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Project and Enterprise Risk Management at the California Department of Transportation
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A better understanding of risk management processes and practices within a government
agency is crucial for enhancing the project delivery process and for implementing formally
risk management. This chapter outlines the whole implementation process carried out with
the risk management team formed from different functional units and backgrounds. In
addition, a discussion is held over the critical steps and aspects for performing project and
enterprise risk management in the real world.
Risk management is not new for the transportation industry in the United States, specifically
in highway projects. The California Department of Transportation (Caltrans), a leading
authority in public transportation projects in the US, has used basic project management
principles along its statewide Districts offices. Risk management has been part of the project
management menu; nevertheless its application was limited only to developing a risk
register and a qualitative analysis at the most. The Office of Statewide Project Management
Improvement (OSPM), has developed a Project Risk Management handbook which is a
guide for project managers at Caltrans for using risk management. Unfortunately, the latest
version of the manual which is from 2007, did not included a detail explanation of the
benefits for performing quantitative risk analysis while determining the risks impacts into
the project objectives, in terms of cost and time. The term quantitative risk analysis is merely
described, lacking a sound description of the tools and methodologies that have been in
place and use in the industry for many years and even with other government agencies
around the world. Cost overruns caused by a lack of using risk management in the practice
for infrastructure and transportation projects, has been mentioned in the literature for many
years. However, only few examples of how risk management can be use in the real life are
available, including how can a risk team be formed and how to educate the team for
performing a sound and trusted risk management exercise.