Contingency funds are funds set aside by the project team to address unforeseen events that cause the project costs to increase.
Organizations exist within an environment that is full of risk. Cost, time and resource estimates should always take risks into account.
List any doubts about feasibility as risks. Other managers are reactive and are more confident in their ability to handle unexpected events when they occur. Ask the key members of your team to do their own sanity checks. John checks the estimated driving time from Chicago to Atlanta using an Internet mapping service and gets an estimate of 11 hours of driving time.
The common framework will be set out in the programme risk management plan. Projects that depend on good weather, such as road construction or coastal projects, face risk of delays due to exceptionally wet or windy weather. The project team that requires drug testing for team members is practicing risk avoidance by avoiding damage done by someone under the influence of drugs.
The project team often develops an alternative method for accomplishing a project goal when a risk event has been identified that may frustrate the accomplishment of that goal. These become the critical few. This approach allows the project team to track the use of contingency against the risk plan.