What is contingency reserve?

Contingency reserve — is a reserve of unforeseen expenses or time in a project, created to cover risks and uncertainties that cannot be accurately predicted at the planning stage.

Features of contingency reserve:

• Used for managing risks that may affect the cost or schedule of the project.
• The size of the reserve is determined based on an assessment of the likelihood and impact of risks.
• It is not part of the baseline budget but added on top to ensure flexibility.

Example: if there is a risk of delay in the delivery of materials in a project, a contingency reserve may be included in the budget for potential additional costs or time related to this delay.