Analysing Contingency Allowance for Projects

Analysing Contingency Allowance for Projects


Contingency allowance is additional funds that are sometimes built into cost estimates to allow for unanticipated events.


Planning Contingency allowances for a project ensures that the project manager is able to manage costs and expenditures.


Contingency Allowance for projects

Here are the guidelines…

Avoid contingency on a contingency

Based on the WBS input, make sure that the work packages do not already have a contingency amount tacked onto the basic estimate.


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Inform the project team

Let them know that the project will be managed against a point estimate without a contingency.


Release contingency fund.

As the Project Manager, you must release contingency funds only through a closely controlled and well-documented process, which is included in the cost management plan. A contingency allowance is not to be used as a slush fund without control.



Typical example…


The city of Lagos hosts the world’s largest jazz festival every year, which thousands of performances and more than two million attendees. Contingency allowances for this event may include funds to cover unexpected problems, such as a cancellation by a headlining act. Such cancellation will force the festival to issue ticket refunds while incurring overhead costs, including theatre rental and advertising.


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Contingency allowance will not be used for general operating support: for example , if ticket sales failed to meet expectations.



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Adeniyi Salau

Adeniyi Salau Scrum Master Certified , CCNA R&S , BeingCert and Scrum Certified Digital Marketing Professional, CEP, MOS, MCP, CSCU (Project 2016), Microsoft Certified Security and Networking Associate is a Google and Beingcert Certified Digital Marketer, Project Manager and SEO Expert of repute with about a decade of Blogging and online marketing experience. He is always ready to share his experience with others.

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