Developing the "Guide for the Process of Managing Risk on Rapid Renewal Projects" (2014)

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26 A p p e n d i x A Annotated Bibliography The following annotated bibliography was initially developed by members of the research team under a different contract for NCHRP Project 8-60, Guidebook on Risk Analysis Tools and Management Practices to Control Transportation Proj- ect Costs, and then amended for this research (with much of the content remaining the same). The research team used the following resources for the literature review: • General Internet search engines • Transportation Research Board’s TRIS (Transportation Research Information Systems) Online • Academic engineering databases, such as LexisNexis and Engineering Village 2 • Academic business databases, such as EBSCO Business Source Complete and Management and Organizational Studies • ASCE Civil Engineering database • PMI Virtual Library • Selected transportation agency websites Literature Review A Code of Practice for Risk Management of Tunnel Works. Interna- tional Tunnelling Insurance Group, Jan. 30, 2006. The intent of this code is to promote and secure best practice for min- imizing and managing risks associated with the design and construc- tion of tunnels and associated underground structures, including the renovation of existing underground structures. It describes the process for identifying risks and for determining their allocation between the parties to a contract and contract insurers, and it discusses the man- agement and control of risks through the use of risk assessments and risk registers. This code applies to the stages of tunnel works—project development, design, contract procurement for construction, and con- struction stages—their operation during any stipulated maintenance period, and the impact of their construction on third parties, including infrastructure. Abi-Karam, T. Managing Risk in Design–Build. AACE International Transactions, CDR.07, Morgantown, W.Va., 2001, pp. 7.1–7.5. This article provides an overview of the design–build method of proj- ect delivery, in which an owner contracts only with a design-builder, rather than the traditional method, in which an owner contracts with an architect, engineer, and contractor. The author proposes that there are inherent risks associated with design–build projects beyond those experienced on traditionally delivered projects and discusses each risk in detail. Ahmad, I. Contingency Allocation: A Computer-Aided Approach. AACE International Transactions, F.5, Morgantown, W.Va., 1992, pp. 5.1–5.5. This paper introduces a method for allocating contingency to individ- ual work packages. For each package, ratios of actual cost to estimated cost are calculated for the highest, most likely, and lowest values as determined by historical information. Using simulation software, the practitioner can then determine a most likely cost and allocate an asso- ciated contingency value to each individual package. Ali, R. The Application of Risk Management in Infrastructure Con- struction Projects. Cost Engineering Journal, Vol. 47, No. 8, Aug. 2005, pp. 20–27. According to this paper, risk management plan (RMP) methodology provides a logically consistent framework for managing risk. An RMP methodology is used in this article to formulate a risk management model, incorporating infrastructure project costs for construction bud- geting purposes, and applying it to the project to improve the evalua- tion and control of costs. Amirkhalili, R. Risk and Capital Budgeting. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1997, pp. 4.0.1–4.0.4. This paper presents a Monte Carlo simulation model using a spreadsheet and a personal computer. The paper demonstrates how managers can simulate the effect of changing the variables and examine the resultant range of the project NPV graphically. Barrazza, G. A., and R. A. Bueno. Cost Contingency Management. Journal of Management in Engineering, Vol. 23, No. 3, July 2007, pp. 140–146. In this article, the Monte Carlo simulation approach is recommended as part of a proposed methodology for cost contingency management, which also includes a heuristic for contingency assignment (allocation) Annotated Bibliography and Agency Contact List

27 among project activities, as long as the activities have some degree of uncertainty regarding their future costs. Bent, J. A. Evaluating and Calculating Contingency. AACE Inter­ national Transactions, RISK.02, Morgantown, W.Va., 2001, pp. 2.1–2.5. A method of calculating contingency using an SFC rating and a contin- gency chart is discussed in this paper. The data demonstrated in contin- gency charts are obtained from historical data, and the SFC rating (a percentage) is developed by calculating the total assessment of 25 factors comprising design, estimator performance, time, project conditions, and team experience. Bjornsson, H. C. Risk Analysis of Construction Cost Estimates. Pro­ fessional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1977, pp. 182–189. This paper briefly discusses the basics of risk simulation, and presents a computerized model for cost estimating that is designed to cope with the problems of correlation and interpretation. It explains how an esti- mate approach using probability is more beneficial than a single value or point estimate approach. Buchan, D. H. Risk Analysis—Some Practical Suggestions. Cost Engi­ neering Journal, Vol. 36, No. 1, Jan. 1994, pp. 29–34. This article suggests some practical methods and solutions in the field of risk management, based on the author’s experience in risk analysis work