Risk Assessment Streamlining

9/30/2011

Dear Colleague,

The Federal Transit Administration’s (FTA’s) Office of Program Management and Office of Planning and Environment are pleased to provide additional information on the agency’s new and streamlined process for conducting risk assessments as part of our overall goal to streamline the New Starts project delivery timeline.

FTA firmly believes that conducting risk assessments is simply good project management. FTA’s current practice is to perform an assessment of cost and schedule risk as a New Starts “mega project” (one with a total cost of one billion dollars or more) enters into the Preliminary Engineering (PE) phase. Also, for all New Starts projects, FTA performs a risk assessment prior to entry into Final Design (FD) and before approving a Full Funding Grant Agreement (FFGA).

The new streamlined approach will be tailored to the unique capabilities of the project sponsor and the project that is the subject of the risk assessment. We will look at the experience of the project sponsor, the complexity and size of the project, and the total New Starts investment sought by the project sponsor before determining the risk assessment process to be applied. FTA’s new risk assessment process will allow project sponsors who are able to demonstrate that they can satisfy FTA’s minimum criteria to perform independent risk assessments on their own. To further streamline the New Starts risk assessment process, FTA will perform more integrated oversight as opposed to conducting risk reviews at discrete points.

More detailed guidance will be available shortly, but in the interim an overview of the new process is provided below.

Pre-PE: FTA will require project sponsors of New Starts “mega” projects (e.g. projects with a total cost of one billion dollars or more) to conduct their own risk assessment as a condition of “project readiness” to enter preliminary engineering (PE). FTA will review and approve the project sponsor’s process for conducting the risk assessment but the sponsor will own it and will have flexibility to set the schedule. Upon completion, the project sponsor will be responsible for including an updated Risk and Contingency Management sub-plan in its Project Management Plan. New Starts projects less than one billion dollars in total cost will not have this pre-PE risk assessment requirement.

Pre-FD: All New Starts projects will receive risk assessments before getting approval to enter the final design (FD) phase of project development. The risk assessment will be tailored to the needs of the project through a three-track system. This system will be based on the complexity of the project, the past experience of the project sponsor, and the overall amount of New Starts funds requested for the project.

Pre-FFGA: Before a New Starts project receives a Full Funding Grant Agreement (FFGA), FTA will no longer refresh the risk assessment unless the project scope has changed significantly during Final Design. However, FTA reserves the right to perform additional oversight, including risk assessments, at its discretion and as prevailing conditions warrant.

The streamlined risk assessment process will apply to New Starts projects currently in the Alternatives Analysis phase, where an FTA risk assessment has not yet started. Grantees with projects further along in the project development pipeline can request the streamlined risk assessment process be applied and FTA will review these requests on a case-by-case basis.

We are also looking at ways to supplement our risk assessment processes with technical assistance. For example, FTA is working with the National Transit Institute to develop and deliver a new course on Risk Assessment for Transit Capital Projects. In addition, we are updating the FTA Project Construction Management Guidelines to focus more on project risk. We are in the third year of sponsoring a New Starts Engineering Workshop that walks prospective project sponsors through FTA’s expectations for risk reviews.

FTA believes this revised risk assessment approach will provide opportunities for faster project development and delivery. We look forward to working with you on this key initiative and hearing from you as you work with the new process.

Sincerely,

Henrika Buchanan-Smith                                                      Lucy Garliauskas
Associate Administrator                                                        Associate Administrator
Office of Program Management                                            Office of Planning and Environment

[PDF]