HKSM
Reserve Analysis
A method that examines key elements and dependencies in the project management plan to set aside contingency reserves for schedule time, budget, cost estimates, or overall project funding.
Key Points
- Determines time and cost reserves by analyzing risks, estimates, and plan components.
- Contingency reserves sit inside the schedule and cost baselines; management reserve is outside the performance measurement baseline and requires change control to use.
- Common inputs and techniques include the risk register, probability-impact data, three-point estimates, and Monte Carlo simulations.
- Reserves are monitored and adjusted as risks evolve; document the basis of reserves and update baselines when changes occur.
Example
A $1,000,000 construction project identifies risks that could add cost and delay critical activities. The team applies three-point estimates and a risk analysis and sets a 12% cost contingency ($120,000) within the cost baseline and a 10-day buffer on the critical path. As risks materialize or retire, the project manager draws from or returns contingency; access to any additional management reserve requires an approved change.
PMP Example Question
While developing the cost baseline, the project manager reviews the risk register and uses three-point estimates to set aside funds to address identified uncertainties. Which tool or technique is being used?
- Cost aggregation
- Funding limit reconciliation
- Reserve analysis
- Parametric estimating
Correct Answer: C - Reserve analysis
Explanation: The scenario describes analyzing risks and estimates to establish contingency funds, which is reserve analysis. The other options address different planning activities.
