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FHWA and Caltrans - Joint Stewardship and Oversight Agreement > Comprehensive Risk-Based Approach COMPREHENSIVE RISK-BASED APPROACHOverviewThe FHWA and Caltrans will work cooperatively to identify appropriate stewardship and oversight initiatives using a risk-based approach. The process will consider items such as strategic goals, mutual FHWA and Caltrans initiatives to improve quality, cost, and the FHWA level of confidence in oversight mechanisms and activities. This process should result in a mixture of initiatives to achieve strategic goals, meet customer needs and expectations, yield high benefits or pay-offs, result in systemic improvement, deploy innovative technology, provide technical assistance, and to ensure that the FAHP is being delivered consistent with laws, regulations, policies and strategic goals. This Agreement, therefore, implements a comprehensive risk-based approach to effectively manage the FAHP and assess its overall health. This risk-based approach to program stewardship and oversight facilitates the effective leveraging of federal resources by focusing on areas of risk at the program and project level. It will be accomplished using four distinctive, yet inter-dependent methodologies:
Joint Strategic Planning ProcessCaltrans and the FHWA will coordinate strategic planning activities, to the extent possible, in an effort to align agency strategic plans. The FHWA will represent California perspectives in setting national FHWA goals and strategies, and will coordinate the adopted national goals and strategies with the Caltrans Strategic Planning Process in order to assure reasonable alignment of desired outcomes, objectives, and measures of both agencies. Each year Caltrans and FHWA staff will jointly assess various elements within the FAHP to ensure that program elements are being managed effectively and efficiently, and assess how well the elements are achieving program goals. They will accomplish this through the utilization of SSO methods (see below), performance measures/indicators and other strategies. In addition, they will consider changes to goals or requirements that affect program elements. Strategic Stewardship and OversightSSO includes methods and activities by which Caltrans and the FHWA will work together in managing the FAHP to: 1) ensure effective strategies are implemented to maintain and improve the overall health of the transportation system within the State of California; and, 2) monitor and maintain compliance with all required federal laws and regulations. These methods develop into the Joint Strategic Planning Process and also serve as a venue for implementing strategies that effectively manage risk and provide the framework for the FHWA’s Multi-Year Plan. SSO is achieved through effective program management of the responsibilities, including those listed in Appendix A. Program management refers to the daily stewardship of these programs and activities within the FAHP. Effective management means ensuring that all requirements are met while proactively seeking opportunities to add to and improve the program through:
Program AssessmentsProgram assessments provide an avenue for determining the current health and effectiveness of the FAHP and assess future risk. Assessments include program analysis such as Risk Management techniques and self-assessments. These tools are based on the common concepts of identifying strengths, areas of concern, opportunities, and sharing best practices to continually improve the programs. Caltrans and the FHWA will conduct Program Analyses and implement principles of Risk Management in assessing the health of the FAHP. Principles of Risk Management include assessing risk, prioritizing risk events and statements, and implementing response strategies to effectively manage risk. This will be accomplished by performing an Annual Program Analysis and Risk Assessment in core program areas. The Program Analysis will identify initiatives that could be accomplished to “close the gap” between the effectiveness of the current state of the program and the program vision of where it should be in three years. In order to accomplish this, a Risk Assessment will be conducted to identify future risk events or elements that may affect the program. In addition, information obtained from oversight activities and performance measures/indicators will be considered when performing the program analysis and risk assessment. The program analysis will outline response strategies and initiatives to effectively manage risk. Response strategies may include training, program reviews, updating manuals/guidance, and providing technology transfer/technical assistance. Each year both agencies will update the program analysis and risk assessment to reflect the most current information, while maintaining a focus on the program vision. Program assessments may be prompted by national requirements or initiatives or the desire to strive for continual improvement. These may also include FHWA review and verification of selected project level approval activities in order to verify their compliance with laws and regulations. These activities will be selected strategically based on findings from program assessments, reviews, or performance measures, while maintaining a focus on efficient project delivery. Program ReviewsProgram reviews analyze key program components and the processes employed by Caltrans and the FHWA in managing the program. Program reviews can be conducted by individuals or teams from the FHWA and Caltrans and other stakeholder groups or organizations. Program reviews are often an outcome of program assessments or performance indicators/measures that suggest a need for improvement. Performance indicators/measures may also be developed as a part of program reviews to help highlight and quantify successes and problem areas. In general, the reviews will:
Program reviews include those that are conducted through the Financial Integrity Review and Evaluation (FIRE) Program. This is a review and oversight program in support of the FHWA’s annual certification of internal and financial controls. Caltrans will perform program reviews on the environmental responsibilities it has assumed under Sections 6004 and 6005 of SAFETEA-LU. Strategic Project OversightOn September 30, 1997, 23 USC 106(b) permitted the States to approve, on a project-by-project basis, plans, specifications, and estimates for projects to resurface, restore, and rehabilitate highways on the National Highway System (NHS), and further permitted the States to request that the U.S. Secretary of Transportation no longer review and approve highway projects on the NHS with an estimated construction cost of less than $1,000,000. Additionally, the FHWA issued guidance on February 22, 2007, that allows for removal of the $1,000,000 threshold and shifting responsibilities to the States for inherently low risk projects on the Interstate. It is mutually desirable to both the FHWA and Caltrans to streamline the approval process for routine and inherently low risk projects. Through this Agreement, the FHWA agrees to delegate to Caltrans responsibility for oversight and approval of project level activities for low-risk