RISK ASSESSMENT TOOL PREVIEW Jeffrey Sedillos, Vice President of Operations and Construction SiteWise Corporation May 2015 1

Definitions Risk relates to the potential of all threats (and opportunities) which can affect (adversely or favorably) the achievement of objectives for an investment. Uncertainty: The gap between the information required to estimate an outcome and the information already possessed by the decision maker. Risk Management: The process of identifying, analyzing, and responding (response development and response control) to project risk.

Risk Management: Definition An organized means of identifying and measuring risks and developing, selecting and managing options for handling these risks. helps the project manager be proactive, rather than reactive minimize the risks allocate the risks equitably.

Risk Management: 3 Issues The parties must discuss and decide: What levels of risk are realistic to assume? Who can best assume each risk? What risks would be covered by insurance carriers? What happens if these issues are not addressed?

Risk Flow Recognize exposure to possible loss Estimate maximum loss and probability of occurrence Is maximum possible loss considered Severe? Yes No

collect more information and knowledge Uncertainty Most effective way to deal with uncertainty is to collect more information and knowledge When this is expensive or not feasible we try to quantify uncertainty using analytical techniques.

Managing Risk

Avoid Consequences

Risk Response Decide on the actions to be taken in response to key risks. Actions can include: Reduction in uncertainty by obtaining more information. This generally leads to a re-evaluation of the likelihood. Eliminate or avoid the risk factor, i.e., partial or complete project re-design, utilization of a different strategy or method, etc. Transfer the risk element by contracting out affected work Insure against the occurrence of the factor Abort the project if the risk is intolerable and no other means can be undertaken to mitigate its damages. Plan response to key risks. Communicate mitigating strategy and response plan to risk review team.

Outline of Risk Analysis Process Risk Review: Identify factors Evaluate Risk Likelihood Impact Consequences Action Plan Develop Risk Management Plan

Risk Assessment Factors Identify risk factors for the project. This step can make use of checklists and/or published literature on risk, but is most effective through properly facilitated brainstorming session(s). Quantify risk factors

Risk Assessment Factors Quantify Risk Factors: Subjectively assess each factor and its impact if it occurs. Determine the likelihood of the factor being encountered (e.g. probability, or a subjective descriptor). Determine the magnitude of the impact if the factor is encountered (e.g. dollar value or a subjective descriptor). Determine the overall impact of the factor by multiplying likelihood (ii) by magnitude (iii). Sort factors into groups based on overall impact Identify the factors that can be considered negligible in terms of overall impact so as to focus on key factors in the remainder of the analysis

Risk Categories (7) Obstructions (buried utilities, density of utilities) Traffic (control requirements, safety) Surface Features (landscaping, etc.) Soil Conditions (geotechnical information) Permit Requirements (staging area, regulatory factors, daily construction times) Construction Standards Quality of Utility Locates

Risk Model Road Map ELECTRIC DISTRIBUTION FACILITIES Private Property Public ROW Risk Categories for Private Property Risk Categories for Public ROW

Risk Index/Consequences Consequences = (Likelihood of Occurrence) x (Impact)

Likelihood of Occurrence Descriptor Probability Value Explanation Certain/Highly Likely 90%-100% 9-10 Very frequent occurrence. Likely 75%-89% 7.5-8.9 High likelihood of occurrence. Possible 50%-74% 5-7.4 Could occur, over 50-50 chance. Unlikely 20%-49% 2-4.9 Low likelihood of occurrence, less than 50-50 chance. Rare/Extremely Unlikely 0%-19% 0-1.9 Negligible, not likely to occur.

Impact/Magnitude Descriptor Explanation Value Severe Substantial impact on project 100 Serious Major threat to project. 75 Moderate Has a moderate impact on project. 50 Marginal Small, little effect on project. 20 Negligible Minimal effect on project. 1

Consequences Risk Score Risk Category Response/Action Over 750 Intolerable Must eliminate or transfer. 500-749 Undesirable Attempt to avoid or transfer. 200-499 Acceptable Accept and manage risk. Less than 200 Negligible Can be ignored but should be managed.

Risk Quantification Select a Risk Factor for Quantification Assess Causes and Impacts Assess the Likelihood of Occurrence Assess the Magnitude of Impact Calculate the Severity Assign a Response Action Plan

Benefits Util-A-Risk will provide a measure of “risk” in a given scenario prior to installation Provides an opportunity to partner with client(s) to reduce risks, provide a safer installation while saving time and money for the client and contractor.

Don’t Put Yourself in a Risky Situation!