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Monday, June 20, 2016
Rail Recovery Plan? Feds Explain How Rail Systems Blow Budget
By Andrew Walden @ 1:00 PM :: 2833 Views :: Rail

HART began talking publicly about a “Recovery Plan” only this month—even though FTA rules apparently required a Recovery Plan since late 2014. 

Here is the most current Federal Transportation Administration explanation of what a Recovery Plan entails.

  *   *   *   *   *

2.3.5 Recovery Plan

From FTA Project and Construction Management Guidelines pg 2-67, March, 2016

This is the action that neither Project Sponsors nor FTA want to have to invoke. For MCPs (Major Capital Projects) in particular, the FFGA (Full Funding Grant Agreement) and the Project Management Plan (PMP) will each include the requirement that the Project Sponsor address negative trends relative to project costs and approved project schedule as soon as they appear. (Translation: This should have been dealt with back in 2014)  Realistically, these negative trends are likely to appear during the Engineering Phase and must be dealt with then, and certainly not ignored on the presumptive basis that they might be mitigated through bidding (“market risk” resolution) or contractor improvements in means/methods or schedule efficiencies (“construction risk” resolution). Based upon a large sample of transit and other major public works projects, negative budget and schedule (with schedule matters also invoking cost) impacts are seen to include, but are not limited to, the following: 

  • Overruns occurring all too often with the soft costs during design 
  • The Engineering activities proceeding without adherence to the principle of “design to budget” 
  • Inadequate change control with concurrent reflection of negative cost and schedule impacts on the Basis for Design, and controls 
  • Incomplete construction document Quality Control with respect to intradisciplinary and interdisciplinary review of plans and specifications 
  • Incomplete plans and specifications 
  • ROW (Right of Way) not being completely and accurately defined and acquired so as to provide straightforward progress by the contractor

The Risk Assessment and consequent development of Contingency funds within project budgets and “hold points” for MCPs will assist in determining if and when a Recovery Plan may be required. The intent of such a plan is to invoke strategic means and methods of mitigating cost and schedule overruns that are identified through trending and cost to complete analyses. For MCPs, there is a requirement to identify Primary and Secondary Mitigation elements of the project and/or project delivery that may be available to mitigate potential negative impact on either the budget or schedule, or both. Chapter 3 provides more detail on budget development, risk assessment and management, contingencies and overall management process for project phases beginning with PD (Project Development) and running through the Construction and Equipment/Materials Phase.

Mitigation cannot compromise the integrity of the project as it was defined in the FEIS or otherwise approved by FTA via a FONSI (Finding of No Significant Impact) or CE (Categorical Exclusion). The recovery options that may be available should not alter the project’s planned level or quality of service to the public. Project Sponsors are cautioned to monitor and evaluate budgets and schedules rigorously, provide robust trend analyses and cost-to-complete forecasting, and report to FTA any conditions that may adversely affect the project so that a Recovery Plan may be prepared transparently and with FTA input.

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