projects. This includes projects on the Interstate System that are routine and inherently low risk in which Caltrans has a high level of experience and has well documented procedures and processes in place for ensuring compliance with federal requirements. For projects on the Interstate that are delegated to Caltrans, the FHWA’s oversight will be satisfied by conducting SSO methods and activities. Therefore, both agencies will implement a risk-based approach to project-level management that no longer uses the $1,000,000 threshold. While Caltrans will be responsible for approval of project level activities for low risk projects, the FHWA will maintain project level approval for High Profile projects. This risk-based approach to project oversight will be conducted in two steps: 1) selecting the projects that traditionally pose a risk to the health of the FAHP (High Profile projects), and 2) within the High Profile projects, further delegating approval authorities in activities that pose a low risk to the individual projects. First, Caltrans and the FHWA will jointly determine which projects are considered to be High Profile projects based on the criteria listed below. The High Profile project determination will be made at the District level in conjunction with FHWA. Appendix D further explains each criterion and provides examples. The criteria include:
Secondly, the risk-based approach will be carried one step further by highlighting activities on the project responsibilities list that can be further delegated on High Profile projects. The FHWA’s intent is to have approval authority in activities that cannot be delegated and activities that may pose a risk to individual projects. High Profile determinations will be a joint, cooperative effort and will be made on a project-by-project basis. For each High Profile determination, the FHWA and Caltrans will establish which project responsibilities will be retained by the FHWA and which project responsibilities will be delegated to Caltrans for the project. Highlighted boxes on the Project Responsibilities list (Appendix B) will be designated as either the FHWA or Caltrans and signed and dated by both agencies. The agreement may also include a general summary of other involvement, including attending regular meetings, conducting project inspections, etc. Any other project that does not have a completed, signed and dated Project Responsibilities List will be designated as a delegated project. For these projects, the FHWA and Caltrans will have project level approval authorities as indicated in the delegated projects column. The Strategic Project Oversight Selection Process is outlined in Appendix E, which identifies the critical phases of project development, criteria to be considered, decisions to be made and the outcome of the decisions. This diagram guides the decision makers though the process so as to identify the potential High Profile projects as early as possible. All projects, regardless of level of delegation, will be administered in accordance with the Project Responsibilities List. The FHWA has the ultimate responsibility for meeting federal requirements with respect to all projects delivered with FAHP funds. Therefore, the FHWA’s delegation of low risk project level approval to Caltrans only functions as long as those activities remain low risk. If SSO methods reveal concerns with Caltrans approval process for delegated activities, these activities would have the potential to become high risk, and therefore could eventually alter the FHWA’s involvement in their approval. Caltrans and the FHWA will maintain an open and collaborative relationship in order to ensure timely and efficient delivery of all projects within the FAHP. Performance Indicators/MeasuresPerformance indicators/measures will be one of several tools used to assess the health of the FAHP during the Strategic Planning Process. They will enable the FHWA and Caltrans to continuously monitor program performance and proactively implement corrective actions when needed. Performance indicators/measures consist of a series of predetermined assessments made at routine intervals and covering all core programs in the FAHP. Data derived from these indicators/measures will be used on an ongoing basis to monitor how well the various program elements are functioning, including how efficiently the program is being delivered and how well the program is complying with various requirements. The indicators/measures are to be used as a tool for the FHWA and Caltrans in jointly managing the FAHP. Changes in the measurements over time will be tracked to determine the progress being made toward any objectives, and whether adjustments are necessary to improve efficiency or reduce risk. While these performance measures/indicators provide a point-in-time evaluation, they do not generally reveal why the program is performing at the measured level. The indicators/measures will also serve as input in conducting annual program analyses and risk assessments and may give cause for program reviews or other program management techniques such as project inspections and project document reviews. At a minimum, the indicators/measures will be used to cover the core program areas and will be arranged by the FHWA, and utilized by both agencies, in a dashboard format that will be updated monthly, quarterly, or annually, depending on the indicator/measure. Results from these additional assessments can provide information on best practices or suggest strategies for improving program performance. Appendix C provides a comprehensive list of the performance indicators/measures, along with the goal, report cycle, lead authority, and supporting justification for the indicator/measure. It is important to note that the indicators/measures may evolve and change over time; however, every effort will be made to achieve the original intent of the indicator/measure. Additionally, other indicators/measures may be developed and used. All changes to the indicators/measures will be agreed upon by both the FHWA and Caltrans and will not by themselves warrant a change to this Agreement. However, if other changes need to be made to the agreement, the latest list of measures will be placed in Appendix C. Collaborative Multi-Year PlanThe FHWA will develop a comprehensive Multi-Year Plan, which encompasses all elements of the collaborative efforts by both agencies in implementing the Comprehensive Risk-Based Approach. These methods will clearly capture the outcome of the Strategic Planning Process and will develop implementation strategies for the next three years. The Multi-Year Plan will identify the actions that the agencies will take separately or jointly to assure the success and improvement of the program elements. This plan will allow both agencies to effectively utilize resources, while focusing on strategic goals and objectives. In addition, this plan will provide a roadmap for enhancing program improvement and risk management. The plan will be updated on an annual basis to incorporate up-to-date strategies for managing risk to positively influence the health of the FAHP. It will include a three-year outlook discussing the following elements:
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