in the United Kingdom construction industry. He combines a logical approach and formal methodology with readily available computer soft- ware, including Lotus P-2-3 version 2.4, with add-ins @Risk 1.55, and What’s Best 1.6. Burger, R. Contingency: Quantifying the Uncertainty. Cost Engineer­ ing Journal, Vol. 45, No. 8, Aug. 2003, pp. 12–17. In this paper, the author defines two methods for determining contin- gency. Zastrozny’s method is used to calculate contingency; Simple Multi-Attribute Rating Technique (SMART) is used to obtain an uncer- tainty rating that, when used together with the calculated contingency, provides an estimate for the contingency needed on a particular project. Burroughs, S. E., and G. Juntima. Exploring Techniques for Contin- gency Setting. AACE International Transactions, EST.03, Morgan- town, W.Va., 2004, pp. 3.1–3.6. This paper discusses the following commonly used techniques for deter- mining contingency: predetermined percentage, expert’s judgment, risk analysis, and regression analysis. Based on the performance of each of these techniques, the author asserts that certain techniques are more accu- rately and appropriately used depending on the project risks involved. Caddell, C. P., S. R. Crepinsek, and G. P. Klanac. Risk Assessments: Value of the Process. AACE International Transactions, RISK.01, Morgantown, W.Va., 2004, pp. 1.1–1.6. Conducting cost and schedule risk assessments on projects has proven to be a valuable exercise. This paper suggests that using the right process can significantly increase the quality of the risk analysis and its results, and provide a number of other benefits to the project. If these assessments are conducted properly, management and the project team can capture the inherent value in the effort and improve their chances for success because key project risks are evaluated and mitigation steps are known. Caltrans. Project Risk Management Handbook. Office of Project Management Process Improvement, California Department of Trans- portation, Sacramento, June 2003. This is California Department of Transportation’s guide to risk and risk management. It describes the basic concepts and processes that guide risk management planning and implementation during project development. Caltrans. Project Risk Management Handbook: Threats and Oppor­ tunities, 2nd ed., rev. 0. Office of Statewide Project Management Improvement, California Department of Transportation, Sacra- mento, 2007. Directed to Caltrans department project managers, functional managers, and other staff engaged in the delivery of capital projects, this handbook is intended to provide its audience with a complete, uniform approach to managing project risks (both threats and opportunities). It describes the basic concepts and processes that guide planning and implementing of risk management during project development. An important purpose of the revision was to make the department’s present policy more accessible to the audience than the handbook’s first edition. Carrier, K. C. A System for Managing Escalation and Contingencies. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1977, pp. 324–336. This paper presents an approach to organizing, developing, maintaining, and reporting cost status situations on capital cost projects. The report- ing and simulation techniques described result in predictions of the forecast of final project cost which is continually varying. Cochrane, R. E. Using @Risk to Predict Project Costs. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1992, pp. F.3.1–F.3.5. This paper is an analysis of a search for a better way of estimating the cost of a project under current operating conditions. Information was used from several papers on risk analysis and from annual meetings, including papers about developing a modified approach to estimating using the @Risk personal computer program. Cohen, M. W., and G. R. Palmer. Project Risk Identification and Man- agement. AACE International Transactions, INT.01, Morgantown, W.Va., 2004, pp. 1.1–1.5. This paper recommends the use of the Critical Path Method (CPM) schedule as a mechanism to manage construction risk on a project. The project life cycle is defined and the author emphasizes the necessity to manage risks throughout the entire project life cycle using the CPM net- work to perform “what if” analyses to adjust a baseline schedule accord- ing to a set of risks brainstormed by the project team. Committee for Oversight and Assessment of U.S. Department of Energy Project Management, Board on Infrastructure and the Con- structed Environment, Division on Engineering and Physical Sci- ences, National Research Council of the National Academies. The Owner’s Role in Project Risk Management, National Academies Press, 2014. www.nap.edu/catalog/11183.html. This report was prepared as a summary of the most effective risk man- agement practices used by owner organizations in project management in the public and private sectors. The primary objective is to provide U.S. Department of Energy project directors with an understanding of (a) the risk management role of an owner’s representative member of a project management team, and (b) the knowledge needed for effective oversight of risk management activities that are delegated to contrac- tors. The document identifies major steps in a specific risk management process based on a proactive approach that requires owners to take a set of basic actions to manage risk. It emphasizes that successful risk man- agement must be performed by qualified personnel working within a project management process that includes review and approval by senior management.

