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Forum Home > Project Management Professional (PMP) > Is it Project Managerial Reserves for unknown or unplanned Risks are developed during execution stage ?

s_anupkumar
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Posts: 57

Not necessarily. Management reserves can be determined during planning stage itself. Remember you should do the budget as part of the planning which means you should identify the cost baseline + Contingency reserves + management reserves in order to arrive at a budget. this happens as part of the planning process.

In a real time scenario, how it works is once when the contingency reserves are known it will give indication about the risk exposure of the respective project so that management will be in a position to decide on certain fund to cover the unknown risks. it's at the discretion of management to decide what percentage of fund to be allocated for management reserves hence it's named as "management reserves".

However, re-baselining happens during exectuion. For example: if a project's risk exposure is reduced drastically, then the cost reserves comes down so the project's "Estimate at Completion (EAC) will become less than Budget at completion (BAC)

February 3, 2015 at 5:01 AM Flag Quote & Reply

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