of location of a construction project
sometimes presents unique problems, but some basic principle for which
there is precedent almost always apply.”
Construction Project Management 5th Edition, Sears and Clough 2008
Project Risk Management Guidance for WSDOT Projects Page 1
July 2010
Chapter 1 Risk Management Planning
Good risk management planning begins with sound project management
practices including review of organizational policies and guidance, Project
Initiation and Team Alignment, and Project Planning steps as provided
for in the WSDOT Project Management Online Guide. Risk Management
must commence early in the project development process and proceed as
project knowledge evolves and project information increases in quantity
and quality. Monitoring project development and risk exposure continues
formal risk assessments of risk may occur several times through the
life of the project. People and resources involved in the project, project
management plan development, and risk management plan development
must consider the resources needed for project risk management and build
it into their project development budget and schedule. Risk management
activities, including risk workshops (such as CRA, CEVP or other
meetings) should be part of the Project Workplan and built into the project
schedule and budget.
As the project develops and moves through scoping and early design
phases, more knowledge about the project becomes available, see
Figure 1-1. With the rising knowledge about a project’s scope comes an
understanding that contending with some elements of the project will
require signifcant additional resources. Such elements could be related
to scope, environmental mitigation and permitting, rising cost of right-of-
way as corridors develop in advance of the project, utilities, seismic and
other considerations. Traditional estimating practices tend to produce “the
number” for a project. But the single number masks the critical uncertainty
inherent in a particular project. It implies a sense of precision beyond what
can be achieved during planning, scoping or early design phases. WSDOT
has come to the understanding that an estimate is more accurately
expressed not as a single number but as a range.
To determine an accurate estimate range for both cost and schedule,
risk must be measured. Formerly, WSDOT measured risk based on the
estimator’s experience and best judgment, without explicitly identifying
the project’s uncertainties and risks. That has changed. Estimates now
comprise two components: the base cost component and the risk (or
uncertainty) component. The Base Cost represents the cost which
can reasonably be expected if the project materializes as planned. .
The base cost does not include contingencies. Once the base cost is
established, a list of risks is created of both opportunities and threats,
called a “risk register.” The risk assessment replaces general and vaguely
defned contingency with explicitly defned risk events. Risk events are
characterized in terms of probability of occurrence and the consequences
of each potential risk event.
Page 2 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
In Executive Order E 1038.00 WSDOT establishes, as policy, to
proactively assess and respond to any risks that may affect the
achievement of WSDOT’s strategic performance based objectives and
their intended outcomes. It further goes on to direct employees to support
the department’s efforts to identify, share and manage risk across all
organizations and functions. Risk reviews are an integral part of budget
development, and the intent is for the department to make informed
decisions about risk tolerance. In can be inferred that determined
Enterprise Risk Management will require comprehensive Project Risk
Management, and Project Risk Management is also a key component of a
Project Management Plan, which is required for all WSDOT projects.
We then, as stewards of the public trust, must endeavour to inform
decision-makers of the uncertainty and risk associated with the projects we
develop. We must understand risk tolerance and we must weigh the value
of project decisions with risks associated with the project.
WSDOT Project Risk Management – “How to guide” 1 Risk Management Planning rev 2009-April
2 of 9
Chapter 1 Risk Management Planning
We then, as stewards of the public trust, must endeavour to inform decision-makers of the
uncertainty and risk associated with the projects we develop. We must understand risk tolerance
and we must weigh the value of project decisions with risks associated with the project.
Figure 1-1 Evolution of Project Knowledge through Project Development
In Chapter 5 of the book “Risk, Uncertainty and Government”, it notes “…lawyers and
economists are accustomed to think of contracts for future performance as devices for allocating
risks of future events”. In order for us to understand this allocation of risk -projects must be
examined and the uncertainty and risks must be documented and characterized.
Components of Uncertainty
P
o
r
t
i
o
n
o
f
P
r
o
j
e
c
t
C
o
s
t
(
w
h
a
t
i
s
k
n
o
w
n
a
n
d
u
n
k
n
o
w
n
?
)
Unrecognized
Unknown - Unknowns
Known but not Quantified
Known - Unknowns
Known and Quantifiable
Known - Knowns
Conservative Estimate w/Allowance
Deterministic Estimate
(conservative est. w/allowance + contingency)
Contingency
Project Development Phase
Planning Programming Scoping Design/P&E Ad/Bid/Award Construct
D
e
s
ig
n
A
llo
w
a
n
c
e
s
Engineer’s
Estimate at Ad
Components of Uncertainty
P
o
r
t
i
o
n
o
f
P
r
o
j
e
c
t
C
o
s
t
(
w
h
a
t
i
s
k
n
o
w
n
a
n
d
u
n
k
n
o
w
n
?
)
Unrecognized
Unknown - Unknowns
Known but not Quantified
Known - Unknowns
Known and Quantifiable
Known - Knowns
Conservative Estimate w/Allowance
Deterministic Estimate
(conservative est. w/allowance + contingency)
Contingency
Project Development Phase
Planning Programming Scoping Design/P&E Ad/Bid/Award Construct
D
e
s
ig
n
A
llo
w
a
n
c
e
s
Engineer’s
Estimate at Ad
Evolution of Project Knowledge through Project Development
Figure 1-1
In Chapter 5 of the book “Risk, Uncertainty and Government”, it notes
“…lawyers and economists are accustomed to think of contracts for future
performance as devices for allocating risks of future events”. In order for
us to understand this allocation of risk -projects must be examined and the
uncertainty and risks must be documented and characterized.
Project Risk Management Guidance for WSDOT Projects Page 3
July 2010
Chapter 1 Risk Management Planning
WSDOT Project Risk Management – “How to guide” 1 Risk Management Planning rev 2009-April
3 of 9
Chapter 1 Risk Management Planning
We can think of risk management as depicted above, the two pillars of risk management are
“IDENTIFY and ANALYZE” the risks then, as depicted in the second pillar “RESPOND,
MONITOR and CONTROL” project risk.
Unless we incorporate the second pillar we are not realizing the full value of risk management.
When preparing our project management plan and work activities for our project, we must
include both pillars of risk management in our plan.
Risk Management
Identify
Analyze
Respond
Monitor/Control
Risk Management
Identify
Analyze
Respond
Monitor/Control
We can think of risk management as depicted above, the two pillars of risk
management are “IDENTIFY and ANALYZE” the risks then, as depicted
in the second pillar “RESPOND, MONITOR and CONTROL” project
risk.
Unless we incorporate the second pillar we are not realizing the full
value of risk management. When preparing our project management plan
and work activities for our project, we must include both pillars of risk
management in our plan.
Page 4 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Risk Management Planning
“ How to”
Project Risk Management Guidance for WSDOT Projects Page 5
July 2010
Chapter 1 Risk Management Planning
How to Plan for Project Risk Management
Do you plan to manage risk for your project? YES! Then include risk
management in your project management plan.
#1 Determine the Level of Risk Assessment for your Project (see Table
1.1).
#2 Incorporate risk management activities into the project schedule (see
Table 1.2 and Figures).