28 Coppo, R. J. Risk Modeling with Influence Factors. AACE Interna­ tional Transactions, RISK.08, Morgantown, W.Va., 2003, pp. 8.1–8.2. The influence factor risk model is based on an interview process that asks a series of questions about the source of uncertainty in the esti- mate. This presentation shows how to model risk by assigning probabil- ity functions and associated costs to the influence factors. The model output results in the total cost of uncertainty. Using this approach to risk modeling puts the focus on the work process and how it introduces uncertainty in the estimate. Cost Engineering Terminology: AACE International Recommended Practice No. 10S­90. AACE International, Morgantown, W.Va., 2007. This publication contains terms that have been developed by various AACE International technical committees, special interest groups, or project teams. All terms have been subject to a thorough review process, followed by approval by the AACE International Technical Board. Por- tions of this document have been incorporated into the American National Standards Institute’s (ANSI) Standard No. Z94.x. Curran, K. M. Value-Based Risk Management (VBRM). Cost Engi­ neering Journal, Vol. 48, No. 2, Feb. 2006, pp. 15–22. As practiced in today’s varied applications, traditional risk manage- ment is typically defined as a process to identify, analyze, mitigate, and control risks and opportunities in decision making. Although such actions move the ball, they do little to carry the decision maker over the goal line. Two additional requirements of risk management are presented in this paper: benchmarking and grading. Incorpora- tion of these two attributes into traditional risk management practice produces a much-improved decision technology, value-based risk management. Curran, M. W. Range Estimating—Coping with Uncertainty. Profes­ sional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1976, pp. 366–372. This paper explains why conventional methods of estimating come up short and why uncertainty needs to be considered and methods need to be changed. This paper proposes the idea of range estimating, with in-depth information about how it is used and can be beneficial to coping with uncertainty. Curran, M. W. Range Estimating: Reasoning with Risk. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1988, pp. N.3.1–N.3.9. This paper explains why our current methods of estimating come up short because of the methods we use, not the people who are perform- ing these methods. It goes on to explain how we think about estimates and how we should think about estimates. del Cano, A. D., and M. P. de la Cruz. Integrated Methodology for Project Risk Management. Journal of Construction Engineering and Management, Vol. 128, No. 6, 2002, pp. 473–485. First, the article explains a complete or generic project risk manage- ment process to be undertaken by organizations with the highest level of risk management maturity in the largest and most complex con- struction projects. Next, factors influencing possible simplifications of the generic process are identified, and simplifications are proposed for some cases. Then the application to a real project is summarized. As a final validation, a Delphi analysis has been developed to assess the project risk management methodology explained here, and the results are presented. Dey, P. K. Project Risk Management: A Combined Analytic Hierarchy Process and Decision Tree Approach. Cost Engineering Journal, Vol. 44, No. 3, March 2002, pp. 13–26. This article demonstrates a quantitative approach to construction risk management through an analytic hierarchy process (AHP) and decision tree analysis. The entire project is classified to form a few work pack- ages. With the involvement of project stakeholders, risky work packages are identified. As all the risk factors are identified, their effects are quan- tified by determining probability (using AHP) and severity (guess esti- mate). Various alternative responses are generated, listing the cost implications of mitigating the quantified risks. Douglas, E. E. Contingency Management on DOE Projects. AACE International Transactions, RISK.03, Morgantown, W.Va., 2001, pp. 3.1–3.6. This paper defines contingency, outlines the elements of risk manage- ment, provides guidelines for the application of contingency to the project baseline, and proposes a standard process to establish, track, and control contingency on a DOE project. While the paper is spe- cific to DOE projects, the definitions and basic guidelines can easily be used by other industries to supplement their methods of contin- gency management. Eschenbach, T. G. Risk Management Through Sensitivity Analysis. Professional Practice Guide to Risk, AACE International, Morgan- town, W.Va., 1996, pp. 4.1–4.6. This paper compares several approaches to identifying and describ- ing key risks and to defining cost/time/risk trade-offs. The paper goes in depth, describing the advantages and disadvantage of using sensi- tivity analysis. FHWA. Major Project Program Cost Estimating Guidance. U.S. Department of Transportation, Jan. 2007, pp. 1–12. This guidance document explains key principals used when preparing a program cost estimate at any stage of a major project. It also explains the cost elements that should be included when preparing a program cost estimate for a major project and how program cost estimates should be used throughout the project. Gunham, S., and D. Arditi. Budgeting Owner’s Construction Con- tingency. Journal of Construction Engineering and Management, Vol. 133, No. 7, June 2007, pp. 492–497. In this paper, the authors suggest that the common practice of allocat- ing a fixed owner contingency (e.g., 10% of the contract value) to all projects contracted out by an owner is not appropriate. Instead, they propose a methodology in which the owner (1) analyzes historical proj- ect data; (2) identifies the line items that are problematic; (3) takes the necessary measures at the preconstruction stage to streamline these line items with respect to site conditions, time constraints, constructability issues, and project scope; and (4) budgets contingency funds based on this information. Hackney, J. W. Applied Contingency Analysis. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1985, pp. B.2.1–B.2.4. This paper describes what contingency is and why it is so important to a project’s performance. It then talks about the different ways in which contingency will help a project and how it can be used or analyzed at different points in the project. Hastak, M., and E. J. Baim. Risk Factors Affecting Management and Maintenance Cost of Urban Infrastructure. Journal of Infrastructure Systems, Vol. 7, No. 2, 2001, pp. 67–76. This paper identifies risk factors that influence the cost-effective man- agement, operation, and maintenance of bridges, roads and highways, and subway stations, as well as how and when in the project life cycle the identified risk factors affect the associated facility costs.

