Project Risk

Management
Guidance for WSDOT Projects
July 2010
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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
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July 2010
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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
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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
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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
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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
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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 Risk Management – “How to guide”   1 Risk Management Planning rev 2009-April
8 of 9 
Chapter 1 Risk Management Planning
Figure 1-3 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


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Page 16 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Identifcation Chapter 2


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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
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Detailed Description of Risk Event
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Risk Trigger
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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)
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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 $M
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Response Actions (action to be taken)
One of the best tools we have to avoid this risk is a concerted, committed & sustained effort
to address env. permits upfront & thoroughly. Including verification of jurisdictions
and parties of concern and clarify understanding and expectations of all parties.
To this end we will form a team to puruse this effort with appropriate representatives from
each permitting authority with review dates and commitments.
Action by date: February 30, 2929
Status review date: March 32, 2929
Status review date: April 31, 2929
ADDITIONAL NOTES:
Actions to implement strategy:
What needs to be done? Who will do it? Due date?
Communication with parties. Project Mgr NOW
Succession plan for staff changes. Business Mgr 2929-Feb
Decisions ASAP on design elements. Executive Oversight 2929-March
Risk Impact
($M or Mo)
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Permits and
Permit Appeals
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Complex project, might require additional time (longer than 
average) to review. Potential agency staff changes. Tribal
issues include fishing rights, effects on fish and habitat, and
other environmental concerns.
Appeals can be made on any of the major permits, whether
based on actual issues with the permits or not. The following
specific issues were highlighted:
• Shoreline permits from various jurisdictions are of particular 
concern shoreline permits are easy to challenge and typically
result in significant delays. There is a process 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 :  <make a decision>; report of a conclusion
A position arrived at after consideration <after much deliberation, we
made a decision about what to use for an estimated unit price>
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 < 10%
Consequence 
(Impact)
Synonyms
Approximate
%
Very high Very Critical Very Strong > 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 < 10%
Figure 3-1 Probability Impact Matrix (5 X 5) 
Qualitative Risk List (ranked based on qualitative risk analysis) 
rank count
T/O RBS # Risk Title Probability Impact
2 a T  ENV 30.1  Permits and Permit Appeals  Medium  High 
1 b T  UTL 20.1  Unidentified Utility Conflicts  High  Very High 
4 c T  STG 20.4  Change to Substructure Assumptions  Very Low  Low 
3 d T ROW 40.1 Managed Access challenge Very High Low
a
b
c
d
Probability
(Likelihood)
Synonyms
1
Approximate %
Very high Almost certain Very Sure > 90%
High Likely Pretty Sure 80%
Medium Possible Maybe 50%
Low Unlikely Seldom 20%
Very Low Rare Improbable < 10%
Consequence
(Impact)
Synonyms
1
Approximate %
of Phase
(PE, RN, CN)
Very high Very Critical Very Strong > 10%
High Critical Strong 8%
Medium Moderate Average 4%
Low Slight Mild 2%
Very Low Very Little Very Mild < 1%
1
Suggested percentages; project teams may adjust if they desire.
Probability Impact Matrix (5 X 5)
Figure 3-1
EXAMPLES ONLY
Project Risk Management Guidance for WSDOT Projects Page 29
July 2010
Chapter 3 Qualitative Risk Analysis
EXAMPLES
ONLY
Qualitative Risk List (ranked based on qualitative risk analysis)
rank count T/O RBS # Risk Title Probability Impact
2 a T ENV 30.1 Permits and Permit Appeals Medium High
1 b T UTL 20.1 Unidentifed Utility Conficts High Very High
4 c T STG 20.4 Change to Substructure Assumptions Very Low Low
3 d T ROW 40.1 Managed Access challenge Very High Low
Qualitative Risk List (threats and opportunities)
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 High
C T STG 20.4 Change to Substructure Assumptions Low Low
D T ROW 40.1 Managed Access challenge High Low
E O CNS 30.1 Negotiate Better Work Windows Low Medium
F O CNS 50.1 Able to salvage some material for $ Medium Medium
G O DES 10.1 Opportunity to switch to ACP (HMA) High High
P
R
O
B
A
B
I
L
I
T
Y
HI D B G HI
P
R
O
B
A
B
I
L
I
T
Y
MED A F MED
LO E LO
VLO C VLO
VLO LO MED HI HI MED LO VLO
NEGATIVE IMPACT POSITIVE IMPACT
Probability Impact Matrix (Double 4 X 4)
Figure 3-2
EXAMPLES ONLY
Page 30 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
A simple matrix, provided below, suitable for smaller, less complex or routine projects, it also
appears in the Project Management Online Guide.
P
r
o
b
a
b
i
l
i
t
y
H
L
L H
Impact
High (probability): more likely than not to happen.
High (impact): Substantial impact on cost, schedule, or technical. Substantial action
required to alleviate issue.
Low (probability): less likely than not to happen.
Low (impact): Minimal impact on cost, schedule, or technical. Normal management
oversight is suffcient.
Project Management Online Guide is found at:
http://www.wsdot.wa.gov/projects/projectMgmt/Process
Project Risk Management Guidance for WSDOT Projects Page 31
July 2010
Simplifed Risk Management Plan Spreadsheet with 2×2 Probability Impact Matrix
Figure 3-3
Project Title EXAMPLE for Risk Management Document
Project PIN # #######
Date Feb 31, 2929
Project Mngr Mgr Name Telephone Number (xxx) xxx-xxxx
Status ID #
Date Identified
Project Phase
Risk Event
(threat/opportunity) SMART Column Risk Trigger
Impact
Area
Affected MDL/WBS
Level 2 process Probability Impact
Risk
Owner
Strategy
ACTION TO BE TAKEN
(include advantages and disadvantages)
Status Interval
or Milestone
Check Date, Status and Review Comments
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (13) (14) (15) (16) (17)
In
s
tr
u
c
tio
n
s
Active=actively monitored
& controlled
Dormant=risk is not
currently a high priority,
but may become active in
the future.
Retired=no longer a
threat to project
objectives.
E1 For example:
6/30/99
Scoping
Risk is an uncertain event or
condition that, if it occurs, has a
positive (opportunity) or negative
(threat) on a project.
For example; Wetland Mitigation
requires additional R/W.
Detailed description of the risk.
Includes information on the risk
that is Specific, Measureable,
Attributable, Relevant and
Timebound. Describe the
consequences of the risk to
scope, schedule, budget or
quality.
Triggers are indications that a risk
has occurred or is about to occur.
Used to determine when to
implement the Risk Response
Strategy.
For example: Wetland impact is
greater than 1/2 acre.
Is the
primary
impact to
the scope,
schedule,
or budget?
Which WBS
element will be
modified as part of
the response
strategy? For
example:
PC-19
Environmental
Permits
Assessment of
the likelihood
of occurrence.
Valid entries
are Low or
High.
The severity
of the risk's
effect on the
projects
objectives.
Valid entries
are Low or
High.
Name of the
person or
office
responsible for
managing the
risk event.
Avoidance
Transferance
Mitigation
Acceptance
(See PM Online
Guide for strategy
definitions.)
Develop options and determine actions to
be taken in response to the risk event.
Immediate action may be required at the
time of identification. Estimate value of
risk and estimate cost to respond.
For example:
Completion of
wetland
delineation
expected:
2/28/00
For example: Last status update
4/30/00. Wetland delineation
completed 3/15/00. Over 1 acre of
wetland was delineated, action is
being taken to expedite meetings with
regulatory agencies & expedite the
effort to provide appropriate wetland
mitigation & attain project permits.
H
L
X
L H
H
X
L
L H
H
L
X
L H
EXAMPLE OF QUALITATIVE ANALYSIS
WITH A 2X2 RISK MATRIX
Monitoring and Control Risk Identification
Scope
WBS 185
Prepare Base
Maps and
Plan Sheets
Low Low
P
r
o
b
a
b
i
l
i
t
y
Mr. History Acceptance
Numerous construcion work in
and around the area has
occurred in the past. No
artifacts have been found.
Supplmenta
l Field
investigatio
n report
due:
11/1/2008
Analysis is
due
9/30/2008
Design/PS&
E
Impact
mm/dd/yyyy
Threat - Cultural
Resources may be
encountered on D Island
During clearing and
grubbing there is a
potential for finding
historical artifacts,
particularly on the
northside of D Hill near
the water.
Trigger during Design:
Archival and/or field
investigation reveals
artifacts on site. Trigger
during CN: Discovery of
indicator items and/or
artifacts during
clearing/grubbing.
Constructio
n
Impact
High
Risk-Response Strategy
High
P
r
o
b
a
b
i
l
i
t
y
Mr.
Noiseman
Mitigation
Press for results of noise
analysis ASAP. This is a high
probability/high impact threat.
Carry design as if the noise wall
is going to be built (to minimize
future rush design work).
(12)
Ms. Eunice
Utility
P
r
io
r
ity
Active
UTL
20.1
PROJECT RISK MANAGEMENT PLAN
Threat - Unknown utility
impacts
(MP 14.7 to MP 19.4).
Next check
is at QPR
on
11/20/2008
Mitigation
Begin subsurface utility
investigations immediately.
Assign team member to this
issue full time until we are
confident all utilities have been
identifed.
May be required to buid a
permanent noise wall
pending results of Type 1
Analysis.
Resutls of Type 1 Analysis
will indicate the level of
Noise mitigation required.
Scope
WBS 165
Perform
Environmental
Studies and
Prepare Draft
Environmental
Document
(DED)
WBS 185
Prepare Base
Maps and
Plan Sheets
Multiple Triggers: If found
toward the end of design
phase may require
additional design work
and/or R/W acquisition. If
found during construction
could potentially stop
work.
mm/dd/yyyy
Scope
Design/PS&
E
Risk Matrix
Qualitative Analysis
High: Substantial impact
on cost, schedule, or
technical. Substantial
action required to
alleviate issue.
Low: Minimal impact on
cost, schedule, or
technical. Normal
management oversight is
ffi i t
P
r
o
b
a
b
i
l
i
t
y
Low
Active
Active
ENV
90.3
ENV
40.4
High
Areas outside of WSDOT
R/W have not been
investigated for utilities
conflicts; Additional work
is required for
sewer/stormwater for
Smalltown, additional
investigation required for
water, gas, power, fiber
optic, telecommunications,
etc.
Impact
mm/dd/yyyy
Threat - Noise Wall
http://www.wsdot.wa.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-Construction/PC_Plan_the_Work/PC_Plan_Risk.htm
Page 32 Project Risk Management Guidance for WSDOT Projects
July 2010
Qualitative Risk Analysis Chapter 3
Simplifed Risk Management Plan Spreadsheet with 5x5 Probability Impact Matrix
Figure 3-4
Project Title EXAMPLE for Risk Management Document
Project PIN # #######
Date Feb 31, 2929
Project Mngr Mgr Name Telephone Number (xxx) xxx-xxxx
Status ID #
Date Identified
Project Phase
Risk Event
(threat/opportunity) SMART Column Risk Trigger
Impact
Area
Affected MDL/WBS
Level 2 process Probability Impact
Risk
Owner
Strategy
ACTION TO BE TAKEN
(include advantages and disadvantages)
Status Interval
or Milestone
Check Date, Status and Review Comments
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (13) (14) (15) (16) (17)
In
s
tru
c
tio
n
s
Active=actively monitored
& controlled
Dormant=risk is not
currently a high priority,
but may become active in
the future.
Retired=no longer a
threat to project
objectives.
E1 For example:
6/30/99
Scoping
Risk is an uncertain event or
condition that, if it occurs, has a
positive (opportunity) or negative
(threat) on a project.
For example; Wetland Mitigation
requires additional R/W.
Detailed description of the risk.
Includes information on the risk
that is Specific, Measureable,
Attributable, Relevant and
Timebound. Describe the
consequences of the risk to
scope, schedule, budget or
quality.
Triggers are indications that a risk
has occurred or is about to occur.
Used to determine when to
implement the Risk Response
Strategy.
For example: Wetland impact is
greater than 1/2 acre.
Is the
primary
impact to
the scope,
schedule,
or budget?
Which WBS
element will be
modified as part of
the response
strategy? For
example:
PC-19
Environmental
Permits
Assessment of
the likelihood
of occurrence.
Valid entries
are Low or
High.
The severity
of the risk's
effect on the
projects
objectives.
Valid entries
are Low or
High.
Name of the
person or
office
responsible for
managing the
risk event.
Avoidance
Transferance
Mitigation
Acceptance
(See PM Online
Guide for strategy
definitions.)
Develop options and determine actions to
be taken in response to the risk event.
Immediate action may be required at the
time of identification. Estimate value of
risk and estimate cost to respond.
For example:
Completion of
wetland
delineation
expected:
2/28/00
For example: Last status update
4/30/00. Wetland delineation
completed 3/15/00. Over 1 acre of
wetland was delineated, action is
being taken to expedite meetings with
regulatory agencies & expedite the
effort to provide appropriate wetland
mitigation & attain project permits.
VH
H
M
L $
VL
VL L M H VH
Impact
P
r
o
b
VH
H $
M
L
VL
VL L M H VH
Impact
P
r
o
b
VH
H
M
L $
VL
VL L M H VH
Impact
EXAMPLE OF QUALITATIVE ANALYSIS
WITH A 5X5 RISK MATRIX
High
Areas outside of WSDOT
R/W have not been
investigated for utilities
conflicts; Additional work
is required for
sewer/stormwater for
Smalltown, additional
investigation required for
water, gas, power, fiber
optic, telecommunications,
etc.
mm/dd/yyyy
Threat - Noise Wall
ENV
90.3
ENV
40.4
Active
Active
Risk Matrix
Qualitative Analysis
High: Substantial impact on cost,
schedule, or technical. Substantial
action required to alleviate issue.
Low: Minimal impact on cost,
schedule, or technical. Normal
management oversight is sufficient.
Low
P
r
o
b
a
b
ility
mm/dd/yyyy
Scope
Design/PS&
E
May be required to buid a
permanent noise wall
pending results of Type 1
Analysis.
Resutls of Type 1 Analysis
will indicate the level of
Noise mitigation required.
Scope
WBS 165
Perform
Environmental
Studies and
Prepare Draft
Environmental
Document
(DED)
WBS 185
Prepare Base
Maps and
Plan Sheets
Multiple Triggers: If found
toward the end of design
phase may require
additional design work
and/or R/W acquisition. If
found during construction
could potentially stop
work.
P
r
io
r
ity
Active
UTL
20.1
PROJECT RISK MANAGEMENT PLAN
Threat - Unknown utility
impacts
(MP 14.7 to MP 19.4).
Next check
is at QPR
on
11/20/2008
Mitigation
Begin subsurface utility
investigations immediately.
Assign team member to this
issue full time until we are
confident all utilities have been
identifed.
Risk-Response Strategy
High
Mr.
Noiseman
Mitigation
Press for results of noise
analysis ASAP. This is a high
probability/high impact threat.
Carry design as if the noise wall
is going to be built (to minimize
future rush design work).
(12)
Ms. Eunice
Utility
Analysis is
due
9/30/2008
Design/PS&
E
mm/dd/yyyy
Threat - Cultural
Resources may be
encountered on D Island
During clearing and
grubbing there is a
potential for finding
historical artifacts,
particularly on the
northside of D Hill near
the water.
Trigger during Design:
Archival and/or field
investigation reveals
artifacts on site. Trigger
during CN: Discovery of
indicator items and/or
artifacts during
clearing/grubbing.
Constructio
n
High
Scope
WBS 185
Prepare Base
Maps and
Plan Sheets
Low Low Mr. History Acceptance
Numerous construcion work in
and around the area has
occurred in the past. No
artifacts have been found.
Supplmenta
l Field
investigatio
n report
due:
11/1/2008
Risk Identification Monitoring and Control
http://www.wsdot.wa.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-Construction/PC_Plan_the_Work/PC_Plan_Risk.htm
Figure 3-4 Simplified Risk Management Plan Spreadsheet with 5x5 Probability Impact Matrix
Project Risk Management Guidance for WSDOT Projects Page 33
July 2010

Chapter 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. 
(WSDOT PMOG)
The Strategic Analysis and Estimating Offce at WSDOT offers several 
tools for quantitative analysis of risk.  These tools are described in 
Executive Order 1053.00 December 10, 2008 and summarized in 
Table 4.1 below.
Project Size ($)
Required Process
(project managers can use
a higher level process if desired)
$10 M to $25 M In-formal workshop using the Self-Modeling Spreadsheet
1, 3
Quantitative $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.
NOTE: For Projects less than $10M qualitative analysis is suffcient, although a higher level may be used if desired.
Levels of risk based estimating, in support of risk management:
Tabel 4.1
Quantitative techniques, such as Monte Carlo simulation, can be a 
powerful tool for analysis of project risk and uncertainty.  This technique 
provides project forecasts with an overall outcome variance for estimated
project cost and schedule. Probability theory allows us to look into the
future and predict possible outcomes.
Use of quantitative analysis, while very powerful, also can be misleading 
if not used properly. WSDOT provides a comprehensive guide for
risk workshops that, if followed, help insure a consistent process and
safeguards against biased and/or misleading results. The comprehensive
set of workshop guidelines are posted at:
http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/workshop.htm
The following caution comes from a paper titled: “Top Down Techniques 
for Project Risk Management” by Martin Hopkinson presented at the 2006 
PMI Conference in Madrid.
But to us, probability is the
very guide of life. – Bishop
Joseph Butler (1756)
“Poor modeling can
produce an output
that looks convincing
to managers but is so
fawed that the results
are dangerously
misleading. On
a project with
unrealistically tight
targets, poor risk
analysis may thus
become a tool that
fosters management
delusions about
the prospects for
success.”
Page 34 Project Risk Management Guidance for WSDOT Projects
July 2010
Quantitative Risk Analysis Chapter 4
Project Risk Management is an integral component of ongoing Project
Management.
Project Managers sometimes ask “when is the best time to conduct a CRA
or CEVP workshop?”  This is answered by reviewing the status of Project 
Development. When a Project Management Plan is being developed and
is kept current (appropriate to the level of project development) with a
well-written scope that can be communicated and comprehended, along
with the associated schedule and cost estimate a project team can begin in
earnest preparing for their risk management workshops.
When preparing materials and planning for a workshop that includes
quantitative analysis be sure to contact the Strategic Analysis and 
Estimating Offce of WSDOT, CREM Unit and they can help guide 
you through the process, including scheduling consultants and WSDOT
resources to effect the completion of a quantitative analysis, either through 
the workshop process or use of the self-modeling spreadsheet.
When a project team prepares for a workshop much of the work that is
performed on a daily or regular basis becomes the input for the analysis.
This includes scope or work, schedule estimate (with backup and
assumptions), cost estimate – including the basis of estimate, assumptions 
and backup information.  Estimates are used to make fnancial decisions 
hence in order to facilitate this materials should be developed that result in
and informed decision-making process; CPMS data requirements are listed 
in Table 4-1.
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., “March 2008 $”)
• Design cost estimate
• Right of way cost estimate
• Construction cost estimate
3. CPMS will be modifed to calculate the midpoint for construction
phases using the project award date and the operationally complete date.
CPMS Data Requirements
Table 4-1
Project Risk Management Guidance for WSDOT Projects Page 35
July 2010
Chapter 4 Quantitative Risk Analysis

Quantitative
Risk
Analysis
“How To”
Page 36 Project Risk Management Guidance for WSDOT Projects
July 2010
Quantitative Risk Analysis Chapter 4
How to perform Quantitative Risk Analysis
General Process
Once risks are identifed and have been screened via qualitative analysis, 
they can be analyzed quantitatively.  Recall that identifcation includes 
a thorough description of the risk and risk triggers.  With quantitative 
analysis the probability of occurrence and consequence if the risk event 
occurs must also be documented. Figure 4-1 depicts the workshop process.
Tools and Techniques
1 Gather and Represent Data
•  Interviews – can be formal or informal settings, such as smaller 
group meetings and/or larger formal workshops.
•  Subject Matter Expert input – participating collaboratively with 
the project team and cost-risk team can participate in interviews or
contribute opinions in other ways such as surveys (questionnaires).
•  Represent data in terms of probability and impact, impacts can be 
represented using discrete distributions or continuous distributions.
2  Quantitative Risk Analysis and Modeling 
•  Project simulation using Monte Carlo technique to generate a 
probability distribution of project cost and schedule based on
uncertainty and risk effects.
Quantitative Risk Analysis Outputs
1  Risk Register – the risk register begins during Risk Identifcation and 
is further developed during analysis (qualitative and/or quantitative); 
the risk register is a key component of the project management plan.
•  Prioritized list of quantifed risks – those risks that have the most 
signifcant impact (threats or opportunities) to project objectives. 
(tornado diagrams, expected values, decision trees)
•  Probabilistic analysis of the project.  Estimated cost and 
completion dates and associated confdence levels.
•  Quantitative analyses can be conducted several times throughout 
project development; trends can be identifed, mitigation strategies 
can be implemented and monitored, the risk profle of a project 
evolves and changes as the project is developed and knowledge is
gained and design changes occur.
Informal Workshop (Meeting)
For smaller projects an informal workshop comprised of the project team
and/or key project team members, and other participants (such as specialty
groups involved with critical items) may suffce.  
Project Risk Management Guidance for WSDOT Projects Page 37
July 2010
Chapter 4 Quantitative Risk Analysis
Workshop Process for CRA or CEVP
Figure 4-1
Page 38 Project Risk Management Guidance for WSDOT Projects
July 2010
Quantitative Risk Analysis Chapter 4
Risk management is ongoing and iterative, periodically workshop
members can regroup to evaluate the project and associated uncertainty
and risks, workshops typically occur for a project every 12 to 24
months or at key project milestones. Project risks and mitigation
efforts should be discussed at regular project meetings, make changes
as appropriate and following those changes re-run the risk model. Value
is gained when action is taken to respond to risks resulting in a cost and
schedule savings to the project.
In order to fully understand our project we must determine what we
know and what we do not know about a project. In our industry, Civil
Engineering – Transportation, we have devoted a good deal of resources 
to clearly explain what is known of a project, we have many specialty
offces that gather and provide data in support of project delivery, 
including: aerial photography, surveying, site investigations, bid
histories, real estate services, right-of-way, access management, utilities,
environmental, hydraulics, structures, geotech, railroad, tribal liaison
offce, planning and programming, ad/bid/award, construction, tolling, 
economic, programming external resource agencies and stakeholders,
public interest groups, and others. Just as important is to devote some
energy and resources to assess what is not known and/or is uncertain
about a project, one tool for accomplishing this is intentional, thoughtful
and deliberate project risk management –as part of an overall project 
management plan.