#3 Make Risk Management an agenda item for regularly scheduled
project meetings.
#4 Communicate the importance of risk management to the entire project
team.
#5 Establish the expectation that risk will be managed, documented and
reported.
Helpful Hints for Risk Management Planning
• Risk assessment should begin early, but there must be enough known
about the project to understand what is being assessed. This will
of course be to varying levels of detail depending on the point in
project development at which the risk assessment is conducted
(planning, scoping, design/ps&e) –hence schedule risk assessments
at appropriate times.
• Allow time in the schedule for prep activities, this includes review and
QA/QC of project schedules and cost estimates at appropriate times.
• Allow budget for risk assessment, risk management and risk response
activities.
• Report on status of Project Risk in regularly scheduled project
meetings.
• Know the organization’s tolerance for risk. –are project managers (and
upper management) risk averse or risk seeking? How much risk is the
organization will to accept? Knowing the answers to these questions
will help with risk management and contribute to the decision-making
process when determining risk-response actions.
Page 6 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Project
Size ($M)
Risk Assessment Level Notes
L
e
s
s
F
o
r
m
a
l
R
i
s
k
A
s
s
e
s
s
m
e
n
t
0 to 10
Project Team Risk Assessment
Project Management
Online Guide (PMOG) Risk
Management Plan
Qualitative Tool
The Project team assesses each identifed
risk for its probability of occurrence and its
impact on project objectives. Project teams
may request assistance from subject matter
experts or functional units to assess the risks
in their respective felds. The self-modeling
spreadsheet can be used for any project.
10 to 25
Project Team Risk Assessment
Self-Modeling Spreadsheet
Quantitative Tool
M
o
r
e
F
o
r
m
a
l
R
i
s
k
A
s
s
e
s
s
m
e
n
t
(
W
o
r
k
s
h
o
p
s
)
25 to 100
Cost Risk Assessment
(CRA) Workshop
Quantitative Tool
The team, working collaboratively with
independent subject matter experts, reviews
and/or validates cost and schedule estimating
and identifes, characterizes and analyzes
risks. Accomplished in a structured workshop
setting. Modeling can be accomplished with off
the shelf software or using the self-modeling
spreadsheet.
Over 100
Cost Estimate Validation
Process (CEVP) Workshop
Quantitative Tool
Determine the Level of Risk Assessment
Table 1-1
Less Formal Risk Assessment
(does not require a Formal Workshop)
Milestones include:
Formal Workshop (CRA/CEVP)
Milestones include:
• Project Scope, Schedule and Estimate are
complete (apt for the level of development)
• Prep meeting (initial review of areas of
concern, determine tool qualitative or self-
modeling)
• Risk Meeting (risks are identifed and
characterized)
• Risk Response Actions Developed
• Risk Response Actions Implemented
• Workshop Request Form submitted
• Project Scope, Schedule and Estimate are
complete (apt for the level of development)
• Prep Session (fowchart project; determine
subject matter experts; additional prep items)
• Workshop
• Preliminary Results Presented
• Draft Report
• Final Report
Include Risk Management Milestones in the project schedule.
Table 1-2
Project Risk Management Guidance for WSDOT Projects Page 7
July 2010
Chapter 1 Risk Management Planning
S
i
m
p
l
i
f
e
d
W
o
r
k
s
h
o
p
T
i
m
e
l
i
n
e
F
i
g
u
r
e
1
-
2
Page 8 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Management Planning Chapter 1
Project Risk Management Guidance for WSDOT Projects Page 9
July 2010
Risk Management Schedule
(with workshop activities and post workshop activities)
Figure 1-3
WSDOT Project RiskManagement – “How to guide” 1 Risk Management Planning rev 2009-April
8 of 9
Chapter 1RiskManagement Planning
Figure1-3 Risk Management Schedule(with workshop activities and post workshop activities)
Page 10 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Guidance for WSDOT Projects Page 11
July 2010
Chapter 2 Risk Identifcation
Risk identifcation occurs through each of the four phases of project
development:
1. Planning
2. Scoping
3. Design/Plans, Specifcations and Estimate (Engineer’s Estimate)
4. Construction
As projects evolve through project development so too the risk profle
evolves project knowledge and understanding grows; hence previously
identifed risks may change and new risks identifed throughout the life of
the project.
Risk Identifcation: Inputs, Tools and Techniques, Outputs
Risk Identifcation Inputs
The frst and most important input is a defned project. In order to
fully understand and assess the risks that our projects are exposed to
we must frst insure that there is a mutual understanding of the project
under evaluation. This means that when we embark to meaningfully and
deliberately focus on the risks and uncertainties our project will face, we
must frst be able to defne the project in terms of scope, schedule and
estimate -commensurate with the level of project development at the time
of risk analysis.
Projects tend to develop in small steps; this incremental process of project
development is termed, by some, progressive elaboration. “Progressive
elaboration means developing in steps, and continuing by increments. For
example, the project scope will be broadly described early in the project
and made more explicit and detailed as the project team develops a better
and more complete understanding of the objectives and deliverables.
Progressive elaboration should not be confused with scope creep.”
PMBOK
Risk Identifcation Tools and Techniques
Try to identify as many risks as possible that may affect project objectives.
State the assumptions for risk identifcation and analysis and delineate
thresholds for risks. For example a project team may want to describe
all cost risks below $100,000 as minor and all schedule risks less than
2 weeks as minor thereby not spending inordinate amounts of time
on those risks and allowing them to focus on more signifcant risks
(assumptions and thresholds for risk assessment will be infuenced by the
size and complexity of the project, project environment, and the owners’
Page 12 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
tolerance for risk). There are a wide variety of techniques used for risk
identifcation. Some common techniques, used at WSDOT are provided
below.
Documentation Reviews
Peer level reviews of project documentation, studies, reports, preliminary
plans, estimates and schedules are a common and early method to help
identify risks that may affect project objectives.
Information Gathering
• Brainstorming Formal and informal brainstorming sessions with
project team members and extended project team members such as
specialty groups, stakeholders and regulatory agency representatives
is a technique for risk identification.. This technique can be scaled
for use on the simplest to the most complex projects. This technique
can also be tailored to specific areas of interest for the project risk,
for example if a project manager is most concerned about Geotech
conditions a brainstorming session on Geotech can be convened, and
so forth.
• Lessons Learned Database Searching for lessons learned using key-
words in the WSDOT lessons learned database that are relevant to
your project can provide an abundance of information on projects that
may have faced similar risks.
• Other methods There are many techniques, some common techniques
include: questionnaires and surveys, interviewing, checklists, and
examination of the Work Breakdown Structure for the project with
appropriate specialty groups, asking “what-if’ questions, for example
“what-if we miss the fsh window?” or “what-if our environmental
documentation is challenged and we have to prepare an EIS?” etc.
Risk Identifcation Outputs
An expected deliverable from Risk Identifcation includes a preliminary
“risk register” which documents the following information:
Identifcation # for each risk identifed
A unique number is assigned to each risk for tracking purposes. If
available this can be done utilizing an established Risk Breakdown
Structure (RBS); the WSDOT RBS is provided in the appendix of this
document.
