Contingency and managing risks

But my project doesn’t run like that

True, the way contingency has been presented in this article, is almost never followed through in this manner. It represents a sum of money that is there, untouched and seemingly is a backup budget. It’s more common to use up contingency to account for scope changes because

  • It is easier than trying to revise the budget at end of every month or even annually. Trying to revise the budget is a tedious work, involving lot of approvals
  • It doesn’t look good on paper. Revising budget also means that there were scope changes in the project, which wont reflect well on the person managing the project. So it’s better to shove these extra changes under the mattress and let contingency take care of it
  • Calculating a realistic value for contingency is tedious work, taking up time and resources. It also might require you to make use of proprietary software and need staff with special skills in using these programs. Why go through the hassle when you could just add an arbitrary value of contingency?

Bottom line is, even with all the standards regarding best practice in using contingency, its one of the least understood concept of project management, and the one that is most mishandled and abused

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