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contingency reserve

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Jahiru_Q
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contingency reserve

Postby Jahiru_Q Tue Aug 08, 2017 1:19 pm

An activity will be delay because an identified risk has occurred. PM find contingency reserve is available. Does PM need to go through change control board or he can approved this change ?

Thanks
// Jahirul
manishpn
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Re: contingency reserve

Postby manishpn Tue Aug 08, 2017 3:52 pm

Jahiru_Q wrote:An activity will be delay because an identified risk has occurred. PM find contingency reserve is available. Does PM need to go through change control board or he can approved this change ?

Yes if PM is utilizing the contingency reserve than a CR should be raised to formally record how much budget is used from the contingency reserve

Thanks
// Jahirul
Br,
Manish P
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pmp_learner
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Re: contingency reserve

Postby pmp_learner Thu Aug 24, 2017 9:51 pm

Hi Manish,
I am not sure why CR is needed here.

+++++++++++++
Qsn: An activity will be delay because an identified risk has occurred. PM find contingency reserve is available. Does PM need to go through change control board or he can approved this change ?

Your response: Yes if PM is utilizing the contingency reserve than a CR should be raised to formally record how much budget is used from the contingency reserve

+++++++++++++++++

A pre-identified risk has occurred. So this risk mitigation/contingency was already planned as a part of project management/ risk/cost/time management plan. PM will be using Contingency reserve which is a part of Project budget.. its not coming from Management reserve. So I am not clear why Change request is required here, Unless Change Management plan states that a change request will be required for any usage of contingency reserve. I don't see as such any information in this question.
Can you please help me in understanding this.

Thanks for your help.
Regards
Kavita
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Re: contingency reserve

Postby nirajsys@gmail.com Fri Aug 25, 2017 4:34 am

My view : Using contingency reserve would impact cost baseline and any impact on baselines should be handled only by formally raising a CR through CCB.

Manish - Please validate the understanding.
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Re: contingency reserve

Postby pmp_learner Fri Aug 25, 2017 2:20 pm

Hi Neeraj,
Thanks for your response.
I am not clear how this would have an impact on cost baseline. Risk response is using the money from contingency reserve (already a part of approved project budget and is in access of PM. PM should not need permission from Sr Mgmt to use the contingency reserves ) , which might have been planned. Here scope is not changing (atleast not clear from the question per my understanding), so we can't say that original cost baseline need to be updated..
however when I rethink, CR might be needed, as PM may want to evaluate this change against other parameters and ensure that baselines are getting affected or not ..

Please do share your thoughts and rational behind your thinking.
Also hoping to hear Saket Or Manish's view point on the same.
Thanks
Kavita
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Re: contingency reserve

Postby pmp_learner Fri Aug 25, 2017 2:50 pm

Sorry a little more clarification on my previous note..
Cost baseline includes : All project estimates + Contingency Reserves


Risk response is using the money from contingency reserve (already a part of approved cost baseline and is in access of PM. PM should not need permission from Sr Mgmt to use the contingency reserves ) , which might have been planned.

So using contingency reserves should not have any impact on cost baseline.
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saket
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Re: contingency reserve

Postby saket Fri Aug 25, 2017 4:11 pm

The risk responses which are already planned and budgeted for not necessary need the Change Request. It all depends on how change management is defined in the project. Please share the question which made you ask this.... If the question is risk occurred and can i apply risk response ... the answer is yes you can.. and you do not need change request for that.
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Re: contingency reserve

Postby pmp_learner Fri Aug 25, 2017 4:23 pm

Hi Saket,
Thanks for your response and clarification. That makes sense.
Sorry I don't have as such question along with possible options related to this. When browsing questions asked at forum, I found someone had the below query:

"An activity will be delay because an identified risk has occurred. PM find contingency reserve is available. Does PM need to go through change control board or he can approved this change ?"

So I shared my point of view on this question.

Thanks & Regards
Kavita
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saket
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Re: contingency reserve

Postby saket Fri Aug 25, 2017 4:26 pm

Difficult to just say on this basis, In general when risk response is planned you do not need to take approval, we need to see rest of the details on the question , do share your view on the question Seema just posted :)
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Re: contingency reserve

Postby manishpn Fri Aug 25, 2017 4:52 pm

Hi Saket my take on this is simple.

