In scheduling and delivering highway projects, a transportation organization mayexperience substantial cost impacts due to project pipeline uncertainties. These uncertaintiesinclude variations in available revenue, inflation, project scope creep, and legal or environmentalissues. Managing these risks is now possible by employing a technique that involves dynamicsimulation of the project pipeline. This technique enables the modeling of cost factors forprojects being planned in the midst of pipeline uncertainties. The objective of this paper is todescribe this project pipeline risk management approach.This targeted approach is needed because the cost and performance impacts of notdealing with funding and other pipeline uncertainties is estimated to be between 4 and 10% of anoverall paving budget. For example, if there are not enough projects in the pipeline, availablestimulus funding may be used ineffectively. There may also be "hurry up" costs of accelerateddesign. However, if there are too many projects "on the shelf" there may be holding costs due tolost permits, unneeded right-of-way acquisitions, redesign and development, and non-optimum,obsolete projects.Solving this problem begins by quantifying potential cost and performance impactsrelated to project pipeline uncertainties. Using dynamic simulation, various scenarios can beanalyzed by varying the number of projects in the pipeline and the mix of project types(preservation versus major rehabilitation). With this process, an organization can determine theoptimum number and type of projects to load and maintain "on the shelf". This will maximizethe performance of highway projects with available funding, and minimize the cost impacts.
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