When I was studying for the PMP exam, I constantly scratched my head over the difference between a contingency plan and a fallback plan.
I thought: “Contingency covers identified risks, fallback covers unidentified ones.” Wrong. Both apply only to identified risks, just at different stages of escalation.
In today’s blog post, I will explain what a contingency is and what a fallback plan is. By the end of this post, you’ll clearly understand the difference between a contingency plan and a fallback plan, and know when to use each.
Let us get started.
What is a Contingency Plan?
A contingency plan is a predefined response to an identified risk event should it occur. The term “contingency” means an event that may but is not certain to happen.
It is your first line of defense against identified risks. According to the PMBOK Guide (7th Edition), it’s an approved action plan embedded in your project management plan, triggered by early warning signs (risk triggers) to minimize impact.
Think of it as a proactive “if-then” script: If a risk materializes, execute these steps immediately.
You build a contingency plan during the “Plan Risk Responses” process. It applies only after a risk is accepted and triggered.
Characteristics
- Applies to identified risks (known-unknowns).
- Has a clear trigger (e.g., “if rainfall exceeds 30 mm”).
- It is budgeted from the contingency reserve (not the management reserve).
- Activated when risk occurs, not when you achieve the primary plan.
Example
On a construction site, you identify a risk of heavy rain damaging outdoor consumables. You build this contingency plan:
- Trigger: Weather forecast shows > 30 mm rain.
- Action: Cover consumables with tarpaulin, bring fans or vacuum pumps after rain stops.
- That is a contingency plan for that risk.
What Is a Fallback Plan?
A fallback plan is a secondary strategy that kicks in when the contingency plan proves ineffective. It remains pre-planned, not ad hoc.
A fallback plan steps in as the safety net when your primary defenses falter. It’s also part of the project management plan and often tied to residual risks (those remaining after initial responses); it provides a secondary layer of protection.
In essence, it’s your Plan B to Plan A—designed for scenarios where the initial response doesn’t fully resolve the issue. This prevents small setbacks from snowballing into project failures.
Characteristics
- Also, for identified risks (you already know the risk exists).
- Trigger: The contingency plan failed to mitigate or contain the risk.
- Serves as “Plan B” (or even “Plan C”) for high-impact risks.
- Often requires resources or budget from a contingency reserve (sometimes additional).
Example
In the same construction project, suppose rain persists longer than expected, damaging consumables despite the contingency measures in place.
Fallback Plan: You reorder consumables from a pre-identified supplier and expedite delivery to avoid project delay.
This plan activates only because the contingency action didn’t fully protect the project.
Key Differences: Contingency Plan Vs Fallback Plan
| Feature | Contingency Plan | Fallback Plan |
| When it is used | After the risk trigger occurs | Only if the contingency plan fails |
| Risk type | Identified risk | Identified risk (especially residual) |
| Budget source | Contingency reserve | Contingency reserve (may require extra) |
| Purpose | First proactive response | Secondary/backup response |
| Example | Covering consumables when rain is forecast | Reordering after damage despite covering |
Shared Features
- Both are risk-response strategies.
- Both apply to identified risks.
- Both should be documented in the Risk Management Plan.
This clear differentiation helps you decide which plan to activate when a risk occurs.
Similarities Between Contingency and Fallback Plans
Despite their differences, these plans share core traits that make them indispensable:
- Risk Focus: Both exclusively manage identified risks, not unknowns (which require workarounds).
- Integration: They’re formalized components of the project management plan that are approved during risk response planning.
- Resource Allocation: Funded via the contingency reserve, ensuring budget predictability.
- Strategic Alignment: They support overall risk strategies, including avoidance, transfer, and acceptance.
- Exam Relevance: Vital for PMP/PMI-RMP, often appearing in multiple-choice questions on response execution.
Together, they form a robust framework that complements each other like gears in a well-oiled machine.
When to Use Each Plan (Project Examples)
Scenario 1 – IT Rollout
Risk: Cloud provider outage.
- Contingency Plan: Switch automatically to backup provider within 10 minutes.
- Fallback Plan: Move operations to a secondary cloud region or alternate vendor if the backup also fails.
Scenario 2 – Marketing Campaign
Risk: Ad platform restrictions.
- Contingency Plan: Use pre-approved alternate ad networks.
- Fallback Plan: Pause campaign and shift budget to influencer channels if backups fail.
Scenario 3 – Construction site
Risk: Unexpected prolonged rainfall.
- Contingency Plan: Cover materials, use vacuum pumps.
- Fallback Plan: Move consumables to indoor storage, reorder damaged items, and delay non-critical works.
Trigger Definition
Define Clearly: “When X happens, do A (contingency). If A fails within Y hours/days, trigger B (fallback).”
Including thresholds makes the plan actionable and measurable.
