Skip to main content

P3 Toolkit

Analytical Tools

P3-VALUE: Risk Assessment Tool User Manual

December 30, 2013

« Previous | Table of Contents | Next »

Chapter 3. Risk Tool Overview

The four major steps in a risk assessment generally include:

  1. Identify the project risks.
  2. Assess the risks for cost and schedule impacts through a qualitative and quantitative assessment process.
  3. Allocate risks to the party best able to manage them.
  4. Mitigate the occurrence and/or the impact of a risk.

This User Manual provides an overview of the risk assessment process and includes instructions for utilizing the Risk Tool at each stage. As outlined in Figure 2, the Risk Tool includes an Introduction and eight key tables to simulate the risk assessment process. The 'Definitions' and 'Risk Assessment Matrix' tables provide instructions and reference information for the user. This User Manual focuses on the Risk Tool's inputs and outputs in the 'Model Assumptions,' 'Risk Register,' and 'Outputs' tables, as informed by the 'Risk Assessment Matrix' and as they relate to the four-step risk assessment process. The 'Risk Register' table is divided into four sections to record the inputs of each stage in the risk assessment process. It is important to note that users must accept the disclaimer in the 'Introduction' before accessing the remaining content of the Risk Tool.

Figure 2: Getting Started with the Risk Assessment Tool

Introduction Users must accept the acknowledgement to access the tool. Instructions on how to use the Risk Tool are also provided.
Table 1. Model Assumptions Allows users to input project data that can serve as a reference for determining the values in the quantitative risk assessment and which affect the schedule impact outputs.
Table 2. Definitions Defines key terms used throughout the Risk Tool and contains pre-defined inputs that enable the tool to operate.
Table 3. Risk Assessment Matrix Provides an example Cost Impact Matrix and Schedule Impact Matrix that support the qualitative risk assessment.
Table 4. Risk Register The outcomes from each stage of the risk assessment process are captured here.
Tables 5-8. Outputs Display the total risk impacts generated from the risk assessment process.
Example Scenario

This User Manual and the Risk Tool include example inputs from a hypothetical availability payment-based P3 project to demonstrate the application of the Risk Tool. The example assumptions, risks, and outputs do not reflect either a traditional or P3 structure, but rather include a comprehensive list of considerations for a project sponsor and its evaluation team. In completing the Risk Tool for their own notional project, users should first approach the inputs from the public agency perspective for a traditional procurement and save their outputs before repeating the steps from the private partner's perspective for P3 procurement.

Timing & Prerequisites

A project sponsor should conduct a risk assessment at the early stages of the project development process and revisit the risk assessment throughout project development and delivery as part of sound risk management practices. An initial risk assessment should begin once a project sponsor has completed sufficient preliminary design work to understand a project's scope and alignment and developed an initial estimate of a project's schedule, procurement options, and life cycle costs.

Using the Risk Assessment Tool

The user inputs project data in the 'Model Assumptions' tab. Note that all inputs are entered into cells shaded light-blue. The assumptions listed in the model are examples of the project data needed to conduct the risk assessment process. The actual assumption categories and values will vary by project, but the tool accounts for sample cost, schedule, and revenue assumptions.

  • Cost assumptions include construction base cost, annual operating cost, average annual maintenance cost and daily delay costs.
  • Schedule assumptions include the expected duration of various project phases (planning, design, construction, commissioning, turn-over, and operations). The project phases listed under schedule assumptions are used in identifying the impact phase during the risk identification process and in determining values in the quantitative risk assessment process.
  • Revenue assumptions are applicable for toll projects and may include the estimated toll revenue per day to assist in calculating impacts of project delays or interruptions.
  • Financing assumptions are applicable if a project utilizes financing and can be included to reflect any penalties that may be incurred if a risk event is realized.

It is important to note that with the exception of the daily delay costs, these user assumptions do not factor into the Risk Assessment Tool's outputs. The assumptions fields are provided as an exercise to help users make realistic cost and schedule impact assumptions in the Risk Register sheet.


« Previous | Table of Contents | Next »

Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000
To view PDF files download the Adobe Acrobat Reader®