Launch Slideshow

Not-so-risky business

Not-so-risky business

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    Daniel Berman

    Built in the mid-1960s, the Factoria Transfer Station in Bellevue will be replaced with a larger and enclosed facility. The project’s expected to cost the King County (Wash.) Solid Waste Division $90 million.

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    Daniel Berman

    Rogers (left) and Hague at one of King County’s 10 transfer stations.

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    King County Dept. of Natural Resources and Parks

    Working in or near private right-of-ways is another major cost risk factor for seemingly straightforward projects like trail creation.

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    King County Department of Natural Resources and Parks

    To the layman, existing utilities are a straightforward aspect of construction. But they’re a potential complication that can greatly affect project cost.

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    Daniel Berman

    To lower the number of truck trips to and from the factility and improve payload efficiency, King County’s new Factoria Transfer Station will have a garbage compactor.

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    King County Department of Natural Resources and Parks

    If managed rigorously, legislators and constituents celebrate a project that was delivered as close to budget and deadline as expected.

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Three major lessons learned

“The system has been in place since 2010 and we’ve been evaluating the process annually,” Rogers says. “But since projects take several years to complete, we don’t have enough data to draw firm conclusions.”

This means, among other things, that King County hasn’t made adjustments to the system yet. Maintaining consistency is important because it will allow the auditor’s office to compare year-to-year data sets that include completed projects. Obviously, the intent is to determine whether projects deemed “high risk” do have more problems with budgets and schedules, and if early intervention does indeed mitigate risk.

Still, some lessons have been learned, albeit informally.

Language matters. “Labeling a project ‘high risk’ in the public record gives the wrong idea and we don’t want unfair stigmas attached to a project,” Rogers says. “So we may move toward the term ‘mandatory phased appropriation.’” A need for consistent reporting language across agencies was also identified.

So does delivery method. “Most projects are design/bid/build, and we know the risks of that. Basically, until you have the bids, you have an element of cost risk,” Rogers says. “But a few divisions are having success with other state-permitted delivery methods, such as design/build, which helps establish cost certainty earlier and mitigates risk. We want to learn what we can about alternative delivery methods and factor that in.”

Not all project owners are created equal. Some agencies will always have more high-risk projects than others. It doesn’t mean they’re mismanaged, just that building or improving assets presents serious schedule, budget, and property acquisition challenges.

For example, from 2010 to 2012, four of the 16 high-risk projects belonged to the Department of Natural Resources and Parks’ Solid Waste Division. The division had the highest average risk scores in that period (277), well above the average of 212.

Legislators understand and accept this reality. “After all, they’re rebuilding our entire solid waste transfer system,” Rogers says. “Projects on that scale are just inherently risky and challenging.”

That’s one reason an effort is made to distribute risky projects across all agencies, to some extent, regardless of actual scores. The thinking is that all agencies deal with risk when it comes to capital projects, and legislators should have better oversight of the large projects of all the agencies they oversee.

Easing elected officials’ concerns

The government that’s not taking on major public works projects isn’t serving its citizens; it’s just maintaining the status quo. But no one wants to be left holding the bag when things go south.

By acknowledging, identifying, and quantifying the factors that contribute to failure, King County’s system empowers staff and elected officials to complete more and larger capital projects while maintaining fiscal prudence.

Angus Stocking is a licensed land surveyor who’s written about infrastructure since 2002. E-mail angusstocking@gmail.com.