What is contingency?

    Contingency is budget set aside for risks and uncertainty within the agreed scope. It is drawn down as risks happen or estimates firm up.

    Contingency is usually sized from the risk register and the maturity of the estimate: an early estimate needs more than one based on detailed design. It covers the known unknowns, not changes to scope, which go through variations.

    Tracking contingency drawdown against the risks it was set aside for shows whether what's left is enough for what's still open.

    Related terms

    Risk register

    Lists a project's identified risks with their cause, likelihood, consequence, owner and the actions to treat them.

    Variation

    A formal change to a contract's scope, price or time.

    Budget at completion

    BAC

    The total approved budget for the work being measured.

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