HKSM

A possible event or situation that might influence how the project is carried out and is anticipated by setting aside time, cost, or resource reserves.

Key Points

• Represents potential events (known-unknown risks) that could affect scope, schedule, cost, or quality.
• Handled through contingency reserves that are included in the approved baseline.
• Should be tied to specific risk responses and activation triggers.
• Different from management reserve, which covers unknown-unknowns outside the baseline.

Example

A software project anticipates possible integration issues with a third-party API. The team sets a 10% schedule buffer and a $25,000 contingency to fund extra testing and bug fixes if the integration fails initial tests. If the first integration test has critical defects (trigger), the contingency is drawn down.

PMP Example Question

Which statement best describes a contingency in project risk management?

1. A possible event that may affect the project and is planned for by allocating reserves.
2. Budget held by senior management for unforeseen work outside the baseline.
3. Extra time added by team members to make estimates feel safe.
4. A mandatory change request raised whenever a risk occurs.

Correct Answer: A — A possible event planned for with reserves

Explanation: A contingency is a potential event that could impact the project and is addressed by including contingency reserves in the baseline. Option B describes management reserve, C is padding, and D is a process action, not the definition.