Date and phase of project development when risk was identifed
Document the date the risk was identifed and which project development
phase (planning, scoping, design/PS&E, construction).
Project Risk Management Guidance for WSDOT Projects Page 13
July 2010
Chapter 2 Risk Identifcation
Name of Risk (does the risk pose a threat or present an opportunity?)
Each identifed risk should have an appropriate name, for example
“NEPA Delay” or “Reduction in Condemnation”; the nature of the risk
with respect to project objectives (threat or opportunity) should also be
documented. This can be done using the Risk Breakdown Structure (RBS)
for naming conventions.
Detailed Description of Risk Event
The detailed description of the identifed risk; the description must be
provide information that is Specifc, Measurable, Attributable (a cause is
indicated), Relevant, and Time bound (SMART). The description must
be clear enough and thorough enough so that others reading about the
description of the risk will understand what it means.
Risk Trigger
Each identifed risk must include the risk trigger(s). Risks rarely just
suddenly occur; usually there is some warning of imminent threat
or opportunity. These warning signs should be clearly described and
information about the risk trigger should be documented. For example
“NEPA Approval Date” may be considered a risk trigger on a project that
has a risk of a legal challenge, or other as appropriate.
Risk Type
Does the identifed risk affect project schedule, cost, or both?
Potential Responses to Identifed Risk
Document, if known, possible response actions to the identifed risk
–can the identifed threat be avoided, transferred, mitigated or is it to
be accepted? Can the identifed opportunity be exploited, shared or
enhanced?
Comments about Risk Identifcation
Risk Management is an iterative process; risks should be reviewed
regularly and as new risks are identifed they should be documented and
assessed. The resulting risk register should only be considered preliminary
until the completion of additional and appropriate activities that may
include any or all of the techniques listed above and/or more robust
processes such as Cost Risk Assessment and Cost Estimate Validation
Process (CRA/CEVP) workshops. More detail about the WSDOT
workshops for CRA/CEVP is offered later in this document, and at: http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/
Page 14 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Identify Risk Events
How to Identify Risk
#1 Determine risk thresholds for the project (establish a minimum dollar
amount and time duration considered signifcant for the project under
evaluation).
#2 Focus on identifying large signifcant risks which affect project
objectives.
#3 Carefully document and describe risks in a risk register.
HELPFUL HINTS FOR RISK IDENTIFICATION
• Determine, for your project, what constitutes “significant” risk.
• Thoroughly describe the risk – there is a form in the following pages
to help with this or you may create your own.
• Include specialty groups and/or other persons who may have
meaningful input regarding the challenges the project may face.
• Determine who “owns” the risk and who will develop a response.
Brainstorming - is an effective method. Brainstorming can range from a small informal project team
effort for simpler projects to a full-blown CEVP workshop. Effective brainstorming requires a skilled
facilitator, working together with the project team and specialists who can bring additional expertise.
Checklists and/or Questionnaires to `specialty groups - checklists/questionnaires are a quick
and easy-to-use technique but limited in nature; they only deal with the items on the list. Each project
is unique; hence a standard list will often not capture the project specifc risks of most concern.
Nonetheless a checklist/questionnaire can spark thinking prior to a more formal brainstorming process.
Examination of past similar projects - lessons learned from past projects help us to avoid repeating
mistakes; using past examples requires prudent and objective judgment, since a previous project may
be similar but is nonetheless different because each new project has unique requirements and features,
including uncertainties and risks.
WSDOT Lessons Learned website:http://eefmapps.wsdot.wa.gov/fmi/xsl/Lessons/Main.xsl?-db=DebriefReport&-lay=LessonWebForm&Mo
nthlyHighlight=Yes&-fnd
Combination of above methods and/or others - It is quite likely that for most projects a combination
of the above methods will be used to identify risks. The important thing is that once identifed the risks
are properly documented.
Figure 2-1 Blank template for documenting identifed risks (tailor to your needs).
Figure 2-2 Example of how template is used.
Figure 2-3 Risk Breakdown Structure for categorizing and organizing risks.
Figure 2-4 Example of risk identifcation using spreadsheet from Project Management Online
Guide found at:http://www.wsdot.wa.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-
Construction/Pre-Construction_fles/slide0001.htm
Risk Identifcation
Table 2.1
Project Risk Management Guidance for WSDOT Projects Page 15
July 2010
Chapter 2 Risk Identifcation
P
r
e
-
m
i
t
i
g
a
t
e
d
E
X
A
M
P
L
E
O
N
L
Y
R i s k #
S t a t u s
D e p e n d e n c y
P r o j e c t P h a s e
S
u
m
m
a
r
y
D
e
s
c
r
i
p
t
i
o
n
T
h
r
e
a
t
a
n
d
/
o
r
O
p
p
o
r
t
u
n
i
t
y
D
e
t
a
i
l
e
d
D
e
s
c
r
i
p
t
i
o
n
o
f
R
i
s
k
E
v
e
n
t
(
S
p
e
c
i
f
ic
,
M
e
a
s
u
r
a
b
l
e
,
A
t
t
r
i
b
u
t
a
b
le
,
R
e
le
v
a
n
t
,
T
im
e
b
o
u
n
d
)
[
S
M
A
R
T
]
R
i
s
k
T
r
i
g
g
e
r
T y p e
P r o b a b i l i t y
C o r r e l a t i o n
(
1
)
(
2
)
(
3
)
(
5
)
(
6
)
(
7
)
(
8
)
(
9
)
(
1
0
)
[
1
0
a
]
(
1
1
)
T
h
r
e
a
t
M
I
N
0
.
5
0
$
M
M
A
X
7
.
0
0
$
M
M
o
s
t
L
ik
e
l
y
1
.
5
0
$
M
0
M
a
s
t
e
r
D
u
r
a
t
i
o
n
R
i
s
k
M
I
N
1
.
0
M
o
M
A
X
6
.
0
M
o
T
h
r
e
a
t
M
o
s
t
L
ik
e
l
y
2
.
0
M
o
R
i
s
k
I
m
p
a
c
t
(
$
M
o
r
M
o
)
A c t i v e
C o n s t r u c t i o n
A
l
t
h
o
u
g
h
s
i
g
n
i
f
i
c
a
n
t
p
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
s
a
r
e
t
o
b
e
c
o
n
d
u
c
t
e
d
t
h
e
r
e
i
s
s
t
i
l
l
s
o
m
e
r
i
s
k
o
f
u
n
d
i
s
c
o
v
e
r
e
d
s
u
b
s
u
r
f
a
c
e
c
o
n
t
a
m
i
n
a
n
t
s
i
n
t
h
i
s
p
r
o
j
e
c
t
.
I
f
t
h
e
s
e
c
o
n
t
a
m
i
n
a
n
t
s
a
r
e
d
i
s
c
o
v
e
r
e
d
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
i
t
c
a
n
i
m
p
a
c
t
b
o
t
h
c
o
s
t
a
n
d
s
c
h
e
d
u
l
e
.
