ITPEC IP October 2024 Question 57
In a project, a contingency reserve is the cost that is included in the initial project scope and is prepared for events that are predictable but uncertain. Among the costs that are allocated by the project manager of a company that receives an order for a system development, which of the following is an appropriate cost that can be classified as a contingency reserve?
Explanation
Replacing a device that happens to fail — a predictable but uncertain event, exactly what a contingency reserve covers.
A device in the development environment may or may not fail, and when is unknown, but the possibility can be foreseen and its cost estimated. Money set aside for such an identified risk (a known unknown) is a contingency reserve within the project's cost baseline.
Answer (a)
Why not others:
- •(b) — the project leader's progress management is certain, planned work, part of the normal cost estimate
- •(c) — new requirements outside the project scope are not in the initial scope at all; they need a change request and usually a contract change
- •(d) — quality management tools already planned for adoption are a certain, known purchase, so they go in the ordinary budget
Key rule: A contingency reserve is for identified risks that may happen; certain costs go in the base estimate, and out-of-scope work goes through change control.
Project Management · AI-written, may contain errors
This question comes from an official ITPEC past paper. ITPEC Practice is an independent study tool and is not affiliated with ITPEC. See the official IP past-paper collection or Report an issue.