contingency reserves VS management reserves VS padding

PMP Fighter's picture

On time management chapter, Rita Exam Prep said should not allow padding on time estimate.

But risk management section, contingency reserves and management reserves is a Reserve Analysis to add buffers to schedule.

Can anyone explain about this?

I search on Google, but cannot find a good answer.

 

Thanks you.

Reserves can be on cost and time.

Padding is an unwanted practice since its placing arbitrarial buffers to cope with uncertities. Note the word Arbitrarial.

Contingency reserves are well planned and well estimated reserves for KNOWN risks, these are risk you allready anticipated on your planning risk managemente process.

Management reserves are reserves for UNKNOWN risk, so things that can happen and you didnt anticipated. Management reserves are planned an estimated also. You can't measure an unknown, but based on the work you're planning the reserve for, you can make an aproximation (if the activity is very complex or not).

 

My two cents.

First we need to understand difference between Reserve and padding.

Padding is unplanned values or reserve are output of estimations planning. Reserve can be in the form of Time or Cost.

Now about the difference between Contingency reserve and Management reserve

Contingency Reserves : This is kind of reserves which is kept for 'Known-Unknowns' that means for Uncertainties which are identified in the project. Example - There is a critical resource in the project which is showing signs of leaving the project, now its a known uncertainty for which PM needs to keep some contingency reserves. Like is he leaves, who can take up his work, for this the new person needs to be trained or PM may look for acquiring a team member. And for all these whatever is required will be kept as contingency reserve. 
Contingency reserve is output of quantitative analysis of risks which are part of Risk Registered, i.e Identified uncertainties.

Management Reserves : This kind of reserve is required in cases of 'Unknown-Unknowns' , like the uncertainties which are not identified and if happened, PM will raise request for additional money from Management. For example - Because of some political scenario near the office complex, office got closed for 3 days, now because of this schedule baseline and cost baselines need to revise. and for this re-baselines, PM may go to Senior Management for some part out of management reserves. 
the control iof management reserve is not with PM, its with Senior Management and allocated to PM only in cases when expenditure on project for the uncertainty is not counted in cost baseline.

 

I hope this clarifies your doubt :)

 

Regards

Indu Sharma