Transportation Risk Analysis

Expecting the Unexpected

To more appropriately assess costs and schedules for infrastructure projects, MTO has used a new procedure commonly referred to as "risk-based cost and schedule analysis". This process is designed to replace traditional practices of using "contingencies" and schedule "float" (or leeway) since projected outcomes usually differ from final project performance. The analysis is typically handled in a workshop involving the project team, the risk team, and the independent experts to give added perspective - similar in form to Value Engineering sessions.

The teams divide the project into manageable activities and identify timeline relationships among them. For example, one particular project required legal traffic signal plans to be completed prior to executive review and construction tendering. However, property acquisition could be finalized simultaneously while legal signal plans developed. After the divisions are made the teams establish a base cost and duration for each activity, assuming that the project will proceed as planned. This allows them to identify potential problems and associated consequences, as well as make a fair judgment about the probability of what may or may not go wrong. This process provides a complete project picture that traffic professionals and stakeholders can appreciate because it considers all the factors involved. The same approach is applied simultaneously to scheduling because cost and time are directly related.

By compiling a list of identified uncertainties, the team creates a risk register that quantifies both the likelihood and the consequences of something going wrong. A computer model is then used to handle calculations, to link activities, and to simulate the effect that each uncertainty will have on the project's outcome. Finally, the schedule and costs are presented in chart form to show the chance of achieving any given value or time, as well as to show a prioritized register of the uncertainties.