FTA Oversight Procedures - Federal Transit Administration - U.S. ...

surveillance plan should present an overview of the issues, technical approach, and PMOC’s
recommendations or course of action and shall identify sampling approaches and inspection
methods as well as timelines for reporting deficiencies in Grantee performance, taking corrective
actions and varying the level of surveillance depending on the Grantee’s conformance to the
performance standards. The purpose of the PMOC’s surveillance plan is to provide the government
with an effective tool to manage PMOC performance and to ensure that the Grantee project
implementation achieves risk management objectives and targets.
6.2 Cost Risk
The PMOC shall use its professional judgment to identify, assess and evaluate the uncertainties in
the Grantee’s cost estimates, in terms of the project’s social, political, legal, financial and physical
environment. Such evaluation shall be based on the PMOC’s review of the Grantee’s structure, and
the project’s scope, schedule, cost estimates, and delivery process, including prior reviews
conducted under other Operational Procedures. Further, the PMOC will document and report its
recommendations for responding to identified items of likely risk, including recommendations of
adjustment to the Grantee’s Project Management Plan.
The process of evaluation of cost risk generally includes at a minimum, identification of potential
risk events (6.2.1), and may include, as directed by the FTA work order manager, such additional
items as cost and/or schedule risk assessment modeling, risk management oversight, or other
specialized services as described below or as required to respond to specific project conditions.
6.2.1 Cost Risk Event Identification
6.2.1.1 Risk Events
Risk events are individually identified contingent, or unplanned, events that may occur and which
may create a plan variance and may be cause for special management scrutiny or action. Such
events, or a combination of such events, do not represent all risk present on a project, and the
identification or disposal of risk events may only become possible as the project proceeds through
its various phases. Therefore, risk event identification may require periodic updates as a project
progresses.
6.2.1.2 Risk Categories
Risk shall be characterized as belonging to any of the following categories, which are listed in
chronological order. Generally, risk is categorized as associated with the category during which the
risk may be earliest and best mitigated; these categories are listed below.
Requirements Risk is associated with all project development activities from earliest concept
through Alternatives Analysis.
Design Risk is associated with all design‐related activities occurring after Alternatives Analysis.
Substantially complete design risk is indicated when no material design‐related non‐conformances
are detected through OP‐32 reviews; OP‐33 reviews indicate that 95% of all construction direct
costs are shown on both design deliverables and cost estimate; and OP‐34 reviews indicate that no
project level critical path element or procurement activity exceeds 45 calendar days in duration.
Market Risk is related to procurement of construction services, materials, and equipment.
OP 40 Risk Assessment and Mitigation Review
Revision 0, June 2008
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