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196 USING AND MANAGING CONTINGENCY

Contingency, for time and cost, should be factored into the project at the start.
The contingency values should be based on an evaluation of risks, completeness
of the project definition, and other contract factors, such as delay penalties.

Contingency must be managed. Where an allowance has been made for time
and budget, there should be an audit trail of the amounts that are moved from the
contingency category to the project baseline.

Alternatives for critical content should be identified in advance, and project
reviews should be scheduled prior to the deadline for exercising such options.

All of this is part of the risk management aspects of a project, with the immedi-
ate objective of balancing schedule, cost, resources, and workscope, and an end
objective of maximizing client satisfaction and project success.

Contingency planning and contingency management are essential to project
success.