SAB7#73_Risk_Reserve

SAB7#73_Risk_Reserve

1. Proper project management requires the use of reserves to cover the cost and time risk in a project estimate.

2. Identify which activities on the Project have significant risks and determining how much time and money to set aside to account for the risks if they occur.

3. Contingency Reserves

   • Are Used for known risks, which are specifically identified risks
   • Part of controlling cost involves analyzing whether the contingency reserves are still necessary or whether new reserves are required.
     • For Example:Let's say a Project team identifies a highly ranked risks and sets aside a contingency reserve to address that risk, should the need arise.If the risks does no occur and it is determined that the risk is no longer a threat, the contingency reserver can be removed from the cost baseline (and subsequently the cost Budget). Another example risk reassessment on a Project may identify new risks, which could lead to a decisión to increase the contingency reserves. Both of these examples result in a change request being submitted through integrated change control.

4. Management Reserves

   • Is used to accommodate unknown risks or unidentified risk
   • Analysis of de management reserves may also indicate that too many unknown risk events are occurring, suggesting that the risk management efforts in planing were inadequate and need to be recalculated.

5. Reserve analysis allows you to evaluate and incorpórate those lessons learned into your Project through Control Cost Process.

6. Reserve analysis is used to evaluate those estimated cost impacts to the entire Project to keep Project work moving forward.

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