29 Hecht, H., and D. Niemeier. Too Cautious? Avoiding Risk in Transpor- tation Project Development. Journal of Infrastructure Systems, Vol. 8, No. 1, 2002, pp. 20–28. This research paper explores the relationship between risk-averse behavior (i.e., engineering judgment applied to certain types of situa- tional problems) and transportation project development time/cost. It concludes that risk-averse behavior by project managers does not sig- nificantly affect project development time or cost and that the required project development process is simply too rigid and bureaucratic to allow an individual project manager to significantly reduce the time or cost of project development. Highways Agency Framework for Business Risk Management. High- ways Agency, UK Department of Transport, London, 2001, pp. 1–9. This document sets out the UK Highways Agency’s framework for risk management. It outlines both the agency’s approach to risk man- agement and the associated roles and responsibilities of the agency’s colleagues. Humphreys, K. K. Risk Analysis and Contingency Determination Using Range Estimating, AACE International Recommended Practice No. 41R­08, TCM Framework: 7.6–Risk Management. AACE Interna- tional, Morgantown, W.Va., 2008. This document offers guidelines for analyzing risk by using range esti- mating, which most practitioners would consider a reliable practice and would recommend be considered for use when applicable. This text aims to improve communication of the meaning of the practice called range estimating because its authors have found that methods being called range estimating in industry do not meet the definition in this document. The authors urge practitioners to confirm that any use of the term meets the definition found here. Jarvis, J. A. Capital Estimates and Cost Control for a Long Term Construction Program. AACE Transactions, AACE International, Morgantown, W.Va., 1976, pp. 63–69. The purpose of this paper is to examine, in context, the cost engineering problems associated with long-term strategies. These include projects that have taken more than 10 years. Jordan, D. W. Managing Change: Making the Most of Contingency. Professional Practice Guide to Risk, AACE International, Morgan- town, W.Va., 1989, pp. Q.1.1–Q.1.9. This paper describes a trend program that provides a means of identify- ing and evaluating the impact which changes have on the cost and sched- ule of a capital project. The program relies on the involvement and cooperation of all members of the project team. The resulting effort pro- vides management with an up-to-date report of the status of the project, a projection of the direction it is taking, and a means of documenting what changes have occurred to cause variations from the original plan. Kageyama, K. Probabilistic Cost Estimate Tree Analysis—Computer Program. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1979, pp. C.3.1–C.3.6. This paper describes (a) the probabilistic cost estimate tree (PCET) and risk data preparation required to use the tree; (b) the PCET com- puter program flow diagram with algorithm; and (c) a sample of a typical operation. Kaliprasad, M. Proactive Risk Management. Cost Engineering Jour­ nal, Vol. 48, No. 12, Dec. 2006, pp. 26–36. This article provides an overview of risk management, its concepts, components, and the associated terminology and methodology, together with different views on how risk management integrates into project management. Karlson, J. T., and J. Lereim. Management of Project Contingency and Allowance. Cost Engineering Journal, Vol. 47, No. 9, Sept. 2005, pp. 24–29. Cost overruns in engineering projects occur frequently because a cer- tain margin of risk is inherent in all projects. As a result, risk man- agement is continuously gaining the attention of the engineering industries. Reserves or contingencies represent the additional funding required to account for the cost of risk. However, many corporations have different practices for estimating and managing such reserves. This article presents several techniques and methods for estimating such reserves. Kraemer, G. T. Quick and Effective Risk Analysis. Professional Prac­ tice Guide to Risk, AACE International, Morgantown, W.Va., 1977, pp. 177–181. This paper describes a different kind of approach to risk analysis. Kumaraswamy, M. M. Appropriate Appraisal and Apportionment of Megaproject Risks. Journal of Professional Issues in Engineering Edu­ cation and Practice, Vol. 123, No. 2, 1997, pp. 51–56. This paper develops and describes strategies for appraising the synergistic potential and risk carrying capacities of prospective project participants, and for identifying, analyzing, and responding to risks by an appropriate appointment to those best equipped and motivated to control them. Lewis, L. Range Estimating: Managing Uncertainty. AACE Bulletin, Nov.