Contingency Reserve Vs Management Reserve
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Contingency Reserve Vs Management Reserve

Risks occur in every project and as a project manager, it is your responsibility to manage them as they occur. These risks can be identified or unidentified. If these risks are identified, you will implement the contingency plan; otherwise, you will manage them through a workaround.

To manage these risks, you will use the contingency reserve and management reserve. These reserves are defined during the risk management planning process. The contingency reserve and management reserve provide you with a cushion against the risks and are part of your project budget.

Many professionals assume these reserves are the same since they serve the same purpose. Generally, small and medium-sized organizations do not differentiate between them and take them as a percentage of the project cost to keep things simple. Therefore, professionals that have experience with these organizations may not know the difference between the contingency and management reserves.