Project Management View from Rail Transit Programs and Projects

This article is collaboration between Lamont Ward, Senior Electrical Engineer at National Railroad Passenger Corporation (Amtrak), and Henry Hattenrath, Senior Technical Consultant – Parsons Transportation Group.   It was started with a simple question and answer to a posted article on Converting the Design-Bid-Build Contract Model for Design Build Delivery in the rail transit domain – see https://www.linkedin.com/pulse/converting-design-bid-build-contract-model-design-build-hattenrath/.  Or https://www.projectmanagement.com/blog-post/47557/Converting-the-Design-Bid-Build-Contract-Model-for-Design-Build-Delivery

This part continues to highlight the differences in project characteristics between construction and rail transit rolling stock purchases.  The characteristics are relative to a project management view as opposed to presenting the program Model showing the processes and life-cycle for development and production of rail transit vehicles.

Q7.      How is the warranty period managed over the extended delivery period?

A7.      Buyer’s warranty requirements are typically effective at the time the Seller’s product is placed into operation after substantial completion is achieved.   The warranty period is 12 months and it can cover labor and material for implementing action to restore as-designed vehicle operation.    Rolling stock contracts become more complicated because each vehicle becomes a product with individual milestones and attributes for delivery, testing, acceptance and the start and end of warranty.   This becomes more complicated if the product is updated during production to incorporate Buyer/Owner Initiated changes or product updates initiated by the Seller.   

Q8.      Are the Operation and Maintenance Manuals different for vehicle purchase contracts?

A8.      Buyer’s Operation and Maintenance (O&M) Manuals for construction contracts are usually a compilation  of products from various vendors and subcontractors providing products and system that make up the constructed asset.    For rolling stock contracts, the Manuals are more similar to the Manuals published and supplied with production automobiles.   The Manuals are  integrated and edited for use by a wide and diverse range of  Buyers and users.    The O&M Manuals are also on integral part of the training documentation and program of course for training operating engineers, train crews, and the maintenance and repair  staff.

Q9.      Performance of building systems is more familiar to Buyer’s than for vehicles.   What is a unique performance attribute for rolling stock?

A9.      Mean Time/Miles Between Failures is a unique industry proven metric for describing the quality of rail cars and locomotives offered to Buyers.   Sellers are required to provide this historical data for vehicles supplied to other Buyers.   Sellers and Buyers use this data to measure performance on prototype vehicles and on production vehicles to as-designed specifications and to identify potential items that may need to be re-designed.   It also extends into the warranty period where upgrades are often incorporated for in-service modifications. 

Q10.    Most construction projects have requirements for training and operation and maintenance manuals.  How are the requirements handled on rolling stock contract?

A10.    Buyer’s training requirements can be extensive and go beyond the most common for initial operation.   The training scope may be individual train curriculums for Engineers, Train Crew, Car Inspectors, and Running Repair/Maintenance Mechanics. The training materials are coordinated assure that the O&M Manuals and the training are closely integrated to maximize effectiveness.

Q11.   How different are the training requirements from those on construction projects?

A11.    Buyer’s training requirements can be extensive and go beyond the most common for initial operation.    The training scope may be individual train curriculums for Engineers, Train Crew, Car Inspectors, and Running Repair/Maintenance Mechanics.  The training materials are coordinated to assure that the O&M Manuals and the training are closely integrated to maximize effectiveness. 

Q12.    What type of testing is performed on the prototypes?

A12.   Burn in-period for first production train set of vehicles is used to verify compliance with performance criteria including operator and passenger comfort attributes such as compartment temperature and forces under acceleration, braking and traveling over switches and interlockings.   Instrumentation and simulated passenger loading may be used on the train set during a specified total quantity of miles, such as 1,000 miles.

Q13.   I have heard Buyers indicate that system contracts are similar to rolling stock contracts but different from construction contracts.   Can you explain this statement further?  