–Dec. 1977, pp. 205–207. This paper describes range estimating. It also describes how and why it should be used. Range estimating quantifies the uncertainty of an esti- mate by addressing itself to the uncertainties of the critical elements of the estimate. Lorance, R. B., and R. V. Wendling. Techniques for Developing Cost Risk Analysis Models. AACE International Transactions, RISK.02, Morgantown, W.Va., 1999, pp. 2.1–2.6. This paper defines Monte Carlo simulation and discusses how the tech- nique can be used to develop risk analysis models to manage risk and predict cost overruns. Lukas, J. A. Managing Risk on Capital Projects. AACE Transactions, AACE International, Morgantown, W.Va., 1995, pp. 7.1–7.4. This paper discusses risk management, covers the process phases that incorporate risk management, and then focuses on experiences with capital projects at Kodak in using risk management. Specific topics include the risk analysis process and how it is used to determine project contingency and the potential range of cost outcomes. Case histories comparing risk projections with actual project costs are reviewed, along with key lessons from more than 3 years of using risk management. Mathur, K. S. Risk Analysis in Capital Cost Estimating. Cost Engineer­ ing Journal, Vol. 31, No. 8, Aug. 1989, pp. 9–16. This article presents an approach to the analysis of historical cost data and the prediction of costs, which takes into account risk and contin- gency involved in budgeting and cost control. The method is a com- puter model based on statistical and operational research techniques. Marshall, H. E., R. E. Chapman, and C. J. Leng. Risk Mitigation Plan for Optimizing Protection of Constructed Facilities. Cost Engineer­ ing Journal, Vol. 46, No. 8, Aug. 2004, pp. 26–33. This article describes a three-step protocol for developing a risk- mitigation plan for optimizing protection of constructed facilities. Step 1 assesses the risk of uncertain, costly, man-made and natural hazards, including terrorism, floods, earthquakes, and fire. Step 2 identifies alter- native risk-mitigation strategies, used singly or in combination, to reduce

30 the expected value of damages from such events. Step 3 evaluates the life-cycle economic effectiveness of alternative mitigation strategies. Mlakar, P. F., and L. M. Bryant. Direct Range Cost Estimating. Profes­ sional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1990, pp. K.4.1–K.4.4. This paper describes the direct range of cost estimating and how to fix the shortcomings of range estimating. It also goes into detail about how range estimating works and why it is popular despite its shortcomings. Molenaar, K. R. Programmatic Cost Risk Analysis for Highway Mega- Projects. Journal of Construction Engineering and Management, Vol. 131, No. 3, 2005, pp. 343–353. This paper presents a methodology developed by the Washington State Department of Transportation for its cost estimating validation process. Nine case studies, with a mean cumulative value of over $22 billion, are presented and analyzed. Programmatic risks are summarized as eco- nomic, environmental, third-party, right-of-way, program management, geotechnical, design process, construction, and other minor risks. Molenaar, K. R., J. E. Diekmann, and D. B. Ashley. Guide to Risk Assess­ ment and Allocation for Highway Construction Management. Report No. FHWA-PL-06-032. FHWA, U.S. Department of Transportation, 2006. This instructional report was developed by FHWA to help raise aware- ness of risk management techniques and to begin the process of incor- porating elements of risk management into the institutional structures of DOTs. The goal of the report is to raise awareness within the highway construction management community that risk can be understood and managed. The more strategic goal is that DOTs and contractors, as appropriate, will actually identify, assess, analyze, mitigate, allocate, and monitor risk in a structured and cooperative way. Moselhi, O. Risk Assessment and Contingency Estimating. AACE International Transactions, D&RM/A.06, Morgantown, W.Va., 1997, pp. 6.1–6.6. This paper describes the common sources of risk associated with the delivery of engineering, procurement, and construction projects. It pro- vides a basic anatomy for project risk. This paper focuses primarily on contingency as a vehicle for managing this risk. The paper presents a direct quantitative method for contingency estimation and avoiding time-consuming analyses. Nabors, J. K., and P. A. Owen. Quantifying Risks in Capital Estimates. Professional Practice Guide to Risk, AACE International, Morgan- town, W.Va., 1983, pp. B.5.1–B.5.7. This article explains why traditional cost-estimating techniques cannot be used across all projects. It goes in depth on how to identify risk and uses an example of risk analysis and construction on a chemical plant. Nassar, K. Cost Contingency Analysis for Construction Projects Using Spreadsheets. Cost Engineering Journal, Vol. 44, No. 9, Sept. 2002, pp. 26–31. The purpose of this article is to present a quantitative approach for per- forming contingency analysis for a construction project using basic spreadsheet techniques. The approach is applied to a practical case study, and a sensitivity analysis of the results is carried out. Practicing contrac- tors can use the developed spreadsheet to analyze cost overrun risks. Neil, J. M. Management of Project Risks. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1989. This paper is an introduction to management of risks associated with a construction project, specifically those faced by the contrac- tor. The principles involved generally apply to management of risk associated with any endeavor. This paper is a condensation of the report Management of Project Risk, prepared by the Construction Industry Institute. Noor, I., and R. L. Tichacek. Contingency Misuse and Other Risk Management Pitfalls. AACE International Transactions, RISK.04, Morgantown, W.Va., 2004, pp. 4.1–4.7. In this article, the authors assert that the methodology that is to be used for the derivation of contingency funds should be based on the level of risks on a project. Contingency funds should be used to address specific risks as they occur along the project execution schedule. Any unspent funds should be returned for possible use on other projects or to fund other activities. Based on the results of the project risk assessments, contingency drawdown plots could be used to manage the contingency funds and to