A Model for Risk Management in America’s Last Frontier

A Model for Risk Management in America’s Last Frontier

Conducting major civil works in the interior of Alaska presents unique challenges beyond the obvious extreme weather conditions. For example, resources that might be taken for granted in most project locations, such as access to high speed internet for file sharing and basic communication, aren’t available here. More significantly, the cost and availability of materials and fuel are heavily impacted when working in such a remote environment.

To be successful, projects such as the Northern Rail Extension, which was constructed in the Fairbanks region required a very detailed approach, particularly with regard to risk management. The program manager, owner, contractor, designers and the rest of the team must worked together to identify and understand the project risks and to develop mitigation measures to address them.

Northern Rail Extension

The Alaska Railroad Corporation (ARRC) initiated the Northern Rail Extension program to construct 80 miles of new track between Fairbanks and Delta Junction. Completing this regionally significant project will provide freight and potentially passenger rail service to these communities and allow improved access to Fort Greely and other military training facilities in the area.

Construction of Northern Rail Extension Phase 1 (NRE1), the first of four planned phases, included a bridge, approach road and levee associated with the alignment’s crossing of the Tanana River near Salcha. The project was delivered using the construction manager general contractor (CMGC) model.

Risk Management

As program manager for NRE1, HDR was responsible for developing the risk management approach. The project team implemented a cost risk assessment (CRA) process throughout the project to identify and quantify risks related to both cost and scope. A vital component of the CRA process is a series of risk workshops held at key stages during the design. Representatives from ARRC, the program manager, the CMGC and the designers attended the workshops and collaborated to reach consensus on the outlook of specific risks. The workshops covered topics on the design status, materials sourcing and pricing, management and contracting issues. These sessions produced a consensus-based determination on the probability of occurrence for cost and schedule risks, and the impact, if the risk occurred. The discussions are documented in a risk register. 

Based on the project’s progress, the workshops have incorporated refinements to the bridge and levee designs, developing more detail for the construction costs and schedules, and obtaining pricing for subcontracting and materials. Many of the risks that were identified early in the process have been incorporated into the baseline cost and schedule as either contractor-controlled or owner-controlled risks. 

At the close of 2012, the uncertainties entailed pricing of materials (steel and riprap) from alternative sources, schedule for obtaining permits (CLO MR and USACE 404), and site and weather conditions that could impact construction. As mentioned previously, constructing big projects in the middle of Alaska creates considerable challenges with regard to the cost and availability of materials and fuel. At the mid-point of the contract, fuel and steel escalation costs remained negative in the budget. Part of the CRA process focused on minimizing these cost risks.

The CMGC considered structural steel fabrication domestically and in Asia, ultimately selecting a firm in China. To address the risk associated with fabricating overseas, HDR worked with a subconsultant to provide hands-on reviews of the fabrication yard, detailed and comprehensive reviews of quality control measures, documentation, testing procedures, and project submittals and requests for information. Members of the project team made numerous trips to China to monitor the fabrication process and help ensure that the quality control processes were followed by the fabricator and that the final product was constructed in conformance with the contract documents. 

Another risk identified early in the design phase involves the foundations for the Tanana River crossing. There was little historical information available for driving large-diameter piling in the unconsolidated sand and gravel formations expected on the project site. HDR facilitated numerous reviews and design revisions with the client, the engineer of record and the geotechnical consultant through both the pre-construction phase and during construction of the project. After driving all of the piling with no major claims from the CMGC, and the designers had confidence in pile capacities for the finished product.

More Keys to Success

Truly mitigating risk is made possible by paying extra attention to all the little things that can impact a project. HDR maintained a crew of qualified engineers and technicians to administer this contract, with someone available on-site 24/7 (regardless of the aforementioned extreme weather conditions). We retained the services of local surveyors and materials testing labs to work as sub-consultants, minimizing cost impacts to the client and providing more intimate knowledge of the project area. 

All project information, including correspondence to all parties involved in the project, daily work reports, materials testing data, submittals and correspondence from the CMGC, were managed using a web-based database. This allowed the client, designers, CMGC and other involved parties to access and manage project documentation in real time, eliminating much duplication and inconvenience while minimizing the potential for error. 

Construction of NRE1 began in July 2011 and was completed in July 2014. Permitting and other pre-construction work has been done for subsequent phases in preparation for future funding availability.

For more information, contact hdrtransportation [at] hdrinc.com