||ACTION: FEDERAL-AID DIVISION OFFICE RISK MANAGEMENT for the AMERICAN RECOVERY AND REINVESTMENT ACT of 2009
||March 4, 2009
||Directors of Field Services
||In Reply Refer To:
This memorandum asks you to identify the primary risks associated with successfully delivering the American Recovery and Reinvestment Act of 2009 (ARRA) program in your Division and to develop a comprehensive risk management plan to address those risks. Please provide a two-page management plan that lists the specific risks in your Division and an outline of your strategies to address them to your DFS, with a copy to Mike Graf, DFS-PMIT, by COB March 27th. Also, please bring your plan to the Spring Business Meeting for further discussion.
Step 1 – Identify ARRA Risks
Identify the risks you see in your state for the ARRA program using your customary FAHP risk assessment process. You should consider some or all of the following:
- Risks identified in the regular overall Division risk assessment last year;
- Existing Division Financial Integrity Review and Evaluation (FIRE) plan;
- Results of recent reviews that give you a current assessment of risk associated with a program or area;
- Other risks that have been mitigated by previous activities;
- State staffing and other resources available to carry out the ARRA program;
- Maturity of programs and experience levels of the various partners involved in delivering the ARRA program;
- Dollar, schedule, public trust and safety impact of the risks;
- The seven agency risks that have been identified in the draft FHWA ARRA Risk Mitigation Plan. These risks are likely to overlap with your locally identified risks. (Attachment A);
- The agency corporate risks as identified in the 2008 Risk Management Report of Results (Attachment B); and
- Summaries of recent national reviews by FHWA, OIG, and GAO (Attachment C).
Once you have identified the key risks associated with the ARRA program in your state, list them in priority order with short statements explaining each risk.
Step 2 -- Develop a Risk Management Plan for your division
After the risks are identified, outline your strategies for managing those risks AND the nationally identified risks. Basically you are answering the question, “What are we doing to minimize, monitor, and/or eliminate those risks?
There are three strategies your Division Risk Management Plan must include:
An approach to conduct “visible monitoring” which includes scheduled and unscheduled sampling and checking of processes and documentation associated with national and locally identified risks such as financial transactions, consultant procurement and administration, construction bid processes, change order approvals, and quality assurance monitoring.
The West Virginia Division Program Accountability & Results (PAR) Review (Attachment D) is an example of such an approach. We will refer to this program of “visible monitoring” as ‘PARs’. PARs are a critical element of the draft FHWA ARRA Risk Management Plan and are intended to coordinate with a series of national “mini” reviews that will be carried out by the Program Management Improvement (PMI) Team on a continuous basis throughout the life of ARRA. Your PARs are intended to be “spot checks.” If significant findings arise from your PAR monitoring activity, you can request the assistance of one of the national review teams to gain a better understanding of the issue at hand.
Enhanced financial oversight by conducting Federal-aid billing reviews during fiscal year 2009 to ensure that states are compliant with Federal-aid billing documentation and Cash Management Improvement Act (CMIA) requirements.
Communications and outreach which includes (as appropriate) outreach strategies listed in the local section of the Draft FHWA ARRA Risk Management Plan ( Attachment A) as well as other efforts designed to heighten awareness of risk issues in your state and thru education, help avoid them.
Other strategies you should consider including in your plan are:
- Identification of individual(s) to serve as the Division Office ARRA point(s) of contact responsible for active monitoring and management of the ARRA risk plan;
- Development of a spreadsheet of all ARRA projects to monitor cost, schedule, and progress;
- Regular meetings with partners to discuss progress and barriers for ARRA projects;
- Continuation of current Local Public Agency (LPA) oversight enhancements and periodic reporting strategy;
- Strategies found in the recent Division survey regarding ARRA risks and response strategies (Attachment E); and
- Coordination with entities responsible for conducting single audits in accordance with OMB Circular A-133, to share information on agency-identified high risks.
Over the course of the next several months, Headquarters will be developing guidance and checklists as tools to support your risk management. You should plan to integrate these tools into your risk management strategies as they become available.
There may be some risks that you identify as significant, but which you do not believe you have the ability to satisfactorily manage at the local level. Those should be reported at the end of your document.
Step 3 – Review Your Risk Management Plan against previous plans and adjust.
Once you are satisfied with an approach to manage risks associated with the ARRA program in your state, go back to your 2009 unit plan and reset your priorities and related activities, in the context of the overall FAHP program. Our intention is not to stop all other initiatives in the agency, but the DFSs believe that many, if not all of the traditional program reviews will be supplanted by your “visible monitoring and checking” PARs. Also, reevaluate your 2009 FIRE Plan to determine what currently planned reviews can be deferred or refocused to address recovery program risks and your revised Division Risk Statements.
On Behalf of the
Directors of Field Services
A. Draft FHWA ARRA Risk Management Plan
B. Summary of FHWA 2008 Corporate Risks
C. Summaries of recent FHWA National Reviews, selected OIG reports, and selected GAO reports
D. West Virginia Division Program Accountability Review guide
E. Division Office ARRA Risks
|cc:|| Associate Administrators
Acting Chief Council
Chief Financial Officer
Director, Innovative Program Delivery
Directors of Field Services
Federal Lands Highway Division Engineers
Director of Technical Services