The project manager
risk taker and contingency planner. Part 2: the project manager as a contingency planner
Because all projects involve some degree of uncertainty, project managers must not only act as effective risk takers but also perform as flexible contingency planners. This article examines how project managers can best plan for project budget and schedule contingencies. In doing so, it details the contingency factors and the contingency types that project managers must address when planning budgets (estimate quality, adjustment, price protection, and escalation) and schedules (duration reduction--particularly, the seven most typical schedule compressions--and precedence relationships: natural, environmental, and preferential). It then explains an approach for planning specification (or technical) contingency. It additionally outlines three examples for establishing three types of contingencies: price protection, escalation, and automated process controller systems. It concludes by discussing the purpose, process, and benefits of using contingency planning when implementing projects.