Contingency can be defined as a specific allocation of resources (capital cost, resources, time) in addition to the project base estimate or schedule as a provision for inherent and/or contingent risks for the project manager's desired confidence level.
The Risk Engineering Society (RES) Contingency Guideline provides a reference document for different practical approaches and guidance to sizing, allocating and managing the most appropriate contingency reserves (time and cost) required at different stages of the asset investment lifecycle for projects and programs. It also explicitly takes into account the risks facing the investment as well as the decision-makers’ level of risk appetite and tolerance.
While this guideline is predominantly for project managers, estimators, schedulers and risk engineers, it also provides a useful overview for business leaders wanting to better understand contingency management and its importance in achieving the objectives of project-based organisations.
This guideline is also designed to raise the general level of awareness of executives about how contingency should be assessed, used and retained from projects to the program and portfolio levels of an organisation. It also provides guidance to establish a consistent methodology to transfer this data between organisational levels to facilitate effective decision making.
The RES Contingency Guideline acknowledges that there are a broad range of contingency definition, setting and management methodologies and while a “one size fits all” approach is not appropriate, there are benefits in constructing a common framework with a uniform set of terminologies and approaches, a high degree of transparency, guidance on clear authorisation arrangements, and fit-for-purpose governance.
The first edition of the RES Contingency Guideline was published in May 2016. Due to the dynamic nature of the subject matter and changing public and private requirements, the RES committee intends to periodically review and update the document. The second edition of the RES Contingency Guideline was published in February 2019, following comprehensive consultation with industry.
The information on this page was primarily drawn from:
Edited by Nadine Cranenburgh