TITLE: Parametric Quantification of Systemic Risks for Transportation and Infrastructure Projects

John K. Hollmann
Validation Estimating LLC

John K. Hollmann: John, lead author of AACE® International’s TCM Framework (2006) and author of “Project Risk Quantification” (2016), owns Validation Estimating, LLC (VE). He works with capital program managers and project leaders in a variety of industries from process to infrastructure to improve their cost engineering practices; i.e., estimating, project control, risk quantification, etc. Mr. Hollmann is a frequent speaker at international conferences, has written many papers, and often leads training workshops. He is an Honorary Life Member of AACE® and also recipient of their Award of Merit and Lifetime Achievement Awards. He was Director of Recommended Practices at AACE® and also led development of the AACE® Decision and Risk Management Professional certification. Prior to founding VE, Mr. Hollmann led metrics and research efforts at Independent Project Analysis, Inc. Prior to that he worked in estimating and controls for owner and contractor companies. His latest venture is cloud-based risk quantification software called ValidRisk (www.validrisk.com) based on his 2016 book; transportation and infrastructure are some of the industries covered.

Synopsis: AACE RPs address empirically-based, risk-driven parametric modeling to quantify systemic risks. These RPs reflect the process industry’s embrace of phase-gate project systems and research supporting the methods. While the cost overrun-prone transportation sector is catching up in applying phase-gate systems, it lags in benchmarking and research. Research in other industries shows that fundamental practice failures (i.e., systemic risks) cause cost growth. However, in transportation and infrastructure, too-narrow estimate accuracy range expectations are wired into owner phase-gate procedures. Estimators use largely subjective risk analysis methods that underestimate contingency because it meets these narrow expectations; so, the cost overrun cycle repeats. Those who benefit from low estimates (promoters/politicians) need not lie about costs; they can just announce a project early in scope definition in perfect confidence that estimators will fail to put a price on poor scope definition. This presentation (subtitle: “we have met the enemy and he is us”) reviews the cost overrun situation, the theories, the research and the various proposed and recommended methods. Despite all evidence to the contrary, the presenter is hopeful that empirically-valid risk quantification and contingency setting practices (e.g., such as ValidRisk) will become more widely used, putting an end to endemic cost overruns in the transportation industry.

LOCATION: (Virtual via Go To Meeting)

Oct 14th, 2021 @ 12:00 PM (PDT)

Link to recording of meeting: