Contingency and Management Reserves

what are contingency reserves and management reserves how are they used - Contingency and Management Reserves

Both Contingency and Management reserves are used to handle risks.

Contingency Reserve

Contingency Reserve is part of the project’s cost baseline. This amount is used for addressing risks that have materialized. Note that contingency reserve cannot be used to address a change request, not even if the reserve is unused.

Management Reserve

Management Reserve is not part of the project’s cost baseline but it is part of the overall project budget. This amount can be used for issues that had not been previously identified as risks and thus are not part of the risk register. Management Reserve can be used only after management approves. In some projects, this reserve can be used for anything that the management approves be it a change request or a team lunch!

Check more articles on Risk Management

Leave a Reply

Your email address will not be published.