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When do we use contingency reserve and when do we use management reserve in the project?

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/04/14
Hossam Maghrabi
par Hossam Maghrabi , Project management & BPM Consultant. , Freelancer

Contingency reserve - This is your fund for “known-unknowns“. That means you’ve already identified the risk; you just don’t know how much it will impact your project. This can be estimated based on the sum of all of your risks’ expected values. 

 

So the project manager use it in implementing the risk response plan of "known-unknowns" risk.

 

Management reserve - This is for the “unknown-unknowns“. Basically, you didn’t even identify the risk until it has occurred. This may be derived from using percentage of the overall project budget.

 

The project manager can use it when the “unknown-unknowns“ risk occurred after approval from the management.

SRINIVAS RAO KANAMARLAPUDI
par SRINIVAS RAO KANAMARLAPUDI , Senior AGM , SEAWAYS SHIPPING AND LOGISTICS LIMITED

Contingency Reserve is utilised for Long Term Projects and it may be Long Term Expectations. Further, It may be utilised for fulfilling Social Responsiblity.

 

Management Reserve is for bridging the Fund Gaps and immediate requirement of the organisation.

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