What is a Contingency?
A contingency is a provision for a possible event or circumstance that is known. In the land of projects these can take many forms. 

• Schedule Contingency - this contingency is a reserved allowance in the planned project delivery timeline. Schedule contingencies allow for risks that will impact the critical path on which the project is delivered. 
• Budget/Cost Contingency - this contingency is a reserved allowance in the project budget or project costs. Cost contingencies allow for risks that will impact the cost of the project. Cost contingencies might be included on a project where scope has some unknowns at the time the budget is set. Cost contingencies might also be set where project delays are expected and a schedule contingency cannot be made. Cost contingencies might also be allowed where needed project resources are not fully identified or confirmed.
  
• Management Reserve - this contingency might involve allowances in the budget or the schedule that are not included in any project performance measurement metrics but are available at the discretion of the project sponsor or project manager in the event that unknown work that is within scope arises. This contingency might best be understood as the contingency for known unknowns. In a customer delivery environment, this reserve may also be an allowance approved by management from within the projected project profits that can be used to ensure client satisfaction in the event of poor project performance.  
• Contingency Plan - this is an element of a risk management plan that describes how the project team will approach utilizing planned contingencies in the event that risks for which the contingencies exist occur. 
  

Which contingencies should I have and how much do I need?
Fundamentally, contingencies are a method of mitigating risk. To identify contingencies you need, you must first identify project risks. Next project risks need to be scored so that the team agrees on and understands how likely the risks are to occur and how severe their impact will be if they do. Once project risks are identified and scored, the team can discuss risk mitigation. Contingencies might be a risk mitigation strategy. Here's an example:

A software delivery team is working on custom software development. The project timeline has been set and the team has identified that a new library for one aspect of the software will be released. Release notes for the new library note a needed feature that is being improved. The team are unclear on whether it will be necessary to upgrade to the new library to ensure the feature can be implemented as needed prior to the software delivery. The team indicates that if the upgrade is required it will cause the team to need to adjust the library version and add some testing to ensure all other functionalities are working as intended. They expect that this will require an extra week of work.  

In the example scenario above the project team has a number of contingency options that could be selected. If the project delivery window is beyond the expected project schedule then the opportunity to add a schedule contingency of one week to address the identified library risk exists. If the project delivery window is not beyond the expected project schedule then the cost of adding resources for one additional week's worth of work within the existing project plan should be added as a cost contingency. 

Choose the contingencies that best address identified risks and the expected occurrence of these risks. 

When can I use my contingency?
Remember, contingencies are strategies for mitigating risks on a project. Contingency reserves should be maintained for as long as possible as the project progresses as this means they are available to manage project risks as they occur. It might be appropriate to consider using a project contingency when all of the following conditions are met:

• The project is nearing completion
• A project risk analysis has been conducted and the risks the contingencies are reserved for are less likely to occur 
• The project is ahead of schedule or budget (depending on the contingency being considered)

Contingencies are not a means to address new scope, except where a management reserve may exist. It is a common mistake, particularly in projects with a fixed budget, to consume a contingency to address emerging or added scope. Resist this temptation, except where a management reserve has been allocated. Ensure that new or emerging scope has been prioritized and assessed against the original project plan. Ensure that a risk analysis on the new or emerging scope has been conducted and does not require contingencies to be added to the project. Push back on scope creep that introduces contingency risks. 

Good contingency planning and management will help you deliver projects on time and on budget. 

Over the past year I have moved around a lot and along the way a few things have become apparent to me.  One of these, hits close to the heart - as it turns out, a lot of organizations don't appear to understand what a project manager does for your organization, let alone, how this can further organizational objectives and/or innovation.  I once was asked in an interview, whether I thought the proposed project I would be managing would be a success.  I told the interviewer that I felt confident that he was taking the first critical step towards success in hiring a project manager.  Project managers, I said, dramatically helped to ensure a project was able to be executed and that implementation was done in an efficient manner - hopefully ensuring that the valuable funding dollars for the project were spent wisely.  I stand by this statement today.  

What is a Project Manager?
This is a surprisingly heterogeneous answer.  Some definitions involve a component of leadership and overall responsibility. Most definitions agree there is a responsibility for planning and for execution of tasks related to a given effort.  Some definitions talk about a timeline of responsibility from inception to completion of a given initiative.  Some definitions even went so far as to comment on the responsibility for success of the initiative (and this is a big stretch...projects do fail and so do project managers).

