Joan is the project manager of the KYU project for her company. She is working with management on defining a contingency reserve for her project. Currently the project is scheduled to last 18 months and it has a cost budget of $2.5 million. What two areas of the project can the contingency reserve address in regard to risk management?
A.
Quality and costs
B.
Risk and project planning
C.
Costs and schedule
D.
Cost and resource management
Explanation:
The contingency reserve is an allotment of funds and time for risk events within the project. Contingency reserves are estimated costs to be used at the discretion of the project manager to deal with anticipated, but not certain, events. These events are "known unknowns" and are part of the project scope and cost baselines. The contingency reserve is calculated by multiplying the probability and the impact for the risk event value for each risk event. The sum of the risk events equals the contingency reserve for the project.
Answer option A is incorrect. The contingency reserve does address costs, but it does not address quality. Answer option D is incorrect. The contingency reserve does not address resource management. Answer option B is incorrect. The contingency reserve addresses time and costs, not risk and project planning.
Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"
C