Advanced Terminology

What is a Contingency Plan in Project Management?

A Contingency plan in project management is a defined, actionable plan that is to be enacted if an identified risk becomes a reality. It is essentially a “Plan B”, to be put in place when things go differently than expected. The Project Management Institute defines contingency planning as, “involve[ing] defining action steps to be taken if an identified risk event should occur.” Contingency plans in project management are a component of risk management and should be part of the risk management plan.

When to use a contingency plan?

It’s can only be created for identified risks, not unidentified or unknown risks — if you do not know what your risk is, it is impossible to plan for it. It should be noted that contingency plans are not only put in place to anticipate when things go wrong — they can also be created to take advantage of strategic opportunities. For example, say you have identified that a new training software should be released soon. If it occurs during your project, you may have a contingency plan on how to incorporate it into the training phase of your project.

The difference between a contingency plan and a mitigation plan

A mitigation plan attempts to decrease the chances of a risk occurring or decreasing the impact of the risk if it occurs. It is implemented in advance. A contingency plan explains the steps to take after the identified risk occurs, to reduce its impact. Think of a contingency plan as the last line of defense.

How to prepare your contingency plan?

When preparing your contingency plan, consider these four guidelines:
  • Identify what specific event or events need to happen to trigger the implementation of the plan.
  • Cover the five bases in each step of your plan: who will be involved, what do they need to do, when does it need to happen, where will the plan take place, and how will it be executed.
  • Have clear guidelines for reporting and communication during the implementation of the plan. How will internal and external stakeholders be notified? Who will draft and send the notice, and how soon after the incident will it be released? How often will updates be provided?
  • Monitor the plan on a regular basis to ensure it is up to date.
In addition, you should be aware of these four common challenges that project managers face with contingency planning:
  • Contingency planning is viewed as a low priority: Since the plan may never be needed, there can be a tendency to put off the creation of it. However, not having a carefully planned out contingency can lead to project failure.
  • Team members may be overconfident or overly invested in Plan A: Therefore, they may not be motivated to create a detailed, actionable Plan B.
  • Lack of enterprise-wide plan awareness and buy-in can hinder implementation: Projects do not happen in isolation. If all stakeholders in the organization are not aware of and invested in the plan, there may be delays in enacting it.
  • Not spending enough time identifying all risks: If a risk has not been properly identified, it is impossible to prepare a viable contingency plan.
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