B
e
c
a
u
s
e
o
f
t
h
e
n
a
t
u
r
e
o
f
t
h
e
p
r
o
j
e
c
t
c
o
r
r
i
d
o
r
t
h
e
a
r
e
a
o
f
g
r
e
a
t
e
s
t
c
o
n
c
e
r
n
i
s
i
n
t
h
e
l
a
t
t
e
r
h
a
l
f
o
f
t
h
e
p
r
o
j
e
c
t
,
h
e
n
c
e
o
u
r
e
x
p
o
s
u
r
e
i
s
p
r
i
m
a
r
i
l
y
d
u
r
i
n
g
t
h
e
s
e
c
o
n
d
y
e
a
r
o
f
c
o
n
s
t
r
u
c
t
i
o
n
.
D
u
r
i
n
g
C
o
n
s
t
r
u
c
t
i
o
n
-
d
i
s
c
o
v
e
r
y
o
f
s
u
b
s
u
r
f
a
c
e
H
a
z
a
r
d
o
u
s
M
a
t
e
r
i
a
l
s
S c h e d u l e
R
I
S
K
T
R
I
G
G
E
R
D
e
t
a
i
l
s
(
a
n
d
d
u
r
a
t
i
o
n
o
f
e
x
p
o
s
u
r
e
t
o
t
h
i
s
r
i
s
k
)
:
T
h
e
t
r
i
g
g
e
r
f
o
r
t
h
i
s
r
i
s
k
i
s
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
u
c
t
i
o
n
.
O
u
r
p
r
o
j
e
c
t
i
s
o
v
e
r
4
m
i
l
e
s
i
n
l
e
n
g
t
h
,
t
h
e
a
r
e
a
o
f
m
o
s
t
c
o
n
c
e
r
n
,
f
o
r
e
x
p
o
s
u
r
e
t
o
u
n
k
n
o
w
n
s
u
b
s
u
r
f
a
c
e
m
a
t
e
r
i
a
l
s
,
i
s
i
n
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
;
t
h
i
s
c
o
n
s
t
r
u
c
t
i
o
n
i
s
e
x
p
e
c
t
e
d
t
o
o
c
c
u
r
i
n
t
h
e
f
i
n
a
l
1
2
m
o
n
t
h
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
(
~
M
a
r
c
h
2
0
1
5
t
o
M
a
r
c
h
2
0
1
6
)
.
R
i
s
k
M
a
t
r
i
x
N
O
T
E
S
:
T
h
i
s
r
i
s
k
h
a
s
b
e
e
n
d
i
s
c
u
s
s
e
d
f
o
r
s
o
m
e
t
i
m
e
a
n
d
o
u
r
c
o
n
c
e
r
n
s
a
r
e
k
n
o
w
n
b
y
m
a
n
a
g
e
m
e
n
t
a
n
d
r
e
g
i
o
n
a
l
s
t
a
k
e
h
o
l
d
e
r
s
.
P
O
S
S
I
B
L
E
R
E
S
P
O
N
S
E
S
T
R
A
T
E
G
I
E
S
T
O
E
X
P
L
O
R
E
:
(
1
)
e
v
e
n
t
h
o
u
g
h
a
t
h
o
r
o
u
g
h
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
i
s
p
l
a
n
n
e
d
w
e
m
a
y
w
a
n
t
t
o
g
o
a
b
o
v
e
a
n
d
b
e
y
o
n
d
,
p
a
r
t
i
c
u
l
a
r
l
y
w
h
e
n
i
n
v
e
s
t
i
g
a
t
i
n
g
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
t
h
i
s
p
r
o
j
e
c
t
;
(
2
)
i
n
v
e
s
t
i
g
a
t
e
t
h
e
u
s
e
o
f
G
r
o
u
n
d
P
e
n
e
t
r
a
t
i
o
n
R
a
d
a
r
;
(
3
)
l
o
o
k
a
t
s
t
r
a
t
e
g
i
e
s
f
o
r
r
e
d
u
c
i
n
g
p
r
o
j
e
c
t
f
o
o
t
p
r
i
n
t
s
o
a
s
t
o
m
i
n
i
m
i
z
e
a
r
e
a
w
e
a
r
e
d
i
s
t
u
r
b
i
n
g
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
.
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
C o s t
3
0
%
C N S 4 0
V
H
HML
V
L
V
L
L
M
H
V
H
I
m
p
a
c
t
P r o b a b i l i t y
S
Þ
L
C
I
I
I
C
Þ
r
o
v
l
d
e
a
w
e
l
l
w
r
l
L
L
e
n
d
e
L
a
l
l
e
d
d
e
s
c
r
l
p
L
l
o
n
o
f
L
h
e
8
l
s
k
L
v
e
n
L
.
W
h
a
L
l
s
L
h
e
s
p
e
c
l
f
l
c
l
s
s
u
e
o
f
c
o
n
c
e
r
n
?
M
L
A
S
U
k
A
8
L
L
Þ
r
o
b
a
b
l
l
l
L
y
o
f
8
l
s
k
L
v
e
n
L
C
c
c
u
r
l
n
g
?
C
o
n
s
e
q
u
n
c
e
l
f
l
L
d
o
e
s
C
c
c
u
r
?
(
l
m
p
a
c
L
L
o
c
o
s
L
a
n
d
s
c
h
e
d
u
l
e
)
A
1
1
k
I
8
U
1
A
8
L
L
W
h
a
L
w
l
l
l
L
r
l
g
g
e
r
(
c
a
u
s
e
)
L
h
l
s
r
l
s
k
?
P
o
w
d
o
w
e
k
n
o
w
?
W
h
o
o
w
n
s
L
h
l
s
r
l
s
k
?
k
L
L
L
V
A
N
1
W
h
y
l
s
L
h
l
s
r
l
s
k
l
m
p
o
r
L
a
n
L
L
o
o
u
r
p
r
o
[
e
c
L
?
W
l
l
l
l
L
l
m
p
a
c
L
p
r
o
[
e
c
L
o
b
[
e
c
L
l
v
e
s
?
l
s
l
L
c
r
l
L
l
c
a
l
?
1
I
M
L
8
C
U
N
D
8
l
s
k
s
h
a
v
e
a
"
s
h
e
l
f
l
l
f
e
"
-
L
h
a
L
l
s
o
u
r
p
r
o
[
e
c
L
l
s
n
o
L
e
x
p
o
s
e
d
L
o
s
p
e
c
l
f
l
c
r
l
s
k
e
v
e
n
L
s
l
n
d
e
f
l
n
L
e
l
y
-
w
h
e
n
a
r
e
w
e
a
L
r
l
s
k
?
Þ
C
1
L
N
1
I
A
L
k
L
S
Þ
C
N
S
L
A
C
1
I
C
N
S
?
l
f
p
o
L
e
n
L
l
a
l
m
l
L
l
g
a
L
l
o
n
s
L
r
a
L
e
g
l
e
s
a
r
e
m
e
n
L
l
o
n
e
d
b
e
s
u
r
e
L
o
c
a
p
L
u
r
e
L
h
e
m
s
o
L
h
e
y
c
a
n
b
e
m
o
r
e
f
u
l
l
y
e
x
p
l
o
r
e
d
l
a
L
e
r
.
