Use of Contingency Reserve for Projects
A Contingency reserve is a predetermined amount of additional time, money or resources set aside in advance to be used to further the project’s objectives in the event that unknown risks or accepted known risks became reality.
Contingency reserves cover risk events that are not accounted for in the project’s baseline duration and cost estimates. The amount of reserve is determined by the potential impact of the risks but should include enough to implement contingency plans and a buffer for dealing with unidentified risks.
A typical example…
A Project Manager in charge of company participation at a trade show may solicit help in the form of employees willing to participate. His continency reserve will take the form of human resources, he could solicit more volunteers that he he expects he will need. In the event that some employees are not able to participate at the last minute. He will have a reserve of other employees to call upon.
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