Budgeting: Contingency Reserve Vs Management Reserve
Many confuse reserves. Here’s how they work:
- Contingency Reserve = budget for known risks (those you have identified and prepared for).
- Management Reserve = a budget for unknown risks (those you cannot identify in advance).
- Both contingency and fallback plans draw on the contingency reserve (because they address identified risks).
Base your cost baseline on contingencies. Suppose you need additional funds because the fallback plan kicks in. In that case, you still use the contingency reserve or escalate via change control—not the management reserve.
Agile Vs Waterfall: How Plans Differ in Each Approach
In a waterfall project:
- You plan for risks and prepare contingency and fallback plans up front.
- You set formal triggers, budgets, and documentation.
In an Agile project:
- Risk planning is more iterative. You may still identify risks, but adjust responses each sprint.
- Contingency/fallback may be lighter and more dynamic (for example: “If velocity drops below 70% for two sprints, deploy an external team”).
- Documentation may be less heavy, but decisions still need clear triggers and budgets.
Real-Life Case Study
Let’s look at a real project. A software company launched a major customer portal switch-over. They identified the risk: “Data migration may fail and block customer access overnight.”
- Contingency Plan: Have a parallel live system to roll back within 2 hours.
- Trigger: If migration fails verification tasks within 60 minutes.
- Fallback Plan: Revert to the existing system, notify customers via email/SMS, and schedule a full migration over the weekend.
They budgeted a $50,000 contingency reserve for the first plan. They also defined a fallback trigger and resource pool (outside the initial budget) to be used only if the first plan failed. The fallback plan was never used, but its existence allowed the team to proceed confidently and meet the go-live.
This example shows how both plans work together.
FAQs
Q1. Do contingency and fallback plans apply to unidentified risks?
No. Both apply only to identified risks. Unidentified risks require management reserve or workaround strategies.
Q2. Can a fallback plan be used instead of a contingency plan?
It’s possible, but not preferable. The fallback plan is meant for when the contingency fails. It should not substitute the contingency plan.
Q3. Who approves the budget for these plans?
The project manager with sponsor/steering-committee approval. Contingency reserve is often part of the cost baseline; fallback may require additional approval if outside the baseline.
Q4. How often should you review these plans?
At each major phase or after major risk-trigger changes. For agile, review each sprint planning session.
Q5. Are these plans mandatory for PMP/PMI-RMP exams?
Yes, understanding them is important for exam questions about risk responses, reserves, triggers, and baselines.
Summary
A contingency plan and a fallback plan work together to manage project risks. A contingency plan helps you act when a known risk occurs, while a fallback plan helps if that first plan fails. Both use the contingency reserve and are part of the risk management plan. Clear triggers, actions, and responsibilities make them effective. Always review and update these plans as your project progresses.
By preparing for both stages of risk, you keep your project on track and avoid costly surprises. Understanding this difference is key for every project manager and PMP exam candidate.
Further Reading:
- What is a Contingency Plan?
- What is Contingency Reserve in Project Management?
- What is the Fallback Plan?
- Mitigation Vs Contingency Plan – Key Differences and How to Use Both
- What is Management Reserve in Project Management?
References:
- Contingency, Backup & Fallback Plans: Examples
- Fallback plan is implemented when a contingency plan fails
The contingency plan and fallback plan are very important from a PMP and PMI-RMP exam point of view, so be sure to understand this topic well.
I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.
a project manager discover that a project problem has occurred.the problem was never discussed during risk planning activities or added to the risk register and it will now cost the project money .what will be an appropriate response for this situation?
Since this risk was not identified, the project manager will manage it through a workaround.
I’m not sure about the PMBOK terminology, but this is my take on risk response planning, from a logical perspective.
Once you have identified all of the risks you (and your team) can think of:
1. If you can reconfigure the project tasks in such a way to eliminate the risk by achieving the task objective in a different way, without negatively impacting schedule, budget, scope, or quality, you can make that change and AVOID the risk.
2. If you can outsource the risky task to another organization, shifting responsibility for the risk to them, you can TRANSFER the risk.
3. If you can augment your project plan in such a way to lessen either the probability or impact of the risk to a more acceptable level, then you can MITIGATE the risk. In this case, you are developing and implementing a MITIGATION PLAN, which becomes part of the baseline project, and for which you are proactively accepting the associated costs and budget impacts into the project. You are committing to paying for this.
4. If the proactive changes are not feasible (cost or schedule impact is too high to accept as is), you can develop a CONTINGENCY PLAN which will be implemented only if the trigger event occurs. This contingency plan becomes part of the approved project baseline, and associated budget is placed in the CONTINGENCY RESERVE. You ACCEPT the risk, but you may not have to pay for it if the trigger event never occurs. You might also create contingency plans for secondary or residual risks which could occur in the event of failure of the primary contingency plans, and allocate additional budget to the contingency reserve in case their trigger events also occur. These secondary contingency plans could be thought of as FALLBACK PLANS.
