With a suitable contingency plan instilled, you rest assured that your ultimate business objective will still be achieved despite any challenges encountered. The likelihood of encountering obstacles is within every team or organization. You may also run into opposition from competitors as well as your own employees.
What is a contingency plan?
A contingency plan is a detailed plan of action to be taken during an unplanned event or problem. Contingency planning is a continuous process involving anticipating possible risks and determining how to address them.
Contingency planning is a broad term that can apply to any business or organization. For example, a small business might have an emergency plan for closing early if there is a fire in the building, while a large government agency might have contingency plans for dealing with an attack by terrorists.
In general terms, contingency planning is any plan that an organization develops to handle unexpected events or problems. Contingency plans can be short-term or long-term and may involve only one aspect of an organization’s operations or several different aspects of an organization’s operations. A shorter-term plan might focus on how an organization will handle server failures within its IT department. A longer-term plan might look at how an organization will deal with natural disasters such as floods or earthquakes over time (for example, by relocating equipment).
Organizations develop contingency plans with the help of experts who know how various systems work and what kinds of problems might arise from system failure.
When to use a contingency plan?
The best way to answer this question is to think about the last time you were on a plane, when the pilot announced a problem with the landing gear.
You probably remember how you felt. But chances are that if you’re like most people, you don’t freak out or panic. You just waited patiently while they worked through the problem.
We’re so calm when faced with an emergency situation because we have a contingency plan in place. We know there will be a problem at some point, so we’ve already prepared ourselves for it.
The same goes for business. If you run a business, then there will almost certainly be times when things don’t go according to plan — and that’s okay! As long as you have a contingency plan in place, you’ll be able to deal with those unexpected events more effectively.
Using a contingency plan example in risk project management
When you start to think about the risks in your project, you will want to create a contingency plan for each of them. The following is an example of what that might look like:
If something goes wrong with the software, we will use the backup copy we keep on our server in emergencies. We will also try to find another vendor who can deliver an alternative solution if necessary.
If there are any problems with our delivery dates, we will discuss them with our clients as soon as possible so they have time to make any changes to their requirements and plans if necessary. If any issues arise later on due to this delay, we will work out what compensation is due and pay it immediately.
If there is not enough money in the budget for this project, we will ask for more funding from our clients before starting work on their project so that they can adjust their plans accordingly if necessary.
How to Make a Contingency Plan
If you’ve ever had to execute a contingency plan, you know that it’s not something you look forward to. It means something has gone wrong with your plan, and now you have to fall back on an alternative course of action.
Contingency plans are helpful when we’re planning out projects or events. They give us the ability to handle unexpected events in a way that minimizes damage and maximizes success.
Here’s a step-by-step process for creating a contingency plan:
List all possible scenarios that could go wrong during your project or event. Write them down on paper or in a spreadsheet. Think about the worst-case scenario and how it might affect your project or event.
Identify what steps can be taken to prevent these scenarios from happening or mitigate their effects if they do happen (e.g., having extra staff members on hand).
Create a list of actions for each scenario, including who is responsible for executing each step, when each step should be executed, and how long each step will take (e.g., how long it takes for the fire department to respond).
Make sure all employees know about the contingency plan and how it works. Include information about what they should do during an emergency situation, such as where they should go if there’s an evacuation order or where they can find supplies if there’s no food left in the office.
Include updates on your company’s website, so everyone knows about any changes made to the contingency plan or if new policies are implemented because of recent events. Also, ensure you update employees with any changes made to their responsibilities within the company, so they know who has what duties during emergencies.
Challenges of Project Contingency Planning and Management
There are several challenges in project contingency planning and management.
The first is the difficulty of accurately predicting the cost and schedule of a project.
The second is that once a project begins, the actual costs and schedules may differ from those predicted at the start. This means that you need to update your contingency plan as you go along continually.
Another challenge is determining how much contingency to add to your budget and schedule. Less contingency can mean that you may need more money or time to finish your project on time or within budget. But too much contingency can lead to unnecessary spending. If the contingency funds are not spent, they can’t be used for other things.
Finally, there’s always the possibility that something unexpected will happen during a project — an event that was not planned for but which affects both costs and/or schedule adversely.