improve the project budgetary process. Paek, J. H. Contractor Risks in Conceptual Estimating. Cost Estimat­ ing Journal, Vol. 36, No. 12, Dec. 1994, pp. 19–22. This article describes the difficulties of bidding a job on the basis of conceptual drawings. It explains the major problems with the estimate and goes in depth on how to bid successfully and be competitive. Parsons, A. Touran, and Golder Associates. Risk Analysis Methodolo­ gies and Procedures. Federal Transit Administration, U.S. Depart- ment of Transportation, 2004. http://www1.coe.neu.edu/~atouran/ FTA%20White%20Paper%20on%20Risk%20Analysis-Final%20 June%202004.pdf. Accessed Aug. 21, 2013. This report describes procedures for performing risk analysis, which consists of two parts: (a) risk assessment, which includes identification and evaluation of risks in terms of their likelihood of occurrence and their probable consequences; and (b) risk management, which involves taking cost-effective actions to reduce risks and to realize opportunities. Piekarski, J. A. Simplified Risk Analysis in Project Economics. Profes­ sional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1984, pp. D.5.1–D.5.3. The purpose of this paper is to demonstrate the use of a simplified method of incorporating risk analysis in project economics to bridge the technology gap and bring the decision maker in direct contact with the critical uncertainties of the project. This paper is meant to present another tool that can be used, not replace the computer model. Ramgopal, M. Project Uncertainty Management. Cost Engineering Journal, Vol. 45, No. 12, Dec. 2003, pp. 12–24. This article argues that all current project risk management processes induce a restricted focus on the management of project uncertainty because the term risk encourages a threat perspective. The article dis- cusses the reasons for this view and argues that a focus on uncertainty rather than risk could enhance project risk management, in terms of designing desirable futures and planning how to achieve them. Regan, S. T. Risk Management Implementation and Analysis. AACE International Transactions, RISK.10, Morgantown, W.Va., 2003, pp. 10.1–10.5. The author of this paper defines the term risk and provides a guideline for developing a risk management program capable of being imple- mented and analyzed on any type of project. Ripley, P. W. Contingency! Who Owns and Manages It? AACE Interna­ tional Transactions, CSC.08, Morgantown, W.Va., 2004, pp. 8.1–8.4. This paper was used as a basis for discussion at the 2004 annual meeting of AACE International. The author defines contingency and discusses the various ways in which different project players use reserve funds. Risk Management Committee, Association for the Advancement of Cost Engineering International. AACE International’s Risk

31 Management Dictionary. Cost Engineering Journal, Vol. 42, No. 4, April 2000, pp. 28–31. This article provides 50 definitions of terms related to the subject of risk management. It was originally published in an October 1995 issue of Cost Engineering and was the first article in AACE International’s Pro- fessional Practice Guide to Risk. Many of the terms included deal with probability and statistics or are particular to project risk management. Roberds, W., and T. McGrath. Quantitative Cost and Schedule Risk Assessment and Risk Management for Large Infrastructure Projects. Proc., 3rd Annual Conference of the PMI College of Scheduling, Orlando, Fla., April 2006. This paper presents an innovative, practical, and cost-effective approach to problem solving by (a) quantifying actual project cost and schedule uncertainty within a probabilistic, risk-based, integrated cost and schedule model, in which the uncertainties in inputs are explicitly assessed (including de-biasing, through elicitation of technical experts) and incorporated; (b) identifying and prioritizing critical cost and schedule risks and opportunities, as well as quantifying the benefits of proposed mitigation strategies to address those critical risks and oppor- tunities; and (c) improving owner and project team understanding and communication. While it is not yet possible to fully validate this new approach, this paper presents an initial evaluation, and discusses chal- lenges related to better implementation. Robert, J. Allocating Construction Risks: What, Why, How & Who? Guidelines for Improving Practice: Architects and Engineers Profes­ sional Liability, Vol. 17, No. 5, 1987, pp. 1–5. This paper describes how design professionals and owners could ben- efit from taking a more global view of risk. The author describes how this could benefit everyone involved and improve the current state of risk assessment. Rothwell, G. Cost Contingency as the Standard Deviation of the Cost Estimate. Cost Engineering Journal, Vol. 47, No. 7, July 2005, pp. 22–25. This article compares project stages, accuracy ranges, and cost contin- gencies recommended by the Association for the Advancement of Cost Engineering International and the Electric Power Research Insti- tute. It shows that current guidelines are consistent with contingen- cies equal to the standard deviation of the cost estimate. It suggests how this standard deviation can be derived from a confidence level (e.g., 80%) for a given accuracy (e.g., ±10%) for normal and lognor- mal probability distributions. Rowe, J. F. A Construction Cost Contingency Tracking System (CTS). Cost Engineering Journal, Vol. 48, No. 2, Feb. 2006, pp. 31–37. The author of this article presents a forward-looking cost contingency tracking system that uses readily available cost information and a sim- ple spreadsheet format. Using the contingency tracking