What are Contingency Reserve and Management Reserve? How are they used in the project?

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[@pmclounge]

Check out more Risk Management videos here goo.gl/3a91nD

[@bienne777]

This video is clearer than the others by breaking each level down to giving actual examples and show how they progress up the ladder in order achieve the final cost outcome. Good on you PMC. You have improved your presentation style and effectiveness. I will recommend it to friends

[@pmclounge]

Glad you think so! 👍🙂

[@pmpbatais1196]

excellent demonstration for the Pyramid and well done

[@pmclounge]

Glad you enjoyed it!

[@omaral-mashhdani9576]

salute from Iraq, Sir.

[@pmclounge]

Salute to you back, wish you the best & don't forget to subscribe for more 🙌

[@ezrakanu2986]

Thank you so much.

[@pmclounge]

You're welcome Ezra, don't forget to subscribe for more on project management 😊👍

[@nitinpagare5261]

simply best

[@pmclounge]

Thanks a lot Nitin, don't forget to subscribe for more 😊👍

[@amitpandey7484]

Well Explained

[@pmclounge]

Thank you Amit 😊👍

[@omercivileng9046]

really amazing, I am from Iraq and I salute you.

[@pmclounge]

Thank you for your comment Omer 😊👍

[@GalaxyCookies76]

This concept is more cleared after studying Risk Management.

[@pmclounge]

True 😊👍

[@arwindersingh690]

Very informative and easy to understand video lecture. Thanks , Now I have more understanding about project reserves.

[@pmclounge]

Glad to hear that, thanks for watching the video. Don't forget to subscribe for more such videos 😊👍

[@sathish5722]

Thanks for the video. How Contingency reserve is arrived? Is is based on EMV? My understanding is that EMV is the cost calculated for the risks identified hence that should be included as Contingency in the project cost. Please clarify.

[@pmclounge]

EMV analysis is one of the ways to arrive at the Contingency reserves. Sometimes your organization and you as a project manager might have delivered several projects of similar nature and you might feel like

[@ramveluselva]

You can add Chart account also

[@sheikabdulkaleem6487]

Do I need to submit a change request to utilize the contingency reserve ( To address an identified risk) or it's not needed. ?? Expecting a response at the earliest... Thank you!

[@pmclounge]

Hi Sheik, it really depends on the situation. If there is a change due to an identified risk materializing, you will anyways get that change approved as well as the amount allocated 👍

[@pranavom]

Is the contingency reserve restricted just to the cost baseline or is it applicable to Schedule baselines too?

[@pmclounge]

Hi Pranav, while you can keep some money aside as reserve, you cannot practically keep 'time' aside as reserve. On real life projects, teams try to pad the schedule with some buffer time to use it if required

[@ayushmansdiary2694]

Can anyone clarify pls.. is there any factor or percentage needed to be considered for contingency reserves.

[@pmclounge]

It could differ from project to project and organization to organization depending on the comfort level

[@GalaxyCookies76]

Does The Contingency reserve cost is in the hands of PM? or it will be released from the sponsor on request?

[@maverick99910]

Q: An unidentified risk has impacted the project, it was due to poor risk planning of PM, now what Reserve to be used and why, if the impact is not manageable and causing a schedule delay, also what if PM tries to use any of the reserves and got a denial from the Sponsor (because of the poor plan) what to do in that case? Workaround like Crashing will affect the quality, and the customer has already set high standards for quality and it was mentioned in the charter

[@AbhishekSharma-rx1tt]

Contingency reserve will be used by PM, and and PM hold this reserve and it’s a part of approved baseline. So no need to go to sponsor for approving.its comes under pm power. Management reserve is under custody of management, so anyone use from this then take first his approval.

[@maverick99910]

@@AbhishekSharma-rx1tt but the risk was unidentified so it can not be part of t Contingency, PM has to go to CCB or Sponsor in this case and what if they deny stating that, it is due to poor RMP, then what to do? A work around?

[@AbhishekSharma-rx1tt]

Hrishi Balodi ohh it is unidentified, then we can use management reserve( it’s for unknown unknown risk) and for this we have to take authorisation of management.and they can’t deny for this bcz it is unidentified. No one can do 100% good planning. Some risk occurs at the time of work. I may be wrong somewhere 🙂

[@sathish5722]

4:30 explains this. Since the risk was not planned and not included in the register then it is to be treated with management reserve.

[@ayushmansdiary2694]

One question. Is it mandatory to keep contingency reserves while you are preparing budget for project?

[@pmclounge]

What would you do if a risk materialized and you had no contingency reserve?

[@ayushmansdiary2694]

@@pmclounge thank you for clarification.

[@pmclounge]

You're welcome 👍

[@dudelove007]

Work Package estimates for B is $ 200 not $250 (B1 $100 + B2 $50 + B3 $50)

[@pmclounge]

That's correct 🙂👍