Does contingency reserves and management reserves always prefer?
Submitted by PMP Fighter on Tue, 04/01/2014 - 06:51
On determine budget, the cost of contingency reserves and management reserves always are nessesary?
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On determine budget, the cost of contingency reserves and management reserves always are nessesary?
admin
Tue, 04/01/2014 - 12:01
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If you dont have any
If you dont have any financial impact due to your risks then you may not add any reserves for your project.
Management reserves is a good practice, since mid-way if you need more budget for your project , you may not get any from corporate, so if Sr. management has set aside some money as reserves it will ensure continuity is maintained in event there is an issue or risk.
Contingency reserves is for your risks. If your Quantitative risk analysis says that you don't have any cost impact due to the risks, then you need not add any contingency reserves.
PMP Fighter
Tue, 04/01/2014 - 17:17
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It seem hard to me :(As i
It seem hard to me :(
As i understand,
1.Contingency reserves use for prevent known-risk. e.g A explicit risk found by Quantitative risk analysis
2.Contingency reserves is perform by project manager.
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3. Management reserves will be apply for prevent unknown-risk.
4. Management reserves is approve by a company's management.
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5.Contingency reserves and Management reserves can be only set on Planning process group (Estimate Activity durations, Estimate Cost or Perform Qualitative risk Analysis)
Am i wrong? :(
ssonkiya
Mon, 04/07/2014 - 03:32
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Reserves
As per my view contingency reserves are also necessary to analyze and develop for the known risks, even though we predict that there will be no financial impact. For example if we have analyzed that a particular task will be completed within 2 hours and the nature of work is quite stable, even though I would refer a range of estimate and yes of course band will be narrow. Like 2 hours – 2 hours 15 min. This is needed because I cannot ask my team member just after 120 min that your time is over. We need a mechanism to identify when to take corrective action? One point cost or time estimates also encourage team members to pad their estimates and hides important information about risks.
Frances Tessler
Fri, 08/08/2014 - 00:36
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Contingency Reserves vs Management Reserves
Contingency Reserves are found in the following:
Estimate Durations
Estimate Cost
Plan Risk Response
All 3 processes plan contingency reserves based on Known Unknowns.
Management Reserves are not part of the BAC as they are for Unknown Unknows. Acts of God, A large scope change, etc...
Sandy10001
Sat, 08/09/2014 - 01:32
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Example
In your home, you and your spouse/significant other have an agreed amount of money for emergencies - new appliance, car trouble, accident, etc. These are known unknown risks. You probably have CONTINGENCY reserves.
When I discuss this topic in class we find that in most homes, one person will have another, somewhat secret pot of money for 'just in case' situations. The other person is somewhat aware of this but doesn't factor this when budgeting. This pot of money is typically used for unknown unknown risks. This pot would be considered MANAGEMENT reserves.
I hope this helps.