Risk Management

A Case for Contingency

A project without contingency is like a pilot without a parachute. Terry Bunio should know. Having participated in a fair share of projects himself, Bunio has seen everything: from those who remove contingency to avoid inflated project costs, to those who see it as an essential factor. In a PM Hut article, Bunio sorts it all out.

Contingency is Reality

The first thing to understand about contingency is that it is meant to reflect reality. Airplanes have crashed in the past. Without a parachute of contingency, past issues can reoccur for project staff. And a lack of contingency in favor of feature velocity may leave the business unsettled by shattering ambitions about project scope.   

Reality means there is Friction

The wisdom of contingency: grab all the budget and schedule you need at the start of the project, instead of shaking your head in despair when months into the project you find yourself short on features to deliver. In the rare case that a lack of estimates is best for your team, it probably means there is more of a product rather than project orientation. Most projects involve friction: 

While No Estimates is intriguing, the removal of the analysis and incorporation of contingency is dangerous and can be deadly. While past velocity is an important factor, future planning and learning from the past is equally important. To manage mathematically based on past history is overlooking one very key factor – prior projects and experience.

To put emphasis on the words of Bunio, the removal of…contingency…can be deadly. Just imagine you are piloting a fighter jet and the control tower radios in to inform that your parachute is faulty. Wouldn’t you feel just a bit better if it weren’t?

To read the full post, visit: http://www.pmhut.com/a-case-for-contingency

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