Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects (2014)

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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 116 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2014 www.TRB.org Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Mindy Price Direct effect SolutionS, inc. Pickerington, OH

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans­ portation of people and goods and in regional, national, and inter­ national commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal respon­ sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera­ tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near­term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon­ sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera­ tive Highway Research Program and Transit Cooperative Research Pro­ gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte­ nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera­ tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100­Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International­North America (ACI­NA), the American Associa­ tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga­ nizations. Each of these participants has different interests and respon­ sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden­ tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro­ fessionals, the intended users of the research products. The panels pre­ pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper­ ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended end­users of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work­ shops, training aids, field visits, and other activities to ensure that results are implemented by airport­industry practitioners. ACRP REPORT 116 Project 01­22 ISSN 1935­9802 ISBN 978­0­309­30804­5 Library of Congress Control Number 2014949632 © 2014 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not­for­profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not­for­profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Cover Photos by Mike Price, Fairfield Photography, LLC Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national­academies.org/trb/bookstore Printed in the United States of America

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Victor J. Dzau is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS This research was performed under ACRP Project 01­22 by Direct Effect Solutions, Inc., Pickerington, Ohio. Mindy Price, President of Direct Effect Solutions, served as the Project Director and Principal Investigator. Other members of the research team were: • Michael Price of Direct Effect Solutions; • Linda Frankl; • Katrina Mossman of Top Notch Consulting; • Peter Wallace and Linda Konrath of Hill International, Inc.; and • Lisa Lankford, Walt Matwijec, Robert Ramsey, Floyd Crook, and Stan Van Ostran of Nashville Metro­ politan Airport Authority. The research team is indebted to the many airport representatives who gave their time to participate in the survey, focus groups, and interviews to share their experience and identify their needs, best practices, and lessons learned. CRP STAFF FOR ACRP REPORT 116 Christopher W. Jenks, Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Marci A. Greenberger, Senior Program Officer Joseph J. Brown-Snell, Program Associate Eileen P. Delaney, Director of Publications Doug English, Editor ACRP PROJECT 01-22 PANEL Field of Administration David M. “Dave” Fleet, Futron Aviation, Hampton, VA (Chair) Joseph R. Heerens, Indianapolis Airport Authority, Indianapolis, IN Keith Kaspari, Capital Region International Airport, Lansing, MI Wayne G. Sieloff, Wayne County Airport Authority, Detroit, MI Donna K. Tyner, The Greenbrier Companies, Inc., Lake Oswego, OR David Fish, FAA Liaison Nardos Wills, FAA Liaison Christopher J. Oswald, Airports Council International–North America Liaison Christine Gerencher, TRB Liaison

ACRP Report 116: Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects provides a step­by­step process for evaluating and manag­ ing risk for capital and maintenance projects that can be scaled depending on the complex­ ity of the project. Each step of the process is explained, allowing the user to understand the step and its relationship to the entire process. Chapter 8 is structured to be a quick user’s guide. Employees at all levels that have any responsibility for safety and risk management will find this guidebook useful. Risk is usually thought of in terms of what bad things can happen to people and property (although it should also be looked at as being able to identify and capitalize on opportuni­ ties). Airports, prior to the emerging requirement for some to have a safety risk manage­ ment process, have been conducting risk assessments and management functions infor­ mally as part of their overall safety programs. But there are other types of risks that airports are prone to, such as operational, financial, reputational, and political. Project risk manage­ ment assessment and the management of those identified risks are becoming more com­ mon at airports to help minimize, mitigate, transfer, or eliminate risk to help control costs, respond to changing regulations, and assist in doing the right thing. Airports engage in many capital and maintenance projects that, by their sheer nature, involve uncertainties, and uncertainties imply risk. Under ACRP Project 01­22, Direct Effect Solutions, Inc., was tasked with developing guidance that airport management and line employees could use when planning capital and maintenance projects regardless of their scope and complexity. Their approach to the research included interviews and focus groups, and they developed this guidebook to be useful to airports of all sizes, geographic locations, and governance structures. As with any two entities, different airports are going to have different risk tolerances, and their approaches to project risk management may dif­ fer. But the process of identifying, prioritizing, and managing project risks will be the same, and this guidance explains each step in the process. F O R E W O R D By Marci A. Greenberger Staff Officer Transportation Research Board

P A R T 1 Project Risk Management Overview 3 Chapter 1 Introduction 3 1.1 Background 8 1.2 Purpose of the Guidebook 8 1.3 Overview and Organization of the Guidebook 10 1.4 Summary 11 Chapter 2 The Risk Management Process 11 2.1 What Is Project Risk Management? 11 2.2 Overview of Project Risk Management 11 2.3 When to Perform Project Risk Management 15 2.4 Determining Project Risk Management Effort 16 2.5 Who Performs Project Risk Management 16 2.6 Summary P A R T 2 Project Risk Management: Step-by-Step Process 21 Chapter 3 Project Risk Management Planning 21 3.1 Key Activities 28 3.2 Inputs 28 3.3 Tools and Techniques 29 3.4 Outputs 29 3.5 Best Practices 30 3.6 Summary 32 Chapter 4 Project Risk Identification 32 4.1 Key Activities 34 4.2 Inputs 34 4.3 Tools and Techniques 37 4.4 Outputs 37 4.5 Best Practices 39 4.6 Summary 42 Chapter 5 Project Risk Analysis 42 5.1 Key Activities 43 5.2 Inputs 44 5.3 Tools and Techniques 52 5.4 Outputs 53 5.5 Best Practices 53 5.6 Summary C O N T E N T S

55 Chapter 6 Project Risk Response Planning 55 6.1 Key Activities 56 6.2 Inputs 56 6.3 Tools and Techniques 60 6.4 Outputs 60 6.5 Best Practices 60 6.6 Summary 62 Chapter 7 Project Risk Monitoring and Control 62 7.1 Key Activities 63 7.2 Inputs 63 7.3 Tools and Techniques 64 7.4 Output 64 7.5 Best Practices 65 7.6 Summary P A R T 3 Project Risk Management Toolbox 69 Chapter 8 Project Risk Management Toolbox 69 8.1 Overview 69 8.2 How to Use This Toolbox 69 8.3 Project Risk Management Plan 70 8.4 Project Risk Management Checklist 70 8.5 Probability and Impact Matrix 82 8.6 Risk Register P A R T 4 Project Risk Management Implementation 95 Chapter 9 Implementing Project Risk Management 95 9.1 Characteristics of Successful Project Risk Management Processes 96 9.2 Fostering a Risk­Based Culture 96 9.3 Overcoming Implementation Barriers 98 9.4 Flowchart as Project Risk Management Tool Selection Guide 99 9.5 Integrating and Maturing Utilization of Tools 101 9.6 Aligning Project Risk Management, Project Management, and Enterprise Risk Management 103 References 104 Glossary 107 Appendix A Case Study I: Taxiway Reconstruction 116 Appendix B Case Study II: Office Build-Out 118 Appendix C Probabilistic Modeling