system, project managers can assign contingency to construction contracts, track its consumption, and manage a reserve for upcoming work. This article discusses the development of rules, using the perceived risk of each con- struction contract, to assign an initial contingency value to each con- struction contract. Shafer, S. L. Estimate and Project Risk Analysis Approaches. Profes­ sional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1991, pp. K.5.1–K.5.5. This paper discusses the different methods that can be used to identify risk and with that set contingency. It tells which method to use based on the individual characteristic of the project at hand. Shafer, S. L. Risk Analysis for Capital Projects Using Risk Elements. Professional Practice Guide to Risk, AACE International, Morgan- town, W.Va., 1974, pp. 218–223. This paper introduces a definition of risk based on cost engineering standards and not the mathematical approach. The purpose of the paper is to present a simple mathematical aid, based on “risk assess- ments,” for (a) determining undefined costs, (b) evaluating range of accuracy, and (c) presenting the results of analysis to management. Smith, G. L. Monte Carlo Simulation: A Tool for Combating Uncer- tainty in Economic Analysis. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1966, pp. 1–17. This paper describes how a Monte Carlo simulation can and should be used. It describes how the simulation will handle the uncertainty and produce the best estimate from the given data. Smith, K. A., and R. L. Thoem. Project Cost Evaluation Using Proba- bility Concepts. Professional Practice Guide to Risk, AACE Interna- tional, Morgantown, W.Va., 1974, pp. 275–279. This paper outlines a stronger technique for preparing realistic cost esti- mates for major capital investments by using probability techniques. These probability concepts for project evaluation are then compared with traditional approaches. Smith, R. J. Owner’s Guide to Saving Money by Risk Allocation: Report to the American Consulting Engineers Council and Associated Gen­ eral Contractors of America. American Consulting Engineers Coun- cil, Washington, D.C., 1992, pp. 1–17. This report examines the ability to divide up the risk of a project so as not to affect any one party more than another. This can be done if the risk is properly handled and assigned to the appropriate member of the construction team. Sonmez, R., A. Ergin, and M. T. Birgonul. Quantitative Methodology for Determination of Cost Contingency in International Projects. Journal of Management in Engineering, Vol. 23, No. 1, pp. 35–39. This paper presents a quantitative methodology to determine financial impacts of risk factors during the bidding stages of international con- struction projects. Project and country data for 26 construction proj- ects from 21 countries were collected for evaluation of the international risk factors. The factors affecting cost contingency were identified using correlation and regression analysis technique. Stevenson, J. J., Jr. Determining Meaningful Estimate Contingency. Cost Engineering Journal, Vol. 26, No. 1, Feb. 1984, pp. 35–41. This article describes the problems that a power plant company went through to establish a program for setting contingency on the retrofit- ting operations of many of their power plants. It describes their goals for the project and how they went about attaining them. Stukhart, G. Sharing the Risks of the Cost of Inflation. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1982, pp. M.1.1–M.1.7. This paper discusses the risk of inflation over the period of a construc- tion project. It discusses how and to whom the effect of inflation should be dispersed. It also talks about how the contract can help divide some of these costs for the contractor. Touran, A. Probabilistic Model for Cost Contingency. Journal of Management in Engineering, Vol. 129, No. 3, June 2003, pp. 280–284. This paper proposes a probabilistic model for the calculation of project cost contingency by considering the expected number of changes and the average cost of change. The model assumes a Poisson arrival pattern for change orders and independent random variables. The probability of cost overrun for a given contingency level is calculated. U.S. Department of Energy. Program and Project Management for the Acquisition of Capital Assets. Order DOE O 413.3B, Nov. 29, 2010. This document provides program and project management direction for the acquisition of capital assets that are delivered on schedule,

32 within budget, and fully capable of meeting mission performance and environmental, safety, and health standards. U.S. Department of Energy. Project Management Practices, Risk Management. U.S. Department of Energy Office of Management, Budget, and Evaluation, and Office of Engineering and Construction Management, June 2003. This document is designed to provide acquisition professionals and program and project management offices with a reference for dealing with system acquisition risks. It is intended to be useful as an aid in classroom instruction and as a reference for practical applications. U.S. Department of Transportation. Risk Assessment Methodologies and Procedures. Prepared by Parsons, San Francisco, Calif., June 2004. The report explains in detail the rationale for risk analysis of public transit capital projects. The emphasis is on probabilistic methods for evaluating risks—as this approach provides an effective way to model uncertain events—and describes the procedures a project owner should follow to carry out the process. Washington State Department of Transportation, Olympia, Wash. http://www.wsdot.wa.gov/. This site was used