Your approved project baseline allows for all of the above, and anything you do up to here generally would not require a scope change or additional approval. This covers all of the KNOWN-KNOWNS and the KNOWN-UNKNOWNS.
Now if something else occurs that you didn’t anticipate, it can be placed in one of the remaining two categories:
1. An UNKNOWN-KNOWN is something that you should have been able to identify WOULD occur in your project, but somehow you did not include this in your plan. This would generally be considered a planning error, since a skilled project manager would have realized that it must be included in the project plan.
2. An UNKNOWN-UNKNOWN is something that could occur during the project execution, but that you had no reasonable expectation to identify as a risk. If it occurs, it would be difficult to place blame on the project plan, and instead most would consider this an unfortunate unforeseen circumstance.
To limit the impact on the project, you have to be REACTIVE and implement a WORKAROUND, requesting approval for a scope change that would then be drawn from the MANAGEMENT RESERVE. You might also use the management reserve to react to low-risk events that had been previously identified but intentionally kept on the watch list.
As I said, I’m not sure how well this matches up with PMBOK-speak, but I find it to be a very logical framework for dealing with real project management situations.
Known-Unknown are identified risk for which you have to develop the contingency plan.
The Unknown- Known, and Unknown-Unknown shall be managed through the workaround.
You are welcome Fahad. I have a quick question. Do we need to open a Change Request if we want to invoke the Contigency Reserve? (I know we need it for Management Reserve).
Also, If we need to implement the work around because something unforeseen occurred and we did not have any response strategy against it – OR – our plan B failed as well – do we need to invoke the CR? I think answer to this is “yes”, but need to confirm. What are your thoughts in these 2 scenarios? Thanks.
In first case, you will not raise the change request. You are going to use the contingency reserve, and no change request is required for it as there is no change in any baselines, scope or project plan.
In second case, ideally if any unforeseen incident occurs, you should use the management reserve.
Thanks.
I disagree on the first point. CR should be initiated because there will be a change in the cost baseline once the contingency reserve will get used. We might have to add more contingency fund for further risks / keep it as it is. nevertheless CR analysis has to be performed.
With due respect.. contingency reserve is already calculated and part of cost/ schedule baseline.. so it won’t change
Do i need to issue a change request to utilise Contingency reseres?
Do i need to issue a change request after utilising the contingency reserves to reflect the update to the cost baseline?
Do i need to issue a change request to implement contingency plan?
1) No
2) No
3) No
Hi Fahad,
You do the 3 point estimate (for Time and Cost) based on risk available in project charter and doing so you may uncover some additional risks.
These risk along with the ones identified during project initiation are dealt with risk management.
During risk management you prepare risk response but, some residual risk remains even after risk response planning.
Now my question is, we keep contingency reserve to “cover cost for risk response that we created” or for the “residual risk remaining that remains after risk response planning” or for both.
Regards,
Shoeb.
You will analyse the residual risk. If it requires further planning, you will go for it, other wise just keep in watch list for future monitoring.
There are some low priority risks which are pushed into risk register as watchlist. when these risks occur what reserve will be used ? contingency or management reserve?
As per the PMBOK 5th edition page: 332,
“Threats found in low-risk zone may not require proactive management action beyond being placed in the risk register as a part of watch list or adding a contingency reserve”.
In your risk management/response plan, you have to decide that how you are going to manage the low priority risks. If you don’t keep contingency reserve, you will have to use the management reserve.
But I dont agree with you. We are reading in the PMBOK about Accept strategy: “This strategy can be either passive or active. Passive acceptance requires no action except to document the strategy, leaving the project team to deal with the risks as they occur. The most common active acceptance strategy is to establish a contingency reserve, including amounts of time, money, or resources to handle the risks.”
So, Please put “chemical” in the situation of question in the place of “resource” in the above paragraph. The project manager buys 15% extra resource to handle the risk. He wants to have it as a reserve and IF some chemical were lost this 15? will be used. It is a proactive acceptance.
In this meaning that you said all strategies except passive accept will be “mitigate” because they are decreasing potential negative impact or probability of risk.
do you agree?
In accept strategy (active) you don’t do anything to reduce the probability of risks. You don’t take any action unless the risk occurs, though you assign a contingency resource for it.
You deal with it if it occurs.
While in mitigation, you try to reduce the probability of happening of risks.
After reading this article bit confused between Risk response and Contingency plan. Both look same to me now, but is it really same or any difference? Please let me know if contingency plan is more or less same as RIsk response.
Kindly clarify.
Contingency Plan is a Risk Response Plan. When a Risk occurs, you'll implement the contingencyplan.And if the contingency plan fails, you'll implement the Fallback Plan. Fallback Plan is also a risk response plan but it is implemented when contingency plan fails.Contingency and Fallback Plans – both are the risk response plan.Hope it clears your doubt.Sent from my iPhone