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7 September 2005

Allocating Contingency

The last topic for today: Allocation of contingency.

For a while now I have worked on projects where contingency is not allocated at task level, just at the project level. The project leaders and team members have tried to estimate accurately what the effort required will be. The project leader will usually accept reasonable reasons for lateness including lack of experience and incorrect estimates.

The overrun is then taken from the overall project contingency (which should have been factored to include the teamÂ’s experience and any other risk issues.) This strikes me as better than everyone adding contingency at task level, then more contingency at a work-stream level, then more again at the project level.

Previously we had a discussion of who pays for changes - and us IT workers tended to charge all changes to the business unit that requests them, while construction people tend to manage it according to the scale of the change - often taking the change costs out of the contingency.

Other views on contingency management: