Strategy, Objectives, and Project Selectionģ.3 Organizational Dimensions and the StructureĬhapter 4. Introduction to Project Managementġ.1 Definition and Key Concepts of Project Managementġ.5 Project Management Life Cycle and Process GroupsĬhapter 2. His website is frasersherman.Interest/Adoption Form and Feedback/Report FormĬhapter 1. He lives in Durham NC with his awesome wife and two wonderful dogs. He's also run a couple of small businesses of his own.
PMP MANAGEMENT CONTINGENCY RESERVE HOW TO
Project Risk Manager: Expected Monetary Value – Where’s the Value?įraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements.PM Study Circle: Contingency Reserve vs Management Reserve.Persimmon Group: How to Use the "Knowns" and "Unknowns" Technique to Manage Assumptions.Project Cubicle: Expected Monetary Value (EMV) Calculation.MPUG: Contingency Reserve and Management Reserve.What Is Precommissioning & Commissioning?Īdvantages & Disadvantages of Discounted.
With some risks, setting a monetary impact may be difficult.If you don't identify all the known knowns and known unknowns, you won't have a big enough reserve.Personal assumptions and bias can skew the result. It's possible you'll underestimate the chance of a given risk happening.EMV works better for large, complex projects than small-scale ones.With a low number of risks, there's a greater chance of underestimating how much you'll need. It works best when you're measuring large numbers of risks.That's not always true, as delays from design changes might push you into the rainy season, for instance. EMV assumes all the risks are independent of each other.It's a cost-effective approach to managing risk.You can see which risks are serious threats and take steps to minimize them.Using statistics helps make your estimates more rational.Using EMV to calculate contingency reserves has its good and bad sides. You build that into your cost estimate for the project. Add the three figures together, and you get a contingency budget of $4,550.Using this information, you can set your contingency budget: However, you estimate that there's only a 15% chance of this. If area construction picks up, materials and labor might be in short supply.Your best guess is that there's a 75% chance that could cost up to $4,000. There's an 80% chance the changes could add up to $1,000 in added labor and tougher standards for the project. The city may request changes to the plans.Construction contingency examples could include: You have a tight deadline, so you sit down and draw up a list of known unknowns. There's no way to know that these unknown risks even exist.įor an estimated monetary value contingency reserve example, suppose you're designing and building a high-rise condo for a real estate developer. These are complete surprises, such as a key staffer quitting abruptly or a meteor hitting your headquarters. The problem is known to some people but not to you. For example, if your team knows the IT response to outages is notoriously slow but nobody shares this information, you may underestimate the time repairs will take. These are things you could have known but haven't learned. What's unknown is how bad the weather will be over the next four months and how much time you'll lose. If you're in road construction, for example, you know bad weather can delay the work.
You can factor these into your project planning and take steps to mitigate the effects. This is stuff that you know for sure: for example, your web designer will be absent for two weeks for a vacation he booked 6 months ago. You can divide information or the lack of it into four classes. Project management is easier when you know what you're dealing with, but sometimes, you don't know what to expect.
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