to conduct research and contains many valuable links and much useful information. Wright, P. A., and T. V. Hill. Cost Estimating: Dealing with Uncer- tainty. Professional Practice Guide to Risk, AACE International, Morgantown, W.Va., 1986, pp. E.5.1–E.5.8. This paper discusses the problem of cost estimating and how to deal with other types of markets. It goes into detail about how to use a prob- abilistic method for construction cost estimates when dealing with other economic market uncertainties. It also describes how to forecast future competitive activity in other economic markets. Yeung, D. K. L., S. Cheung, K. K. W. Cheung, and H. C. H. Seun. Web- Based Project Cost Monitoring System for Construction Manage- ment. AACE International Transactions, IT.09, Morgantown, W.Va., 2003, pp. 9.1–9.11. This paper discusses the concepts of developing an automated online cost control/monitoring and assessment system for construction proj- ects. One of the key functions of a project cost monitoring system is as a detector of potential risks and hazards in cost management, or as a warning sign to the client and professionals that the preset cost budget is overrun and requires immediate corrective action. Zeanah, P. H. Advanced Techniques for Contingency Evaluation. Professional Practice Guide to Risk, AACE International, Morgan- town, W.Va., 1973, pp. 68–75. This paper reviews the fundamentals of probability and then uses these techniques—along with Monte Carlo simulation and decision trees analysis—to better understand an estimate when uncertainty is involved. It explains how to use these techniques when using objec- tive data. SOC Annual Meeting 2008 The AASHTO Subcommittee on Construction (SOC) 2008 annual meeting was held August 3–7, 2008, in San Antonio, Texas. The following papers relevant to risk management of rapid renewal projects were presented: • Seven Bridges in 75 Days, E. Powell, North Carolina Department of Transportation. • Risk Assessment for Bonds for Highway Contracts, M. McCallum, National Association of Surety Bond Producers. • An Update on the Accelerated Construction Technology Transfer Program, Experiences and Lessons Learned, C. Schneider, FHWA. • Accelerated Bridge Construction (ABC) and the Utah Experience, K. Peterson, Utah Department of Transporta- tion, and M. L. Ralls, Ralls Newman, LLC. • Quality Assurance in Design–Build Projects, D. Gransberg, University of Oklahoma. • Alternative Contracting Approaches to Accelerate Project Completion, I. Damnjanovic, Texas Transportation Institute. The AASHTO SOC has posted these papers on its website: http://construction.transportation.org/Pages/default.aspx (accessed Aug. 22, 2013). Additional Sources Contract Administration Section, AASHTO Subcommittee on Con- struction. Primer on Contracting: for the Twenty-first Century, 5th ed. AASHTO, Washington, D.C., 2006. http://construction.transportation. org/Documents/PrimeronContracting2006.pdf. Accessed Oct. 16, 2013. Pakkala, P. Innovative Project Delivery Methods for Infrastructure: An International Perspective. Finnish Road Enterprise, Helsinki, Fin- land, 2002. Texas Department of Information Resources. http://www.dir.state .tx.us/eod/qa/risk/. Agency Contact List The following is a list of contact information for agencies whose representatives participated in interviews or who were invited to attend a pilot workshop. Transportation Research Board 500 Fifth Street, NW Washington, DC 20001 Federal Highway Administration Headquarters, Southeast Federal Center Building 1200 New Jersey Avenue, SE Washington, DC 20590-9898 Federal Highway Administration Resource Center 61 Forsyth Street SW, Suite 17126 Atlanta, GA 30303

33 Federal Highway Administration Washington Division 711 South Capitol Way, Suite 501 Olympia, WA 98501 Arizona Department of Transportation Room 131A, MD 102A 206 South 17th Avenue Phoenix, AZ 85007 California Department of Transportation Headquarters 1120 N Street P.O. Box 942873 Sacramento, CA 94273-0001 Colorado Department of Transportation Project Development Branch 4201 East Arkansas Avenue, 4th Floor Denver, CO 80222 Florida Department of Transportation 605 Suwannee Street Tallahassee, FL 32399 Hawaii Department of Transportation Aliiaimoku Building 869 Punchbowl Street Honolulu, HI 96813 Iowa Department of Transportation 800 Lincoln Way Ames, IA 50010 Minnesota Department of Transportation 1000 Highway 10 West Detroit Lakes, MN 56501 Nevada Department of Transportation 1263 South Stewart Street Carson City, NV 89712 New York State Department of Transportation 50 Wolf Road Albany, NY 12232 North Carolina Department of Transportation and North Carolina Turnpike Authority 5400 Glenwood Avenue, Suite 400 Raleigh, NC 27612 Oregon Department of Transportation, Region 1 123 NW Flanders Street Portland, OR 97209-4012 Seattle Department of Transportation Capital Projects and Roadway Structures Division 700 Fifth Avenue, Suite 3900 Seattle, WA 98104 Utah Department of Transportation Mail Stop 141200 4501 South 2700 West Salt Lake City, UT 84114-1200 Virginia Department of Transportation 1401 East Broad Street Richmond, VA 23219 Washington State Department of Transportation Cost Risk Estimating Management 310 Maple Avenue SE P.O. Box 47336 Olympia, WA 98504-7336 Ministry of Transportation Alberta Twin Atria Building, 2nd Floor 4999 - 98 Avenue Edmonton, AB T6B 2X3 Canada Ministry of Transportation British Columbia 940 Blanshard Street Victoria, BC V8W 9T5 Canada Ministry of Transportation Ontario 301 St. Paul Street St. Catharines, ON L2R 7R4 Canada Other contacts include Texas DOT, Idaho DOT, Wisconsin DOT, Alaska DOT, King County (WA) DOT, and the Federal Transit Administration (FTA).