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

Example events that may incur secondary mitigation include construction bids that are significantly
over the estimate, or unexpected geotechnical hazards that are encountered, etc., such that the
change is likely to cause a significant over‐budget condition. Such “triggered” mitigation enables
the Grantee to make cost reductions in a planned and orderly process and preserves contingencies
for use later in the project.
Tertiary Mitigation consists of adjustment to the project budget by means of supplementing or
“recharging” the project funds. Tertiary mitigation generally is a last‐resort reaction to incurred
risk, occurring only when primary and secondary mitigation has been exhausted. Tertiary
mitigation should only be recommended upon consultation with and approval of the FTA. Such
“recharge” mitigation enables the grantee to take further steps in a planned and orderly process
and ensures secondary mitigation capacity meets minimum requirements in the next phase.
6.6.1.3 Mitigation Types
The PMOC shall organize risk mitigation recommendations into four categories—Risk Transfer,
Risk Avoidance, Risk Reduction, or Risk Acceptance.
Risk Transfer occurs when the consequences resulting from a risk event become the liability of a
party other than the Grantee; this may include a partial transfer (or risk sharing). The PMOC shall
clearly identify those risks that can be shared with or transferred to a third party such as a
contractor, consultant, or other governmental organization in the form of contract requirements,
warranties, or insurance policies, etc. The recommendation may also be to reallocate scope in such
a manner as to transfer risks to scope elements or contract packages that are better suited to
mitigate risk.
Risk Avoidance is available when a project element that is associated with certain potential risk
may be alternatively delivered through a less‐risky process or design, or may be eliminated
altogether. The PMOC shall clearly identify those risks that can be avoided or eliminated.
Risk Reduction is a planned action that will either reduce the consequence or the likelihood of a
risk event. The PMOC shall clearly identify the root cause of the risk event, how the root cause will
be reduced by implementing the PMOC’s recommendation, and who the PMOC recommends within
the Grantee organization or project team to carry out the risk mitigation scope element. The PMOC
will also recommend progress‐reporting intervals for tracking the performance of mitigation
measures as well as any integration with the Grantee’s overall program schedule and resource
loading. All material assumptions shall be identified along with their rationales.
Risk Acceptance results from the recognition, in the PMOC’s opinion, that further reduction of a
particular risk would only come at the expense of unacceptable scope reduction or cost increase,
etc. The PMOC shall clearly identify those risks that it recommends the Grantee accept as inherent
to the project. Risk Acceptance often involves the consumption of project contingency funds,
project schedule float, or an increase in either project budget or schedule.
When providing recommendations, the PMOC shall only suggest Risk Acceptance when neither Risk
Avoidance, Risk Reduction, nor Risk Transfer is available. However, PMOC recommendations shall
recognize that there is a point in the implementation of the Grantee’s project (“break point”) where
mitigation becomes increasingly difficult to effect and beyond which Risk Acceptance through the
use of project contingency funds is the only effective means to treat project risk. This “break point”
OP 40 Risk Assessment and Mitigation Review
Revision 0, June 2008
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