Risk assessment is not a measure of estimate accuracy:
The project team must examine each critical item and predict its possible
extreme values considering all risks, including compounding effects. It is
important to understand that the range,as considered in this method, is not
the expected accuracy of each item. This is a key issue. Risk analysis is
not an analysis of estimate accuracy. Accuracy is dependent upon estimate
deliverables and estimate maturity.
AACE International Recommended Practice No. 41R-08
RISK ANALYSIS AND CONTINGENCY
DETERMINATION USING RANGE ESTIMATING
TCM Framework: 7.6 – Risk Management
June 25, 2008
Project Risk Management Guidance for WSDOT Projects Page 39
July 2010
Chapter 4 Quantitative Risk Analysis
Risk management must be partnered with a well-organized and properly
documented project base cost estimate. Risk management introduces
reality into our project management process by recognizing that every
project has a risk of cost overrun –this does not mean cost overrun is 
inevitable –it means it is possible.
In the book titled “Project Risk Management” by Chris Chapman
and Stephen Ward there is an acronym presented to describe a Risk
Management Process framework for projects, the acronym is SHAMPU
which refers to: Shape, Harness, And Manage Project Uncertainty. There
are some helpful ideas expressed via this acronym and they are presented
here from page 58 of the above referenced book.
Detailed steps of process Mid level portrayal Simplest portrayal
defne the project
focus the process
clarify the basis of analysis shape the project strategy
identify the issues
structure the issues
clarify ownership
execute the qualitative analysis
estimate variability
evaluate implications
execute the quantitative
analysis
harness the plans harness the plans harness the plans
manage implementation manage implementation manage implementation
SHAMPU process in 3 levels of detail
Table 4-3
Figure 4-2 is a schematic of how an estimate range emerges from a risk 
based estimating process.  The frst estimate, or “plan value”, provided by 
the project team often will contain contingencies (explicit and/or implicit)
within the estimate; the frst step is to review the estimate and remove 
the contingencies and making any needed corrections that are identifed.  
Figure 4-3 depicts the regions of an estimate.
Page 40 Project Risk Management Guidance for WSDOT Projects
July 2010
Quantitative Risk Analysis Chapter 4
PLAN VALUE
(includes contingency)
RAW ESTIMATE
(no contingency)
validated base
subtract
contingency
BEST CASE WORST CASE
subtract
opportunity impacts
add
threat impacts
subtract
opportunity
contingency ?
add
threat
contingency ?
OPINION
OF COST
(most likely)
probabilistic cost range
PLAN VALUE
(includes contingency)
RAW ESTIMATE
(no contingency)
validated base
subtract
contingency
BEST CASE WORST CASE
subtract
opportunity impacts
add
threat impacts
subtract
opportunity
contingency ?
add
threat
contingency ?
OPINION
OF COST
(most likely)
probabilistic cost range
Credit: David Hillson, Effective Opportunity Management for Projects
Credit: David Hillson, Effective Opportunity Management for Projects
Creating a probabilistic estimate
Figure 4-2
WSDOT Project Risk Management – “How to guide” 4 Quantitative Risk Analysis
9 of 9
Chapter 4 Quantitative Risk Analysis
Opinion
of
Cost
Mean
Regions of an estimate.
Min Max
(Most likely)
Potential opportunity Potential threat
Area of estimating
uncertainty
“Base uncertainty”
Opinion
of
Cost
Mean
Regions of an estimate.
Min Max
(Most likely)
Potential opportunity Potential threat
Area of estimating
uncertainty
“Base uncertainty”
Credit: David Hillson, Effective Opportunity Management for Projects
Regions of an estimate
Figure 4-3
Project Risk Management Guidance for WSDOT Projects Page 41
July 2010
Chapter 4 Quantitative Risk Analysis
Quantitative analysis is a natural activity that fts into our standard project management process, 
and unfolds something like this:
Initiate
and
Align
Plan
the
Work
Endorse
the
Plan
Work
the
Plan
Transition
and
Closure
• Project Description
• Team Mission/Assignment
• Major Milestones
• Boundaries
• Team Identification
• Roles/Responsibilities
• Measures of Success
• Operating Guidelines
• Work Breakdown Structure
• Task Planning & Scheduling
• Budget
• Risk Planning
• Communication Plan
• Change Management Plan
• Quality (QA/QC) Plan
• Transition and Closure Plan
• Manage SSB
• Manage Risks
• Manage Change
• Communicate
-Progress
-Issues
-Lessons Learned
• Implement
Transition Plan
• Review Lessons
Learned
• Reward &
Recognize
• Archive
• Project Team
Commitment
• Management
Endorsement
Initiate
and
Align
Plan
the
Work
Endorse
the
Plan
Work
the
Plan
Transition
and
Closure
• Project Description
• Team Mission/Assignment
• Major Milestones
• Boundaries
• Team Identification
• Roles/Responsibilities
• Measures of Success
• Operating Guidelines
• Work Breakdown Structure
• Task Planning & Scheduling
• Budget
• Risk Planning
• Communication Plan
• Change Management Plan
• Quality (QA/QC) Plan
• Transition and Closure Plan
• Manage SSB
• Manage Risks
• Manage Change
• Communicate
-Progress
-Issues
-Lessons Learned
• Implement
Transition Plan
• Review Lessons
Learned
• Reward &
Recognize
• Archive
• Project Team
Commitment
• Management
Endorsement
IDENTIFY and ANALYZE Risk RESPOND, MONITOR and CONTROL Risk
Project Description: subject of the risk
assessment
Risk Management is an integral component of
day-to-day project management. Project teams
implement and continuously upgrade the Risk
Management Plan throughout the project. Primary
Risk Management functions include:
• Monitor risks (threats and opportunities)
• Identify new risks
• Evaluate/update probability of occurrence and
potential impacts
• Devise and implement response strategies
• Evaluate and document effectiveness of
response
• Report to Management and Stakeholders
Task Planning &
Scheduling Budget
This produces a project
estimate and schedule.
Risk Planning:
The project team, as part of their normal project
development and project management activities
needs to include activities for risk management in
its work plan.
----
The team prepares a project estimate based on
what is known about the project at that time; the
estimate refects the project if things go per the
project plan. Uncertainty and risk events are
identifed and characterized.
Risk Management, a part of Project Management
Figure 4–4
Page 42 Project Risk Management Guidance for WSDOT Projects
July 2010
Quantitative Risk Analysis Chapter 4
Project Risk Management Guidance for WSDOT Projects Page 43
July 2010

Chapter 5 Risk Response
Take action in response to identifed risks.  Following identifcation and 
analysis of project risks project managers and project teams must take
action in response to the identifed project risks, focusing on risks of most 
signifcance, in order to shift the odds in favor of project success.
Early in project development, activities and information can seem chaotic 
and comes to us from multiple directions and multiple sources, risk
management provides a structured and disciplined way to document the
information, evaluate and analyze the information, and emerge with a
well-organized and prioritized list of project risks. This prioritization
rescues us from indecision with information we can use to direct our
project risk management resources.
In order to maximize the benefts of project risk management we must 
incorporate the project risk management activities into our project
management plan and work activities. This means building risk
management activities into our Work Breakdown Structure (WBS); 
WSDOT has a ready made WBS in the form of its Master Deliverables
List (MDL) to help insure our project workplans are comprehensive,
consistent and complete. Recall the Risk Management steps include: Risk
Management Planning, Risk Identifcation, Qualitative Risk Analysis, 
Quantitative Risk Analysis, Risk Response, Risk Monitoring and Control.
Risk Response requires effort to develop and implement response actions; 
we must plan for expending this effort following the results of our
risk analysis. To this end we have a number of tools readily available,
including the Risk Management Planning Spreadsheet found at:
http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/
Descriptions of risk response actions follow:
Actions in response to risks: Threats Opportunities
1. Avoid 1. Exploit
2. Transfer 2. Share
3. Mitigate 3. Enhance
4. Accept
Risk Response: Actions
AVOID (threats)
Avoidance actions include: change project management plan to eliminate
a threat, to isolate project objectives from the risk’s impact, or to relax the
project objective that is in jeopardy, such as extending schedule or reducing
scope. Some risks that arise early in the project can be avoided by clarifying
requirements, obtaining information, improving communication, or acquiring
expertise
PMBOK
Action taken to insure the
probability or impact of a
threat is eliminated.
Page 44 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Response Chapter 5
Two types of action 1) remove the cause of the risk (risk trigger); 2) execute
project in different way while still aiming to achieve project objectives. Not all
risks can be avoided or eliminated, and for others this approach may be too
expensive or time-consuming, but this should be the frst strategy considered for
each risk.
Effective Opportunity Management for Projects by David Hillson
EXPLOIT (opportunities)
Opposite of avoid – this strategy is to insure a positive impact, an opportunity is
realized. Taking action to make the opportunity defnitely happen, such response
actions include: assigning more talented resources to a project to reduce time to
completion, and/or to provide better quality than originally planned.
PMBOK
Eliminate the uncertainty associated with a particular upside risk. An opportunity
is defned as a risk event that if it occurs will have a positive effect on
achievement of project objectives. Avoid and Exploit is the most aggressive of
the response strategies and should be reserved for those “golden opportunities”
with high probability and impacts.
Effective Opportunity Management for Projects by David Hillson
TRANSFER (threats)
Transferring a threat does not eliminate it; the threat still exists however it is
owned and managed by another party. Transferring risk can be an effective
way to deal with fnancial risk exposure. Transferring project risk almost always
involves payment of a risk premium to the party taking the risk, examples include:
insurance, performance bonds, warranties, etc. Contracts may be used to
transfer specifed risks to another party.
PMBOK
Transferring risk involves fnding another party who is willing to take responsibility
for its management, and who will bear the liability of the risk should it occur. The
aim is to ensure that the risk is owned and managed by the party best able to
deal with it effectively. Risk transfer usually involves payment of a premium, and
the cost-effectiveness of this must be considered when deciding whether to adopt
a transfer strategy.
Effective Opportunity Management for Projects by David Hillson
SHARE (opportunities)
Sharing a positive risk involves allocating ownership to a third party who is best
able to capture the opportunity for the beneft of the project. Examples of sharing
actions include forming risk-sharing partnerships, teams, or joint ventures, which
can be established with the express purpose of managing opportunities.
PMBOK
Allocating risk ownership for an opportunity to another party who is best able
to handle it, in terms of maximizing probability of occurrence and increasing
potential benefts if it does occur. Transferring threats and sharing opportunities
are similar in that a third party is used, those to whom threats are transferred
take on the liability and those to whom opportunities are allocated should also be
allowed to share in the potential benefts.
Effective Opportunity Management for Projects by David Hillson
Action taken to insure the
beneft of an opportunity
is realized.
Action to allocate
ownership for more
effective management of
a threat.
Action to share with a third
party; enhance/exploit
opportunity.
Project Risk Management Guidance for WSDOT Projects Page 45
July 2010
Chapter 5 Risk Response
MITIGATE – or reduce (threats)
Risk mitigation implies a reduction in the probability and/or impact of an adverse
risk event to an acceptable threshold. Taking early action is often more effective
to repair than trying to repair the damage after the risk has occurred. Examples
of mitigation strategies include: adopting less complex processes, conducting
more tests and/or feld investigations, developing a prototype; measures to
address impact include: targeting linkages that determine the severity, such as
designing redundancy into a subsystem may reduce the impact from a failure of
the original component.
PMBOK
Mitigation or acceptance or the strategies most often used since the number
of threats that can be addressed by avoidance or transfer are usually limited.
Preventive responses are better than curative responses because they are more
pro-active and if successful can lead to risk avoidance. Preventive responses
tackle the causes of the risk; where it is not possible to reduce probability a
mitigation response should address the adverse impact, targeting the drivers that
determine the extent of the severity.
Effective Opportunity Management for Projects by David Hillson
ENHANCE (opportunities)
This response modifes the “size” of an opportunity by increasing probability
and/or impact. Seeking to facilitate or strengthen the cause of the opportunity,
and proactively targeting and reinforcing its trigger conditions. Impact drivers
can also be targeted, seeking to increase the project’s susceptibility to the
opportunity.
PMBOK
This response aims to modify the “size” of the positive risk. We enhance the
opportunity by increasing the probability and/or impact of an opportunity thereby
maximizing benefts realized for the project. If the probability can be increased to
100% this is effectively an exploit response.
Effective Opportunity Management for Projects by David Hillson
ACCEPT
The term “accept” refers to risks that remain after response actions and/or for
which response is not cost effective are accepted; risks that are uncontrollable
(no response actions are practical) are also accepted.
Effective Opportunity Management for Projects by David Hillson
Ultimately it is not possible to eliminate all threats or take advantage of all
opportunities –we can document them and at least provide awareness that
these exist and have been identifed, some term this ‘passive acceptance’. In
some cases, in some industries, a contingency reserve is established to deal
with the aggregate residual risk that has been accepted, some term this ‘active
acceptance’.
As we continue through project development the project risk profle will 
change. Typically as we successfully respond to risks and our project
knowledge increases our risk exposure will diminish. In effect we can
retire risk reserve as risk events are successfully avoided or mitigated
or we have passed the time during which the risk is active and it
becomes retired.
Action taken to reduce the
probability and/or impact of
a threat.
Action to enhance
opportunity.
Action taken to document
the acceptance of the risk.
Page 46 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Response Chapter 5
Risk Response
“How to”
Project Risk Management Guidance for WSDOT Projects Page 47
July 2010
Chapter 5 Risk Response
Risk Management Planning Spreadsheet
(http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/)
WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April 
5 of 11
Chapter 5 Risk Response
Risk Management Planning Spreadsheet
(http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/ )
Risk Identification Risk Analysis Risk Response Monitor and Control
(description/trigger)  (quantitative/qualitative)  (actions, owner, date) (status, updates, results)
Next page zooms in
on this section.
IN THIS CHAPTER WE FOCUS ON RESPONSE 
IN THIS CHAPTER WE FOCUS ON RESPONSE
Risk Management & Planning Spreadsheet
Figure 5-1
Page 48 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Response Chapter 5
Type of Response action
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Chapter 5 Risk Response
Type of Response action
Threats Opportunities
Avoid
Transfer
Mitigate
Exploit
Share
Enhance
Accept
Detailed description of
response action that
will be taken; the 
response action should
be reflected in project
management plan and
work activities.
Name of person who
owns the risk and is
responsible for
implementing the
response actions.
Journal entries for date
and status of risk – 
track effectiveness of
response action.
Risk response requires 
an effort and
investment of
resources – enter the 
planned cost of the
response here.
RMP Spreadsheet: Response
Figure 5-2
Project Risk Management Guidance for WSDOT Projects Page 49
July 2010
Chapter 5 Risk Response
Risk Response Tools and Techniques
After we have identifed and analyzed the risks we know where to focus 
our efforts. The output from the analysis provides a ranked risk register
with the risks of greatest signifcance to project objectives determined.  
Apt response actions to signifcant risks must be cost effective and 
realistic.
Critical risks must be met with vigorous response actions, lower
ranking risks should receive response actions commensurate with their
signifcance.  
Documentation of Response Actions
Document the response action by describing the action, which work
activities it will affect and the cost of the response action. Identify the
person(s) responsible for successful implementation of the response
action. Also consider the time impacts of the response action and how the
risk response may affect the overall project and/or other risks.
Planning Risk Response Actions
•  Select a response action - the action selected is influence by the level
of the risk consider the figure below:
High impact and high probability
risks require aggressive
responses (threats should
be avoided and opportunities
exploited if possible).
P
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Transfer
(share)
Avoid
(exploit)
L
o
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Accept
Mitigate
(Enhance)
Low High
Impact
Simple Response Matrix
Figure 5-3
The next two fgures on the following pages depict typical response 
actions for threats and for opportunities depending on the region of
probability and impact the risk resides.
Page 50 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Response Chapter 5
WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April 
8 of 11 
Chapter 5 Risk Response
1. If a risk has an extremely high probability of occurrence, it may be best to assume the condition
as part of the base.
2. Risks (threats) with high impacts, can over a given limit, wreck a project; these risks must be 
avoided.
3. Insignificant risks can be accepted, passive response.
4. Between avoidance and acceptance we can take other actions such as mitigation or for risks with
low probabilities we may want to transfer them.
5. For risks (threats) above a certain probability we may choose to accept actively by mitigating
and/or preparing contingency plans in the event of its occurrence.
6. All risks (threats) should be mitigated where practical and cost-effective.
Typical Risk Response Planning Chart for Threats
Risk Response Planning: Selecting the Right Strategy  Piney (2002)
1. If a risk has an extremely high probability of occurrence, it may be best to assume the condition as part
of the base.
2. Risks (threats) with high impacts, can over a given limit, wreck a project; these risks must be avoided.
3. Insignifcant risks can be accepted, passive response.
4. Between avoidance and acceptance we can take other actions such as mitigation or for risks with low
probabilities we may want to transfer them.
5. For risks (threats) above a certain probability we may choose to accept actively by mitigating and/or preparing
contingency plans in the event of its occurrence.
6. All risks (threats) should be mitigated where practical and cost-effective.
Typical Risk Response Planning Chart for Threats
Risk Response Planning: Selecting the Right Strategy Piney (2002)
Figure 5-4
Project Risk Management Guidance for WSDOT Projects Page 51
July 2010
Chapter 5 Risk Response
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9 of 11
Chapter 5 Risk Response
1. If a risk has an extremely high probability of occurrence, it may be best to assume the condition
as part of the base.
2. Risks (opportunities) with high impacts; these risks should be exploited. 
3. Insignificant risks can be accepted, passive response.
4. Between exploit and accept we can take other actions such as enhance and/or share opportunity
risks.
5. Risks (opportunities) above a certain probability we may choose to accept actively by preparing
plans in the event of its occurrence –how will we take advantage of a fortunate occurrence?
6. All risks (opportunities) should be enhanced where practical and cost-effective.
Typical Risk Response Planning Chart for Opportunities
Risk Response Planning: Selecting the Right Strategy  Piney (2002)
1. If a risk has an extremely high probability of occurrence, it may be best to assume the condition as part of the
base.
2. Risks (opportunities) with high impacts; these risks should be exploited.
3. Insignifcant risks can be accepted, passive response.
4. Between exploit and accept we can take other actions such as enhance and/or share opportunity risks.
5. Risks (opportunities) above a certain probability we may choose to accept actively by preparing plans in the
event of its occurrence –how will we take advantage of a fortunate occurrence?
6. All risks (opportunities) should be enhanced where practical and cost-effective.
Typical Risk Response Planning Chart for Opportunities
Risk Response Planning: Selecting the Right Strategy Piney (2002)
Figure 5-5
Page 52 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Response Chapter 5
Recall the Identifed Risk (compare pre-mitigated to mitigated)
WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April 
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Chapter 5 Risk Response
Recall the Identified Risk (compare pre-mitigated to mitigated)
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
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Summary
Description
Threat and/or
Opportunity
Detailed Description of Risk Event
(Specific, Measurable, Attributable, Relevant,
Timebound) [SMART]
Risk Trigger
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(1) (2) (3) (5) (6) (7) (8) (9) (10) [10a] (11)
Threat MIN
MAX
Most Likely
0 Master 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?
Communication with parties.
Succession plan for staff changes.
Decisions ASAP on design elements.
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VH
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VL L M H VH
P
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Impact
Risk ID Sheet
Figure 5-6
Project Risk Management Guidance for WSDOT Projects Page 53
July 2010