A13.    Most construction contracts contain drawings and specifications that provide prescriptive requirements based on Buyer’s criteria, including selected materials, coverings, furnishings and colors, and proven, commercially available products, and means and methods anticipated by the Buyer’s engineer and approved/endorsed by the Buyer.   During execution, there is little flexibility to vary from the drawings and specifications

In rolling stock contracts, the specifications and drawings provide the performance, functionality and features the Buyer expects from the Seller.   Much like the automotive industry, the Seller will design and manufacturer the rolling stock to meet the Buyer’s requirements by modifying its proven and available materials, equipment, and subassemblies to build an integrated product meeting the Buyer’s requirements.  While these contracts are typically lump sum, they are executed by Sellers more as design-build.   This approach results in frequent interactions by the Seller with the Buyer to formalize the customizable features of the rolling stock and to  meet the expectation of both the Buyer and the Buyer’s customers. 

Q14.    What kind of staffing  is required by the Buyer to manage and execute the rolling stock contract?   

A14.    Regardless of the total number of rolling stock in scope, the basic team for the Buyer will include:  Project Manager, Document Coordinator, Quality Manager, Project Controller, Contract Manager, Equipment Engineer, Master Mechanic-Operation/Maintenance, Transportation Manager,  ROW-Signal Engineer, Training Manager, Commissioning/Warranty Manager, and Consulting Engineer.  The basic team for the Seller will include: Project Manager, Contract Manager, Design Lead, Materials Manager, Reliability Manager, Production Manager, Quality Manager, Testing Manager, and Warranty Coordinator.   For projects with government funding, the team may include:  Oversight Consultant and Independent Engineering Consultant. 

This article was started with a simple question and answer to a posted article on Converting the Design-Bid-Build Contract Model for Design Build Delivery in the rail transit domain – see https://www.linkedin.com/pulse/converting-design-bid-build-contract-model-design-build-hattenrath/.  Or  https://www.projectmanagement.com/blog-post/47557/Converting-the-Design-Bid-Build-Contract-Model-for-Design-Build-Delivery

Q1.      (October 2018-Ward) Thanks for sharing your insight on Project Management. Just curious if you can share your experiences with rolling stock acquisition. Is the methodology the same for these projects compared to fixed assets like station, signal projects, etc?

A1.      (October 2018-Hattenrath)  Many of the published articles can be applied to rolling stock projects, which are most similar to contracts for fixed assets such as rail signal systems and train movement operation centers.   But rolling stock projects have more stakeholders and normally involve heavy customer outreach and focus groups for customizing the travel compartment to meet the target commuter travel experience, comfort, and environment.   Rail commuters, like air travelers, are expecting amenities that will make their on-board time equally suitable for sleeping, working, socializing, enjoying a movie or video game on a computer, or using a smart-phone feature while connected to on-board power or wifi network.

This article is collaboration between Lamont Ward, Senior Electrical Engineer at National Railroad Passenger Corporation (Amtrak), and Henry Hattenrath, Senior Technical Consultant – Parsons Transportation Group.   In a Q&A format, it covers items in the rolling stock contract acquisition and the Buyer and Seller interaction on contract elements.  

Ward has 19 years of combined experience with Amtrak and LIRR while holding technical engineering positions in the mechanical department responsible for modification, maintenance and repair of rolling stock.   Hattenrath has over thirty year experience on capital projects with LIRR and MTACC while holding project management positions on rolling stock modifications for ASC and event recorders, and fixed assets for track, signal and communications and power systems.

In theory, the vehicle purchase project is a successor to a Seller’s program for developing a ready for production vehicle that can be customized to individual Buyer’s requirements.   While not the same volume, rail transit vehicles follow a process used by automobile manufacturers.

This article highlights the differences in project characteristics between construction and rail transit rolling stock purchases.  The characteristics are relative to a project management view as opposed to presenting the program Model showing the processes and life-cycle for development and production of rail transit vehicles.

Q2.      (November 2018)  How are prototypes used in the contract?

A2.      (November 2018)  Depending on the Buyer’s contract, there may be prototypes that are delivered for form, fit, function testing and assessment prior to final design and the start of vehicle production and assembly.   Elements of the rail passenger that are frequently prototypes are passenger seating, car vestibules,  restroom  compartment, and operating cab and engineer seating,   The Project Manager will ensure the contract includes the technical requirements as well as performance milestones and dates for delivery of the prototypes.

Q3.      Are there design submittals and review meetings specified in the contract?

A3.      Yes.   While the Buyer’s contract may not provide detailed requirements, most rail car manufacturers in their proposals will explain the their established and proven  plans for managing the execution of design and documentation to support material purchase, fabrication and assembly, delivery and acceptance testing, in-production upgrades, warranty, and spare parts. 

