Guest Post by James Kline (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
The 2012 Moving Ahead for Progress in the 21st Century Transportation Act (MAP 21) requires state departments of transportation to develop a Transportation Asset Management Plan (TAMP). The TAMP is to include a Risk Based Asset Management Plan (RBAMP). The two plans must be certified by the Federal Highway Administration (FHWA) by June 30, 2019. Certification failure will result in National Highway Performance Program funds being reduced by thirty-five percent. As a carrot, federal funds can be used to cover the cost of developing these plans. This article discusses the FHWA’s approach to risk management. It also shows that the FHWA approach will filter down to local governments.
FHWA Approach to Risk Management
In November 2017, the FHWA issued ‘Incorporating Risk Management Into Transportation Asset Management Plans’. This document provides the guidelines for developing a RBAMP. The guide is influence by ISO 31000.2009
The recommended risk assessment steps include:
- Establish the Context – Risk Management should be goal oriented. Team members should focus on the risk to the TAMP’s objectives and targets.
- Risk Identification – Team member should identify both short term and long-term risks. While the TAMP is for ten years, the life cycle of assets could be 50 years or more. All risks to assets should be examined. This includes long-term climate conditions and seismic risks.
- Risk Analysis – Use a heat map to identify the likelihood and impact of each risk.
- Risk Evaluation and Prioritization – The analyzed risks are compared against the organizations risk appetite. This allows for prioritization.
- Manage Risks – The organization is to develop a mitigation plan for their top priority risks and identify an approach to monitoring them.
- Communicate – Key internal and external groups are consulted so they become aware of the risks and mitigation plan. The vehicle for facilitating this communication is the risk register. The risk register can be incorporated into the TAMP and periodically updated by the team.
- To integrate risk management into the organization, the risk register should be review and updated on a regular basis. This update should be done along with the performance review process. The risk to performance relationship should also be included in budget development, and strategic planning.
Item seven makes it clear that FHWA considers risk assessment measures part of the performance measurement and the budget development process.
Risk Based Asset Management Team
To assist states in developing their RBAMP, FHWA recommends the creation of a risk assessment team. The composition of the team is to be broad based. Its purpose is to identify and prioritize risks. The table below shows selected team members and their expected contributions.
| Risk Team Members and Their Roles | |
| Discipline | Role or Contribution |
| Finance Staff | Forecasting expected revenues available for asset investment |
| Asset Modelers or Forecasters | Providing scenarios of how much investment is needed to achieve and sustain asset-condition targets. Producing scenarios of alternative treatment strategies to manage risk to a fiscally balanced program. |
| Planners | Forecasting traffic and population trends that will influence investment assumptions. |
| Pavement, bridge, other Asset Engineers and Asset Owners | Providing insights on condition trends, asset performance, emerging issues and assessing, prioritizing and developing mitigation strategies for high-priority risks. |
| Program/Estimators | Estimate unit costs and pricing trends that will influence investment assumptions. |
| IT Staff | Provide support for data extraction, analysis, mapping and managing the technical aspects of developing and maintaining the risk register for enterprise use. |
| District or Field Staff | Provide insights on how risk and performance issue vary across the State. |
| Local Owners of NHS Assets | Identify and address risks to locally owned assets addressed in the TAMP. |
| TAMP | This is a role of the group or person(s) responsible for coordinating the updates to the TAMP to reflect changing risk priorities. Without this role, any new risk may not be reflected in the TAMP. This can be a person from any of the other groups or a person specifically assigned to coordinate updates to the TAMP. By assigning this role at the start of the TAMP development, the agency is assured the TAMP reflects new high-priority risk that arise, such as budget cuts, new taxes, or safety incidents. |
Risk Assessment Pushed Down
The Local Owners of National Highway System Assets are local governments. Their presence is beneficial, because they know the risks to their assets and the best mitigation approaches. There is another benefit to their inclusion. Local government are exposed to the ISO 31000.2009 methodology.
While the FHWA Congressional mandate affects only state departments of transportation, the Federal Aviation Administration is developing a similar certification for all aviation activities. When implemented, local governments with aviation assets will be required to have their risk assessment certified. Other federal agencies concerned with infrastructure like sewer and water treatment plants and utilities may also implement risk assessment requirements.
Conclusion
The federal mandate that state department of transportation implement a RBAMP is the first step in focusing attention on the importance of risk assessment. The FHWA risk assessment approach is likely to be adopted by other federal agencies. As a result, state and local governments will not only be exposed to ISO 31000.2009, they will have to use it to be risk assessment certified.
BIO:
James J. Kline is a Senior Member of ASQ, a Six Sigma Green Belt, a Manager of Quality/Organizational Excellence and a Certified Enterprise Risk Manager. He has over ten year’s supervisory and managerial experience in both the public and private sector. He has consulted on economic, quality and workforce development issues for state and local governments. He has authored numerous articles on quality in government and risk analysis. jeffreyk12011@live.com
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