In an executed contract with a manager reserve and contingencies, if the reserve and contingencies are not used, do those budgets go into all of profit? Saving Changes...
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John NanneyRETIRED Program Manager, Aviation and IT Technical Project Management RETIRED| RETIRED (Just incase you missed that in the title :o)Amboy, Wa, United States
Usually. Those reserves are there if needed, but once the milestone for the reserve is passed, those funds should be considered no longer available and therefore rolled up into profits. After all that is what we want to do, make a profit or be under budget right?
Now, that said, you may find that as a project progresses additional information becomes available about known and known unknown risks that may require additional funding. When a risk milestone is passed, this always a good time to look at those remaining risk registers items and make adjustments. However, one word of caution, make sure that such movements are transparent and approved by necessary stakeholders per your communication plan. I have seen stakeholders who have reason to be happy for the whole risk reserve of a milestone to be rolled up into profits… dabbling in such cases without transparency could cost you your job! Hope that helps. Saving Changes...
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Management reserve is not part of the cost baseline or BAC but contingency reserve is so when it is not used, then the company either decides to use it for upgrades sometimes and if not used, it goes into the profit. Saving Changes...
It depends - from a portfolio management perspective, if the contingency reserves were time sequenced and tied to specific milestones, the company might choose to release them back to the portfolio for use by other projects that are in dire straits to avoid having one project profitable and multiple others over budget.
At the end of the contact it is profit from the project point of view. Organization may have other usage and decide to use it in various way like previous post stated. Saving Changes...
It goes back to the program and the portfolio to be utilised in different projects. However, in small projects/companies mostly they consider the contingency reserve as saving for the project if they do not use it, but contingency management goes back to the company in all above cases.
Anyhow, remember that contingency management is not part of the BAC and also it is not part of cost baseline and you do not have access to it. It is for unknown-unknown risks Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
I understand your point. Sorry, but those are not profit at all. As other mentioned, @John Nanney comment above told you the situation you live when facing the situation you stated. Saving Changes...
Great. Basically, if there is unused budgets it could be allocated as profit or used as capital in some cases. It even could get moved to another endeavour. Saving Changes...
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