Contingency
PMBOK Guide 5th Edition:
Budget within cost baseline or performance measurement baseline that is allocated for identified risks that are accepted and for which contingent or mitigated responses are developed.
AACE, Skills and Knowledge of Cost Engineering, 6th Edition:
"An amount added to an estimate to allow for items, conditions, or events for which the state, occurrence, or effect is uncertain and that experience shows will likely result, in aggregate, in additional costs".
- The Sum of Individual Subproject Risk Analysis Results is more conservative than the integrated QRA of combined project in terms of contingency at the given probability (underrunning AFE).
- Risks without quantification are purely gut feels! Qualification to QRA is also critical!
- Qualifying the identified risks is foundation to risk responses with effective risk strategy.