Q4.      What are the elements and durations in the typical acquisition process for rolling stock contracts.

A4.      Due to the limited amount of manufactures for locomotives and rail passenger cars, the process is different than the process for construction and systems purchase contracts.   For rolling stock, the process may include:

A)  Outreach to manufacturers for comments on the proposed technical requirements.   This allows the Buyer and Seller to adjust requirements so the specifications are not outside the current products available in the industry.   Estimate six months for this activity.

B) Expression of Interest from contractors.  This allows the Buyer to test the market for Sellers that can deliver the product within the Buyer’s proposed milestone dates and the budget range.    Estimate three months for this activity.

C)  Request For Proposals.   This allows the Buyer to solicit and evaluate detailed technical and cost proposal from Seller’s and to select the most responsive and responsible contractors to negotiate the contract amount.    Estimate six months for this activity.

D)  Request for Best And Final Offer (BAFO).   This allows the Buyer to obtain and evaluate cost to determine the final contract amount that offers the best value to the Buyer over the intended life cycle of the product.   Estimate three months for this activity.  

Q5.      Are contract specifications and drawings very different from construction contracts?

A5.      Yes.    Most construction contracts define the requirements for each square foot of space as well as detailed descriptions of equipment, systems and furnishings that are installed within the space.   Rolling stock contracts are more oriented to defining features and performance attributes of the vehicle’s performance expectations over a specified period in years for the life cycle, which includes period maintenance, running repair and  mid-life  maintenance overhauls.   

Q6.      What is the basis for selecting the Seller with the best value?

A6.      Buyers define the criteria for selecting the Seller in the Information For Bidders.   Buyer’s cost proposal requirements for rolling stock contracts will contain detailed cost data for evaluating the direct and indirect costs.   The Seller’s proposals will include per vehicle cost for delivery, and estimated labor and materials costs for operation, inspection, maintenance/running repair and mid-life overhauls.    The total costs will be used to determine the Seller offering the best value.  The Buyer’s contract may also consider negotiating long-term operating contracts for providing Original Equipment Manufacture (OEM) components and spare parts.  

The Project Management Institute’s (PMI) - Project Management Body of Knowledge (PMBOK) contains a framework for the management elements for effective planning, initiating, monitoring and controlling and closing projects.   

PMBOK defines the PMO as “a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools and techniques.”   

PMOs support project managers by providing services that make project management processes effective and efficient.  The services include governance, knowledge transfer, work environment, training and continuing education of project professionals, and tactical and strategic products such as schedules, estimates, progress report, performance analysis, process/procedures management, records management, knowledge management, personnel administration, resources planning, backlog plans and program development for future projects.

“Project management is an added value service.”

A PMO that is solely focused on performance data and schedule may fall short of the PMI-PMBOK expectations.   The short PMO may excel at defining metrics, collecting data, measuring the data to performance goals, and on creating “Fire Charts” that must address the red, yellow and green activities extracted from the Critical Path Schedule.   While this is an important function of the PMO, it must be balanced with other project management knowledge, skills and judgment in other areas, such as integration, requirements, stakeholder management, procurement, risk, safety/security, and human resources.  

The PMO silo adds another organizational level between the project manager and the organization’s management.   A holistic and effective PMO requires organizational resources - staff, equipment, facilities, institutional knowledge, and qualified project management staff that is accountable for explaining to the PMO governance the variances and corrective actions to improve performance to metrics. 

PMI’s Agile Practice Guide states “The PMO exists to shepherd business value throughout the organization.”

Standard management practices have always included measuring performance to critical metrics for cost, schedule, quality, safety and security.   Depending on the project domain, the practices will be enhanced by the PMO for the project business case and be integrated with the business’ management organization and functional Models for processes and procedures.   A PMO is best comprised of personnel with:

• Demonstrated experience and understanding of the project scope
• Expert knowledge of the project industry domain, and the available materials, equipment and systems needed for the work
• Superior project management skills with a proven record of effective communications and validated decision making
• Prior management positions in an environment that closely resembles the framework and culture of the project recipient’s organization

“Pencils fit where hammers don’t.” 

Introducing a complex record management system and a new reporting Model with numerous charts and graphs will initially get attention to data and the need to expedite actions to better meet goals.   But it may not be the best strategy for improving long term performance of projects.