Chapter 6 Risk Monitoring and Control
“Control is an illusion.”   Some of us may have heard this phrase before; 
and we may have had experiences when we have felt this phrase to be
very apropos –however this phrase does not tell the whole story.  We may 
have little or no control over the external environment but we do have
control over how we interact with it. We do have control over our state
of readiness, we can look ahead and improvise and adapt. We can control
the robustness of our response to identifed risk events and the quality of 
our documentation. We have control over how earnestly we integrate risk
management into our project management plans.
Risk Monitoring and Control
As we continue through project development the project risk profle will 
change. Typically as we successfully respond to risks and our project
knowledge increases our risk exposure will diminish. In effect we can
retire risk reserve as risk events are successfully avoided or mitigated
or we have passed the time during which the risk is active and it
becomes retired.
Risk Monitoring and Control Tools and Techniques
After we have implemented response actions, we must track and record
their effectiveness and any changes to the project risk profle.  Did the 
response actions have a positive or negative effect on achieving project
objectives? If so explain how and why in the risk management plan.
Documentation of Response Actions
This section is devoted to measuring project risk management per
performance, and determining whether a project is tracking to plan or
deviating in a negative manner. This will require a blend of qualitative 
judgments and quantitative measures to determine the “health” of the 
project. Document the response action by describing the action, the
work activities it will affect and the cost of the response action. Identify
the person(s) responsible for successful implementation of the response
action. Also consider the time impacts of the response action and how the
risk response may affect the overall project and/or other risks.
Determining the appropriate metrics for the project, ensuring they are
not burdensome and affect behavior. Too often, metrics change behavior
to provide better metrics not better performance. Set the amounts
and conditions for use of the project risk reserves.  Establish the fnal 
objectives of the project with stakeholders to improve the chances of
project success. Confrm endorsement of team members and stakeholders 
as the project plan evolves.
Page 54 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Monitoring and Control Chapter 6
Monitoring and Controlling Project Risk
The project manager and project team apply their project management
plan through project development and completion of their deliverables.
Monitor the project status looking for trends that can indicate variations
(good and bad) in the project execution. Results of the analysis need to
be communicated and adjustments made through a change management
and/or issue resolution process. The ability to describe the history of the
project and how it evolved is essential to developing lessons learned for
the future.
Helpful Hints
• Be thorough and tenacious in gathering status update information for risks.
• Monitor status and trends continuously (scope, schedule, cost estimates, quality of product, et al).
• Address problems and issues immediately –in fact anticipate and discuss in advance if possible.
• Communicate.
Project Risk Management Guidance for WSDOT Projects Page 55
July 2010
Chapter 6 Risk Monitoring and Control
Risk
Monitoring and Control
“How to”
Page 56 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Monitoring and Control Chapter 6
Risk Management Planning (RMP) Spreadsheet
(http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/ )
Figure 6-1 depicts the RMP spreadsheet; this easy to use spreadsheet provides an effective and 
convenient way to summarize project risk management activities for projects that have conducted
a quantitative risk analysis.  The spreadsheet is typically used for the most signifcant risks as 
determined via the quantitative risk analysis, some term these risks “candidates for mitigation”.  
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Chapter 6 Risk Monitoring and Control
Risk Management Planning (RMP) Spreadsheet
(http://www.wsdot.wa.gov/Projects/ProjectMgmt/RiskAssessment/ )
Figure 6-1 depicts the RMP spreadsheet; this easy to use spreadsheet provides an effective and
convenient way to summarize project risk management activities for projects that have conducted a
quantitative risk analysis.  The spreadsheet is typically used for the most significant risks as
determined via the quantitative risk analysis, some term these risks “candidates for mitigation”.
Risk Identification Risk Analysis Risk Response Monitor and Control
(description/trigger)  (quantitative/qualitative) (actions, owner, date) (status, updates, results)
FIRST PILLAR OF RISK MANAGEMNENT
Identify and Analyze
SECOND PILLAR OF RISK MANAGEMENT 
Response, Monitor and Control
Notice that the spreadsheet is conveniently arranged into four sections: 1) risk identification; 2) risk 
analysis; 3) risk response; and 4) monitor and control. In this chapter we focus on monitor and
control.
Risk Management Plan spreadsheet
Figure 6-1
Notice that the spreadsheet is conveniently arranged into four sections: 1) risk identifcation; 2) 
risk analysis; 3) risk response; and 4) monitor and control.  In this chapter we focus on monitor 
and control.
Project Risk Management Guidance for WSDOT Projects Page 57
July 2010
Chapter 6 Risk Monitoring and Control
Figure 6-2 zooms in on the second pillar of risk management, as recorded in the RMP 
spreadsheet, and indicates how to use the entries to document the risk response actions and their
effectiveness in the monitoring and control portion of the spreadsheet.
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Chapter 6 Risk Monitoring and Control
Figure 6-2 zooms in on the second pillar of risk management, as recorded in the RMP spreadsheet,
and indicates how to use the entries to document the risk response actions and their effectiveness in
the monitoring and control portion of the spreadsheet.
Figure 6-3 provides an example of a completed RMP spreadsheet, and the following pages, describe
how to use the Risk Management Plan spreadsheet to monitor and control project risk.
Name of person who
owns the risk and is
responsible for
implementing the
response actions.
Journal entries for date and
status of risk – track 
effectiveness of response
action.
What happened after the risk response
actions were implemented? How
much was spent? What did it save us?
Figure 6-2
Figure 6-3 provides an example of a completed RMP spreadsheet, and the following pages,
describe how to use the Risk Management Plan spreadsheet to monitor and control project risk.
Page 58 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Monitoring and Control Chapter 6
R
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Project Risk Management Guidance for WSDOT Projects Page 59
July 2010
Chapter 6 Risk Monitoring and Control
Notice the frst 15 columns in the risk management plan spreadsheet are 
devoted to Identify and Analyze – the frst pillar of risk management.  The 
remaining columns (16 thru 25) are devoted to the second pillar of risk 
management – RESPONSE, MONITOR and CONTROL.
In Chapter 5 we reviewed in some detail risk response actions, in
this chapter we follow-up and follow-through with monitoring and
control. The way we “monitor and control” risk is regularly review the
effectiveness of the response. Are the response actions working? Are
things getting better?  Are we more confdent about our ability to meet 
project objectives after the response actions have been implemented?
In effect response, monitor and control is a natural component of our day-
to-day project management activities, communicate with the project team
and ascertain how things are going. Make note in the risk management
plan and document the results.
Notice that Figure 6-1 only lists 5 risks – most will agree this is not too 
many to manage, but is it enough to make a difference for our project.
The answer is a resounding YES and it is demonstrated in the example 
provided. Figure 6-4 below depicts the bottom of the RMP Spreadsheet
under column 11, notice that for these 5 risks there is an expected value of
$7.1 M.
It should also be recognized that this project identifed over 50 risks, 23 
of which were deemed signifcant enough to warrant inclusion in the 
quantitative risk analysis model.  These fve emerged as the top ranked 
risks after the analysis and provided the project manager a prioritized list
of risks to manager.  The other 40+ risks were not simply ignored, they 
provided “issues awareness” for various specialty groups and were dealt
with as each specialty group deemed appropriate for relevant risks; these 
additional risks also acted as a “watch list” for the project.
Total Estimated Cost Impacts of
top 5 risks for the example project
Figure 6-4
The following page depicts a performance measure for the effectiveness of
risk management on this project (Figure 6-5).
Page 60 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Monitoring and Control Chapter 6
Performance Measure of Risk Management for this project
Figure 6-5
When reporting on the risk management efforts for this project we can
summarize as follows:
“The total dollar amount planned for response actions was $0.6M, to
achieve reduced project risk exposure by an estimated $3.8M (expected 
value of risk reduction). After implementing the response actions we
found the total cost of the response actions were $0.7M which avoided an
estimated $3.7M in project costs.”
This example illustrates an excellent return on the dollar for risk
management efforts.  Other benefts, less quantifable, included: improved 
communication among team members and externally to stakeholders and
the public; identifed areas of concern for each specialty group as they 
helped develop the risk register during risk elicitation; greater confdence 
by the project manager and project team during project development; 
upper management was informed of the issues and there were fewer
surprises; the information gleaned from the overall risk workshop and risk 
management effort resulted in more informed decision-making.
Project Risk Management Guidance for WSDOT Projects Page 61
July 2010
Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management
efforts, including:
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
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Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
Our state of readiness
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
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Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
Our commitment to looking ahead, and being prepared to
improvise and adapt
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
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Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
The robustness of our risk response actions
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
9 of 9
Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
  The quality of our documentation
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
9 of 9
Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
How earnestly we integrate risk management into our project
management plan
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
9 of 9
Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
Keeping our RMP up-to-date, including the RMPS spreadsheet
WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April 
9 of 9
Chapter 6 Risk Monitoring and Control
We can monitor and control a number of things in our risk management efforts, including:
Our state of readiness
Our commitment to looking ahead, and being prepared to improvise and adapt
The robustness of our risk response actions
The quality of our documentation 
How earnestly we integrate risk management into our project management plan
Keeping our RMP up-to-date, including the RMPS spreadsheet
Our preparedness to provide the following performance data regarding our risk
management efforts:
o Number of risks identified
o Number of significant risks, as determined through quantitative analysis   
o Dollar value of significant risks
o Estimated cost of planned response actions   
o Estimated value of costs avoided through risk management   
o Actual cost of response actions
o Estimated Actual value of costs avoided through risk management   
o Estimated amount of delay (months) avoided through risk management   
Our preparedness to provide the following performance data
regarding our risk management efforts:
•  Number of risks identifed
•  Number of signifcant risks, as determined through quantitative 
analysis
•  Dollar value of signifcant risks
•  Estimated cost of planned response actions
•  Estimated value of costs avoided through risk management
•  Actual cost of response actions
•  Estimated Actual value of costs avoided through risk 
management
•  Estimated amount of delay (months) avoided through risk 
management
Page 62 Project Risk Management Guidance for WSDOT Projects
July 2010
Risk Monitoring and Control Chapter 6
Project Risk Management Guidance for WSDOT Projects Page 63
July 2010

Appendix A Project Risk Management Plan Template
A project risk management plan describes how a project team will incorporate the risk
management process into its project management plan. Particular emphasis should be given
to how a project team will respond to risks and monitor and control risk throughout the life
of the project. By identifying and analyzing risks, and then responding to risk aggressively and
monitoring the effectiveness of the response, project teams can improve the odds of meeting
project objectives.
This template is a convenient tool for project teams wishing to develop a detailed risk
management plan document; typically this is more common for highly complex project and/
or projects with signifcant risk. 
The template presents an organized approach and is meant as a starting point only;
project teams must tailor the document to meet the needs for the risk management plan
for their project.
Page 64 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A
Project Risk Management Plan
Offcial Project Title:
SR ###, MP limits:
Project Manager:
Risk Manager:
WIN:
PIN:
L#:
Introduction
This document is the Risk Management Plan for this project; it is a plan of action that describes how
this project team will deal with uncertainty and risk. Project risk management is an ongoing and integral
part of project management and is performed throughout the life of the project. The Project Manager is
responsible for reviewing and maintaining the Risk Management Plan to ensure that risk is appropriately
dealt with by the project team.
Project Manager Review
Initial and date after each review and update of this risk management plan:
Year Quarter 1 Quarter 2 Quarter 3 Quarter 4
2009
2010
2011
Project Risk Management Guidance for WSDOT Projects Page 65
July 2010
Appendix A Project Risk Management Plan Template
Project Risk Management Plan
1
A formal project risk management plan is: a detailed plan of action for the management of
project risk. Project risk planning involves the thoughtful development, implementation, and
monitoring of appropriate risk response strategies. It is the process to develop and document an
organized, comprehensive, and interactive risk management strategy; determine the methods to 
be used to execute a risk management strategy; and plan for adequate resources. The project risk 
management plan may be specifc in some areas and general in others. The key to this tool is 
its scalability. Every project should have a formal risk management plan, but the level of detail 
varies with the project complexity.
What is a project risk management plan?
It is a document that gives a summary of the project and outlines the steps of the risk
management process and how the project manager and project team is approaching them.
The risk management plan employed will vary based on the complexity of the project, but most
project risk management plans should include an outline similar to the following:
1. Introduction 4. Organization and roles 7. Risk assessment and analysis
2.  Summary  5.  Risk management strategy/approach  8.   Risk response actions/allocation
3.   Defnitions  6.   Risk identifcation  9.   Risk monitoring and control
Why use a project risk management plan?
It explains how a project manager and project team manages risk for their project. It provides
guidance and requirements, and serves as a communication tool for those who wish to be 
informed of a project’s risk management approach. The plan formalizes the ideas presented
during the risk management process and may clarify some of the assumptions the project team
has regarding the risk management process.
What does a project risk management plan do?
It provides specifc guidance for the project team members in all steps of the risk management 
process for their project. The risk management plan documents the processes to use throughout
the project for identifying, assessing, and managing risk.
When to develop and use a project risk management plan?
The formal plan should be developed during the Planning and Scoping Process and updated
during subsequent project development phases.
How to use a project risk management plan?
The risk management plan is developed early in the project by collaboration with as many
members of the team as possible. It should be consulted and revised throughout the project
development process to guide the project through to completion.
1 (from NCHRP 8-60 review draft –with edits)
Page 66 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A
Duties
Project Manager
• Approve the project risk management plan.
• Approve and insure implementation of response actions to identifed risks,
particularly signifcant risks that emerge as prospects for risk response.
• Confrm who will carry-out response actions and when action will be taken,
incorporate into work plan.
• Monitor effectiveness of response actions.
• Regularly review and update the project risk management plan.
• Promote aggressive risk management for this project.
• Actively participate in risk workshops.
• Communicate to senior management the risk and uncertainty the project is
exposed to and the action be taken to address it.
Project Team
Member
• Pro-actively identify risks and their characteristics in terms of probability of
occurrence and impact.
• Pro-actively respond to risks within specialty area.
• Document actions and report to project manager for inclusion in risk
management updates.
• Monitor effectiveness of response actions.
• Communicate with project manager with regard to risk management
actions and changing project risk profle (addition of new risks or retirement
of old risks –as appropriate).
Project Risk
Manager
• Prepare and update the project risk management plan.
• Develop a schedule for key check-in milestones for review and update of
the risk management plan.
• Determine when risk workshops will be needed and that appropriate
preparation is accomplished prior to the workshop.
• Collaborate with the Strategic Analysis and Estimating Offce, CREM
unit to coordinate pre-workshop, workshop and post-workshop activities,
including the need for consultants and/or other participants –both internal
and external.
• Oversee and manage day-to-day risk management process for the project.
• Ensure quality of risk data.
• Track and monitor effectiveness of response actions.
• Promote risk management activities within the project team and with
stakeholders.
• Communicate with project manager on all matters related to risk
management.
Risk Owner
(Action Owner)
• Implement agreed response actions.
• Report on effectiveness of the risk actions to the project manager/risk
manager and affected project team members.
• Identify new risks that may emerge after response actions.
• Communicate with project manager regularly, including the need for other
risk response actions if needed.
Project Risk Management Guidance for WSDOT Projects Page 67
July 2010
Appendix A Project Risk Management Plan Template
Project Risk Management Process
This project complies with all WSDOT directional documents and
guidance for project risk management, including:
WSDOT Project Risk Management References
Project Management Online Guide (pre-construction) http://www.wsdot.wa.gov/Projects/
ProjectMgmt/Process.htm
Project Risk Management Guidance for WSDOT Projects
(Draft Working Document)
http://www.wsdot.wa.gov/Projects/
ProjectMgmt/Process.htm
WSDOT Guidelines for CRA-CEVP Workshops
Risk Management Plan Spreadsheet
Reference materials on the topic of risk management and risk
workshops at WSDOT.
WSDOT Directional Documents relating to Project Risk Management
IL 4071.00
Infation and Market Conditions Applied to Base Estimates
July 13, 2007
E 1038.00
Enterprise Risk Management
September 4, 2007
E 1042.00
Project Management and Reporting System
July 1, 2008
E 1032.01
Project Management
July 1, 2008
Project Delivery Memo 07-01
Project Cost Estimate Creation, Update, Review and Approval Procedures
July 1, 2008
E 1053.00
Project Risk Management and Risk Based Estimating
December 10, 2008
Page 68 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A
1) Risk Management Planning
Risk Management will be a directed, focused and intentional effort for
this project. To that end the following items are included in this risk
management plan:
i. Level of Risk Assessment has been determined.
As indicated in E 1053.00 this project will conduct a Cost Risk 
Assessment workshop as required for all projects between $25M and 
$100M.
ii. Risk management activities are in the project schedule.
Risk management activities are included in the appropriate sections of
the project schedule, using the appropriate WSDOT MDL codes.
MDL Code MDL Name Description
PE.PD.04 Cost Risk
Estimate &
Management
Cost Risk Assessment, is an integral
element of project risk management
at WSDOT, and quantifes, within a
reasonable range, the cost and schedule to
complete a project; we will identify, assess
and evaluate risk that could impact cost
and/or schedule during project delivery.
PE.PD.04.20 CRA
Workshop
Cost Risk Assessment (CRA) is a workshop
process similar but less intense CEVP®.
The CRA workshop for this project is
planned for January 2010 and is included
in the project schedule; pre and post
workshop activities are also included in the
project schedule
NOTE: Project teams need to add tasks and sub-tasks as appropriate to their
project work activities using the appropriate MDL items.
iii. Risk management is an agenda item in regularly schedule project
meetings.
Risk management is included as an agenda item on our monthly
project meetings and is the number one agenda item each quarter.
iv. Communication to project team of our risk management effort and
expectations has been communicated to the project team.
  During Initiate and Align, Plan the Work and Endorse the Plan risk 
management has been communicated as an item of work for this
project. Specifcally it is included in the Team Mission/Assignment 
and in our Roles and Responsibilities.
v. Risk will be managed, documented and reported.
Incorporated into the project schedule and monthly meetings is an item
for reporting on status of risk response actions. In addition this team
will use the Risk Management Plan Spreadsheet for summarizing and
tracking risk response action efforts for signifcant risks.
Project Risk Management Guidance for WSDOT Projects Page 69
July 2010
Appendix A Project Risk Management Plan Template
This Project Team is committed to aggressively and pro-actively managing
risk. We recognize that project risk management is at the heart of project
management and is an ongoing activity throughout the life of the project.
We also recognize that two pillars of risk management and we embrace
both, and we will respond to identifed risks and track the effectiveness 
of our response actions.
Risk Management
Identify
Analyze
Respond
Monitor/Control
Risk Management
Identify
Analyze
Respond
Monitor/Control
First Pillar of Risk Management (Identify and Analyze)
2) Identify Risk Events
This project team will begin identifying risks and building its risk
register early in project development. Our risk manager will maintain
the risk register in anticipation of the CRA workshop and following the
risk management workshop. The WSDOT Risk Breakdown Structure
(RBS), provided in Chapter 2 of the Risk Management Guide, is used 
for organizing risks via appropriate categories. Organizing risks in this
manner provides a consistent and convenient way to monitor and track
risks at the appropriate level of detail; this also allows for the development 
of a risk database by category.
An example of how to use the RBS is provided on the following page.
Page 70 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A
RISK BREAKDOWN STRUCTURE
EXAMPLE ON HOW TO USE
ENV 10.01
WSDOT Project Risk Management – “How to guide”    APPENDIX_A_Risk Management Plan Template_2009-April 
9 of 12 
APPENDIX A Risk Management Plan Template 
RISK BREAKDOWN STRUCTURE 
EXAMPLE ON HOW TO USE  ENV 10.01 
ENV = Environmental/Hydraulics   (Risk Category, Level 2 in the RBS) 
ENV 10 = NEPA/SEPA Documentation  (Level 3 in the RBS: 10 = Group within the category) 
ENV10.01 = First Identified Risk in this Category and Group
3) Qualitative Risk Analysis
Initial analysis of risks will begin with a qualitative assessment; see Chapter 3 of the Risk 
Management Guide.
4) Quantitative Risk Analysis
Quantitative analysis of risks will begin with our CRA workshop in January 2010; see 
Chapter 4 of the Risk Management Guide for more detail on quantitative analysis. 
ENV 10
NEPA/SEPA Documentation
Completion (incl. Section 4f,
etc.)
----------------
NEPA/SEPA Challenges
ENV = Environmental/Hydraulics (Risk Category, Level 2 in the RBS)
ENV 10 = NEPA/SEPA Documentation (Level 3 in the RBS: 10 = Group within the
category)
ENV10.01 = First Identifed Risk in this Category and Group
3 Qualitative Risk Analysis
Initial analysis of risks will begin with a qualitative assessment; see 
Chapter 3 of the Risk Management Guide.
4) Quantitative Risk Analysis
Quantitative analysis of risks will begin with our CRA workshop in
January 2010; see Chapter 4 of the Risk Management Guide for more 
detail on quantitative analysis.
Project Risk Management Guidance for WSDOT Projects Page 71
July 2010
Appendix A Project Risk Management Plan Template
Second Pillar of Risk Management (Respond, Monitor,
and Control)
5) Risk Response Planning
2
3
Our Project Team is committed to making effective use of the actionable
information that emerges from risk identifcation and analysis. Risk 
response strategy is the process of the project team determining what,
if anything should be done with identifed risks signifcant enough to 
impact project objectives. It leads to specifc actions the project team will 
implement into their project management plan and work plans and then
pro-actively execute; response actions for threats (avoid, transfer, mitigate-
reduce) and opportunities (exploit, share, enhance) can be pursued or the
risk event may be accepted if the response action is not cost-effective.
Response actions will be developed and implemented promptly following
identifcation and analysis. Risks have a shelf life and risk management 
plans can become stale if not monitored and updated regularly, we are
committed to making use of information when it is fresh and keeping our
project management and risk management plans up-to-date so they do not
lapse into irrelevance because they have become outdated and obsolete.
Chapter 5 of this document describes response actions for threats and
opportunities. The project work plan, including the schedule and resource
assignment establishes points at which response actions to identifed risks 
will be implemented, including immediately following the CRA workshop
for this project. In addition the members of this project team are reminded
to be vigilant regarding risk for this project and to identify potential risk
events as they think of them, with the purpose of responding appropriately
to risk for this project.
Residual risks and responses (primary and secondary risks)
As a project develops its risk profle will change. Risks are identifed, 
response actions are implemented which changes the nature of the project
risk profle and new risks are identifed. During risk identifcation we 
identify of risk events, the frst time this is accomplished it constitutes a 
list of primary risks, as actions are taken, secondary risks can emerge as a
result of implementing the treatment response to the primary risk.; where 
possible secondary risks should be dealt with as part of the primary risk
response action. When developing our response actions we will be vigilant
in considering the ramifcations of the response actions. We will take 
measures to include strategies that deal with the primary risk as well as
secondary risks and endeavor to minimize or eliminate residual risk as part
or risk response efforts.
2  Also referred to as Risk Treatment, Risk Mitigation, Risk Management or Risk Prevention in
some publications.
3 Practical Risk Management by David Hillson and Peter Simon (with edits)
Page 72 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A
6) Risk Monitoring & Control
Monitoring and control is not complete unless communication has
occurred. COMMUNICATION is the lynch-pin of effective project
management and risk management.
Communication within and among the project team will be crisp,
concise, complete, correct and timely as will the communication to upper
management and executives. Effectiveness of the risk response actions 
will be monitored and reported regularly, as indicated previously, at our
project meetings; adjustments will be made as needed.
RISK MONITORING and CONTROL (communication)
•  Project Team
– Record assumptions that underlie judgments and decisions;
– Monitor and document results of implemented risk response
actions.
•  Upper Management and Executives
– Avoid unpleasant surprises;
– Fully inform parties of risks, response actions and trade-offs;
•  Accountability
– Document the risk assessment process in such a way that it can be
reviewed and examined for the reasons particular judgments and
decisions were made.
•  Control of risk and management activities
– Specify criteria for risk management success, including targets and
measures used to assess performance;
– Follow-up with risk owners regarding the status of completing
the risk response actions and the resulting effect, track resource
allocation associated with risk response actions.
Project Risk Management Guidance for WSDOT Projects Page 73
July 2010
Appendix A Project Risk Management Plan Template
Project Risk Management Performance
Date of this Report: ___________________
Cost Risk Estimating Management
Project Risk Management Performance Summary Report
(Workshops held between MMMM DD, YYYY and MMMM DD, YYYY)
Performance Measures
CRA
Workshop #1
CRA
Workshop #2
CRA
Workshop #3
CRA
Workshop #4
Workshop Date(s)
CRA
Workshop #1
CRA
Workshop #2
CRA
Workshop #3
CRA
Workshop #4
Pre-workshop Base Cost
Estimate for Project
Validated Base Cost
Estimate for Project
CRA
Workshop #1
CRA
Workshop #2
CRA
Workshop #3
CRA
Workshop #4
Total # of Risks Identified
Total $ Value of Threats
Total $ Value of Opportunities
$ Value of Prospects for Risk
Response Actions
$ Cost of Risk Response
$ Cost Avoided through
pro-active risk response
RBS
CODE
Risk Break Down Structure
Group (Level 2)
Number of Risks Value of Threats $
Value of
Opportunities $
ENV Environmental and Hydraulics
STG Structures and Geotechnical
DES Design/PS&E
ROW Right-Of-Way and Access
UTL Utilities
RR Railroad
PSP Partnerships and Stakeholders
MGT Management and Funding
CTR Contracting and Procurement
CNS Construction
Page 74 Project Risk Management Guidance for WSDOT Projects
July 2010
Project Risk Management Plan Template Appendix A

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 benefits 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 file a complaint  with WSDOT’s Office 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 individual 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:  engrpubs@wsdot.wa.gov Internet: www.wsdot.wa.gov/publications/manuals

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 quantified.  Estimates are comprised of two components: the base cost component and  the risk (or uncertainty) component. Base cost is defined as the likely cost  of the planned project if no significant 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 defined contingency with explicitly defined 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 Office (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.
“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

DRAFT
FirstName LastName WSDOT State Design Engineer Project Risk Management Guidance for WSDOT Projects July 2010 Page iii

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E. From: Date: Phone: To:         WSDOT – Headquarters Design Strategic Analysis and Estimating Office 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.   WSDOT Strategic Analysis Estimating Office Project Risk Management Guidance for WSDOT Projects July 2010 Page v .Comment Form NOTE: This document is a working draft – your feedback and input is greatly appreciate.

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. . . . . . . . . . . . . . . . . . . . . 63\ Project Risk Management Guidance for WSDOT Projects July 2010 Page vii . . . . . . . . . . . . . . . . . . . . . .43 Risk Monitoring and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xix Statement of Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii Comment Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Purpose . . . . . . . . .1 Risk Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xiii Project Risk Management Process . . 11 Qualitative Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Quantitative Risk Analysis . . . . . . . . . . . . . . . . .Contents Foreword . . . . . . . . . . . . . .53 Project Risk Management Plan Template . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xxi Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Appendix A Risk Management Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Definitions of Selected Terms . . . xi The Value of Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Risk Response . . . . . . . . . . . . . . . . . . . . . . xvii Maximum Effort = Reduced Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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•  Provide information on how project risk management fits into the  overall project management process at WSDOT. Estimating the cost of transportation projects is a fundamental  responsibility of the Washington State Department of Transportation (WSDOT).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. or accepted. 1994 * The methodology is consistent with the Project Management Institute (PMI) per the Project Management Body Of Knowledge (PMBOK). Project Risk Management Guidance for WSDOT Projects July 2010 Page ix . Understanding of project risks will better enable project teams to contribute to the fulfillment of public service through assessing project  risk and uncertainty to aide in making decisions regarding project development and delivery. 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. It cannot be ignored. •  Identify data requirements for risk analysis input and for output  (CPMS data requirements). Estimators  need to prepare estimates based on the scope of the project.* •  Provide techniques and tools for project risk management.  Estimators must be shielded from pressures to prepare estimates that  match some preconceived notion of what a project should cost. Risk can be managed. These guidelines were developed by the Strategic Analysis and Estimating Office  with contributions from a number of specialists in cost estimating and project development.” Sir Michael Latham. “No construction project is risk free. •  Provide guidance on how to proactively respond to risks. the schedule of the project and the bidding conditions that are anticipated. shared. transferred. minimized. These decisions contribute to public safety and the projects we deliver add value to Washington State on many levels.

