HKSM
Reserve
An amount planned in the project management plan to address potential impacts on cost or schedule from risk. It is often specified with a modifier (such as contingency reserve or management reserve) to clarify which types of uncertainty it is intended to cover.
Key Points
- Provides a buffer to handle risk-driven cost or time impacts.
- Contingency reserve covers known-unknowns; management reserve covers unknown-unknowns.
- Size is typically based on risk analysis and reviewed as risks change.
- Use is controlled by governance; it is not unrestricted padding.
Example
A construction project sets a 10% contingency reserve for weather delays and rework identified in risk analysis, and a separate management reserve held by executives for unforeseen regulatory changes that could add scope or time.
PMP Example Question
Which statement best describes a reserve in project management?
- A planned allowance in the project management plan to address cost and/or schedule risks, often labeled as contingency or management reserve.
- Extra scope added to satisfy late stakeholder requests without formal approval.
- A penalty fee paid to a vendor for early delivery.
- Hidden padding inserted by the team to mask inefficiency.
Correct Answer: A — A planned allowance to address cost or schedule risks
Explanation: Reserves are formal risk responses documented in the plan; modifiers like contingency and management reserve indicate the type of uncertainty they cover.