Fire Charts use colors to highlight various metrics.  Red highlights are used for performance metrics on issues or action items that are late, overspent, have missed critical dates on goals and decisions, or that indicate a negative risk event is triggered.  Yellow highlights are used for items nearing monitoring thresholds that indicate a performance problem.   Green highlights are used for issues and action items that are making progress within accepted ranges for performance.  

Ideally, Fire Charts should show less Red performance conditions for events and more Yellow and Green.   As corrective action resolves Red events, the PMO should conduct a review to determine if there is a deeper Lessons Learned.   The Lessons Learned may initiate a change in processes or procedures so the risk of the Red event can be eliminated or routinely mitigated during the current and future projects under the management of the PMO. 

“It’s just bad management.”

Conversely, Fire Charts that continue to increase Red performance conditions indicate that the Model may not reflect the environment, or that the PMO and project management tools, processes and procedures are not effective.  Like repeating positive outcomes for resolving Red events, the PMO needs to review negative outcomes and make changes that allow project managers and the PMO improve performance metrics -  less Red and more Yellow and Green highlights.

The primary services by PMOs are related to groupings of projects, and they directly impact the performance of project teams and the results delivered by the projects.   In some cases, the PMOs becomes a part of the organization’s structure and its business plan that integrates processes for maintaining and building infrastructure in-line with the core business product and its strategy for achieving business goals.

Dinsmore in Human Factors in Project Management compares project management and on-going management:

“Running projects calls for specialized managerial approaches to avoid pitfalls.  General managerial principles, while applicable to projects, must be tailored to accommodate each project’s unique traits.  The special needs of the project team, which are different from those of operations personnel, must also be fulfilled.

Ongoing ventures require long range planning and marketing, thus setting for long-range survival.  Projects are finite, complex and call for task oriented approach.”  

“They don’t know what they don’t know.”

But for projects, programs and portfolios, the distinction between project management and on-going operation management becomes increasing blurred as the extent of scope and duration of project work comes close to or surpasses the organization’s product cycle.   At this point, the function of managing projects and operations become even more aligned with requiring long range planning, marketing, financing, and execution and realization [business] plans.

Under these circumstances, the project knowledge, business skills, management competence and leadership IQ of the PMO staff must meet the highest proficiency in project management and its working knowledge of operations within the organization.   However, the quality of PMOs can vary just like any other business function that relies on management for creating, sustaining and growing an organization’s business.  

As Roadstrum stated in Excellence In Engineering – “Engineering work is project work”,   it could be derived that “Organization management is project management.”    And similar to organizational management, success factors for PMOs include:

• Creating a Project Management Plan (regardless of project, program, portfolio monetary value) that defines the PMO’s entire plan and its processes, procedures and deliverables for the business of managing projects
• Building a management staff that demonstrates core values of the organization and PMI ethics
• Utilizing as many procedures, processes and systems that already exist within the organization’s assets
• Capturing and maintaining retrievable knowledge and historical data for all projects
• Establishing annual training and on-going professional improvement requirements
• Creating and maintaining standards for estimating, scheduling, reporting and Key Performance Indicators (KPI)
• Correlating and reinforcing KPI with the organization’s business goals and strategies
• Conducting, documenting and sharing  periodic management review meetings that generate tangible assessments and guidance for improvement
• Developing where required simple, efficient and effective recurring processes and procedures
• Documenting, sharing, and making accessible and common practice for Lessons Learned
• Providing decision making criteria and timelines for rendering/implementing decisions
• Documenting organization policies for risk, integration, performance, quality, safety, security, and  sustainability/environmental awareness
• Establishing long-term staffing plans that integrate a career path and succession of personnel
• Supporting employee nominations, application and recognition in industry publications and professional awards

Newpapers, industry magazines, corporate press releases and televisions sound-bites have introduced “transformation” and “transformational” into the lexicon of content in reporting on projects and describing corporate reorganizations.   