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scoping. Project Cost Estimate – total project cost estimate includes  PE + RW + CN Project Risk Management Guidance for WSDOT Projects July 2010 Page xi . Contingencies are currently limited to 4% of the total contract amount for all WSDOT contracts. payment for work completed.  The Base Cost typically falls in the 20% to 40% confidence level in  the Risk Based. and the documentation of physically constructed elements. and design phases. Primarily. Planning and scoping typically have separate budgets but are encompassed under Preliminary Engineering. or a strictly defined part of the project. the construction phase includes change management. certification and documentation of  quality. and state a likely or  approximate quantity in generally accepted units of measurement and cost  for the project. materials. and additional items. equipment and labor) to be done to complete  a project.03(2) “Contingency percentages’ are setup to handle unforeseen changes in a project during construction. Construction Phase (CN) – The activities associated with the  administration of a contract for specified services and physical  infrastructure. It dose not include any significant risks (threats or  opportunities). The terms “Design” or “Design Phase” are  sometimes used interchangeably with PE.Definitions of Selected Terms Base Cost Estimate – The Base Cost represents the cost which can  reasonably be expected if the project materializes as planned. assurance that safety and associated impacts to the traveling public are mitigated. The base cost estimate includes the standard WSDOT 4% construction contingency described in the Plans Preparation Manual M 22-31.” Preliminary Engineering Phase (PE) – The effort (budget/cost) of taking  a project through the planning.” 2. including additional work. quantity overruns. Note: 1.e.it is not optimistic and it is not conservative. The base cost estimate is ubbiased and neutral. refer to WSDOT Plans Preparation Manual M 22-31 Section  800. Estimator – “One who assesses the extent of work and/or components  of the work (i.

wa.htm Page xii Project Risk Management Guidance for WSDOT Projects July 2010 .  negotiation. all new Right-of-Way must be acquired before  the project can go to Ad. The right-of-way phase can begin during scoping.gov/Projects/ProjectMgmt/RiskAssessment/workshop. processes. Except  under rare circumstances. except that CN cannot begin unless the RW is certified. A positive consequence presents an opportunity. Risk – The combination of the probability of an uncertain event and its  consequences. Risk-Based Estimate – Involves simple or complex modeling based  on inferred and probabilistic relationships among cost. a negative  consequence poses a threat.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 defined during the design phase.wsdot. and structures that  are directed toward effective management of risks –including potential  opportunities and threats to project objectives. schedule. Purchase and  Acquisition of R/W is performed by the Real Estate Services office and  comprises the cost of R/W. or anytime in between. The phase end is when the RW is certified. and events related to the project. Risk Management –Refers to the culture. but this may not have a direct relationship to the construction  phase. 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 defined and applied to the Base  Cost through modeling to provide a probable range for both project cost and schedule. and purchase of new Right of Way by the Real Estate Services  office. after design  completion. Negotiation. NOTE: Preparation of R/W Plans is paid for  with PE dollars and is part of the design effort. A comprehensive glossary can be found at: http://www. It also includes the appraisal.

 on the following pages. as noted in the National Cooperative Highway Research Program in NCHRP Report 574. Figures 1 and 2. •  Recognizes uncertainty and provides forecasts of possible outcomes. greater focus  on benefits. •  Is a positive influence on creative thinking and innovation. •  Offers better control –less overhead and less time wasted. “The problem with the future is that more things might happen than will happen” (Plato). Project Risk Management Guidance for WSDOT Projects July 2010 Page xiii . we can take action to shift the odds for project success in our favor. •  Helps senior management to understand what is happening with the  project and the challenges the project has to overcome. depict Project Risk Management  through Project Development and Balanced Risk Management. which is available at the WSDOT library along with other publications on project management and risk management. as an integral and required part of project management. •  Produces better business outcomes through more informed decisionmaking. Risk management is also a key component of project cost estimating and scheduling. we can not only predict possible future outcomes. With effective risk management.The Value of Risk Management Project risk management delivers the following values: •  Contributes to project success. Project risk management is an integral component of project management and found at the heart of WSDOT’s Project Management processes.

schematics & location) Project scope (schematics. (P or I). preliminary plans. location Cost Estimating Scoping Baseline cost estimate Capital Improvement & Preservation Program (CIPP) & Biennial Program Scoping Estimating Set baseline cost for project and program project (CIPP and biennial program) CURRENT Project Mgmt Plan Scope Schedule Estimates Documentation Update Project Mgmt Plan Project scope (design. concepts..Project scope (final plans /specs and bid documents) Cost Estimating PS & E Advertise and Bid Engineer’s Estimate PS & E Estimating Estimate construction costs to obligate funds & compare with bids Award Construction Project Risk Management Guidance for WSDOT Projects July 2010 Document and record Change Orders and the effect on project scope.) Design Periodic cost estimate updates Design Estimating Estimate for Cost Management Cost Estimating Risk Response Results Of Risk Response Actions Risk Monitoring and Control TAKE ACTION IMPLEMENT RISK RESPONSE PLAN Planning Post-response Analysis . type. e . development. alternatives. Project Risk Management through Project Development and Construction Figure 1 s e s a h p n io t c e u r t P s n o c Page xiv Planning and Project Development Phases Needs/ deficiencies Planning Project Risk Management Risk Management Planning Risk Identification (determine and document risk characteristics Produce Preliminary Risk Register) Risk Analysis Qualitative Quantitative Pre-Response Analysis Risk management is at the heart of project management and is an ongoing activity until the project is completed. etc . schedule and cost.g . plans for approval. Cost Estimating Cost Estimates (Recycle loop) Program (project) cost estimate Highway System Plan Conceptual Estimating Estimate potential funds needed & prioritize needs for highway system plan Program (project) scope (category.

Effects of risk-seeking approach Effects of risk-averse approach Balanced Risk Management Approach Risk process becomes burdensome Risk management becomes less cost effective Resources spent on low priority items Inadequate resources for risk process Ineffective risk management Threats materialize Opportunities are missed Under-invest in risk management Appropriate Risk Management Matches Enterprise Risk Tolerance Pro-Active responses to risks Resources allocated effectively Over-invest in risk management Project Risk Management Guidance for WSDOT Projects July 2010 Spend resources on “fire-fighting” Strengthen risk process Page xv Balanced Risk Management (Risk Tolerance) Figure 2 .

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With pro-active risk management we look at projects in a comprehensive manner and assess and document risks and uncertainty. Risk response strategy is the process of developing options and determining actions to enhance opportunities and reduce threats to the project’s objectives. Quantitative analysis is based on a simultaneous evaluation of the impacts of all identified and quantified risks. The Project Manager and the project team identify which strategy is best for each risk. plan. Project teams may elicit assistance from subject matter experts or functional units to assess the risks in their respective fields. Qualitative risk analysis assesses the impact and likelihood of the identified risks and develops prioritized lists of these risks for further analysis or direct mitigation. This process ensures that each risk requiring a response has an “owner” . or an outcome of the CEVP®/CRA workshop process. as an integral part of project management. Risk Monitoring and Control is an ongoing process for the life of the project. It identifies and assigns parties to take responsibility for each risk response. monitors residual risks. and evaluating their effectiveness in reducing risk. Risk Monitoring and Control tracks identified risks. The steps for risk management are provided below. 2) Identify Risk Events 3) Qualitative Risk Analysis 4) Quantitative Risk Analysis 5) Risk Response Planning 6) Risk Monitoring & Control The remainder of this document includes more detail on the steps listed above. Project Risk Management Guidance for WSDOT Projects July 2010 Page xvii . Quantitative risk analysis is a way of numerically estimating the probability that a project will meet its cost and time objectives. It may be a simple risk assessment organized by the project team.Project Risk Management Process Risk management. and execute risk management activities throughout the life of a project. It is intended to maximize the beneficial outcome of the opportunities and minimize or eliminate the consequences of adverse risk events. and then selects specific actions to implement that strategy. and identifies new risks—ensuring the execution of risk plans. (WSDOT PMOG) Risk identification involves determining which risks might affect the project and documenting their characteristics. The team assesses each identified risk for its probability of occurrence and its impact on project objectives. 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. occurs on a daily basis.

repeat work. Performance. asset security. reduced insurance premiums. maintainability. Project Risk: any uncertainty that. Business risk management Safety risk management Technical risk management Security risk management Information security. Safety Risk: any uncertainty that. quality. share price. For this document we are interested in Project risk management. personnel security. client satisfaction. if it occurs. market share. if it occurs. would affect one or more safety objectives . Effective Opportunity Management for Projects Relationship between Risk and Objectives Table 1 Page xviii Project Risk Management Guidance for WSDOT Projects July 2010 . would affect one or more business objectives . if it occurs. Internal Rate of Return (IRR). minimal lost days. reputation. physical security. Technical Risk: any uncertainty that. Credit: David Hillson. would affect one or more objectives . would affect one or more technical objectives . if it occurs.Table 1 provides a helpful comparison between risk and objectives for various types of risk management. Business Risk: any uncertainty that. would affect one or more project objectives . regulatory compliance. would affect one or more security objectives . performance. if it occurs. Profitability. Technical Risk: any uncertainty that. reliability. competitiveness. Sample objectives - Project risk management Time. cost. functionality. Type of risk management Generic Description Risk: any uncertainty that. scope. Low accident rate. if it occurs.

schedule. with  effort being directed toward those risks that rank the highest in terms of significant impact to project objectives. and estimate package. 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 Project Risk Management Guidance for WSDOT Projects July 2010 Page xix . Inputs Project scope. 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 flexibility  so that project teams can match the tool with the specific needs of their  projects.Maximum Effort = Reduced Risk Description The power of risk management is fully realized when a project manager takes action to respond to identified risks based on the risk analysis.

e.  Estimated Project Cost Data (in Current Year Dollars. “2007 $”) •  Design cost estimate •  Right of way cost estimate •  Construction cost estimate 3.. Page xx Project Risk Management Guidance for WSDOT Projects July 2010 . Midpoint for construction phases using the project award date and the operationally complete date. The required data is: 1.•  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 $100M Output CPMS data requirements per in Instructional Letter (IL) 4071.00. Project  teams must provide specific data to the region program management office  for inclusion into CPMS and the Transportation Executive Information  System (TEIS). Project scheduling data for the following milestone dates: •  Project definition completion date •  Date for the beginning of preliminary engineering •  Completion date for the environmental document •  Start date for the acquisition of right of way •  Date of right of way certification •  Project advertisement date •  Date project is operationally complete (substantially complete) 2. CY$) •  Date of estimate basis (i.

cost. Project Risk Management Guidance for WSDOT Projects July 2010 Page xxi . This policy reaffirms the requirement that a  risk management plan is a component of every project management plan. 3 Cost Estimate Validation Process (CEVP®) Workshop2 $25 M to $100 M Cost Risk Assessment (CRA) Workshop1. General Note: Workshops are orchestrated by the Cost Risk Estimating Management (CREM) unit of the Strategic Analysis and Estimating Office in HQ in collaboration with the project manager. 2 Projects $25 Million and over should use the self-modeling spreadsheet in the scoping phase risk based estimating process. in support of risk management (E 1053. schedule. CEVP® 3 – 5 days Internal and external. 2 1 In some cases it is acceptable to combine the Value Engineering Study and Risk Based Estimating Workshop. and manage risks for all projects. An assessment of risks with an evaluation and update of costs and schedule estimates.Statement of Policy 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 $10 Million (PE. other participants may be included as the project manager/project team deem necessary. Typically updated when design changes or other changes to the project warrant an updated CRA. See WSDOT Guidelines for CRA-CEVP workshops for more details. Levels of risk based estimating. 3 An informal workshop is comprised of the project team (or key project team members). Anytime. An intense workshop that provides an external validation of cost and schedule estimates and assesses risks.00): Project Size ($) Required Process (project managers can use a higher level process if desired) Less than $10 M Qualitative Spreadsheet in the Project Management Online Guide1 $10 M to $25 M Greater than $100 M In-formal workshop using the Self-Modeling Spreadsheet1. R/W and Const). major projects are typically updated as needed. The project manager submits a workshop request and works with the CREM unit to ascertain the type of workshop required and candidate participants. A general comparison of a few typical characteristics for CRA and CEVP® CRA Workshop length Subject Matter Experts Timing (when to hold workshop) 1 – 2 days Internal and local. Best to start early in the process. followed up by the more formal CRA or CEVP® process during the design phase. These workshops provide information  to project managers that can help them control scope.

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. Sears and Clough 2008 Page xxii Project Risk Management Guidance for WSDOT Projects July 2010 . but some basic principle for which  there is precedent almost always apply. Nevertheless. a skilled and experienced estimator. 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.“It must be recognized that even the final construction estimate is of  limited accuracy and that it bears little resemblance to the advance determination of the production costs of mass-produced goods. using cost accounting information gleaned from previous construction work of a similar nature. Construction estimating is a relatively crude process.” Construction Project Management 5th Edition.

Traditional estimating practices tend to produce “the number” for a project. Estimates now  comprise two components: the base cost component and the risk (or uncertainty) component. . risk must be measured. and risk management plan development must consider the resources needed for project risk management and build it into their project development budget and schedule. Such elements could be related  to scope. Risk events are  characterized in terms of probability of occurrence and the consequences  of each potential risk event. That has changed. WSDOT measured risk based on the estimator’s experience and best judgment. scoping or early design phases.Chapter 1 Risk Management Planning Good risk management planning begins with sound project management practices including review of organizational policies and guidance. rising cost of right-ofway as corridors develop in advance of the project. With the rising knowledge about a project’s scope comes an understanding that contending with some elements of the project will require significant additional resources. CEVP or other  meetings) should be part of the Project Workplan and built into the project schedule and budget. without explicitly identifying the project’s uncertainties and risks. The base cost does not include contingencies. environmental mitigation and permitting. utilities. People and resources involved in the project. project management plan development. a list of risks is created of both opportunities and threats. seismic and other considerations. WSDOT has come to the understanding that an estimate is more accurately expressed not as a single number but as a range. Project Initiation and Team Alignment. see Figure 1-1. To determine an accurate estimate range for both cost and schedule. As the project develops and moves through scoping and early design phases. Once the base cost is established. including risk workshops (such as CRA. Risk management activities. It implies a sense of precision beyond what can be achieved during planning. The Base Cost represents the cost which can reasonably be expected if the project materializes as planned. Monitoring project development and risk exposure continues  formal risk assessments of risk may occur several times through the life of the project. more knowledge about the project becomes available. Risk Management must commence early in the project development process and proceed as project knowledge evolves and project information increases in quantity  and quality. Project Risk Management Guidance for WSDOT Projects July 2010 Page 1 . and Project Planning steps as provided for in the WSDOT Project Management Online Guide. Formerly. called a “risk register.” The risk assessment replaces general and vaguely defined contingency with explicitly defined risk events. But the single number masks the critical uncertainty inherent in a particular project.

and Project Risk Management is also a key component of a Project Management Plan.Knowns Deterministic Estimate (conservative est. as stewards of the public trust. Uncertainty and Government”. must endeavour to inform decision-makers of the We then. which is required for all WSDOT projects. In can be inferred that determined Enterprise Risk Management will require comprehensive Project Risk  Management. w/allowance + contingency) Components of Uncertainty Evolution of Project Knowledge through Project Development Figure 1-1 Figure 1-1  Evolution of Project Knowledge through Project Development In Chapter 5 of the book “Risk. and the intent is for the department to make informed WSDOT Project Risk Management – “How to guide”     1 Risk Management Planning rev 2009-April decisions about risk tolerance.  We then. to  proactively assess and respond to any risks that may affect the achievement of WSDOT’s strategic performance based objectives and their intended outcomes. share and manage risk across all organizations and functions. In order for In Chapter 5 of the book “Risk. Project Development Phase Planning Programming Scoping Design/P&E Ad/Bid/Award Construct Unrecognized Unknown . Uncertainty and Government”. Page 2 Project Risk Management Guidance for WSDOT Projects July 2010 Chapter 1 Risk Management Planning 2 of 9  . Risk reviews are an integral part of budget development.00 WSDOT establishes.Unknowns Contingency Engineer’s Estimate at Ad Portion of Project Cost (what is known and unknown?) Known but not Quantified Known .Risk Management Planning Chapter 1 In Executive Order E 1038. -projects must be uncertainty and risks order for us to understand this allocation of risk examined and the uncertainty and risks must be documented and characterized. as policy. as risk associated with the trust. develop. We must understand risk tolerance and we must weigh the value of project decisions with risks associated with the project. Inmust be documented and characterized. we develop.Unknowns ces wa n Allo Conservative Estimate w/Allowance ign Des Known and Quantifiable Known . it notes “…lawyers and economists are accustomed to think of contracts for future performance as devices for allocating risks of future events”. it notes “…lawyers and economists are accustomed to think of contracts for future performance as devices for allocating us to understand this allocation of risk -projects must be examined and the risks of future events”. It further goes on to direct employees to support the department’s efforts to identify. We to inform uncertainty andstewards of the publicprojectsmust endeavour must understand risk tolerance decision-makers of the uncertainty and risk associated with the projects we and we must weigh the value of project decisions with risks associated with the project.

We can think of risk management as depicted above. When plan.Chapter 1 WSDOT Project Risk Management – “How to guide”     1 Risk Management Planning rev 2009-April Risk Management Planning Risk Management Identify Analyze Respond Monitor/Control Wemanagement are “IDENTIFY and ANALYZE” the risks then. we full include both pillars of risk management in ourpreparing our project management plan value of risk management.  in the second pillar “RESPOND. the two pillars of risk management are “IDENTIFY and ANALYZE” the risks then. MONITOR and CONTROL” project  MONITOR and CONTROL” project risk. as depicted in the second pillar “RESPOND. the two pillars of risk risk. we must include both pillars of risk management in our plan. Unless we incorporate the second pillar we are not realizing the full value of risk management. Unless we incorporate the second pillar we are not realizing the must When preparing our project management plan and work activities for our project. and work activities for our project. as depicted  can think of risk management as depicted above. 3 of 9 Chapter 1 Risk Management Planning Project Risk Management Guidance for WSDOT Projects July 2010 Page 3 .

Risk Management Planning Chapter 1 Risk Management Planning “How to” Page 4 Project Risk Management Guidance for WSDOT Projects July 2010 .

#2  Incorporate risk management activities into the project schedule (see  Table 1. design/ps&e) –hence schedule risk assessments  at appropriate times. #5  Establish the expectation that risk will be managed. •  Know the organization’s tolerance for risk. #3 Make Risk Management an agenda item for regularly scheduled project meetings. this includes review and  QA/QC of project schedules and cost estimates at appropriate times. scoping. #1 Determine the Level of Risk Assessment for your Project (see Table 1. –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. Helpful Hints for Risk Management Planning •  Risk assessment should begin early. •  Allow time in the schedule for prep activities. 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.1). •  Report on status of Project Risk in regularly scheduled project  meetings. •  Allow budget for risk assessment.2 and Figures). documented and  reported. risk management and risk response  activities. #4 Communicate the importance of risk management to the entire project team. Project Risk Management Guidance for WSDOT Projects July 2010 Page 5 . but there must be enough known  about the project to understand what is being assessed.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.

reviews and/or validates cost and schedule estimating and identifies. working collaboratively with independent subject matter experts. Project teams may request assistance from subject matter experts or functional units to assess the risks Project Team Risk Assessment in their respective fields. Schedule and Estimate are complete (apt for the level of development) • Prep Session (flowchart project. determine tool qualitative or selfmodeling) • Risk Meeting (risks are identified and characterized) • Risk Response Actions Developed • Risk Response Actions Implemented Formal Workshop (CRA/CEVP) Milestones include: • Workshop Request Form submitted • Project Scope. Modeling can be accomplished with off the shelf software or using the self-modeling spreadsheet.Risk Management Planning Chapter 1 Project Size ($M) Less Formal Risk Assessment Risk Assessment Level Project Team Risk Assessment Project Management Online Guide (PMOG) Risk Management Plan Qualitative Tool Notes 0 to 10 10 to 25 The Project team assesses each identified risk for its probability of occurrence and its impact on project objectives. Schedule and Estimate are complete (apt for the level of development) • Prep meeting (initial review of areas of concern. More Formal Risk Assessment (Workshops) 25 to 100 Over 100 Determine the Level of Risk Assessment Table 1-1 Less Formal Risk Assessment (does not require a Formal Workshop) Milestones include: • Project Scope. Quantitative Tool Cost Risk Assessment (CRA) Workshop Quantitative Tool Cost Estimate Validation Process (CEVP) Workshop Quantitative Tool The team. determine subject matter experts. characterizes and analyzes risks. The self-modeling Self-Modeling Spreadsheet spreadsheet can be used for any project. Accomplished in a structured workshop setting. Table 1-2 Page 6 Project Risk Management Guidance for WSDOT Projects July 2010 . additional prep items) • Workshop • Preliminary Results Presented • Draft Report • Final Report Include Risk Management Milestones in the project schedule.

Chapter 1 Risk Management Planning Simplified Workshop Timeline Project Risk Management Guidance for WSDOT Projects July 2010 Page 7 Figure 1-2 .

Risk Management Planning Chapter 1 Page 8 Project Risk Management Guidance for WSDOT Projects July 2010 .

WSDOT Project Risk Management – “How to guide”     1 Risk Management Planning rev 2009-April Figure 1-3 Risk Management Schedule (with workshop activities and post workshop activities) Management Schedule Risk (with workshop activities and post workshop activities) Figure 1-3 Chapter 1 Risk Management Planning 8 of 9  Project Risk Management Guidance for WSDOT Projects July 2010 Page 9 .

Page 10 Project Risk Management Guidance for WSDOT Projects July 2010 .

and the owners’ Project Risk Management Guidance for WSDOT Projects July 2010 Page 11 . hence previously  identified risks may change and new risks identified throughout the life of  the project. For example. Tools and Techniques. State the assumptions for risk identification and analysis and delineate  thresholds for risks. we must first be able to define the project in terms of scope. For example a project team may want to describe all cost risks below $100. This means that when we embark to meaningfully and deliberately focus on the risks and uncertainties our project will face.  Design/Plans. by some.” PMBOK Risk Identification Tools and Techniques Try to identify as many risks as possible that may affect project objectives.  Scoping  3. this incremental process of project  development is termed. schedule and  estimate -commensurate with the level of project development at the time of risk analysis. Planning 2. Construction As projects evolve through project development so too the risk profile  evolves project knowledge and understanding grows. progressive elaboration. Progressive elaboration should not be confused with scope creep.Chapter 2 Risk Identification Risk identification occurs through each of the four phases of project  development: 1. In order to  fully understand and assess the risks that our projects are exposed to we must first insure that there is a mutual understanding of the project  under evaluation. and continuing by increments. Risk Identification: Inputs. project environment. Projects tend to develop in small steps.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 significant risks  (assumptions and thresholds for risk assessment will be influenced by the  size and complexity of the project. Outputs Risk Identification Inputs The first and most important input is a defined project. 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. Specifications and Estimate (Engineer’s Estimate)  4. “Progressive elaboration means developing in steps.

for example if a project manager is most concerned about Geotech conditions a brainstorming session on Geotech can be convened. •  Other methods There are many techniques. checklists. design/PS&E. scoping.Risk Identification Chapter 2 tolerance for risk). Documentation Reviews Peer level reviews of project documentation. interviewing.  Page 12 Project Risk Management Guidance for WSDOT Projects July 2010 . Some common techniques. some common techniques  include: questionnaires and surveys. This technique can be scaled  for use on the simplest to the most complex projects. used at WSDOT are provided  below. reports. If  available this can be done utilizing an established Risk Breakdown Structure (RBS). • Lessons Learned Database Searching for lessons learned using keywords 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. for example  “what-if we miss the fish window?” or “what-if our environmental  documentation is challenged and we have to prepare an EIS?” etc. asking “what-if’ questions. and  examination of the Work Breakdown Structure for the project with appropriate specialty groups. Information Gathering •  Brainstorming Formal and informal brainstorming sessions with project team members and extended project team members such as specialty groups.. and so forth. Date and phase of project development when risk was identified Document the date the risk was identified and which project development  phase (planning. the WSDOT RBS is provided in the appendix of this  document. estimates and schedules are a common and early method to help identify risks that may affect project objectives. Risk Identification Outputs An expected deliverable from Risk Identification includes a preliminary  “risk register” which documents the following information: Identification # for each risk identified A unique number is assigned to each risk for tracking purposes. studies. construction). stakeholders and regulatory agency representatives is a technique for risk identification. preliminary plans. This technique  can also be tailored to specific areas of interest for the project risk. There are a wide variety of techniques used for risk  identification.