Page 16 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
?
?
P
r
e
-
m
i
t
i
g
a
t
e
d
E
X
A
M
P
L
E
O
N
L
Y
R i s k #
S t a t u s
D e p e n d e n c y
P r o j e c t P h a s e
S
u
m
m
a
r
y
D
e
s
c
r
i
p
t
i
o
n
T
h
r
e
a
t
a
n
d
/
o
r
O
p
p
o
r
t
u
n
i
t
y
D
e
t
a
i
l
e
d
D
e
s
c
r
i
p
t
i
o
n
o
f
R
i
s
k
E
v
e
n
t
(
S
p
e
c
i
f
i
c
,
M
e
a
s
u
r
a
b
l
e
,
A
t
t
r
i
b
u
t
a
b
l
e
,
R
e
l
e
v
a
n
t
,
T
i
m
e
b
o
u
n
d
)
[
S
M
A
R
T
]
R
i
s
k
T
r
i
g
g
e
r
T y p e
P r o b a b i l i t y
C o r r e l a t i o n
(
1
)
(
2
)
(
3
)
(
5
)
(
6
)
(
7
)
(
8
)
(
9
)
(
1
0
)
[
1
0
a
]
(
1
1
)
T
h
r
e
a
t
M
I
N
0
.
5
0
$
M
M
A
X
7
.
0
0
$
M
M
o
s
t
L
i
k
e
l
y
1
.
5
0
$
M
0
M
a
s
t
e
r
D
u
r
a
t
i
o
n
R
i
s
k
M
I
N
1
.
0
M
o
M
A
X
6
.
0
M
o
T
h
r
e
a
t
M
o
s
t
L
i
k
e
l
y
2
.
0
M
o
R
I
S
K
T
R
I
G
G
E
R
D
e
t
a
i
l
s
(
a
n
d
d
u
r
a
t
i
o
n
o
f
e
x
p
o
s
u
r
e
t
o
t
h
i
s
r
i
s
k
)
:
T
h
e
t
r
i
g
g
e
r
f
o
r
t
h
i
s
r
i
s
k
i
s
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
u
c
t
i
o
n
.
O
u
r
p
r
o
j
e
c
t
i
s
o
v
e
r
4
m
i
l
e
s
i
n
l
e
n
g
t
h
,
t
h
e
a
r
e
a
o
f
m
o
s
t
c
o
n
c
e
r
n
,
f
o
r
e
x
p
o
s
u
r
e
t
o
u
n
k
n
o
w
n
s
u
b
s
u
r
f
a
c
e
m
a
t
e
r
i
a
l
s
,
i
s
i
n
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
;
t
h
i
s
c
o
n
s
t
r
u
c
t
i
o
n
i
s
e
x
p
e
c
t
e
d
t
o
o
c
c
u
r
i
n
t
h
e
f
i
n
a
l
1
2
m
o
n
t
h
s
o
f
c
o
n
s
t
r
u
c
t
i
o
n
(
~
M
a
r
c
h
2
0
1
5
t
o
M
a
r
c
h
2
0
1
6
)
.
R
i
s
k
M
a
t
r
i
x
N
O
T
E
S
:
T
h
i
s
r
i
s
k
h
a
s
b
e
e
n
d
i
s
c
u
s
s
e
d
f
o
r
s
o
m
e
t
i
m
e
a
n
d
o
u
r
c
o
n
c
e
r
n
s
a
r
e
k
n
o
w
n
b
y
m
a
n
a
g
e
m
e
n
t
a
n
d
r
e
g
i
o
n
a
l
s
t
a
k
e
h
o
l
d
e
r
s
.
P
O
S
S
I
B
L
E
R
E
S
P
O
N
S
E
S
T
R
A
T
E
G
I
E
S
T
O
E
X
P
L
O
R
E
:
(
1
)
e
v
e
n
t
h
o
u
g
h
a
t
h
o
r
o
u
g
h
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
i
s
p
l
a
n
n
e
d
w
e
m
a
y
w
a
n
t
t
o
g
o
a
b
o
v
e
a
n
d
b
e
y
o
n
d
,
p
a
r
t
i
c
u
l
a
r
l
y
w
h
e
n
i
n
v
e
s
t
i
g
a
t
i
n
g
t
h
e
l
a
s
t
1
.
5
m
i
l
e
s
o
f
t
h
i
s
p
r
o
j
e
c
t
;
(
2
)
i
n
v
e
s
t
i
g
a
t
e
t
h
e
u
s
e
o
f
G
r
o
u
n
d
P
e
n
e
t
r
a
t
i
o
n
R
a
d
a
r
;
(
3
)
l
o
o
k
a
t
s
t
r
a
t
e
g
i
e
s
f
o
r
r
e
d
u
c
i
n
g
p
r
o
j
e
c
t
f
o
o
t
p
r
i
n
t
s
o
a
s
t
o
m
i
n
i
m
i
z
e
a
r
e
a
w
e
a
r
e
d
i
s
t
u
r
b
i
n
g
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
.
d
i
s
c
o
v
e
r
y
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
C o s t
3
0
%
C N S 4 0
S c h e d u l e
A c t i v e
C o n s t r u c t i o n
A
l
t
h
o
u
g
h
s
i
g
n
i
f
i
c
a
n
t
p
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
s
i
t
e
i
n
v
e
s
t
i
g
a
t
i
o
n
s
a
r
e
t
o
b
e
c
o
n
d
u
c
t
e
d
t
h
e
r
e
i
s
s
t
i
l
l
s
o
m
e
r
i
s
k
o
f
u
n
d
i
s
c
o
v
e
r
e
d
s
u
b
s
u
r
f
a
c
e
c
o
n
t
a
m
i
n
a
n
t
s
i
n
t
h
i
s
p
r
o
j
e
c
t
.
I
f
t
h
e
s
e
c
o
n
t
a
m
i
n
a
n
t
s
a
r
e
d
i
s
c
o
v
e
r
e
d
d
u
r
i
n
g
c
o
n
s
t
r
u
c
t
i
o
n
i
t
c
a
n
i
m
p
a
c
t
b
o
t
h
c
o
s
t
a
n
d
s
c
h
e
d
u
l
e
.
B
e
c
a
u
s
e
o
f
t
h
e
n
a
t
u
r
e
o
f
t
h
e
p
r
o
j
e
c
t
c
o
r
r
i
d
o
r
t
h
e
a
r
e
a
o
f
g
r
e
a
t
e
s
t
c
o
n
c
e
r
n
i
s
i
n
t
h
e
l
a
t
t
e
r
h
a
l
f
o
f
t
h
e
p
r
o
j
e
c
t
,
h
e
n
c
e
o
u
r
e
x
p
o
s
u
r
e
i
s
p
r
i
m
a
r
i
l
y
d
u
r
i
n
g
t
h
e
s
e
c
o
n
d
y
e
a
r
o
f
c
o
n
s
t
r
u
c
t
i
o
n
.
