The connection between contingency and risk management is subtle. Seeming to unconnected variables in the grand scheme of project management is now identified as having a significant impact on one another. The late realization of the existing connection can be attributed a shortcoming of understanding in traditional project management. Specifically, how contingencies are normally used up in projects (and still used up today)
It is the least understood concept in project management. Contingency has been synonymous with backup, when applied to cost and time. If a project deviates from the plan, then a backup sum of money is there to take care of it. Similar concepts for time component of project also exists.
In the current project management era, contingency should not used everytime a baseline plan changes. More specifically, changes to scope cannot be handled by it.
Maybe so. But common practice doesn’t always translate to correct practice. Problems of using it to take care of changes to scope can be tremendous, specially due to the way contingency is calculated, traditionally