 More detail about the WSDOT  workshops for CRA/CEVP is offered later in this document. mitigated or is it to  be accepted? Can the identified opportunity be exploited. Risk Type Does the identified risk affect project schedule. for example  “NEPA Delay” or “Reduction in Condemnation”. and Time bound (SMART). and at:  http://www. Measurable. Detailed Description of Risk Event The detailed description of the identified risk. usually there is some warning of imminent threat  or opportunity. 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. shared or  enhanced? Comments about Risk Identification Risk Management is an iterative process. This can be done using the Risk Breakdown Structure (RBS) for naming conventions. if known. the nature of the risk  with respect to project objectives (threat or opportunity) should also be documented. risks should be reviewed  regularly and as new risks are identified they should be documented and  assessed. Risks rarely just  suddenly occur. These warning signs should be clearly described and information about the risk trigger should be documented. Relevant.wsdot. cost. The description must be clear enough and thorough enough so that others reading about the description of the risk will understand what it means. transferred. or both?  Potential Responses to Identified Risk Document.wa.Chapter 2 Risk Identification Name of Risk (does the risk pose a threat or present an opportunity?) Each identified risk should have an appropriate name. Attributable (a cause is indicated). possible response actions to the identified risk  –can the identified threat be avoided.gov/Projects/ProjectMgmt/RiskAssessment/ Project Risk Management Guidance for WSDOT Projects July 2010 Page 13 . the description must be  provide information that is Specific. or other as appropriate. Risk Trigger Each identified risk must include the risk trigger(s). For example “NEPA Approval Date” may be considered a risk trigger on a project that  has a risk of a legal challenge.

It is quite likely that for most projects a combination of the above methods will be used to identify risks. Checklists and/or Questionnaires to `specialty groups . using past examples requires prudent and objective judgment. for your project. Nonetheless a checklist/questionnaire can spark thinking prior to a more formal brainstorming process. Figure 2-3 Risk Breakdown Structure for categorizing and organizing risks.  •  Thoroughly describe the risk – there is a form in the following pages  to help with this or you may create your own. Brainstorming can range from a small informal project team effort for simpler projects to a full-blown CEVP workshop.wsdot. Each project is unique. including uncertainties and risks. •  Include specialty groups and/or other persons who may have  meaningful input regarding the challenges the project may face. Figure 2-2 Example of how template is used. The important thing is that once identified the risks are properly documented.1 Page 14 Project Risk Management Guidance for WSDOT Projects July 2010 . WSDOT Lessons Learned website: http://eefmapps. Examination of past similar projects . Figure 2-1 Blank template for documenting identified risks (tailor to your needs). what constitutes “significant” risk.wsdot.xsl?-db=DebriefReport&-lay=LessonWebForm&Mo nthlyHighlight=Yes&-find Combination of above methods and/or others . Effective brainstorming requires a skilled facilitator. •  Determine who “owns” the risk and who will develop a response. they only deal with the items on the list.wa. hence a standard list will often not capture the project specific risks of most concern. working together with the project team and specialists who can bring additional expertise.htm Risk Identification Table 2.is an effective method. since a previous project may be similar but is nonetheless different because each new project has unique requirements and features. #3 Carefully document and describe risks in a risk register. HELPFUL HINTS FOR RISK IDENTIFICATION •  Determine.checklists/questionnaires are a quick and easy-to-use technique but limited in nature.Risk Identification 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 significant for the project under  evaluation). Figure 2-4 Example of risk identification using spreadsheet from Project Management Online Guide found at: http://www.wa.lessons learned from past projects help us to avoid repeating mistakes.gov/fmi/xsl/Lessons/Main. #2  Focus on identifying large significant risks which affect project  objectives. Brainstorming .gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/PreConstruction/Pre-Construction_files/slide0001.

             Risk Identification Page 15 . is in the last 1. EXAMPLE ONLY Pre-mitigated Chapter 2 Risk # Status Dependency Project Phase Summary Description Threat and/or Opportunity Probability Correlation (Specific. (3) look at strategies for reducing project footprint so as to minimize area we are disturbing during construction. particularly when investigating the last 1. Measurable.      RISK TRIGGER Details (and duration of exposure to this risk): The trigger for this risk is discovery during constuction. Attributable. (2) investigate the use of Ground Penetration Radar. If these discovery contaminants are discovered during construction during constructi it can impact both cost and schedule.0Mo 2. POSSIBLE RESPONSE STRATEGIES TO EXPLORE: (1) even though a thorough site investigation is planned we may want to go above and beyond.00$M 1.50$M (9) (10) [10a] (11) Type Detailed Description of Risk Event Risk Impact ($M or Mo)     (1) (2) (3) (5) (6) (7) Threat      Cost 30% MAX Most Likely 7.0Mo Threat Risk Matrix Schedule P rob ability Project Risk Management Guidance for WSDOT Projects July 2010 Although significant pre-construction site investigations are to be conducted there is still some risk of undiscovered subsurface contaminants in this project. the area of most concern. Our project is over 4 miles in length.5 miles of this project. VH H M L VL VL L M Impact H VH     NOTES: This risk has been discussed for sometime and our concerns are k nown by management and regional stak eholders. this construction is expected to occur in the final 12 months of construction (~March 2015 to March 2016). for exposure to unknown subsurface materials.50$M 0 CNS 40 Active Construction Master Duration Risk MIN MAX Most Likely During Construction discovery of subsurface Hazardous Materials 1. Timebound) [SMART] Risk Trigger (8) MIN 0.0Mo 6.5 miles of construction. on Because of the nature of the project corridor the area of greatest concern is in the latter half of the project. hence our exposure is primarily during the second year of construction. Relevant.

Attributable.50$M (7) (8) (9) Probability Correlation 0 CNS 40 Active Construction Schedule P robability Page 16 EXAMPLE ONLY Pre-mitigated Detailed Description of Risk Event (Specific.  Chapter 2 Project Risk Management Guidance for WSDOT Projects July 2010  . POSSIBLE RESPONSE STRATEGIES TO EXPLORE: (1) even though a thorough site investigation is planned we may want to go above and beyond. hence our exposure is primarily during the second year of construction. Our project is over 4 miles in length. constructi Because of the nature of the project corridor the on area of greatest concern is in the latter half of the project. (2) investigate the use of Ground Penetration Radar. Timebound) [SMART] Risk Trigger Risk Impact ($M or Mo) [10a] (11) (10) Master Duration Risk MIN MAX Most Likely During Construction discovery of subsurface Hazardous Materials 1. this construction is expected to occur in the final 12 months of construction (~March 2015 to March 2016). VH H M L VL VL L M Impact H VH NOTES: This risk has been discussed for sometime and our concerns are k nown by management and regional stak eholders.50$M 7. If these contaminants are discovered during construction during it can impact both cost and schedule.0Mo 6.Type Risk # Status Dependency Project Phase Risk Identification Summary Description Threat and/or Opportunity (1) (2) (3) (5) Threat Cost 30% MAX Most Likely (6) MIN 0. (3) look at strategies for reducing project footprint so as to minimize area we are disturbing during construction. for exposure to unknown subsurface materials.5 miles of construction.0Mo 2. particularly when investigating the last 1. is in the last 1. Threat Risk Matrix RISK TRIGGER Details (and duration of exposure to this risk): The trigger for this risk is discovery during constuction.00$M 1.5 miles of this project. the area of most concern.0Mo Although significant pre-construction site investigations are to be conducted there is still some risk of undiscovered subsurface discovery contaminants in this project. Measurable. Relevant.

Attributable.Chapter 2 Risk Identification Project Title: Project Manager: Date Risk Identified: CN Duration Estimate PE Estimate RW Estimate CN Estimate Risk ID Sheets. Relevant. Threat and/or Timebound) [SMART] Opportunity (6) Threat (7) Probability Correlation Status Risk # Risk Trigger Risk Impact ($M or Mo) [10a] MIN (11) (1) (2) (3) (5) (8) Type (9) (10) Cost MAX Most Likely Construction Retired 1 Master Duration Risk 0 Schedule MIN MAX Most Likely Threat Supplemental notes about this risk event Risk Trigger Details: Risk Owner: Risk Breakdown Structure # (RBS#) Risk Matrix VH Probability H M L VL VL L M Impact H VH 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? Blank Template For Documenting Identified Risks (Tailor to Your Needs) Figure 2-1 Project Risk Management Guidance for WSDOT Projects July 2010 Page 17 .xls Pre-mitigated or Post mitigated ? Parameters for Monte-Carlo Modeling Project Phase Dependency Summary Detailed Description of Risk Event Description (Specific. Measurable.

Threat and/or Timebound) [SMART] Opportunity (6) Threat (7) Complex project. Who will do it? Project Mgr Business Mgr Executive Oversight Due date? NOW 2929-Feb 2929-March Example of How Template is Used Figure 2-2 Page 18 Project Risk Management Guidance for WSDOT Projects July 2010 . There is a process to weed out frivolous appeals. 2929 Actions to implement strategy: What needs to be done? Communication with parties. whether based on actual issues with the permits or not. Appeals can be made on any of the major permits.0 $M 8.xls Pre-mitigated or Post mitigated ? Parameters for Monte-Carlo Modeling Project Phase Dependency Summary Detailed Description of Risk Event Description (Specific. Ule Givens ENV 30. To this end we will form a team to puruse this effort with appropriate representatives from each permitting authority with review dates and commitments. might require additional time (longer than  average) to review. permits upfront & thoroughly.1 PC-18 yes Risk Breakdown Structure # (RBS#) Work Breakdown Stucture # (WBS#) Critical Path (yes or no) Response Actions (action to be taken) VH Probability H M L VL VL L M Impact H VH $.50$M (1) (2) (3) (5) (8) Type (9) (10) Cost 70% MAX Most Likely Pre-construction 1 Permits and Permit Appeals Determination decisions by several agencies. Retired Master Duration Risk 0 Schedule MIN MAX Most Likely 1.0 $M 30. and other environmental concerns. committed & sustained effort to address env.0Mo Threat Risk Trigger Details: Risk Owner: Supplemental notes about this risk event Should know by the ides of March. Tribal issues include fishing rights. Probability Correlation Status Risk # Risk Trigger Risk Impact ($M or Mo) [10a] MIN (11) 0.Mo One of the best tools we have to avoid this risk is a concerted. Potential agency staff changes.Risk Identification Chapter 2 Project Title: Project Manager: Date Risk Identified: Risk Management Guide Example Scott Adams 1-Feb-29 CN Duration Estimate PE Estimate RW Estimate CN Estimate 10. • New NPDES outfalls (appealable) • HPA issues with WDFW Coast Guard permits for THE channel.25$M 2. Succession plan for staff changes. Action by date: Status review date: Status review date: ADDITIONAL NOTES: February 30.00$M 0. Attributable. Relevant. Including verification of jurisdictions and parties of concern and clarify understanding and expectations of all parties.0Mo 5. effects on fish and habitat. The following specific issues were highlighted: • Shoreline permits from various jurisdictions are of particular  concern shoreline permits are easy to challenge and typically result in significant delays. Revisions to our estimated areas of impact.0 $M Risk ID Sheets.0Mo 2. 2929 March 32. Decisions ASAP on design elements.0Mo 8. Risk Matrix Mr. Measurable. 2929 April 31.

) MGT 30 Availability of Funding / Cash Flow Restrictions CTR 30 Delays in Ad/Bid/Award Process (Addenda. Liquidated Damages. etc. Section 4f.g. relocations. Access Hearing.) ---------------NEPA/SEPA Challenges Structures & Geotech STG STG 10 Potential Changes to Structures Design (Bridge Superstructure. etc. work restrictions) ENV 30 Environmental Permitting (incl. etc. work restrictions. disposal. Protests.Chapter 2 Risk Identification Level 1 ----------------------- Project Risk Environmental & Hydraulics ENV ENV 10 NEPA/SEPA Documentation Completion (incl.g. etc.) ENV 40 Archaeological/Cultural Discoveries.) RR 30 Contractor Right of Entry Requirements PSP 30 Additional Scope in Response to Third Party Concerns (e. Insurance/Bonding. artwork.) CNS 30 Work Windows (Weather. 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. Fish Passage) STG 20 Potential Changes to Geotechnical Design Foundations. including change in land use. Retaining Walls) Design / PS&E DES DES 10 Potential Changes to roadway design (including vertical and/or horizontal alignment. USFS. 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. demolitions. seismic) DES 30 Changes to Architectural. Tolling. TESC etc. Landscape Design ROW 30 Limited Access (Interchange Justification Report .) MGT 40 Political/Policy Changes CTR 40 Market Conditions (noncompetitive bidding environment) Lack of Qualified Bidders CNS 40 Construction Schedule Uncertainty (general. cities.) ROW 60 Additional ROW is required (including full vs partial takes): Temporary and Permanent Access Breaks FHWA approval ----------------Construction / Subterranean Easements MGT 50 State Workforce Limitations CTR 50 Delays in Procurement of Specialty Materials or Equipment and associated cost premiums CTR 60 Contractor NonPerformance CNS 50 Marine/ Over Water Construction Issues CNS 70 Earthwork Issues (re-use. work windows.IJR. Liquefaction. haul. etc. Traffic Projections. sight distance.) Right-of-Way (including Access and Acquisition) ROW ROW 10 Issues Associated with Development of ROW Plan Utilities UTL UTL 10 Utility Design Coordination and Agreements Railroad RR RR 10 Railroad Design Coordination and Agreements Partnerships and Stakeholders PSP PSP 10 Tribal Issues Management / Funding MGT MGT 10 Change in Project Managers and/or other key Leadership Contracting and Procurement CTR CTR 10 Change in Project Delivery Method Construction CNS CNS 10 Traffic Control and Staging Issues (MOT/WZTC) Level 2 ----------------------------- ENV 20 ESA Issues (incl. shared-use pathways. urbanization.) ENV 70 Stormwater. etc. counties.. including timing of award) Level 3 ENV 50 Hazardous Materials Groundwater and Soil Contamination (PE. etc.) ROW 20 Uncertainty in Future ROW Escalation Rate (ProjectSpecific. Sound Transit. etc. etc. earthwork. etc.) MGT 20 Delayed Decision Making CTR 20 Issues Related to Contract Language (Contract Packaging. CN) ENV 60 Wetlands / Stream / Habitat Mitigation DES 50 Potential Changes to Design of Permanent Traffic Items (ITS. intersection improvements.) UTL 20 Utility relocations and conflicts RR 20 Railroad Coordination during construction (flagging. extend project terminii. -----------------Challenging Geotech Conditions DES 20 Approval of Design Deviations ---------------Changes to roadway design criteria (i. etc.) CNS 20 Construction Permitting Issues (incl.) PSP 20 Public Involvement Issues ------------------------Other Interagency Agreements (i.) ENV 90 Permanent Noise Mitigation ENV 900 Other Environmental Issues STR 900 Other STR Issues DES 900 Other 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 90 Contractor Access / Staging Coordination and Constructability Issues CNS 100 Construction Accidents CNS 900 Other Construction Issues (including unanticipated change orders/claims) Design Issues ------------- Risk Breakdown Structure Figure 2-3a Project Risk Management Guidance for WSDOT Projects July 2010 Page 19 . Mitigation. Biologic Assessments/Biological Opinions. Appeals) STG 30 Changes to Structural Design Criteria (e..) DES 60 Design / PS&E Reviews ---------------Additional Scope Driven by Internal Considerations (e. DBE. RW. etc. etc. Illumination. consultation.) ROW 50 ROW Acquisition Issues (condemnation. CSS.e. Warranties. pavement. Intersection. etc. change to purpose and need. Maintenance.g.. etc. etc. Fish. shoulder width.e.

Risk Identification

Chapter 2

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. RISK TRIGGER RISK EVENT RBS CODE (CAUSE or PRECIPITATING EVENT) ENV 10.01 ENV 10.02 ENV 10.03 As a result of… Because of… Due to… the public involvement process public pressure and internal reviews reviews by WSDOT Environmental a challenge to the NEPA/SEPA document may occur a challenge to the level of environmental documentation may occur, the design information may be deemed inadequate for NEPA/SEPA approval

CONSEQUENCE (effect on project objectives)

PROBABILITY

IMPACT
($) (TIME)

which would delay delivery of the EA document. resulting in the need to prepare an EIS, adding scope and cost and lengthening the schedule. leading to additional design work, added cost, and schedule delays.

70% 10% 10%

$5M $0.1M $0.1M

8 weeks 6 months 4 months

Risk Breakdown Structure (Example of use)
Figure 2-3b

Page 20

Project Risk Management Guidance for WSDOT Projects July 2010

Chapter 2

Risk Identification

Spreadsheet from Project Management Online Guide
Figure 2-4

Project Risk Management Guidance for WSDOT Projects July 2010

Page 21

Risk Identification

Chapter 2

Page 22

Project Risk Management Guidance for WSDOT Projects July 2010

 as mentioned in the previous chapter. Qualitative . Risk identification. •  when a quick assessment is desired. EXAMPLE the risk of a heavy rainstorm affecting our erosion control is “Very High”. Project Risk Management Guidance for WSDOT Projects July 2010 Page 23 . the recording of risk details and relationships. Identifying. Qualitative techniques include the definition of risk.observations that do not involve measurements and numbers. documented risk events that  we can act on to shift the odds in favor of project success. describing. Prioritization helps us make decisions in an uncertain environment and address project risk in a direct and deliberate manner. 2004 APM Publishing Qualitative analysis provides a convenient and “user-friendly” way to identify. SOURCE: Project Risk Analysis and Management Guide. gives project managers the information necessary to focus project resources. The risk register can be sizeable and it is necessary to evaluate and prioritize the risk events identified in the risk  register. describe and characterize project risks. A thoroughly developed register of risks.  •  the preferred approach for some simpler and smaller projects where  robust and/or lengthy quantitative analysis is not necessary.An assessment of risk relating to the qualities and subjective elements of the risk –those that cannot be quantified accurately. Prioritization can free us from indecision by providing specific.  and assessing project risks allow us to prioritize risks. which present the highest potential for significantly affecting project  objectives. We sometimes find ourselves in situations where  moving forward is difficult because of indecision. Qualitative assessment . results in the  generation of a risk register. and the categorization and prioritization of risk relative to each other. Prioritizing risks. (WSDOT PMOG) Qualitative analysis is often used as… •  an initial screening or review of project risks. Project teams may elicit assistance from subject matter experts or functional units to assess the risks in their respective fields. The team assesses each identified risk for its probability of occurrence  and its impact on project objectives. that may affect project objectives. is helpful.Chapter 3 Qualitative Risk Analysis Qualitative Risk Analysis assesses the impact and likelihood of the identified risks and develops prioritized lists of these risks for further  analysis or direct mitigation. Evaluation and prioritization is typically an iterative process and  can take place at various points in project development.

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 identified project risk event in descriptive nonnumeric 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.

Chapter 3 Qualitative Risk Analysis Qualitative Risk Analysis “How to” Project Risk Management Guidance for WSDOT Projects July 2010 Page 25 .

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. Page 26 Project Risk Management Guidance for WSDOT Projects July 2010 . •  Record the results. Medium. in exasperation. In any field. The definitions in the following  table come from the Merriam-Webster Online Dictionary/Thesaurus (with edits). 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. Something to consider: those relatively new to risk analysis sometimes claim. Structures/Geotech) and ranked within each category. The determination of a value for the probability of occurrence and its consequence to project objectives. “This is nothing more than guessing”. is for many a new activity  and can seem strange at first.  Low…. #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.  •  Prioritize the risks based on the results. it can be characterized in terms of probability of occurrence and the consequence if it does occur. #6  Prioritize the risks based on the results of the qualitative analysis. High. Etc. Environmental. define the terms you plan to use (Very High.e. if it occurs. with experience. #2  Review the risk information from the risk identification step. This does not represent the full actuality that assigning values for probability and impact relies on the expertise and professional judgment of experienced participants. professionals  develop intuition and an ability to understand projects to a greater degree than those not involved with project development and delivery.  •  Stay focused – put a time limit on discussion if necessary. #1 Gather the project team and appropriate persons to discuss project risk. #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. including a thorough description of the risk and  risk triggers.  HELPFUL HINTS FOR QUALITATIVE RISK ANALYSIS •  Invite appropriate participants (not too many not too few). Establish which of the qualitative risk matrices you intend to  use. #3 Discuss the risk with the group.).Qualitative Risk Analysis Chapter 3 How to perform Qualitative Risk Analysis Once a risk is identified. •  Define terms.  If it is desirable the risks can also be group by category (i.

suspect.  the exercise of this capacity. ruling. an  idea that is believed to be true or valid without positive knowledge. diagnosis. finding. infer. the process of  forming an opinion or evaluation by discerning and comparing b: an opinion or estimate so formed.  an opinion on the nature.  PERCEPTION implies quick discernment. choice. character. sentence. Insight. DISCERNMENT stresses accuracy. surmise. Perception.  expect. and Acumen mean a power to see what is not evident to the average mind. imagine. PENETRATION implies  a searching mind that goes beyond what is obvious or superficial. Judgment a: The process of forming an opinion or evaluation by discerning and comparing b:   An opinion or estimate so formed. verdict. or quality of something Guess To form an opinion from little or no evidence Synonyms assume.  ACUMEN implies characteristic penetration combined with keen  practical judgment. judgment. conceive. reckon Decision The act or process of deciding b: a determination arrived at after consideration :  <make a decision>. report of a conclusion A position arrived at after consideration <after much deliberation. Acumen. hypothesize. conjecture. suspicion   Related Words gather. determination.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 capacity for judging. Insight. a formal utterance of an  authoritative opinion. we made a decision about what to use for an estimated unit price> Synonyms conclusion. Related Words mandate. Penetration. Penetration. theorize.  INSIGHT suggests depth of discernment coupled with understanding. a position arrived at after consideration. resolution.  selection Project Risk Management Guidance for WSDOT Projects July 2010 Page 27 . presume. Synonyms Perception. suppose. option. speculate. believe.