From behind podiums and microphones, executives and public officials are touting the benefits of transformational projects.   The content typically emphasizes how the projects will transform the company, the region, the community and the products/services to customers.   Some of the projects in the media include:

• Hudson Yards – a real estate development over a rail right of way
• 7 Subway Line Extension – a transit system expansion extending from 42ndSt to 34thSt at  Hudson Yards
• 2nd Ave Subway – a transit system expansion along Manhattan’s east side between 63rdSt and 96thSt
• Double Track  -  a railroad system expansion between Farmingdale and Ronkonkoma
• 3rd Track – a railroad system expansion between Floral Park and Hicksville

In the rail transit domain, the context may contain dramatic changes in the organization to improve operating performance or to re-energize the completion of major projects that change the existing products and services to customers.   This may include system expansions with new terminals that advertise high-end property features and stores, and a new fleet with never before seen amenities, such as charging stations, video advertizing, new seating features, and CCTV monitoring operator and passenger compartments.  

On projects, the organization provides the input and the tools and techniques to accomplish the plan and realize the deliverables and benefits.  Not surprising, transformational projects usually contain detailed analysis of the financial investment and forecast returns for the execution, start-up, operation and maintenance phases.   Each of these phases may also require adjusting the organization’s operating model for staffing, training, facilities and furnishing, tools and equipment, and materials.  

Transforming an organization is different than the results from the output of the projects involving capital improvements, and it may require changes in culture, reporting structure, and processes and procedures.    For these transformations, there needs to be a strategic framework for changing the current performance trends and to better aligning organizational assets with longer term goals and expectations for both short term and continued improvement in the quality of management and business operations.   Some organizational changes in the media include:

• Restructuring management and business processes, procedures and practices at NYC-MTA
• Changing management leadership at MTA East Side Access Project with new Leadership
• Integrating a new PMO into the MTA East Side Access Projects
• Launching a consolidated website for MTA-LIRR Projects – A Modern LI (http://www.amodernli.com)  

Any change is an organization can be disruptive and create challenges to existing operations while improvements are defined and implemented systematically.   The decided upon change should be the outcome of a thorough review of the existing organizational conditions, work flow problems and execution risks.  Determining the transformation plan and proofing the end results will focus on:

Validating the reported performance metrics and trends are correct and accurate

Verifying and concurring changes are required to better align all activities and deliverables with the organization’s business plan and the organization’s assets including personnel, processes, procedures, tools, and techniques.      

The transformation should be undertaken as a project or a series of projects that when completed can mitigate conditions or solve the stated problem(s), and achieve the envisioned end results.  The solutions should demonstrate improvements in the organization ability and confidence in achieving the short term and long term goals.  Ideally, the plan will follow proven project management and quality management processes and methods and adhere to a defined lifecycle.   However before finalizing a plan roll-out, the organization’s executives should perform a rigorous vetting of the plan to prove out assumptions, approve the approach and hold the project team accountable for the expected results.  

The transformation initiative must be carefully planned and executed with transparency throughout the organization’s reporting structure.   The lessons for updating tools and techniques and adopting best practices learned from executing capital projects will be applied for transformation, including a proven communications plan and a strong scope management plan.

An operating transformation in an organization will require a well defined communications plan covering:

• Internal press releases on the poor performance and the plan for making improvements in processes, training personnel and hiring additional staff
• External press releases on corporate commits to specific and aggressive milestones and dates for implementing changes
• Local media coverage and endorsements by public officials and influencers to the benefits from the changes to the community and the region
• Social media videos covering sound bites on cost savings, tax reductions, employment increases, and home values

The transformation plan will be complemented by strong project governance and highly skilled and experienced project staff.  Since the transformation will likely require changes in existing practices, processes and procedures, it will be necessary to continue the existing operations while the transformation proceeds.   As milestones and deliverables are achieved, changes will be systematically and deliberately implemented.   The plan will identify the required training for personnel and the new equipment, tools, software and software licenses that will be installed, tested and ready for use.    

The scope of the transformation will focus on re-engineering management work flows, which are the root cause of poor performance metrics.  The work flow reviews should include attributes and objectives such as:

• Existing project documents to identify gaps, such as materials management involving Owner supplied materials, and work zone logistics for work areas shared by multiple contractors
• Existing project documents to eliminate requirements that are obsolete and no longer used for management functions
• Lessons Learned program to ensure documenting and sharing negative and positive experiences across all management functions
• Work flow durations to compare expected timelines with actual durations
• Processes and procedures to make changes to overly complex and time consuming steps, which erode value by creating non-value added deliverables, such as duplicating logs and tracking sheets already produced by other participants.
• Project schedule to validate activity sequences, interfaces with predecessor and successor work packages, and contact time and productivity is consistent with work hours and access restrictions.