1. to implement a risk response PM will need resources/time and this will impact other planned activities during that time hence a CR is needed.
2. even if the contingency reserve is available when you implement risk response the reserve will get reduced and this has to be noted somewhere, also when you implement the response it could result in secondary risk as well
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Re: contingency reserve

Postby pmp_learner Tue Aug 29, 2017 10:09 am

Hi Manish,
Thanks for sharing your feedback. However a follow-up qsn occurred to me ( in red) on this and would appreciate your response on that.. May be I am thinking too much and reading between the lines.. Still I think discussion will help in developing the correct understanding:

1. to implement a risk response PM will need resources/time and this will impact other planned activities during that time hence a CR is needed.
When Planning risk response and keeping the contingency reserves, would PM not think about the resources & Time requirement? Impact on other activities should also be part of those risk response analysis and response plan..

2. even if the contingency reserve is available when you implement risk response the reserve will get reduced and this has to be noted somewhere, also when you implement the response it could result in secondary risk as well
Agree that this update should be noted somewhere. But I believe that this could go as Update Project documents. Doesn't need CR. Agree that secondary risk can occur. But again they need to be logged in Risk register and will have to go through impact and probability assessment to ensure they are the real risk and need to be taken care of .. or just leave them in "to watch" list.

Sorry for being pain here.. but such things are really confusing and don't think that you get straight forward answer anywhere. I really think that such discussion helps as that enforces you to look at the question with different angles.

Looking forward to hear from you, Saket and other experts.
Thanks
Kavita
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Re: contingency reserve

Postby manishpn Tue Aug 29, 2017 5:21 pm

pmp_learner wrote:Hi Manish,
Thanks for sharing your feedback. However a follow-up qsn occurred to me ( in red) on this and would appreciate your response on that.. May be I am thinking too much and reading between the lines.. Still I think discussion will help in developing the correct understanding:

1. to implement a risk response PM will need resources/time and this will impact other planned activities during that time hence a CR is needed.
When Planning risk response and keeping the contingency reserves, would PM not think about the resources & Time requirement? Impact on other activities should also be part of those risk response analysis and response plan..
[color=#0040FF]
[color=#0080FF]

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yes PM will think but you cannot plan for it as you dont know when risk occurs.. for e.g. if a risk occurs at a crtical time when resources are on leave/ or buy with other activities those activities needs to be put on hold to execute risk response plan and hence schedule will have to be changed[/color]

2. even if the contingency reserve is available when you implement risk response the reserve will get reduced and this has to be noted somewhere, also when you implement the response it could result in secondary risk as well
Agree that this update should be noted somewhere. But I believe that this could go as Update Project documents. Doesn't need CR. Agree that secondary risk can occur. But again they need to be logged in Risk register and will have to go through impact and probability assessment to ensure they are the real risk and need to be taken care of .. or just leave them in "to watch" list.

yes for first part, updating a document may not need change but secondary risk may need CR for additional budget need for mitigation/risk response.

Sorry for being pain here.. but such things are really confusing and don't think that you get straight forward answer anywhere. I really think that such discussion helps as that enforces you to look at the question with different angles.

you dont need to hesitate to ask any questions, this forum is for finding solutions to queries

Looking forward to hear from you, Saket and other experts.
Thanks
Kavita
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akitut
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Re: contingency reserve

Postby akitut Thu Aug 31, 2017 12:05 pm

Hi Manish/Saket,

I read complete thread, so what is the conclusion derived for a situation where PM has to use contingency reserve, do he need to raise change request?
With this base situation and no other conditions added, I hope PM should not create a change request, Pls comment.

Thanks,
Praveen.
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Re: contingency reserve

Postby pmp_learner Thu Aug 31, 2017 6:56 pm

Hi Manish,
Thanks for your response. Still bit confused about the correct answer for this and if the CR is really needed to use contingency reserve in the given scenario when Identified risk has occurred.
Please take a look at the few points I have noted from Rita 8th edition:

In Rita page 262, Cost Management, Determine Budget process:
The cost baseline includes the contingency reserves: It represents the funds the project manager has authority to manage and control.

Time Management, Rita, Page 204,
Tricks of the trade: Things to Know about Estimating for the exam
4th Bullet: Identified risks must be considered when estimating the time and cost of project work.

12th Bullet:
Changes should be requested when problems with schedule, cost, scope, quality, or resources occur and cannot be solved by using time and cost reserves.


Appreciate your feedback on this please.

Best regards
Kavita

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