3.7 Contingency Plan

Contingency funds are set aside by the project team to address unforeseen events that cause an increase in project costs. Projects with a high-risk profile will typically have a large contingency budget. The amount of contingency allocated in the project budget is often a function of the risks identified in the risk analysis process. It is possible to allocate contingency to specific activities. However, contingency can also be managed as a “one-line item” in the project budget when risks are difficult to assign to specific activities.

Contingency plans are often reviewed during the life of the project. This review evaluates the effectiveness of the risk responses and whether there is a need for additional contingency.