A Reserve is a provision in the project management plan to mitigate cost and/or schedule risk, often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.
Reserves are intended to address known or unknown risks and ensure the project can absorb delays or cost overruns without jeopardizing objectives.
Key Characteristics
- Built into Baselines – Included in time and cost estimates for risk absorption
- Defined by Type – May be contingency (for known risks) or management (for unknown risks)
- Used With Governance – Typically requires approval before use, especially for management reserves
- Supports Risk Response – Enables flexibility in handling adverse events without formal rebaselining
Example Scenarios
- Including a contingency reserve to cover expected delays from complex integration tasks
- Allocating a management reserve for unanticipated scope changes requiring executive approval
- Drawing from a cost reserve to respond to inflation-driven material price increases
Role in Risk and Performance Management
- Buffers Against Variance – Helps maintain control over schedule and budget
- Improves Predictability – Increases confidence in meeting objectives despite uncertainty
- Supports Escalation Protocols – Establishes thresholds for reserve usage
- Enables Informed Decision-Making – Provides data for trade-off and scenario analysis
See also: Contingency Reserve, Management Reserve, Risk Management Plan, Cost Baseline, Schedule Baseline.