Like project plans, the transformation milestones and dates should be realistic, measurable and achievable.   In some cases, public sector transformations are the product of executive goals and government influencers.    This often creates lofty promises and aggressive performance metrics that challenge an organization’s operating processes, its long established working culture, and the quality of personnel.   These challenges and risks will need to be addressed as part of the transformation plans.   Ideally, the format and content of the plans will resemble the Project Charter and Project Management Plan requirements from Project Management Institutes – Project Management Body of Knowledge (www.pmi.org) and Federal Transit Administration (www.FTA.dot.gov).

In short, stop voluntarily creating the potential for risk events on projects that may not have adequate management resources to ensure opportunities are realized and threats are mitigated! 

Projects are exposed to risks throughout the project lifecycle and they present threats and opportunities for altering the original project plan for scope, schedule, budget and quality expectations as well as for adjusting the project business case for purpose, deliverable requirements and functionality, and the cost benefit analysis for project completion. 

Guides for project management and practice standards for project risk management are available from government funding agencies and from industry advocates and professional development organizations such as the Federal Transit Administration (www.transit.dot.gov) and the Project Management Institute (www.pmi.org).    Managing risks also requires experienced project professionals with demonstrated expertise in the industry domain of the project and with adequate allocation of hours and budget to perform risk management activities.  

Hard risks can be addressed with engineering solutions and added funds to retain schedule goals.  But soft risks require managerial solutions that must be addressed with funds, changes in project management processes and other innovations that mitigate impacts to extending schedule duration and forecasting new milestone dates.    

Organizational processes and internal struggles between managerial silos create risks on projects.  Many of the risks in this category can be managed and controlled by diligently monitoring events and consequences to assure operational initiatives do not place new burdens on established project objectives, management processes, performance metrics and progress to goals.

Here are some examples soft risks:

1. Mitigate project level changes to the project plan/charter.   While continuous change is a common mantra, it is not a license for project governance, and program and project managers to propose and implement unbridled changes in the project scope and requirements.   Decisions for changes must be vetted with rigor tested to assess facts, substantiate benefits, identify the consequences, and the expected benefits.   Mitigation can be supplemented by developing a Plan B for recovery if the outcomes of the change are not achieved.   

2. Mitigate changes to roles and personnel assignments.   Turnover of personnel during a project life cycle can occur due to actions outside the control of the project manager.   While a certain amount of events can be anticipated by monitoring years of service and performance records of assigned personnel, most changes are driven by the work environment created by the organization, project governance, program and project management and the priorities in the company’s providing management, design and construction services.   Mitigation can be supplemented by enhancing project management activities to incorporate cross-training and a succession plan to reduce impacts for transitioning staff in and out of the team.      

3. Mitigate changes in organizational processes and procedures.   Most projects rely upon the organization’s existing processes and procedures as the foundation for project processes and procedures.   As a result, changes in project processes and procedures should be carefully implemented by ensuring the intended benefits of the change outweigh any increase in complexity, management oversight and the duration for completing the transaction.   Mitigation can be supplemented by ensuring project governance is flexible to allow the project to vary from organizational work flows while maintaining the intended accountability for managerial diligence and accountability for compliance with professional standards in the industry and licensing/educational oversight.

4. Mitigate changes created by political influences outside of project governance.   Ideally, political will can provide added urgency, funding, and streamlined regulations/processes to help progress project work.   However, sometimes there are arbitrary project metrics that are committed to that may fall outside the realm of reality.   Mitigation can be supplemented with a robust project communication plan that builds and maintains channels for aligning tactics and strategies between project governance, political officials, news and television media and community influencers.     

In the rail transit domain, the value and duration of projects, including planning and defining requirements, can span 5 years to 10 years.   For megaprojects in this domain, the operating organizations are usually highly bureaucratic.   As a result, the project durations can be longer due to factors that add time and complexity for processes associated with government contracting requirements, securing bonds and insurance carrier support, managing available manpower and labor agreements, coordinating a large quantity of contracts and project participants, monitoring vast interdependencies and interfaces, directing the logistics for work within fixed boundaries, and for managing materials provided by the project to contractors. 