1 RBS # Permits and Permit Appeals  Unidentified Utility Conflicts  Change to Substructure Assumptions  Managed Access challenge Risk Title Probability Medium  High  Very Low  Very High High  Very High  Low  Low Impact EXAMPLES ONLY 6 of 10 Chapter 3 Qualitative Risk Analysis Probability Impact Matrix (5 X 5) Figure 3-1 Page 28 Project Risk Management Guidance for WSDOT Projects July 2010 .30% 10% % < 10% of Phase Approximate (PE. CN) > 10% % 8% 4% 2% > 90% 70% .1 ROW 40.1 Risk Title Permits and Permit Appeals Permits and Permit Appeals  Unidentified Utility Conflicts Unidentified Utility Conflicts  Change to Substructure Assumptions Change to Substructure Assumptions  Managed Access challenge Managed Access challenge Probability (Likelihood) Probability Very high (Likelihood) High Very high Medium High Low Medium Probability Medium Medium  High High  Very Low Very Low  Very High Very High Impact High High  Very High Very High  Low Low  Low Low 1Approximate Synonyms Almost certain Synonyms Likely Almost certain Possible Likely Unlikely Possible Rare Unlikely Very Sure Pretty Sure Very Sure Maybe Pretty Sure Seldom Maybe % Probability and Impact Matrix Approximate > 90% VH H M L VL d b a 50% .4  ROW 40.1  STG 20.1 ENV 30. RN.1 UTL 20.WSDOT Project Risk Management – “How to guide”    3 Qualitative Risk Analysis rev 2009-April Qualitative Risk Analysis Chapter 3 EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively) EXAMPLE (depicts a simple list of risks evaluated and ranked qualitatively)  Qualitative Risk List count T/O Qualitative Risk RBS # List count a a b Risk Title Probability Impact T/O T T  T T  T T  T T b c c d d RBS # ENV 30.4 STG 20.70% 30% 1Approximate 80%> 90% % 1Suggested Figure 3-1 Probability Impact Matrix (5 X 5)  Qualitative Risk List (ranked based on qualitative risk analysis)  rank 2 1 4 3 count a b c d EXAMPLES ONLY c (Impact) Very high Very high High High Medium Medium Low Low Very Low Very Low Synonyms Very Critical Very Critical Critical Critical Moderate Moderate Slight Slight Very Little Very Little Very Strong Very Strong Strong VL L M Impact H VH Very Low Low Consequence Very Low (Impact) Consequence  Improbable Seldom Rare Improbable Synonyms < 10% .4  ROW 40.90% 70% 20% .1  UTL 20. Strong Average Average Mild Mild Very Mild Very Mild < 1% T/O T  T  T  T ENV 30.30% < 10% percentages.1  UTL 20.1  STG 20. project teams may adjust if they desire.70% 10% .90% 30% .

4 ROW 40.1 Risk Title Permits and Permit Appeals Unidentified Utility Conflicts Change to Substructure Assumptions Managed Access challenge Probability Medium High Very Low Very High Impact High Very High Low Low Qualitative Risk List (threats and opportunities) count T/O A B C D E F G T T T T O O O RBS # ENV 30.4 ROW 40.1 UTL 20.1 STG 20.1 CNS 50.Chapter 3 Qualitative Risk Analysis Qualitative Risk List (ranked based on qualitative risk analysis) rank count T/O 2 1 4 3 a b c d T T T T RBS # ENV 30.1 Risk Title Permits and Permit Appeals Unidentified Utility Conflicts Change to Substructure Assumptions Managed Access challenge Negotiate Better Work Windows Able to salvage some material for $ Opportunity to switch to ACP (HMA) Probability Medium High Low High Low Medium High Impact High High Low Low Medium Medium High EXAMPLES ONLY HI D B G HI PROBABILITY MED LO A F MED LO E VLO C VLO VLO LO MED HI NEGATIVE IMPACT HI MED LO VLO POSITIVE IMPACT EXAMPLES ONLY Probability Impact Matrix (Double 4 X 4) Figure 3-2 Project Risk Management Guidance for WSDOT Projects July 2010 PROBABILITY Page 29 .1 UTL 20.1 DES 10.1 STG 20.1 CNS 30.

less complex or routine projects. Low (probability): less likely than not to happen. Probability H L L H Impact High (probability): more likely than not to happen. suitable for smaller. High (impact): Substantial impact on cost. Project Management Online Guide is found at: http://www. Substantial action required to alleviate issue. it also appears in the Project Management Online Guide. or technical.Qualitative Risk Analysis Chapter 3 A simple matrix. or technical.gov/projects/projectMgmt/Process Page 30 Project Risk Management Guidance for WSDOT Projects July 2010 .wa. Low (impact): Minimal impact on cost. schedule. Normal management oversight is sufficient. schedule. provided below.wsdot.

Retired=no longer a threat to project objectives. Assign team member to this issue full time until we are confident all utilities have been identifed. Noiseman Mitigation High High Press for results of noise analysis ASAP. Detailed description of the risk. Normal management oversight is ffi i t Avoidance Transferance Mitigation Acceptance (See PM Online Guide for strategy definitions. strategy? For or budget? example: For example: Wetland impact is PC-19 greater than 1/2 acre. Environmental Permits Assessment of the likelihood of occurrence. gas. budget or quality. Status and Review Comments (17) (1) (5) (15) Active=actively monitored & controlled Dormant=risk is not currently a high priority. risk event. additional (MP 14. the response Strategy. particularly on the northside of D Hill near the water. Over 1 acre of wetland was delineated.Noise Wall WBS 165 Perform May be required to buid a Environmental Resutls of Type 1 Analysis permanent noise wall Studies and will indicate the level of Scope pending results of Type 1 Prepare Draft Noise mitigation required. Substantial responsible for action required to managing the alleviate issue. primary element will be Used to determine when to impact to modified as part of implement the Risk Response the scope. schedule. Probability WBS 185 Prepare Base Scope Maps and Plan Sheets H X L L H Mr. mm/dd/yyyy Active UTL 20. Includes information on the risk that is Specific. due Carry design as if the noise wall 9/30/2008 is going to be built (to minimize future rush design work). Probability H X L L H Ms. Impact mm/dd/yyyy Threat . or office technical. Supplmenta l Field investigatio n report due: 11/1/2008 http://www. If Plan Sheets found during construction could potentially stop work.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-Construction/PC_Plan_the_Work/PC_Plan_Risk. but may become active in the future. telecommunications. Low: Minimal impact on cost. action is being taken to expedite meetings with regulatory agencies & expedite the effort to provide appropriate wetland mitigation & attain project permits. Next check is at QPR on 11/20/2008 Impact mm/dd/yyyy Active ENV 90. Valid entries are Low or High. schedule. No artifacts have been found. schedule. Estimate value of delineation risk and estimate cost to respond.4). Name of the High: Substantial impact person or on cost.4 Trigger during Design: Archival and/or field investigation reveals artifacts on site. Environmental Document (DED) X Probability H L L H Mr. This is a high Analysis is probability/high impact threat. Additional work is required for Threat .Unknown utility sewer/stormwater for impacts Smalltown. if it occurs.wa. Measureable.htm Impact EXAMPLE OF QUALITATIVE ANALYSIS WITH A 2X2 RISK MATRIX Simplified Risk Management Plan Spreadsheet with 2×2 Probability Impact Matrix Figure 3-3 Project Risk Management Guidance for WSDOT Projects July 2010 Page 31 .Cultural Resources may be encountered on D Island Constructio n During clearing and grubbing there is a potential for finding historical artifacts. fiber optic. etc.) Develop options and determine actions to For example: be taken in response to the risk event. schedule. For example. E1 Instructions For example: 6/30/99 Scoping Risk is an uncertain event or condition that. Valid entries are Low or High. Analysis. History Acceptance Low Low Numerous construcion work in and around the area has occurred in the past.7 to MP 19.1 Design/PS& E Areas outside of WSDOT R/W have not been investigated for utilities conflicts. Trigger during CN: Discovery of indicator items and/or artifacts during clearing/grubbing. power. Triggers are indications that a risk Is the Which WBS has occurred or is about to occur. expected: 2/28/00 For example: Last status update 4/30/00.3 Design/PS& E Threat . Active ENV 40. Relevant and Timebound. Wetland delineation completed 3/15/00. The severity of the risk's effect on the projects objectives. Multiple Triggers: If found toward the end of design WBS 185 phase may require Prepare Base additional design work Scope Maps and and/or R/W acquisition. or technical. Wetland Mitigation requires additional R/W. Eunice Utility Mitigation Low High Begin subsurface utility investigations immediately. has a positive (opportunity) or negative (threat) on a project. Completion of Immediate action may be required at the wetland time of identification. Describe the consequences of the risk to scope.wsdot. Attributable. investigation required for water.Project Title Project PIN # Date Project Mngr EXAMPLE for Risk Management Document ####### Feb 31. 2929 Mgr Name Telephone Number (xxx) xxx-xxxx PROJECT RISK MANAGEMENT PLAN Risk Identification Priority Date Identified Project Phase (3) (4) Risk Event (threat/opportunity) Qualitative Analysis Impact Area (8) Affected MDL/WBS Level 2 process (9) Risk-Response Strategy Risk Owner ACTION TO BE TAKEN Strategy (13) (14) (include advantages and disadvantages) Monitoring and Control Status Interval or Milestone Check (16) Status (2) ID # SMART Column (6) Risk Trigger (7) Probability (10) Impact (11) Risk Matrix (12) Date.

schedule.htm EXAMPLE OF QUALITATIVE ANALYSIS WITH A 5X5 RISK MATRIX Figure 3-4 Simplified Risk Management Plan Spreadsheet with 5x5 Probability Impact Matrix Simplified Risk Management Plan Spreadsheet with 5x5 Probability Impact Matrix Figure 3-4 Page 32 Project Risk Management Guidance for WSDOT Projects July 2010 . Attributable. Detailed description of the risk.gov/Projects/ProjectMgmt/OnLine_Guide/Phase_Guides/Pre-Construction/PC_Plan_the_Work/PC_Plan_Risk. wetland Immediate action may be required at the delineation time of identification. mm/dd/yyyy Active UTL 20.Noise Wall WBS 165 Perform Environmental May be required to buid a Resutls of Type 1 Analysis Studies and permanent noise wall will indicate the level of Scope Prepare Draft pending results of Type 1 Noise mitigation required.Unknown utility sewer/stormwater for impacts Smalltown. person or schedule. Wetland delineation completed 3/15/00. Strategy. management oversight is sufficient. managing the schedule.wa. telecommunications. Permits Assessment of the likelihood of occurrence. Environmental Analysis. Normal risk event. primary impact to modified as part of Used to determine when to the response the scope. etc. H Probability M L VL VL Impact Prob VH H M $ L M H VH $ Low High Ms. example: or budget? PC-19 For example: Wetland impact is Environmental greater than 1/2 acre. History M H VH Acceptance Numerous construcion work in and around the area has occurred in the past. Describe the consequences of the risk to scope. Which WBS Is the Triggers are indications that a risk element will be has occurred or is about to occur. For example. responsible for Low: Minimal impact on cost. gas. additional (MP 14. fiber optic. Next check is at QPR on 11/20/2008 mm/dd/yyyy Active ENV 90.1 Design/PS& E Areas outside of WSDOT R/W have not been investigated for utilities conflicts.4). Eunice Utility Mitigation Begin subsurface utility investigations immediately. Trigger during Design: Archival and/or field investigation reveals artifacts on site. Name of the High: Substantial impact on cost. 2/28/00 For example: Last status update 4/30/00. Valid entries are Low or High. Measureable. Retired=no longer a threat to project objectives. Relevant and Timebound.wsdot.Qualitative Risk Analysis Chapter 3 Project Title Project PIN # Date Project Mngr EXAMPLE for Risk Management Document ####### Feb 31. has a positive (opportunity) or negative (threat) on a project. E1 Instructions For example: 6/30/99 Scoping Risk is an uncertain event or condition that. investigation required for water. Substantial office action required to alleviate issue. VH Multiple Triggers: If found toward the end of design phase may require WBS 185 additional design work Prepare Base Scope and/or R/W acquisition. action is being taken to expedite meetings with regulatory agencies & expedite the effort to provide appropriate wetland mitigation & attain project permits. Valid entries are Low or High. Noiseman Mitigation Press for results of noise analysis ASAP. Trigger during CN: Discovery of indicator items and/or artifacts during clearing/grubbing. or technical. Status and Review Comments (17) (1) (5) (15) Active=actively monitored & controlled Dormant=risk is not currently a high priority. or technical. L Supplmenta l Field investigatio n report due: 11/1/2008 http://www. 2929 Mgr Name Telephone Number (xxx) xxx-xxxx PROJECT RISK MANAGEMENT PLAN Risk Identification Priority Date Identified Project Phase (3) (4) Risk Event (threat/opportunity) Qualitative Analysis Impact Area (8) Affected MDL/WBS Level 2 process (9) Risk-Response Strategy Risk Owner ACTION TO BE TAKEN Strategy (13) (14) (include advantages and disadvantages) Monitoring and Control Status Interval or Milestone Check (16) Status (2) ID # SMART Column (6) Risk Trigger (7) Probability (10) Impact (11) Risk Matrix (12) Date. Includes information on the risk that is Specific. Estimate value of expected: risk and estimate cost to respond. power. Document (DED) High High L VL VL Impact Prob VH H L M H VH Mr. due Carry design as if the noise wall 9/30/2008 is going to be built (to minimize future rush design work). This is a high Analysis is probability/high impact threat. mm/dd/yyyy ENV 40.4 Constructio n Threat . If Maps and found during construction Plan Sheets could potentially stop work. No artifacts have been found. Assign team member to this issue full time until we are confident all utilities have been identifed. implement the Risk Response strategy? For schedule.Cultural Resources may be encountered on D Island Active During clearing and grubbing there is a potential for finding historical artifacts. WBS 185 Prepare Base Scope Maps and Plan Sheets M Low Low L VL VL Impact $ Mr.) Develop options and determine actions to For example: Completion of be taken in response to the risk event. The severity of the risk's effect on the projects objectives. if it occurs. Over 1 acre of wetland was delineated. Avoidance Transferance Mitigation Acceptance (See PM Online Guide for strategy definitions. Additional work is required for Threat .7 to MP 19. budget or quality.3 Design/PS& E Threat . but may become active in the future. particularly on the northside of D Hill near the water. Wetland Mitigation requires additional R/W.

help insure a consistent process and safeguards against biased and/or misleading results.gov/Projects/ProjectMgmt/RiskAssessment/workshop. The comprehensive set of workshop guidelines are posted at: http://www. Levels of risk based estimating. “Poor modeling can produce an output that looks convincing to managers but is so flawed that the results are dangerously misleading. NOTE: For Projects less than $10M qualitative analysis is sufficient. probability is the very guide of life. other participants may be included as the project manager/project team deem necessary. while very powerful.  This technique  provides project forecasts with an overall outcome variance for estimated project cost and schedule.1 Quantitative techniques. WSDOT provides a comprehensive guide for risk workshops that. Use of quantitative analysis. 2008 and summarized in  Table 4.” Project Risk Management Guidance for WSDOT Projects July 2010 Page 33 . in support of risk management: Tabel 4. although a higher level may be used if desired. Projects $25 Million and over should use the self-modeling spreadsheet in the scoping phase risk based estimating process. Probability theory allows us to look into the future and predict possible outcomes. such as Monte Carlo simulation. can be a  powerful tool for analysis of project risk and uncertainty.1 below.wsdot. 2 Cost Estimate Validation Process (CEVP®) Workshop2 $25 M to $100 M Greater than $100 M In some cases it is acceptable to combine the Value Engineering Study and Risk Based Estimating Workshop.  These tools are described in  Executive Order 1053.Chapter 4 Quantitative Risk Analysis Quantitative Risk Analysis is a way of numerically estimating the probability that a project will meet its cost and time objectives. also can be misleading  if not used properly. followed up by the more formal CRA or CEVP® process during the design phase. An informal workshop is comprised of the project team (or key project team members). Project Size ($) $10 M to $25 M Quantitative 1 2 3 But to us. – Bishop Joseph Butler (1756) Required Process (project managers can use a higher level process if desired) In-formal workshop using the Self-Modeling Spreadsheet1.wa.htm The following caution comes from a paper titled: “Top Down Techniques  for Project Risk Management” by Martin Hopkinson presented at the 2006  PMI Conference in Madrid. poor risk analysis may thus become a tool that fosters management delusions about the prospects for success. On a project with unrealistically tight targets.  (WSDOT PMOG) The Strategic Analysis and Estimating Office at WSDOT offers several  tools for quantitative analysis of risk. 3 Cost Risk Assessment (CRA) Workshop1. if followed.00 December 10. Quantitative analysis is based on a simultaneous evaluation of the impacts of all identified and quantified risks.

CPMS will be modified to calculate the midpoint for construction phases using the project award date and the operationally complete date. Project teams must provide specific data to the region program management office for inclusion into CPMS and the Transportation Executive Information System (TEIS). cost estimate – including the basis of estimate. This includes scope or work. either through  the workshop process or use of the self-modeling spreadsheet. “March 2008 $”) • Design cost estimate • Right of way cost estimate • Construction cost estimate 3. When a project team prepares for a workshop much of the work that is performed on a daily or regular basis becomes the input for the analysis. including scheduling consultants and WSDOT resources to effect the completion of a quantitative analysis. CPMS Data Requirements Table 4-1 Page 34 Project Risk Management Guidance for WSDOT Projects July 2010 . When preparing materials and planning for a workshop that includes quantitative analysis be sure to contact the Strategic Analysis and  Estimating Office of WSDOT. When a Project Management Plan is being developed and is kept current (appropriate to the level of project development) with a well-written scope that can be communicated and comprehended.  Estimates are used to make financial decisions  hence in order to facilitate this materials should be developed that result in and informed decision-making process. CY$) • Date of estimate basis (i..e. Estimated Project Cost Data (in Current Year Dollars. schedule estimate (with backup and assumptions). The required data is: 1. Project scheduling data for the following milestone dates: • Project definition 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 certification • Project advertisement date • Date project is operationally complete (substantially complete) 2. Project Managers sometimes ask “when is the best time to conduct a CRA or CEVP workshop?”  This is answered by reviewing the status of Project  Development. assumptions  and backup information. CPMS data requirements are listed  in Table 4-1. CREM Unit and they can help guide  you through the process.Quantitative Risk Analysis Chapter 4 Project Risk Management is an integral component of ongoing Project Management. along with the associated schedule and cost estimate a project team can begin in earnest preparing for their risk management workshops.

Chapter 4 Quantitative Risk Analysis Quantitative Risk Analysis “How To” Project Risk Management Guidance for WSDOT Projects July 2010 Page 35 .

  they can be analyzed quantitatively.  Estimated cost and  completion dates and associated confidence levels. decision trees) •  Probabilistic analysis of the project. trends can be identified. expected values. •  Quantitative analyses can be conducted several times throughout  project development. •  Prioritized list of quantified risks – those risks that have the most  significant impact (threats or opportunities) to project objectives.  With quantitative  analysis the probability of occurrence and consequence if the risk event  occurs must also be documented. mitigation strategies  can be implemented and monitored. Informal Workshop (Meeting) For smaller projects an informal workshop comprised of the project team and/or key project team members.  the risk register is a key component of the project management plan. and other participants (such as specialty groups involved with critical items) may suffice. Quantitative Risk Analysis Outputs 1  Risk Register – the risk register begins during Risk Identification and  is further developed during analysis (qualitative and/or quantitative).  Recall that identification includes  a thorough description of the risk and risk triggers. •  Represent data in terms of probability and impact.Quantitative Risk Analysis Chapter 4 How to perform Quantitative Risk Analysis General Process Once risks are identified and have been screened via qualitative analysis.   Page 36 Project Risk Management Guidance for WSDOT Projects July 2010 . the risk profile of a project  evolves and changes as the project is developed and knowledge is gained and design changes occur. such as smaller  group meetings and/or larger formal workshops. Figure 4-1 depicts the workshop process. 2  Quantitative Risk Analysis and Modeling  •  Project simulation using Monte Carlo technique to generate a  probability distribution of project cost and schedule based on uncertainty and risk effects. •  Subject Matter Expert input – participating collaboratively with  the project team and cost-risk team can participate in interviews or contribute opinions in other ways such as surveys (questionnaires).  (tornado diagrams. impacts can be  represented using discrete distributions or continuous distributions. Tools and Techniques 1 Gather and Represent Data •  Interviews – can be formal or informal settings.

Chapter 4 Quantitative Risk Analysis Workshop Process for CRA or CEVP Figure 4-1 Project Risk Management Guidance for WSDOT Projects July 2010 Page 37 .

including compounding effects. Accuracy is dependent upon estimate deliverables and estimate maturity. geotech.as considered in this method. access management. utilities. workshops typically occur for a project every 12 to 24 months or at key project milestones.6 – Risk Management June 25. surveying. In our industry. thoughtful and deliberate project risk management –as part of an overall project  management plan. This is a key issue. railroad. Just as important is to devote some energy and resources to assess what is not known and/or is uncertain about a project. and others. is not the expected accuracy of each item. tolling. ad/bid/award. Value is gained when action is taken to respond to risks resulting in a cost and schedule savings to the project. planning and programming. It is important to understand that the range. we have many specialty offices that gather and provide data in support of project delivery. periodically workshop members can regroup to evaluate the project and associated uncertainty and risks.Quantitative Risk Analysis Chapter 4 Risk management is ongoing and iterative. we have devoted a good deal of resources  to clearly explain what is known of a project.  economic. environmental.  including: aerial photography. Risk analysis is not an analysis of estimate accuracy. programming external resource agencies and stakeholders. In order to fully understand our project we must determine what we know and what we do not know about a project. hydraulics. Risk assessment is not a measure of estimate accuracy: The project team must examine each critical item and predict its possible extreme values considering all risks. structures. public interest groups. right-of-way. Project risks and mitigation efforts should be discussed at regular project meetings. real estate services. site investigations. 2008 Page 38 Project Risk Management Guidance for WSDOT Projects July 2010 . one tool for accomplishing this is intentional. make changes as appropriate and following those changes re-run the risk model. construction. Civil Engineering – Transportation. tribal liaison office. bid histories. 41R-08 RISK ANALYSIS AND CONTINGENCY DETERMINATION USING RANGE ESTIMATING TCM Framework: 7. AACE International Recommended Practice No.

the acronym is SHAMPU which refers to: Shape. Detailed steps of process define the project focus the process identify the issues structure the issues clarify ownership estimate variability evaluate implications harness the plans manage implementation Mid level portrayal clarify the basis of analysis execute the qualitative analysis Simplest portrayal shape the project strategy execute the quantitative analysis harness the plans manage implementation harness the plans manage implementation SHAMPU process in 3 levels of detail Table 4-3 Figure 4-2 is a schematic of how an estimate range emerges from a risk  based estimating process. or “plan value”. Harness.Chapter 4 Quantitative Risk Analysis Risk management must be partnered with a well-organized and properly documented project base cost estimate. In the book titled “Project Risk Management” by Chris Chapman and Stephen Ward there is an acronym presented to describe a Risk Management Process framework for projects. the first step is to review the estimate and remove  the contingencies and making any needed corrections that are identified.   Figure 4-3 depicts the regions of an estimate. Risk management introduces reality into our project management process by recognizing that every project has a risk of cost overrun –this does not mean cost overrun is  inevitable –it means it is possible. And Manage Project Uncertainty.  The first estimate. provided by  the project team often will contain contingencies (explicit and/or implicit) within the estimate. There are some helpful ideas expressed via this acronym and they are presented here from page 58 of the above referenced book. Project Risk Management Guidance for WSDOT Projects July 2010 Page 39 .

