To address the known-unknown and to address the unknown-unknown the reserves allocated
It is the reserve allocated within the cost baseline for identified risks. It is used for known risks identified. The budget is to address the known-unknown. It can be a percentage of estimated cost, a fixed number. To address the known-unknown and to address the unknown-unknown the reserves allocated are?
A. Management, unknown.
B. Contingency, schedule.
C. Management, contingency.
D. Contingency, management.
Answer: Option D is correct. To address the known-unknown and to address the unknown-unknown the reserves allocated are contingency reserve and management reserve.
- Contingency reserve: It is the reserve allocated within the cost baseline for identified risks. It is used for known risks that are identified. The budget is to address the known-unknown. It can be a percentage of estimated cost, a fixed number.
- Management reserve: Additional reserves allocated to manage the unforeseen risks. It is not included in the schedule baseline. It is associated with unknown-unknowns.
- Cost baseline: project cost + contingency reserve.
- Cost budget: cost baseline + management reserve