1. Government contracting requirements:  In exchange for funding, government processes and reporting add significant hard and soft costs to contracts.   In the US, these include requirements for union level rates of pay, overall diversity of employees in the company, compliance with safety regulations, use of quality process, security checks on employees and subcontractors, specific percentages of work by designated subcontractors, and US made steel and US headquarter locations.   Risk mitigation includes processes and strategies for interpreting the requirements and the standard for demonstrating compliance.

2. Insurance:   The magnitude of cost on construction contracts affects the expense to contractors for obtaining specified insurance types and liability levels.   The high cost of insurance premiums can limit the number and proposed price for bids on contracts.   In some cases, it may prohibit insurance carriers from offering policies within the contractors bid price framework.   As a result, Owners can be forced to re-bid the contract with a reduced scope by creating several different contracts, which will allow bidders to obtain required insurance policies for the work.   Risk mitigation includes periodic peer reviews with contractors and insurance companies to align procurement plans with the current industry environment.     

3. Manpower and labor agreements:    New construction and job creation create an economic benefit.  However, they may outpace the availability of manpower in the region were the work is located.   As a result, Owners may require contractors to enter into non-binding labor agreements with trade unions to increase confidence that qualified manpower will be available for the work without creating a hardship to existing contracts from contractors competing for qualified workers.  Risk mitigation includes periodic peer reviews with contractors and local labor officials to assess overall labor availability and the projected public and private contract acquisitions.      

4. Quantity of contracts:  The quantity of contracts within a project proportionally affects the level of manpower for direct work and for management and oversight of the work to meet the project’s overall objectives and quality expectations within the established scope schedule and budget.   In addition to increasing the complexity of execution, it also requires more resources for managing interdependencies and interfaces between the contracts.   Risk mitigation includes a well defined and maintained procurement plan that describes the each contract scope, interfaces and interdependencies with other contracts, and the sequence of execution in the project.      

5. Quantity of project participants:   The quantity of project participants proportionally affects the complexity of the projects’ communications management plan, and other essential project management plan actions.    The other actions include establishing baseline requirements, making decisions and resolving conflicts throughout the project lifecycle, and for identifying the acceptance criteria for deliverables.    Risk mitigation includes a well defined and maintained system of current names and contact information for distributing project documents, scheduling and requesting attendance at meetings, and for organizing and managing project records.   

6. Interdependencies and interfaces:    The quantity of interdependencies and interfaces affects the project team’s ability to make schedule adjustments to work around problems and implement schedule recovery to achieve the project milestones dates on the path to project completion.   The higher the quantity, the lower the ability to maintain project progress and dates.   Consequently, the higher the risk threat for missing dates and extending the project duration and for adding soft cost for management staff that is proportional to the longer project duration.   Risk mitigation includes regular discussion of risks at monthly management coordination meetings, project meetings and contractor progress meetings.       

7. Logistics:    The work boundaries of the project and the amount of resources scheduled to work creates and inverse ratio that affects the environment for efficient execution and optimum progress to original scheduled project milestone dates and goals.  At some point, the amount of area required for personnel, equipment, material staging and means and method processes will not achieve planned productivity within the defined work boundaries.    Risk mitigation includes a detailed master construction schedule and integration plan, and a fully staffed and comprehensive construction management and monitoring plan.

8. Materials Management:   While most typical contracts transfer project risks to the contractor, so it is unusual for projects to plan to provide materials to contractors for installation.   When it occurs, the most common execution involves using in-house personnel from the rail transit agency to install, test and commission the constructed product.  As a result, the project creates a material procurement and inventory management plan, which is overseen by the construction manager and executed by in-house personnel.    This arrangement of responsibilities introduces risks that would normally be managed exclusively by a prime/general contractor.   Risk mitigation includes creating a material management plan with detailed processes and procedures  for managing requirements, purchase cycles and lead times, receipt inspection, inventory control, and for warehouse and distribution operations        

TIP:  Conduct a time study of recurring risk management activities and deliverables to estimate the manhours required from supporting staff. 

TIP:  Ensure Agendas for monthly project meetings, monthly contract progress meetings and periodic management oversight meetings include risk topics.

TIP:  Project program budgets should identify separate budget line items and schedule duration reserves that can be drawn down for mitigating and responding to risks.