4-3 Figure Regions of an estimate Page 40 Project Risk Management Guidance for WSDOT Projects July 2010 .Quantitative Risk Analysis Chapter 4 PLAN VALUE (includes contingency) subtract contingency RAW ESTIMATE (no contingency) validated base subtract opportunity impacts add threat impacts subtract opportunity contingency ? WSDOT Project Risk Management – “How to guide” BEST CASE WORST CASE add threat contingency ? 4 Quantitative Risk Analysis OPINION OF COST (most likely) probabilistic cost range Credit: David Hillson. Effective Opportunity Management for Projects Credit: David Hillson. Effective Opportunity Management for Projects Regions of an estimate. Effective Opportunity Management for Projects Creating a probabilistic estimate Figure 4-2 Area of estimating uncertainty “Base uncertainty” Potential opportunity Potential threat Min Opinion Mean of Cost (Most likely) Max Credit: David Hillson.

Primary Risk Management functions include: • Monitor risks (threats and opportunities) • Identify new risks • Evaluate/update probability of occurrence and potential impacts • Devise and implement response strategies • Evaluate and document effectiveness of response • Report to Management and Stakeholders Risk Planning: The project team. Project teams implement and continuously upgrade the Risk Management Plan throughout the project. as part of their normal project development and project management activities needs to include activities for risk management in its work plan.  and unfolds something like this: Initiate and Align Plan the Work Endorse the Plan • Project Team Commitment • Management Endorsement Work the Plan • Manage SSB • Manage Risks • Manage Change • Communicate -Progress -Issues -Lessons Learned Transition and Closure • Implement Transition Plan • Review Lessons Learned • Reward & Recognize • Archive • Project Description • Team Mission/Assignment • Major Milestones • Work Breakdown Structure • Boundaries • Task Planning & Scheduling • Team Identification • Budget • Roles/Responsibilities • Risk Planning • Measures of Success • Communication Plan • Operating Guidelines • Change Management Plan • Quality (QA/QC) Plan • Transition and Closure Plan IDENTIFY and ANALYZE Risk Project Description: subject of the risk assessment Task Planning & Scheduling Budget This produces a project estimate and schedule. MONITOR and CONTROL Risk Risk Management is an integral component of day-to-day project management. Risk Management. ---The team prepares a project estimate based on what is known about the project at that time. a part of Project Management Figure 4–4 Project Risk Management Guidance for WSDOT Projects July 2010 Page 41 . RESPOND.Chapter 4 Quantitative Risk Analysis Quantitative analysis is a natural activity that fits into our standard project management process. the estimate reflects the project if things go per the project plan. Uncertainty and risk events are identified and characterized.

Quantitative Risk Analysis Chapter 4 Page 42 Project Risk Management Guidance for WSDOT Projects July 2010 .

Accept Risk Response: Actions AVOID (threats) Avoidance actions include: change project management plan to eliminate a threat. This prioritization rescues us from indecision with information we can use to direct our project risk management resources. such as extending schedule or reducing scope. In order to maximize the benefits of project risk management we must  incorporate the project risk management activities into our project management plan and work activities. Exploit 2. Recall the Risk Management steps include: Risk Management Planning. Transfer 3. evaluate and analyze the information. Enhance 4. Page 43 . Risk Monitoring and Control. Early in project development. including the Risk Management Planning Spreadsheet found at: http://www. or acquiring expertise . PMBOK Project Risk Management Guidance for WSDOT Projects July 2010 Action taken to insure the probability or impact of a threat is eliminated.  WSDOT has a ready made WBS in the form of its Master Deliverables List (MDL) to help insure our project workplans are comprehensive. risk management provides a structured and disciplined way to document the information. Mitigate Opportunities 1.wa. improving communication. This means building risk management activities into our Work Breakdown Structure (WBS). Avoid 2. obtaining information. Qualitative Risk Analysis.gov/Projects/ProjectMgmt/RiskAssessment/ Descriptions of risk response actions follow: Actions in response to risks: Threats 1. Some risks that arise early in the project can be avoided by clarifying requirements. To this end we have a number of tools readily available.wsdot.  we must plan for expending this effort following the results of our risk analysis. and emerge with a well-organized and prioritized list of project risks. consistent and complete. activities and information can seem chaotic  and comes to us from multiple directions and multiple sources. in order to shift the odds in favor of project success. Share 3.Chapter 5 Risk Response Take action in response to identified risks. to isolate project objectives from the risk’s impact. Risk Response requires effort to develop and implement response actions. Risk Identification.  Quantitative Risk Analysis.  Following identification and  analysis of project risks project managers and project teams must take action in response to the identified project risks. focusing on risks of most  significance. or to relax the project objective that is in jeopardy. Risk Response.

Examples of sharing actions include forming risk-sharing partnerships. Effective Opportunity Management for Projects by David Hillson SHARE (opportunities) Sharing a positive risk involves allocating ownership to a third party who is best able to capture the opportunity for the benefit of the project. Taking action to make the opportunity definitely happen. Risk transfer usually involves payment of a premium. and/or to provide better quality than originally planned. such response actions include: assigning more talented resources to a project to reduce time to completion. but this should be the first strategy considered for each risk. in terms of maximizing probability of occurrence and increasing potential benefits if it does occur.Risk Response Chapter 5 Two types of action 1) remove the cause of the risk (risk trigger). Contracts may be used to transfer specified risks to another party. Page 44 Project Risk Management Guidance for WSDOT Projects July 2010 . Transferring threats and sharing opportunities are similar in that a third party is used. Transferring risk can be an effective way to deal with financial risk exposure. or joint ventures. PMBOK Transferring risk involves finding another party who is willing to take responsibility for its management. enhance/exploit opportunity. Action to allocate ownership for more effective management of a threat. An opportunity is defined as a risk event that if it occurs will have a positive effect on achievement of project objectives. and for others this approach may be too expensive or time-consuming. which can be established with the express purpose of managing opportunities. etc. 2) execute project in different way while still aiming to achieve project objectives. an opportunity is realized. Avoid and Exploit is the most aggressive of the response strategies and should be reserved for those “golden opportunities” with high probability and impacts. those to whom threats are transferred take on the liability and those to whom opportunities are allocated should also be allowed to share in the potential benefits. the threat still exists however it is owned and managed by another party. PMBOK Eliminate the uncertainty associated with a particular upside risk. warranties. PMBOK Allocating risk ownership for an opportunity to another party who is best able to handle it. teams. The aim is to ensure that the risk is owned and managed by the party best able to deal with it effectively. Transferring project risk almost always involves payment of a risk premium to the party taking the risk. and who will bear the liability of the risk should it occur. Action to share with a third party. performance bonds. Effective Opportunity Management for Projects by David Hillson Action taken to insure the benefit of an opportunity is realized. Not all risks can be avoided or eliminated. and the cost-effectiveness of this must be considered when deciding whether to adopt a transfer strategy. Effective Opportunity Management for Projects by David Hillson EXPLOIT (opportunities) Opposite of avoid – this strategy is to insure a positive impact. Effective Opportunity Management for Projects by David Hillson TRANSFER (threats) Transferring a threat does not eliminate it. examples include: insurance.

conducting more tests and/or field investigations. In effect we can retire risk reserve as risk events are successfully avoided or mitigated or we have passed the time during which the risk is active and it becomes retired. Action taken to document the acceptance of the risk. Preventive responses tackle the causes of the risk. some term this ‘active acceptance’. in some industries. Impact drivers can also be targeted. developing a prototype. In some cases. seeking to increase the project’s susceptibility to the opportunity. If the probability can be increased to 100% this is effectively an exploit response. some term this ‘passive acceptance’. PMBOK Mitigation or acceptance or the strategies most often used since the number of threats that can be addressed by avoidance or transfer are usually limited. Action taken to reduce the probability and/or impact of a threat. and proactively targeting and reinforcing its trigger conditions. Preventive responses are better than curative responses because they are more pro-active and if successful can lead to risk avoidance. Project Risk Management Guidance for WSDOT Projects July 2010 Page 45 . a contingency reserve is established to deal with the aggregate residual risk that has been accepted. risks that are uncontrollable (no response actions are practical) are also accepted. such as designing redundancy into a subsystem may reduce the impact from a failure of the original component. targeting the drivers that determine the extent of the severity. where it is not possible to reduce probability a mitigation response should address the adverse impact. We enhance the opportunity by increasing the probability and/or impact of an opportunity thereby maximizing benefits realized for the project. Examples of mitigation strategies include: adopting less complex processes. Effective Opportunity Management for Projects by David Hillson ACCEPT The term “accept” refers to risks that remain after response actions and/or for which response is not cost effective are accepted. Action to enhance opportunity.Chapter 5 Risk Response MITIGATE – or reduce (threats) Risk mitigation implies a reduction in the probability and/or impact of an adverse risk event to an acceptable threshold. Typically as we successfully respond to risks and our project knowledge increases our risk exposure will diminish. Taking early action is often more effective to repair than trying to repair the damage after the risk has occurred. Seeking to facilitate or strengthen the cause of the opportunity. PMBOK This response aims to modify the “size” of the positive risk. Effective Opportunity Management for Projects by David Hillson Ultimately it is not possible to eliminate all threats or take advantage of all opportunities –we can document them and at least provide awareness that these exist and have been identified. measures to address impact include: targeting linkages that determine the severity. Effective Opportunity Management for Projects by David Hillson ENHANCE (opportunities) This response modifies the “size” of an opportunity by increasing probability and/or impact. As we continue through project development the project risk profile will  change.

Risk Response Chapter 5 Risk Response “How to” Page 46 Project Risk Management Guidance for WSDOT Projects July 2010 .

results) IN THIS CHAPTER WE FOCUS ON RESPONSE IN THIS CHAPTER WE FOCUS ON RESPONSE  Risk Management & Planning Spreadsheet Chapter 5 Risk Response 5 of 11 Figure 5-1 Project Risk Management Guidance for WSDOT Projects July 2010 Page 47 .wa. date) Next page zooms in on this section.wsdot. Monitor and Control (status.wa. owner. updates.gov/Projects/ProjectMgmt/RiskAssessment/ ) Risk Identification (description/trigger)  (quantitative/qualitative)  Risk Analysis Risk Response (actions.wsdot.gov/Projects/ProjectMgmt/RiskAssessment/) (http://www.Chapter 5 WSDOT Project Risk Management – “How to guide”    Risk Response 5 Risk Response rev 2009-April  Risk Management Planning Spreadsheet Risk Management Planning Spreadsheet (http://www.

RMP Spreadsheet: Response Figure 5-2 6 of 11 Chapter 5 Risk Response Page 48 Project Risk Management Guidance for WSDOT Projects July 2010 .Risk Response Chapter 5 Type of Response action WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April  Detailed description of response action that will be taken. Journal entries for date and status of risk –  track effectiveness of response action. Type of Response action Opportunities Avoid Exploit Transfer Share Mitigate Enhance Accept Threats Name of person who owns the risk and is responsible for implementing the response actions. Risk response requires  an effort and investment of resources – enter the  planned cost of the response here. the  response action should be reflected in project management plan and work activities.

   Documentation of Response Actions Document the response action by describing the action. lower ranking risks should receive response actions commensurate with their significance. Planning Risk Response Actions •  Select a response action . Also consider the time impacts of the response action and how the risk response may affect the overall project and/or other risks.Chapter 5 Risk Response Risk Response Tools and Techniques After we have identified and analyzed the risks we know where to focus  our efforts. Project Risk Management Guidance for WSDOT Projects July 2010 Page 49 . Critical risks must be met with vigorous response actions. Identify the person(s) responsible for successful implementation of the response action. Probability Transfer (share) Accept Low Impact Avoid (exploit) Mitigate (Enhance) High High Low Simple Response Matrix Figure 5-3 The next two figures on the following pages depict typical response  actions for threats and for opportunities depending on the region of probability and impact the risk resides. The output from the analysis provides a ranked risk register with the risks of greatest significance to project objectives determined.the action selected is influence by the level of the risk consider the figure below: High impact and high probability risks require aggressive responses (threats should be avoided and opportunities exploited if possible). which work activities it will affect and the cost of the response action.   Apt response actions to significant risks must be cost effective and  realistic.

an extremely high probability of occurrence. can over a given limit. Between avoidance and acceptance we canmay choose to accept actively by mitigating and/or preparing contingency plans in the event of its occurrence. low probabilities we may want to transfer them. passive response. 2. wreck a project. For risks (threats) above a certain probability we may choose to accept actively by mitigating and/or preparing contingency plans in the event of its occurrence. If a risk has an extremely high probability of occurrence. can over a given limit. 3. For risks (threats) above a certain probability we take other actions such as mitigation or for risks with 4. avoided.3. Insignificant we may want toaccepted. 6. it may be best to assume the condition of the has part (threats) with 2.5. 6. high impacts. wreck a project. as Risks of the base. it may be best to assume the condition as part Typical Risk Response Planning Chart for Threats Risk Response Planning: Selecting the Right Strategy Piney (2002) Figure 5-4 8 of 11  Chapter 5 Risk Response Page 50 Project Risk Management Guidance for WSDOT Projects July 2010 . these risks must be avoided. All risks (threats) should be mitigated where practical and cost-effective. If a riskbase.Risk Response WSDOT Project Risk Management – “How to guide”    Chapter 5 5 Risk Response rev 2009-April  1. Typical Risk Response Planning Chart for Threats Risk Response Planning: Selecting the Right Strategy  Piney (2002) 1. All risks (threats) should be mitigated where practical and cost-effective. these risks must be  Insignificant risks can be accepted. passive response. 4. Risks (threats) with high impacts. 5. avoidance and acceptance we can take other actions such as mitigation or for risks with low Between probabilities risks can be transfer them.

3. these risks should be exploited.1. of its occurrence –how will we take advantage of a fortunate occurrence? 6. Risks (opportunities) above becertain probability we may choose to accept actively by preparing All risks (opportunities) should a enhanced where practical and cost-effective. these risks should be exploited. Risks (opportunities)be accepted. part (opportunities) 2.5. plans in the event of its occurrence –how will we take advantage of a fortunate occurrence? 6. best to be best to assume the condition base.4. Typical Risk Response Planning Chart for Opportunities Risk Response Planning: Selecting the Right Strategy  Piney (2002) Typical Risk Response Planning Chart for Opportunities Risk Response Planning: Selecting the Right Strategy Piney (2002) Figure 5-5 Project Risk Management Guidance for WSDOT Projects July 2010 Page 51 . Between exploit andabove a certain probability we may choose to accept actively and/or share opportunity Risks (opportunities) accept we can take other actions such as enhance by preparing plans in the event risks. enhance and/or share opportunity risks. impacts. as Risks of the base. with high impacts. All risks (opportunities) should be enhanced where practical and cost-effective. 5. Insignificant risks can be accepted. it may be it mayassume the condition as part of the extremely high probability of occurrence. 2. Insignificant risks can 3. Between exploit and accept we can take other actions such as 4. passive response. If a risk has an extremely high probability of occurrence.Chapter 5 Risk Response WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April  If a risk has an 1.  with high passive response.

Risk Response WSDOT Project Risk Management – “How to guide”    5 Risk Response rev 2009-April  Chapter 5 Recall the Identified Risk (compare pre-mitigated to mitigated) Recall the Identified Risk (compare pre-mitigated to mitigated) Project Title: Project Manager: Date Risk Identified: CN Duration Estimate PE Estimate RW Estimate CN Estimate Risk ID Sheets. Threat and/or Timebound) [SMART] Opportunity (6) Threat (7) Probability Correlation Status Risk # Risk Trigger Risk Impact ($M or Mo) [10a] MIN (11) (1) (2) (3) (5) (8) Type (9) (10) Cost MAX Most Likely Construction Retired 1 Master Duration Risk 0 Schedule MIN MAX Most Likely Threat Supplemental notes about this risk event Risk Trigger Details: Risk Owner: Risk Breakdown Structure # (RBS#) Risk Matrix VH Probability H M L VL VL L M Impact H VH 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? Communication with parties. Relevant. Succession plan for staff changes. Measurable.xls Pre-mitigated or Post mitigated ? Parameters for Monte-Carlo Modeling Project Phase Dependency Summary Detailed Description of Risk Event Description (Specific. Attributable. Who will do it? Due date? Risk Risk Response Chapter 5ID Sheet Figure 5-6 10 of 11 Page 52 Project Risk Management Guidance for WSDOT Projects July 2010 . Decisions ASAP on design elements.

metrics change behavior to provide better metrics not better performance.  and we may have had experiences when we have felt this phrase to be very apropos –however this phrase does not tell the whole story. We have control over how earnestly we integrate risk management into our project management plans. and determining whether a project is tracking to plan or deviating in a negative manner.  Did the  response actions have a positive or negative effect on achieving project objectives? If so explain how and why in the risk management plan. Confirm endorsement of team members and stakeholders  as the project plan evolves. the work activities it will affect and the cost of the response action. we can look ahead and improvise and adapt. Document the response action by describing the action. Identify the person(s) responsible for successful implementation of the response action.  Establish the final  objectives of the project with stakeholders to improve the chances of project success. ensuring they are not burdensome and affect behavior.Chapter 6 Risk Monitoring and Control “Control is an illusion. This will require a blend of qualitative  judgments and quantitative measures to determine the “health” of the  project.”   Some of us may have heard this phrase before. We do have control over our state of readiness. Risk Monitoring and Control As we continue through project development the project risk profile will  change. Typically as we successfully respond to risks and our project knowledge increases our risk exposure will diminish. We can control the robustness of our response to identified risk events and the quality of  our documentation. In effect we can retire risk reserve as risk events are successfully avoided or mitigated or we have passed the time during which the risk is active and it becomes retired. Documentation of Response Actions This section is devoted to measuring project risk management per performance. Also consider the time impacts of the response action and how the risk response may affect the overall project and/or other risks. Risk Monitoring and Control Tools and Techniques After we have implemented response actions. we must track and record their effectiveness and any changes to the project risk profile. Project Risk Management Guidance for WSDOT Projects July 2010 Page 53 .  We may  have little or no control over the external environment but we do have control over how we interact with it. Set the amounts and conditions for use of the project risk reserves. Too often. Determining the appropriate metrics for the project.

Results of the analysis need to be communicated and adjustments made through a change management and/or issue resolution process. schedule. Page 54 Project Risk Management Guidance for WSDOT Projects July 2010 . • Monitor status and trends continuously (scope.Risk Monitoring and Control Chapter 6 Monitoring and Controlling Project Risk The project manager and project team apply their project management plan through project development and completion of their deliverables. quality of product. The ability to describe the history of the project and how it evolved is essential to developing lessons learned for the future. et al). Helpful Hints • Be thorough and tenacious in gathering status update information for risks. Monitor the project status looking for trends that can indicate variations (good and bad) in the project execution. • Communicate. cost estimates. • Address problems and issues immediately –in fact anticipate and discuss in advance if possible.

Chapter 6 Risk Monitoring and Control Risk Monitoring and Control “How to” Project Risk Management Guidance for WSDOT Projects July 2010 Page 55 .

results) FIRST PILLAR OF RISK MANAGEMNENT Identify and Analyze SECOND PILLAR OF RISK MANAGEMENT  Response.gov/Projects/ProjectMgmt/RiskAssessment/ ) Figure 6-1 depicts the RMP spreadsheet. owner. 4 of 9 Chapter 6 Risk Monitoring and Control Page 56 Project Risk Management Guidance for WSDOT Projects July 2010 .  The spreadsheet is typically used for the most significant risks as  determined via the quantitative risk analysis. some term these risks “candidates for mitigation”.wa. 2) risk  analysis. and 4) monitor and control. some term these risks “candidates for mitigation”. updates. this easy to use spreadsheet provides an effective and Risk Identification (description/trigger)  (quantitative/qualitative) Risk Analysis Risk Response (actions. 2)  control.  In this chapter we focus on monitor  and control. 3) risk response.wsdot.wa. this easy to use spreadsheet provides an effective and  convenient way to summarize project risk management activities for projects that have conducted a convenient way to summarize project risk management activities forsignificantthat have conducted quantitative risk analysis. risk analysis. Monitor and Control Risk Management Plan spreadsheet Figure 6-1 Notice that the spreadsheet is conveniently arranged into four sections: 1) risk identification.Risk Monitoring and Control WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April  Chapter 6 Risk Management Planning (RMP) Spreadsheet (http://www.   Figure 6-1 depicts the RMP spreadsheet. In this chapter we focus on monitor and Notice that the spreadsheet is conveniently arranged into four sections: 1) risk identification.gov/Projects/ProjectMgmt/RiskAssessment/ ) Risk Management Planning (RMP) Spreadsheet (http://www.  The spreadsheet is typically used for the most projects risks as a quantitative risk analysis. determined via the quantitative risk analysis. date) Monitor and Control (status. 3) risk response.wsdot. and 4) monitor and control.

describe how to use the Risk Management Plan spreadsheet to monitor and control project risk. Figure 6-2 zooms in on the second pillar of risk management. Journal entries for date and status of risk – track  effectiveness of response action. the monitoring and control portion of the entries to document the risk response actions and their effectiveness in the monitoring and control portion of the spreadsheet. and the following pages. 5 of 9 Chapter 6 Risk Monitoring and Control Project Risk Management Guidance for WSDOT Projects July 2010 Page 57 . Figure 6-3 provides an example of a completed RMP spreadsheet. describe how to use the Risk Management Plan spreadsheet to monitor and control project risk. as recorded in the RMP spreadsheet. What happened after the risk response actions were implemented? How much was spent? What did it save us? Figure 6-2 Figure 6-3 provides an example of a completed RMP spreadsheet. and indicates how to usethe spreadsheet. and the following pages. as recorded in the RMP  and indicates how to use the entries to document the risk response actions and their effectiveness in spreadsheet.WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April  Chapter 6 Risk Monitoring and Control Figure 6-2 zooms in on the second pillar of risk management. Name of person who owns the risk and is responsible for implementing the response actions.

wa.WSDOT Project Risk Management – “How to guide”    6 Risk Monitoring and Control rev 2009-April  Page 58 6 of 9 Chapter 6 Risk Monitoring and Control Risk Monitoring and Control http://www.gov/projects/projectmgmt/riskassessment/ Figure 6-3 Risk Management Plan spreadsheet (completed) Chapter 6 Project Risk Management Guidance for WSDOT Projects July 2010 Risk Management Plan spreadsheet (completed) Figure 6-3 .wsdot.