D
u
r
i
n
g
C
o
n
s
t
r
u
c
t
i
o
n
-
d
i
s
c
o
v
e
r
y
o
f
s
u
b
s
u
r
f
a
c
e
H
a
z
a
r
d
o
u
s
M
a
t
e
r
i
a
l
s
R
i
s
k
I
m
p
a
c
t
(
$
M
o
r
M
o
)
V
H
HM
L
V
L
V
L
L
M
H
V
H
I
m
p
a
c
t
P r o b a b i l i t y
Project Risk Management Guidance for WSDOT Projects Page 17
July 2010
Chapter 2 Risk Identifcation
Blank Template For Documenting Identifed Risks (Tailor to Your Needs)
Figure 2-1
Project Title: CN Duration Estimate Risk ID Sheets.xls
Project Manager: PE Estimate
Date Risk Identified: RW Estimate
CN Estimate
Parameters for
Pre-mitigated or Post mitigated ? Monte-Carlo Modeling
R
i
s
k
#
S
t
a
t
u
s
D
e
p
e
n
d
e
n
c
y
P
r
o
j
e
c
t
P
h
a
s
e
Summary
Description
Threat and/or
Opportunity
Detailed Description of Risk Event
(Specific, Measurable, Attributable, Relevant,
Timebound) [SMART]
Risk Trigger
T
y
p
e
P
r
o
b
a
b
i
l
i
t
y
C
o
r
r
e
l
a
t
i
o
n
(1) (2) (3) (5) (6) (7) (8) (9) (10) [10a] (11)
Threat MIN
MAX
Most Likely
0Master Duration Risk
MIN
MAX
Threat Most Likely
Supplemental notes about this risk event
Risk Trigger Details: Risk Matrix
Risk Owner:
Risk Breakdown Structure # (RBS#)
Work Breakdown Stucture # (WBS#)
Critical Path (yes or no)
Response Actions (action to be taken)
Action by date:
Status review date:
Status review date:
ADDITIONAL NOTES:
Actions to implement strategy:
What needs to be done? Who will do it? Due date?
Risk Impact
($M or Mo)
1
R
e
t
i
r
e
d
S
c
h
e
d
u
l
e
C
o
n
s
t
r
u
c
t
i
o
n
C
o
s
t
VH
H
M
L
VL
VL L M H VH
P
r
o
b
a
b
i
l
i
t
y
Impact
Page 18 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Example of How Template is Used
Figure 2-2
Project Title: Risk Management Guide Example CN Duration Estimate 10.0Mo Risk ID Sheets.xls
Project Manager: Scott Adams PE Estimate 2.0 $M
Date Risk Identified: 1-Feb-29 RW Estimate 8.0 $M
CN Estimate 30.0 $M
Parameters for
Pre-mitigated or Post mitigated ? Monte-Carlo Modeling
R
i
s
k
#
S
t
a
t
u
s
D
e
p
e
n
d
e
n
c
y
P
r
o
j
e
c
t
P
h
a
s
e
Summary
Description
Threat and/or
Opportunity
Detailed Description of Risk Event
(Specific, Measurable, Attributable, Relevant,
Timebound) [SMART]
Risk Trigger
T
y
p
e
P
r
o
b
a
b
i
l
i
t
y
C
o
r
r
e
l
a
t
i
o
n
(1) (2) (3) (5) (6) (7) (8) (9) (10) [10a] (11)
Threat MIN 0.25$M
MAX 2.00$M
Most Likely 0.50$M
0Master Duration Risk
MIN 1.0Mo
MAX 8.0Mo
Threat Most Likely 5.0Mo
Supplemental notes about this risk event
Risk Trigger Details: Should know by the ides of March. Risk Matrix
Risk Owner: Mr. Ule Givens
Risk Breakdown Structure # (RBS#) ENV 30.1
Work Breakdown Stucture # (WBS#) PC-18
Critical Path (yes or no) yes
Response Actions (action to be taken)
One of the best tools we have to avoid this risk is a concerted, committed & sustained effort
to address env. permits upfront & thoroughly. Including verification of jurisdictions
and parties of concern and clarify understanding and expectations of all parties.
To this end we will form a team to puruse this effort with appropriate representatives from
each permitting authority with review dates and commitments.
Action by date: February 30, 2929
Status review date: March 32, 2929
Status review date: April 31, 2929
ADDITIONAL NOTES:
Actions to implement strategy:
What needs to be done? Who will do it? Due date?
Communication with parties. Project Mgr NOW
Succession plan for staff changes. Business Mgr 2929-Feb
Decisions ASAP on design elements. Executive Oversight 2929-March
Risk Impact
($M or Mo)
1
R
e
t
i
r
e
d
70%
Permits and
Permit Appeals
S
c
h
e
d
u
l
e
P
r
e
-
c
o
n
s
t
r
u
c
t
i
o
n
Complex project, might require additional time (longer than
average) to review. Potential agency staff changes. Tribal
issues includefishingrights, effects on fish and habitat, and
other environmental concerns.
Appeals can bemadeon any of themajor permits, whether
based on actual issues with thepermits or not. Thefollowing
specific issues werehighlighted:
• Shoreline permits from various jurisdictions are of particular
concern shorelinepermits areeasy to challengeand typically
result in significant delays. Thereis aprocess to weed out
frivolous appeals.
• New NPDES outfalls (appealable)
• HPA issues with WDFW
Coast Guard permits for THE channel.
Determination
decisions by several
agencies.
Revisions to our
estimated areas of
impact.
C
o
s
t
VH
H $,Mo
M
L
VL
VL L M H VH
Impact
P
r
o
b
a
b
i
l
i
t
y
Project Risk Management Guidance for WSDOT Projects Page 19
July 2010
Chapter 2 Risk Identifcation
Risk Breakdown Structure
Figure 2-3a
Level 1 Project Risk
--------------------
----
Level 2
Environmental &
Hydraulics
Structures & Geotech Design / PS&E Right-of-Way (including
Access and Acquisition)
Utilities Railroad Partnerships and
Stakeholders
Management / Funding Contracting and
Procurement
Construction
ENV STG DES ROW UTL RR PSP MGT CTR CNS
--------------------
----------
ENV 10
NEPA/SEPA Documentation
Completion (incl. Section 4f,
etc.)
----------------
NEPA/SEPA Challenges
STG 10
Potential Changes to
Structures Design (Bridge
Superstructure, Retaining
Walls)
DES 10
Potential Changes to roadway design
(including vertical and/or horizontal
alignment, earthwork, pavement,
etc.)
ROW 10
Issues Associated with
Development of ROW Plan
UTL 10
Utility Design Coordination
and Agreements
RR 10
Railroad Design
Coordination and
Agreements
PSP 10
Tribal Issues
MGT 10
Change in Project Managers
and/or other key Leadership
CTR 10
Change in Project Delivery
Method
CNS 10
Traffic Control and Staging
Issues (MOT/WZTC)
ENV 20
ESA Issues (incl.
consultation, Biologic
Assessments/Biological
Opinions, Fish Passage)
STG 20
Potential Changes to
Geotechnical Design
Foundations, Liquefaction,
Mitigation, etc.
