That is a term widely used in project management, most of the time misused to justify a not well done planning or analysis. In project management Contingency is generally (and wrongly) used when talking about Times (when duration is uncertain) or Costs (the famous “safety bearings” to absorb some cost oscillation).
Actually that usage of Contingency is not correct, in fact it is a tool, and must be used as a tool, to manage risk.
Contingency is about a risk we have already found, analyzed and assessed for which we decided to not do any pro-active action, but just hope for that risk to not happen. So the only action undertaken for that risk is to take into account that risk and that could bring to longer times or (and) higher costs.
The contingency must be taken into consideration in the budget estimation, it has to be always explicated and not be confused with some rounding of costs and times.
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