Chapter 6 Risk Monitoring and Control Notice the first 15 columns in the risk management plan spreadsheet are  devoted to Identify and Analyze – the first pillar of risk management. Figure 6-4 below depicts the bottom of the RMP Spreadsheet under column 11. In Chapter 5 we reviewed in some detail risk response actions. communicate with the project team and ascertain how things are going.1 M. they  provided “issues awareness” for various specialty groups and were dealt with as each specialty group deemed appropriate for relevant risks. notice that for these 5 risks there is an expected value of $7. The way we “monitor and control” risk is regularly review the effectiveness of the response. MONITOR and CONTROL. The answer is a resounding YES and it is demonstrated in the example  provided. Project Risk Management Guidance for WSDOT Projects July 2010 Page 59 . Total Estimated Cost Impacts of top 5 risks for the example project Figure 6-4 The following page depicts a performance measure for the effectiveness of risk management on this project (Figure 6-5). but is it enough to make a difference for our project.  These five emerged as the top ranked  risks after the analysis and provided the project manager a prioritized list of risks to manager.  The  remaining columns (16 thru 25) are devoted to the second pillar of risk  management – RESPONSE. Notice that Figure 6-1 only lists 5 risks – most will agree this is not too  many to manage.  The other 40+ risks were not simply ignored. monitor and control is a natural component of our dayto-day project management activities. It should also be recognized that this project identified over 50 risks. these  additional risks also acted as a “watch list” for the project. in this chapter we follow-up and follow-through with monitoring and control. Make note in the risk management plan and document the results. Are the response actions working? Are things getting better?  Are we more confident about our ability to meet  project objectives after the response actions have been implemented? In effect response. 23  of which were deemed significant enough to warrant inclusion in the  quantitative risk analysis model.

 greater confidence  by the project manager and project team during project development.  upper management was informed of the issues and there were fewer surprises.7M which avoided an estimated $3. included: improved  communication among team members and externally to stakeholders and the public. to achieve reduced project risk exposure by an estimated $3. After implementing the response actions we found the total cost of the response actions were $0.” This example illustrates an excellent return on the dollar for risk management efforts.  Other benefits.Risk Monitoring and Control Chapter 6 Performance Measure of Risk Management for this project Figure 6-5 When reporting on the risk management efforts for this project we can summarize as follows: “The total dollar amount planned for response actions was $0.7M in project costs. identified areas of concern for each specialty group as they  helped develop the risk register during risk elicitation. the information gleaned from the overall risk workshop and risk  management effort resulted in more informed decision-making.6M. less quantifiable.8M (expected  value of risk reduction). Page 60 Project Risk Management Guidance for WSDOT Projects July 2010 .

as determined through quantitative analysis  o Estimated cost of planned response actions  identified o Estimated value of costs avoided through risk management •  Number of risks provide the following performance data regarding our risk Our Estimated amount of delay (months) avoided through risk management  preparedness Keeping our RMPtosignificantincluding the RMPS spreadsheet Dollar value ofup-to-date. including: and control number Our robustness of our risk of things in being prepared to improvise and adapt The state of readiness The Management – “How to guide”  response actions Our WSDOT Project Risk robustness of our risk response actions   We can monitor and control a number of things in our risk 6 Risk Monitoring and Control rev 2009-April  management efforts. including: The robustness of our risk response actions   The quality of our documentation  The quality of our documentation  and being prepared to improvise and adapt WSDOT Project Risk Management – “How to guide”  6 Risk Monitoring and Control rev 2009-April  Our commitment to looking ahead. including: WSDOT Project Risk Management – “How to guide”    We can monitor and control a number of things in our risk 6 Risk Monitoring and Control rev 2009-April  management efforts. as determined through quantitative analysis  o Estimated cost of planned response actions  o Estimated amount of delay (months) avoided through risk management  Dollar value o management of significant risks Estimated Actual value of costs avoided through risk management  o Estimated value of costs avoided through risk management  o Estimated cost of planned response actions  Estimated amount of delay (months) avoided through risk management  o Actual cost of response actions o Estimated value of costs avoided through risk management  o Estimated Actual value of costs avoided through risk management  o Actual cost of response actions o Estimated amount of delay (months) avoided through risk management  o Estimated Actual value of costs avoided through risk management  o Estimated amount of delay (months) avoided through risk management  improvise and adapt                                                                 9 of 9 Chapter 6 Risk Monitoring and Control 9 of 9 Chapter 6 Risk Monitoring and Control 9 of 9 Chapter 6 Risk Monitoring Project Risk Management Guidance for WSDOT Projects and Control July 2010 Chapter 6 Risk Monitoring and Control 9 of 9 Page 61 9 of 9 .Chapter 6 WSDOT Project Risk Management – “How to guide”  WSDOT Project Risk Management – “How to guide”      Risk Monitoring and Control 6 Risk Monitoring and Control rev 2009-April  6 Risk Monitoring and Control rev 2009-April  We can monitor and control a number of things in our risk management We can monitor and control a number of things in our risk management efforts. as management efforts: o analysis Keeping our RMPtosignificantincluding the RMPS spreadsheet Our Estimated cost of planned response actions  preparedness up-to-date. including the RMPS spreadsheet The quality of our documentation  Our Our robustness of toprovide the following performance data regarding our Keeping our RMPour risk response actions RMPS spreadsheet The preparedness provide the following Our preparedness toup-to-date. as determined through quantitative analysis  o Estimated value of costs avoided through risk management  management efforts: provide the following performance data regarding our risk •  Actual cost of response actions o Estimated cost of planned response actions  Our Estimated amount of delay (months) avoided through risk management  preparedness response actions o Dollar value of significant risks o Actual cost ofto o Number o Estimated value of costs avoided through risk management  •  Estimated Actual value of costs avoided through risk  management of risks identified efforts: o Estimated cost of planned response actions  o Estimated Actual value of costs avoided through risk management  o Number of significant risks. including: efforts. as determined through quantitative  The quality of our documentation  o Number significant risks. andour risk management efforts. including the RMPS spreadsheet Keeping our RMP up-to-date. as determined through quantitative analysis  Number efforts: identified o Estimated value of costs avoided through risk management  How earnestly riskssignificantincluding the RMPS spreadsheet •  Estimated cost of planned response actions management ofwe integrate risk management into our project management plan Keeping our RMP up-to-date. management ofweto looking risk management prepared to improvise and adapt Keeping our RMPour risk response actions RMPS spreadsheet The Number of significant risks. including: earnestly Our robustnesswe our risk response actions prepared to improvise and adapt Keeping The state of readiness of up-to-date. Our preparedness to the following regarding our risk management efforts: performance data regarding our risk The quality of our documentation  and being into our project management plan o Howrobustness of integrate ahead. risks Dollar value of o Estimated Actual value of costs avoided through risk management  Number of of response actions o Actual cost significant risks. and adapt Our and of readiness The earnestly of management plan our risk response actions We can monitor commitmentato looking risk management into our project management plan control number things in being How and our RMP integrateofahead. andour riskpreparedto improvise including: management Our and of readiness We can monitor commitmentato looking ahead. including theperformance datamanagement risk The quality of our documentation  and being into our project Our commitment to looking risk management prepared to improvise and adapt Howstate of readiness plan Our earnestly we integrate management efforts: provide ahead. earnestly risks Our Number efforts: identifiedincluding the commitment up-to-date. and being prepared to efforts. risks actionsperformance data regarding our risk •  Number of significant risks. risks o Estimated Actual value of costs avoided through risk management  o Number of significant risks. and adapt   We can monitor commitmenttonumber ofahead. andour risk management efforts. risks o Dollar value of provide the following performance data regarding our risk The quality of our documentation  o Number of risks identified Estimated value of costs avoided through risk management  How earnestly we integrate risk management into our project management plan management efforts: provide the following performance data regarding our risk •  Dollar value of significant risks o Our Estimated cost of planned response actions  preparedness response actions Number of ofto o Actual cost significant risks. as determined through quantitative analysis  o management risks identified o Actual cost of response actions Number of Estimated value of costs avoided through risk management  o Estimated amount of delay (months) avoided through risk management  o Dollar value of significant risks o Estimated Actual value of costs avoided through risk management  Number of of response actions o Estimated amount of delay (months) avoided through risk  •  Actual cost significant risks. Our state of readiness How state control integrateof things in our riskinto our project The quality of our documentation  Our commitment integrate risk management prepared to improvise including: We can monitorearnestly weato lookingrisk managementinto our project management plan Howrobustnesswe number ahead. including: Our state of readiness Our state of – “How to guide”  readiness WSDOT Project Risk Management   6 Risk Monitoring and Control rev 2009-April  Our Management – “How to guide”  Our state control to looking things in being 6 Risk Monitoring and Control rev 2009-April  WSDOT Project Risk commitment a looking ahead. and being management efforts. as determined through quantitative analysis  •  Number of risks identified o o Number of risks identified Howrobustnesswe tosignificantincluding the RMPS spreadsheet earnestly Our preparedness integrate risk management into our project management plan o Keeping our of of our risk response determined through quantitative analysis  RMP provide the following The Dollar value ofup-to-date.

Risk Monitoring and Control Chapter 6 Page 62 Project Risk Management Guidance for WSDOT Projects July 2010 .

project teams can improve the odds of meeting project objectives. typically this is more common for highly complex project and/ or projects with significant risk. This template is a convenient tool for project teams wishing to develop a detailed risk management plan document. and then responding to risk aggressively and monitoring the effectiveness of the response. Particular emphasis should be given to how a project team will respond to risks and monitor and control risk throughout the life of the project. project teams must tailor the document to meet the needs for the risk management plan for their project. By identifying and analyzing risks.  The template presents an organized approach and is meant as a starting point only. Project Risk Management Guidance for WSDOT Projects July 2010 Page 63 .Appendix A Project Risk Management Plan Template A project risk management plan describes how a project team will incorporate the risk management process into its project management plan.

MP limits: Project Manager: Risk Manager: WIN: PIN: L#: Introduction This document is the Risk Management Plan for this project. Project Manager Review Initial and date after each review and update of this risk management plan: Year 2009 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2010 2011 Page 64 Project Risk Management Guidance for WSDOT Projects July 2010 . Project risk management is an ongoing and integral part of project management and is performed throughout the life of the project.Project Risk Management Plan Template Appendix A Project Risk Management Plan Official Project Title: SR ###. The Project Manager is responsible for reviewing and maintaining the Risk Management Plan to ensure that risk is appropriately dealt with by the project team. it is a plan of action that describes how this project team will deal with uncertainty and risk.

Introduction 2.  Risk management strategy/approach  8. Project risk planning involves the thoughtful development. but most project risk management plans should include an outline similar to the following: 1. 1 (from NCHRP 8-60 review draft –with edits) Project Risk Management Guidance for WSDOT Projects July 2010 Page 65 . assessing. and serves as a communication tool for those who wish to be  informed of a project’s risk management approach. Organization and roles 7.   Definitions  4. and monitoring of appropriate risk response strategies. determine the methods to  be used to execute a risk management strategy. The risk management plan employed will vary based on the complexity of the project. The key to this tool is  its scalability. implementation. It should be consulted and revised throughout the project development process to guide the project through to completion. The project risk  management plan may be specific in some areas and general in others.Appendix A Project Risk Management Plan Template Project Risk Management Plan1 A formal project risk management plan is: a detailed plan of action for the management of project risk.   Risk monitoring and control Why use a project risk management plan? It explains how a project manager and project team manages risk for their project. How to use a project risk management plan? The risk management plan is developed early in the project by collaboration with as many members of the team as possible. and interactive risk management strategy.  Summary  3. Every project should have a formal risk management plan. The risk management plan documents the processes to use throughout the project for identifying. comprehensive. and plan for adequate resources. It provides guidance and requirements.   Risk identification  9. When to develop and use a project risk management plan? The formal plan should be developed during the Planning and Scoping Process and updated during subsequent project development phases. What is a project risk management plan? It is a document that gives a summary of the project and outlines the steps of the risk management process and how the project manager and project team is approaching them. What does a project risk management plan do? It provides specific guidance for the project team members in all steps of the risk management  process for their project.   Risk response actions/allocation 6. The plan formalizes the ideas presented during the risk management process and may clarify some of the assumptions the project team has regarding the risk management process. Risk assessment and analysis 5. and managing risk. but the level of detail  varies with the project complexity. It is the process to develop and document an organized.

Project Risk Management Plan Template

Appendix A

Duties
• Approve the project risk management plan. • Approve and insure implementation of response actions to identified risks, particularly significant risks that emerge as prospects for risk response. • Confirm who will carry-out response actions and when action will be taken, incorporate into work plan. • Monitor effectiveness of response actions. • Regularly review and update the project risk management plan. • Promote aggressive risk management for this project. • Actively participate in risk workshops. • Communicate to senior management the risk and uncertainty the project is exposed to and the action be taken to address it. • Pro-actively identify risks and their characteristics in terms of probability of occurrence and impact. • Pro-actively respond to risks within specialty area. • Document actions and report to project manager for inclusion in risk management updates. • Monitor effectiveness of response actions. • Communicate with project manager with regard to risk management actions and changing project risk profile (addition of new risks or retirement of old risks –as appropriate). • Prepare and update the project risk management plan. • Develop a schedule for key check-in milestones for review and update of the risk management plan. • Determine when risk workshops will be needed and that appropriate preparation is accomplished prior to the workshop. • Collaborate with the Strategic Analysis and Estimating Office, CREM unit to coordinate pre-workshop, workshop and post-workshop activities, including the need for consultants and/or other participants –both internal and external. • Oversee and manage day-to-day risk management process for the project. • Ensure quality of risk data. • Track and monitor effectiveness of response actions. • Promote risk management activities within the project team and with stakeholders. • Communicate with project manager on all matters related to risk management. • Implement agreed response actions. • Report on effectiveness of the risk actions to the project manager/risk manager and affected project team members. • Identify new risks that may emerge after response actions. • Communicate with project manager regularly, including the need for other risk response actions if needed.

Project Manager

Project Team Member

Project Risk Manager

Risk Owner (Action Owner)

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Project Risk Management Guidance for WSDOT Projects July 2010

Appendix A

Project Risk Management Plan Template

Project Risk Management Process This project complies with all WSDOT directional documents and guidance for project risk management, including:
WSDOT Project Risk Management References Project Management Online Guide (pre-construction) Project Risk Management Guidance for WSDOT Projects (Draft Working Document) WSDOT Guidelines for CRA-CEVP Workshops Risk Management Plan Spreadsheet Reference materials on the topic of risk management and risk workshops at WSDOT. WSDOT Directional Documents relating to Project Risk Management IL 4071.00 Inflation and Market Conditions Applied to Base Estimates E 1038.00 Enterprise Risk Management E 1042.00 Project Management and Reporting System E 1032.01 Project Management Project Delivery Memo 07-01 Project Cost Estimate Creation, Update, Review and Approval Procedures E 1053.00 Project Risk Management and Risk Based Estimating July 13, 2007 September 4, 2007 July 1, 2008 July 1, 2008 July 1, 2008 December 10, 2008 http://www.wsdot.wa.gov/Projects/ ProjectMgmt/Process.htm http://www.wsdot.wa.gov/Projects/ ProjectMgmt/Process.htm

Project Risk Management Guidance for WSDOT Projects July 2010

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Project Risk Management Plan Template

Appendix A

1)

Risk Management Planning

Risk Management will be a directed, focused and intentional effort for this project. To that end the following items are included in this risk management plan: i. Level of Risk Assessment has been determined. As indicated in E 1053.00 this project will conduct a Cost Risk  Assessment workshop as required for all projects between $25M and  $100M. ii. Risk management activities are in the project schedule. Risk management activities are included in the appropriate sections of the project schedule, using the appropriate WSDOT MDL codes.
MDL Code PE.PD.04 MDL Name Cost Risk Estimate & Management Description Cost Risk Assessment, is an integral element of project risk management at WSDOT, and quantifies, within a reasonable range, the cost and schedule to complete a project; we will identify, assess and evaluate risk that could impact cost and/or schedule during project delivery. Cost Risk Assessment (CRA) is a workshop process similar but less intense CEVP®. The CRA workshop for this project is planned for January 2010 and is included in the project schedule; pre and post workshop activities are also included in the project schedule

PE.PD.04.20 CRA Workshop

NOTE: Project teams need to add tasks and sub-tasks as appropriate to their project work activities using the appropriate MDL items.

iii. Risk management is an agenda item in regularly schedule project meetings. Risk management is included as an agenda item on our monthly project meetings and is the number one agenda item each quarter. iv. Communication to project team of our risk management effort and expectations has been communicated to the project team.   During Initiate and Align, Plan the Work and Endorse the Plan risk  management has been communicated as an item of work for this project. Specifically it is included in the Team Mission/Assignment  and in our Roles and Responsibilities. Incorporated into the project schedule and monthly meetings is an item for reporting on status of risk response actions. In addition this team will use the Risk Management Plan Spreadsheet for summarizing and tracking risk response action efforts for significant risks.

v. Risk will be managed, documented and reported.

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Project Risk Management Guidance for WSDOT Projects July 2010

Appendix A Project Risk Management Plan Template This Project Team is committed to aggressively and pro-actively managing risk. We also recognize that two pillars of risk management and we embrace both. and we will respond to identified risks and track the effectiveness  of our response actions. Risk Management Identify Analyze Respond Monitor/Control First Pillar of Risk Management (Identify and Analyze) 2) Identify Risk Events This project team will begin identifying risks and building its risk register early in project development. is used  for organizing risks via appropriate categories. this also allows for the development  of a risk database by category. provided in Chapter 2 of the Risk Management Guide. Project Risk Management Guidance for WSDOT Projects July 2010 Page 69 . An example of how to use the RBS is provided on the following page. Organizing risks in this manner provides a consistent and convenient way to monitor and track risks at the appropriate level of detail. Our risk manager will maintain the risk register in anticipation of the CRA workshop and following the risk management workshop. The WSDOT Risk Breakdown Structure (RBS). We recognize that project risk management is at the heart of project management and is an ongoing activity throughout the life of the project.

Section 4f. Initial analysis of risks will Risk Analysis 4) Quantitative begin with a qualitative assessment.Project Risk Management Plan Template Appendix A RISK BREAKDOWN STRUCTURE  EXAMPLE ON HOW TO USE  RISK BREAKDOWN STRUCTURE EXAMPLE ON HOW TO USE ENV 10.) ---------------NEPA/SEPA Challenges ENV = Environmental/Hydraulics (Risk Category.01 = First Identified Risk in this Category and Group 3 Qualitative Risk Analysis Initial analysis of risks will begin with a qualitative assessment. see  Chapter Risk Analysis 3) Qualitative 3 of the Risk Management Guide. Level 2 in the RBS) ENV 10 = NEPA/SEPA Documentation (Level 3 in the RBS: 10 = Group within the ENV = Environmental/Hydraulics   (Risk Category.01 = First Identified Risk in this Category and Group ENV10. see Chapter 3 of the Risk  Management Guide. 4) Quantitative Risk Analysis Quantitative analysis of risks will begin with our CRA workshop in January 2010.  APPENDIX A Risk Management Plan Template  9 of 12  Page 70 Project Risk Management Guidance for WSDOT Projects July 2010 .01  ENV 10 NEPA/SEPA Documentation Completion (incl. Level 2 in the RBS)  category) ENV 10 = NEPA/SEPA Documentation  (Level 3 in the RBS: 10 = Group within the category)  ENV10. Quantitative analysis of risks will begin with our CRA workshop in January 2010. see  Chapter 4 of the Risk Management Guide for more detail on quantitative analysis. see Chapter 4 of the Risk Management Guide for more  detail on quantitative analysis.01 ENV 10. etc.

Response actions will be developed and implemented promptly following identification and analysis. It leads to specific actions the project team will  implement into their project management plan and work plans and then pro-actively execute. Risk Management or Risk Prevention in some publications. transfer. Chapter 5 of this document describes response actions for threats and opportunities. including immediately following the CRA workshop for this project. as actions are taken. Risk Mitigation. Residual risks and responses (primary and secondary risks) As a project develops its risk profile will change. When developing our response actions we will be vigilant in considering the ramifications of the response actions. The project work plan.  response actions are implemented which changes the nature of the project risk profile and new risks are identified. with the purpose of responding appropriately to risk for this project. 2  3 Also referred to as Risk Treatment. we are committed to making use of information when it is fresh and keeping our project management and risk management plans up-to-date so they do not lapse into irrelevance because they have become outdated and obsolete. During risk identification we  identify of risk events. secondary risks can emerge as a result of implementing the treatment response to the primary risk. Risks have a shelf life and risk management  plans can become stale if not monitored and updated regularly. Monitor. including the schedule and resource assignment establishes points at which response actions to identified risks  will be implemented. In addition the members of this project team are reminded to be vigilant regarding risk for this project and to identify potential risk events as they think of them. We will take  measures to include strategies that deal with the primary risk as well as secondary risks and endeavor to minimize or eliminate residual risk as part or risk response efforts. and Control) 5) Risk Response Planning2 3Our Project Team is committed to making effective use of the actionable information that emerges from risk identification and analysis. enhance) can be pursued or the risk event may be accepted if the response action is not cost-effective.. Risks are identified. the first time this is accomplished it constitutes a  list of primary risks.Appendix A Project Risk Management Plan Template Second Pillar of Risk Management (Respond. Practical Risk Management by David Hillson and Peter Simon (with edits) Project Risk Management Guidance for WSDOT Projects July 2010 Page 71 . where  possible secondary risks should be dealt with as part of the primary risk response action. mitigatereduce) and opportunities (exploit. if anything should be done with identified risks significant enough to  impact project objectives. Risk  response strategy is the process of the project team determining what. response actions for threats (avoid. share.

•  Control of risk and management activities – Specify criteria for risk management success. including targets and measures used to assess performance. correct and timely as will the communication to upper management and executives. COMMUNICATION is the lynch-pin of effective project management and risk management. adjustments will be made as needed. •  Accountability – Document the risk assessment process in such a way that it can be reviewed and examined for the reasons particular judgments and decisions were made. Effectiveness of the risk response actions  will be monitored and reported regularly. complete. – Monitor and document results of implemented risk response actions. •  Upper Management and Executives – Avoid unpleasant surprises. Communication within and among the project team will be crisp. response actions and trade-offs. concise.Project Risk Management Plan Template Appendix A 6) Risk Monitoring & Control Monitoring and control is not complete unless communication has occurred. RISK MONITORING and CONTROL (communication) •  Project Team – Record assumptions that underlie judgments and decisions. at our project meetings. as indicated previously. track resource allocation associated with risk response actions. – Fully inform parties of risks. – Follow-up with risk owners regarding the status of completing the risk response actions and the resulting effect. Page 72 Project Risk Management Guidance for WSDOT Projects July 2010 .

YYYY and MMMM DD. YYYY) Performance Measures CRA Workshop #1 Workshop Date(s) CRA Workshop #1 Pre-workshop Base Cost Estimate for Project Validated Base Cost Estimate for Project CRA Workshop #1 Total # of Risks Identified Total $ Value of Threats Total $ Value of Opportunities $ Value of Prospects for Risk Response Actions $ Cost of Risk Response $ Cost Avoided through pro-active risk response RBS CODE ENV STG DES ROW UTL RR PSP MGT CTR CNS Risk Break Down Structure Group (Level 2) Environmental and Hydraulics Structures and Geotechnical Design/PS&E Right-Of-Way and Access Utilities Railroad Partnerships and Stakeholders Management and Funding Contracting and Procurement Construction Page 73 CRA Workshop #2 CRA Workshop #3 CRA Workshop #4 CRA Workshop #2 CRA Workshop #3 CRA Workshop #4 CRA Workshop #2 CRA Workshop #3 CRA Workshop #4 Number of Risks Value of Threats $ Value of Opportunities $ Project Risk Management Guidance for WSDOT Projects July 2010 .Appendix A Project Risk Management Plan Template Project Risk Management Performance Date of this Report: ___________________ Cost Risk Estimating Management Project Risk Management Performance Summary Report (Workshops held between MMMM DD.

Project Risk Management Plan Template Appendix A Page 74 Project Risk Management Guidance for WSDOT Projects July 2010 .

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