------------------ Challenging
Geotech Conditions
DES 20
Approval of Design Deviations
----------------
Changes to roadway design criteria
(i.e. shoulder width, sight distance,
etc.)
ROW 20
Uncertainty in Future ROW
Escalation Rate (Project-
Specific, including change in
land use, urbanization, etc.)
UTL 20
Utility relocations and
conflicts
RR 20
Railroad Coordination during
construction (flagging, work
restrictions, work windows,
etc.)
PSP 20
Public Involvement Issues
-------------------------
Other Interagency
Agreements (i.e. Sound
Transit, USFS, cities,
counties, etc.)
MGT 20
Delayed Decision Making
CTR 20
Issues Related to Contract
Language (Contract
Packaging, Warranties,
Liquidated Damages, DBE,
Insurance/Bonding, etc.)
CNS 20
Construction Permitting
Issues (incl. work
restrictions)
ENV 30
Environmental Permitting
(incl. Appeals)
STG 30
Changes to Structural
Design Criteria (e.g.,
seismic)
DES 30
Changes to Architectural, CSS,
Landscape Design
ROW 30
Limited Access (Interchange
Justification Report - IJR,
Access Hearing, etc.)
RR 30
Contractor Right of Entry
Requirements
PSP 30
Additional Scope in
Response to Third Party
Concerns (e.g., artwork,
shared-use pathways,
intersection improvements,
etc.)
MGT 30
Availability of Funding / Cash
Flow Restrictions
CTR 30
Delays in Ad/Bid/Award
Process (Addenda, Protests,
etc.)
CNS 30
Work Windows (Weather,
Fish, etc.)
ENV 40
Archaeological/Cultural
Discoveries, historic property
impacts & mitigation
(Section 106)
DES 40
Projects by other agencies affected
by or affecting this project (design
coordination)
ROW 40
Managed Access (Appeal
Hearing, etc.)
MGT 40
Political/Policy Changes
CTR 40
Market Conditions (non-
competitive bidding
environment)
Lack of Qualified Bidders
CNS 40
Construction Schedule
Uncertainty (general,
including timing of award)
ENV 50
Hazardous Materials
Groundwater and Soil
Contamination (PE,
RW, CN)
DES 50
Potential Changes to Design of
Permanent Traffic Items (ITS,
Illumination, Intersection, etc.)
ROW 50
ROW Acquisition Issues
(condemnation, relocations,
demolitions, etc.)
MGT 50
State Workforce Limitations
CTR 50
Delays in Procurement of
Specialty Materials or
Equipment and associated
cost premiums
CNS 50
Marine/ Over Water
Construction Issues
ENV 60
Wetlands / Stream / Habitat
Mitigation
DES 60
Design / PS&E Reviews
----------------
Additional Scope Driven by Internal
Considerations (e.g., Maintenance,
Traffic Projections, Tolling, extend
project terminii, change to purpose
and need, etc.)
ROW 60
Additional ROW is required
(including full vs partial
takes): Temporary and
Permanent Access Breaks -
FHWA approval
-----------------
Construction / Subterranean
Easements
CTR 60
Contractor Non-
Performance
CNS 70
Earthwork Issues (re-use,
haul, disposal, etc.)
ENV 70
Stormwater, Potential
Changes to Flow Control or
Runoff Treatment/Hydraulic
Requirements
CTR 70
Availability of Specialty
Labor/Labor and/or
Productivity Disruptions
CNS 80
Coordination with Adjacent
Projects During Construction
ENV 80 Environmental
Impacts during Construction
(includng water quality,
TESC etc.)
CNS 90
Contractor Access / Staging
Coordination and
Constructability Issues
ENV 90
Permanent Noise Mitigation
CNS 100
Construction Accidents
ENV 900
Other Environmental Issues
STR 900
Other STR Issues
DES 900 Other
Design Issues
ROW 900
Other ROW Issues
UTL 900
Other UTL Issues
RR 900
Other RR Issues
PSP 900
Other PSP Issues
MGT 900
Other MGT Issues
CTR 900
Other CTR Issues
CNS 900
Other Construction Issues
(including unanticipated
change orders/claims)
-------------
L
e
v
e
l 3
Page 20 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Risk Breakdown Structure (Example of use)
Figure 2-3b
The RBS provides several functions and benefits to the project team and to management, including:
1) Consistency with taxonomy (wording);
2) Organizes risk events into common categories;
3) Helps to identify trends with respect to common usage of risk event categories & event types along with their probability and impact values;
4) Helps to identify common risk events among projects that the Region and HQ offices should be aware of due to their potential cumulative effects; e.g. negotiating agreements with agencies or other municipalities;
5) Provides a basis to work from for risk elicitors during CEVP workshops;
6) Provides a basis for development of independent risk surveys for those that are unable to attend a CEVP workshop.
This RBS serves as a starting point in assessing project risks in CEVP and CRA workshops; and also for smaller projects that may not conduct a formal workshop.
RBS CODE PROBABILITY
IMPACT
($) (TIME)
ENV 10.01 As a result of… 70% Ï$5M 8 weeks
ENV 10.02 Because of… 10% Ï$0.1M 6 months
ENV 10.03 Due to… 10% Ï$0.1M 4 months
public pressure and internal reviews
a challenge to the level of environmental documentation may
occur,
resulting in the need to prepare an EIS, adding scope and
cost and lengthening the schedule.
reviews by WSDOT Environmental
the design information may be deemed inadequate for
NEPA/SEPA approval
leading to additional design work, added cost, and schedule
delays.
the public involvement process a challenge to the NEPA/SEPA document may occur which would delay delivery of the EA document.
RISK TRIGGER
(CAUSE or PRECIPITATING EVENT)
RISK EVENT
CONSEQUENCE
(effect on project objectives)
Project Risk Management Guidance for WSDOT Projects Page 21
July 2010
Chapter 2 Risk Identifcation
Spreadsheet from Project Management Online Guide
Figure 2-4
Page 22 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2
Project Risk Management Guidance for WSDOT Projects Page 23
July 2010
Chapter 3 Qualitative Risk Analysis
Qualitative Risk Analysis assesses the impact and likelihood of the
identifed risks and develops prioritized lists of these risks for further
analysis or direct mitigation.
The team assesses each identifed risk for its probability of occurrence
and its impact on project objectives. Project teams may elicit assistance
from subject matter experts or functional units to assess the risks in their
respective felds. (WSDOT PMOG)
Qualitative analysis is often used as…
• an initial screening or review of project risks;
• when a quick assessment is desired;
• the preferred approach for some simpler and smaller projects where
robust and/or lengthy quantitative analysis is not necessary.
Qualitative - observations that do not involve measurements and numbers.
EXAMPLE the risk of a heavy rainstorm affecting our erosion control is
“Very High”.