The vagueness of project manager expectations across the organizations I have worked for is understandable given the above. But before we talk about what a project manager is, let's talk about who a project manager is.  I'm a strong advocate for my professional body, the Project Management Institute (PMI), and they describe a project manager as follows:

They go on to describe project managers as change agents, people who work well in high pressure environments with high levels of complexity, people who are both able to see the big picture and at the same time be detail attentive, and team builders who foster trust and facilitate communication.  And, since 1969, they have been right.

The reality is, that when you hire a project manager, you hire someone who is disruptive, who has a passion for things that at times might seem unimportant to everyone else in the organization, someone who flies at a high elevation in your organization but is oddly obsessive about minutiae your executives won't care about, someone who lives and breathes risk assessment, evaluation and mitigation for breakfast, someone who thinks unlike most of the rest of your organization and ultimately specializes in delivering the activities and tasks you haven't yet fully thought out.  Project managers bring an outside perspective to the intimate inner workings of your company and this should be refreshing, but can also be threatening.  Lastly, project managers are the get things done agents in your departments, divisions, and product lines - people who inspire others to complete activities at a ferocious pace typically not seen in your organization otherwise and for many organizations, this pace will seem intimidating. 

Now that you know the cowboy you are looking for, what will they do for you?

What is Project Management?
Project management is a mix of science and art.  As mentioned above, project managers study the things projects have in common, and we build out an extensive toolkit of things that work to address these commonalities.  For the rest, we sprinkle around our secret sauce of "expert judgement" - our artistic license, and arguably, our most valuable commodity. 

The act of project management is the carrying out of various activities associated with the delivery of a unique outcome.  This outcome might be a new product, a new service, a new process, a new system, a new strategic direction and/or many other things.  However, all projects have a few fundamental things in common. 
1) They are temporary. All projects occur over a defined period of time after which they end. 
2) They are not routine. All projects involve something new or different for the organization(s) involved, hence the role of the project manager as an organizational change agent. 

Now we understand the work the cowboy will be undertaking, let's understand our return on investment.

What does Project Management do for your organization?
Besides increasing your chance of successful outcomes, and having someone to hold accountable for success or failure, project management realizes some other very important organizational benefits.

1) Clarity
A project manager is going to hone in on a good justification for the project before it is initiated.  This means the project manager is going to ask you some tough questions about what you are doing and why.  Many organizations are taken aback by these questions. Don't be.  A key to project success is clear project scope and scope is the "project what".  We ask why you are doing a project so that we can understand what metrics should be used to measure project success. This means that when you reach the end of your project you will know that you have delivered what you intended.

2) Do the Right Things
A project manager helps you define the path from A to B.  A project manager will help to take an idea and define a series of executable steps to deliver the idea.  We specialize in seeing pathways that might not be visible to others.  We practice seeing the obstacles along the way and we carry a backpack full of solutions to help us pass by these obstacles.  We will tell you what we think are the right things to do and we will help you do them in the right way.  Probably this will be different than you expected.  You will need to trust us to deliver the improbable. 

3) Learning Along the Way
Project managers are trained to examine successes and failures objectively and to document these lessons learned for future reference.  When a project is completed, project managers will spend some time conducting a post-mortem.  Don't underestimate this value towards your future projects and business. 

4) Inspire you Forward
Project managers bring passion to an organization.  This passion is infectious and can inspire your teams to be more productive than was ever thought possible.  Goal-oriented is probably a bit polite. We are relentless in our drive to improve and to deliver.  We inspire others with this attitude and overall morale, quality, and effort are improved as a result.

5) Aren't Like the Next Guy
Project managers bring their special sauce to your organization, and if we are successful in your organization, this uniqueness becomes a key competitive ingredient.  No two project managers think the same, or execute in the same manner, and if you are lucky enough to find someone who realizes the above benefits and can hang onto them, your organization will clamber over its competition with ease.  To realize this benefit as an organization you have to value the diverse thinking and unique approach that your project manager(s) bring to each project. 

So when you advertise for a project manager position, and hire someone remember this:

• You've hired a leader, a trailblazer and an expert in something your organization is not expert in. This expertise and leadership is critical to your organizational success in the long run. Don't squash it. 
• You've hired someone who is bold, passionate, and thinks differently than most people in your organization. Value this, don't be upset by it. 
• You've hired someone who will ask questions that make a room go silent.  This has purpose.  Embrace it.
• You've hired someone who will see things you do not understand and will warn you about risks you don't see.  This is not embarrassing, it is for survival. 
• You've hired someone who will make your company their family and will throw themselves down for anyone and anything you ask them to take on.  Remember to thank them for this sacrifice.

Now that you know, go forth willingly into the unknown and don't be afraid.  Success is before you, of that you are assured.