Four ways we're incorporating risk management

 

Operations risk management

Assessing risks to providing a safe, high quality, reliable transportation system through maintaining, operating and preserving transportation assets, building trust with green sustainable solutions and collaborative innovations in a cost effective manner.

 

 

Project risk management

The process of management that deals with identifying, quantifying and responding to, and controlling the risks in project decisions, MnDOT oversight levels and its related project objectives.

 

Program risk management

The assessment process to help determine system and quality of life risks that leads to investment priorities for capital funding that utilizes current strategic plan and integrated performance measurement.

 

 

Corporate risk management

The assessment of management of risks to the overall organizational performance through assessing tasks, people, structure and culture and the organization's ability to be congruent and compatible to managing strategic performance risks and goals.

 

Examples of risk management in action

 

Highway Strategic Operations Plan (HSOP)

MnDOT has been evaluating changes in laws, regulations, expectations and standards regarding budget tradeoffs. Options for operations and capital budgets are available and tradeoff discussions have resulted in various requests for funding needs. Tradeoff discussions require a risk management approach (PPT 890 KB) that rates risk levels, funding effectiveness and funding levels to determine investment priorities. MnDOT’s objectives in completing a HSOP gap risk analysis were numerous, but primarily focused on challenging the funding gaps to find high-priority needs.

 

Approximately 27 budget challenges were analyzed based on risk. For example: 

• Salt prices
• Drainage maintenance
• Potholes
• Gas prices
• Fleet prices
• Preventive maintenance

 

From the risk assessment process MnDOT now has a baseline understanding of the current risks, established a common language in operations, described common risk appetite, identified and described a risk inventory, and implemented a risk-ranking methodology to prioritize risks within and across functions. 

 

Next steps include using the ranking methodology to facilitate discussions about funding scenarios. In the end, it’s likely that a difficult decision will need to be made between funding alternatives. The risk assessment process has built a strong foundation from which to do this.

 

 

 

Risk Assessments and Management Plans for major projects

 

Risk workshop objectives

The objective of a risk assessment and planning workshop is to create a safe, structured and creative environment that uses current and past information, performance measures and professional judgment to forecast future events and develop plans to manage likely risk. The process focuses on collaborative forecasting and problem solving that is enhanced by integrating diversity of perspectives. Many times management plans are the result of aligning common interests and “loose” consensus around effectiveness of risk response strategies.

 

Vision and next steps

Risk management is the heart of project management and reaching objectives at MnDOT. The vision is to have dynamic risk registers that are “living” throughout the objective and project delivery continuum. Additionally, risk based processes should continue to be used in areas where decisions, communications, cooperation, and/or sharing of resources becomes complex. MnDOT will continue to develop a risk management framework. 

 

The Hwy 169/I-494 project

MnDOT had two distinct alternatives to redesign and rebuild the interchange at Hwy 169 and I-494 in Eden Prairie. The project could either be a full-build construction project or a rescoped project that would be less than a full rebuild of the interchange.

 

The risk of a full-build was primarily the cost. It would require funding from a combination of federal funds, local bonding and future alternatives. This would harm regional relationships and public stakeholders. Based on the risk assessment process, the rescope alternative was chosen because it had around 50 percent less risk than the full-build option. Additionally, the rescoped project required roughly half of the resources needed to manage the identified risks in the full build.

 

 

Balanced program risk analysis

The BPRA process communicates how program investments create worthwhile results by focusing on managing risk. If federal fund cuts are substantial, business as usual will not be worth the effort in the fiscally constrained environment. MnDOT will need to decide what risk levels we are willing to accept through reducing investments in demographic and/or functional areas.

 

One significant success coming out of this process was the development of the Better Roads for Minnesota program, which was adopted by Governor Dayton.