Qualitative assessment - An assessment of risk relating to the qualities and
subjective elements of the risk –those that cannot be quantifed accurately.
Qualitative techniques include the defnition of risk, the recording of risk details
and relationships, and the categorization and prioritization of risk relative to
each other. SOURCE: Project Risk Analysis and Management Guide, 2004
APM Publishing
Qualitative analysis provides a convenient and “user-friendly” way to
identify, describe and characterize project risks.
Risk identifcation, as mentioned in the previous chapter, results in the
generation of a risk register. The risk register can be sizeable and it is
necessary to evaluate and prioritize the risk events identifed in the risk
register. Evaluation and prioritization is typically an iterative process and
can take place at various points in project development.
A thoroughly developed register of risks, that may affect project
objectives, is helpful. We sometimes fnd ourselves in situations where
moving forward is diffcult because of indecision. Identifying, describing,
and assessing project risks allow us to prioritize risks. Prioritization can
free us from indecision by providing specifc, documented risk events that
we can act on to shift the odds in favor of project success. Prioritizing
risks, which present the highest potential for signifcantly affecting project
objectives, gives project managers the information necessary to focus
project resources. Prioritization helps us make decisions in an uncertain
environment and address project risk in a direct and deliberate manner.
Page 24 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
Qualitative analysis utilizes relative degrees of probability and
consequence of each identifed project risk event in descriptive non-
numeric terms; see Figure 3-1 and Figure 3-2 for examples of qualitative
risk matrices. Qualitative analysis can provide a prioritized list of risks to
work on.
Project Risk Management Guidance for WSDOT Projects Page 25
July 2010
Chapter 3 Qualitative Risk Analysis
Qualitative Risk
Analysis
“ How to”
Page 26 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
How to perform Qualitative Risk Analysis
Once a risk is identifed, including a thorough description of the risk and
risk triggers, it can be characterized in terms of probability of occurrence
and the consequence if it does occur.
#1 Gather the project team and appropriate persons to discuss project
risk. Establish which of the qualitative risk matrices you intend to
use, defne the terms you plan to use (Very High, High, Medium,
Low…. Etc.).
#2 Review the risk information from the risk identifcation step.
#3 Discuss the risk with the group.
#4 Evaluate the likelihood of the risk occurring by asking the group “How
likely is it that this risk will occur?” Record the result that the group
agrees on.
#5 Evaluate the consequences if the risk does occur by asking the group
“What will be the impacts if this risk does occur?” Record the result
that the group agrees on.
#6 Prioritize the risks based on the results of the qualitative analysis.
If it is desirable the risks can also be group by category (i.e.
Environmental, Structures/Geotech) and ranked within each category.
HELPFUL HINTS FOR QUALITATIVE RISK ANALYSIS
• Invite appropriate participants (not too many not too few).
• Define terms.
• Stay focused – put a time limit on discussion if necessary.
• Record the results.
• Prioritize the risks based on the results.
Something to consider: those relatively new to risk analysis sometimes
claim, in exasperation, “This is nothing more than guessing”. This does
not represent the full actuality that assigning values for probability and
impact relies on the expertise and professional judgment of experienced
participants.
The determination of a value for the probability of occurrence and its
consequence to project objectives, if it occurs, is for many a new activity
and can seem strange at frst. In any feld, with experience, professionals
develop intuition and an ability to understand projects to a greater degree
than those not involved with project development and delivery. This
experience and intuition is extremely valuable –in a risk workshop forum
we surround ourselves with “wise counsel” to seriously and thoroughly
discuss the project. It might be helpful to examine the word “guess” and
compare it to other words such as ‘discernment’ and ‘judgment’ that more
appropriately describe risk assessment. The defnitions in the following
table come from the Merriam-Webster Online Dictionary/Thesaurus (with
edits).
Project Risk Management Guidance for WSDOT Projects Page 27
July 2010
Chapter 3 Qualitative Risk Analysis
Discernment
1: The quality of being able to grasp and comprehend what is obscure
: skill in discerning (insight and understanding); the process of
forming an opinion or evaluation by discerning and comparing
b: an opinion or estimate so formed; the capacity for judging;
the exercise of this capacity.
Synonyms Perception, Penetration, Insight, Acumen, Perception,
Penetration, Insight, and Acumen mean a power to see what is not
evident to the average mind. DISCERNMENT stresses accuracy;
PERCEPTION implies quick discernment; PENETRATION implies
a searching mind that goes beyond what is obvious or superfcial;
INSIGHT suggests depth of discernment coupled with understanding;
ACUMEN implies characteristic penetration combined with keen
practical judgment.
Judgment
a: The process of forming an opinion or evaluation by discerning and
comparing
b: An opinion or estimate so formed; a formal utterance of an
authoritative opinion; a position arrived at after consideration; an
idea that is believed to be true or valid without positive knowledge;
an opinion on the nature, character, or quality of something
Guess
To form an opinion from little or no evidence
Synonyms assume, conjecture, presume, speculate, suppose, surmise,
suspect, suspicion
Related Words gather, infer; hypothesize, theorize; believe, conceive,
expect, imagine, reckon
Decision
The act or process of deciding b: a determination arrived at after
consideration : ; report of a conclusion
A position arrived at after consideration
Synonyms conclusion, determination, diagnosis, judgment, resolution,
verdict.
Related Words mandate, fnding, ruling, sentence; choice, option,
selection
Page 28 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
EXAMPLES
ONLY
EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively)
Qualitative Risk List
count T/O RBS # Risk Title Probability Impact
a T ENV 30.1 Permits and Permit Appeals Medium High
b T UTL 20.1 Unidentifed Utility Conficts High Very High
c T STG 20.4 Change to Substructure Assumptions Very Low Low
d T ROW 40.1 Managed Access challenge Very High Low
WSDOT Project Risk Management – “How to guide” 3 Qualitative Risk Analysis rev 2009-April
6 of 10
Chapter 3 Qualitative Risk Analysis
EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively)
Qualitative Risk List
count
T/O RBS # Risk Title Probability Impact
a T ENV 30.1 Permits and Permit Appeals Medium High
b T UTL 20.1 Unidentified Utility Conflicts High Very High
c T STG 20.4 Change to Substructure Assumptions Very Low Low
d T ROW 40.1 Managed Access challenge Very High Low
Probability
(Likelihood)
Synonyms
Approximate
%
Very high Almost certain Very Sure >90%
High Likely Pretty Sure 70% - 90%
Medium Possible Maybe 30% - 70%
Low Unlikely Seldom 10% - 30%
Very Low Rare Improbable 90%
High Critical Strong 70% - 90%
Medium Moderate Average 30% - 70%
Low Slight Mild 10% - 30%
VH
H
M
L
VL
VL L M H VH
Impact
Probability and Impact Matrix
Very Low Very Little Very Mild 90%
High Likely Pretty Sure 80%
Medium Possible Maybe 50%
Low Unlikely Seldom 20%
Very Low Rare Improbable 10%
High Critical Strong 8%
Medium Moderate Average 4%
Low Slight Mild 2%
Very Low Very Little Very Mild