What is a Contingency Plan in Project Management?

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, “involv[ing] defining action steps to be taken if an identified risk event should occur.” Contingency plans in enterprise project management are a component of risk management, and should be part of the risk management plan, which may include risk management software.

By creating a business contingency plan, project managers can identify potential risks and develop strategies to mitigate them, reducing the likelihood of project delays, budget overruns, and other negative outcomes. We’ll walk you through when you should use a contingency plan, the difference between contingency plans and mitigation plans, how to do contingency planning, four steps you can take to develop your own contingency plan, and why Wrike is the ideal tool to help project managers create and implement contingency plans.

When to use a contingency plan

Contingency plans can only be created for identified risks, not unidentified or unknown risks — if you don’t know what your risk is, it’s 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’ve 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.

Another excellent example of when a contingency plan would be appropriate is during a website launch since those are typically complex and multifaceted projects involving several stakeholders — including web developers, designers, marketers, and content creators. Some identified risks could be website crashes, cybersecurity breaches, or user experience issues. But if any of these occur, a contingency plan can help you adjust. For instance, if the website experiences technical difficulties, the contingency plan would include strategies to resolve the issue quickly, such as working with the web development team to identify the problem and implement a fix.

The plan may also include strategies for communicating with customers or stakeholders to manage expectations and mitigate the impact of the issue. This could involve using social media channels or email newsletters to inform customers of the problem and provide updates on the status of the website. Overall, having a contingency plan in place during a website launch can help ensure that pre-identified risks don’t derail the project’s success, ultimately leading to a smooth and successful launch.

Contingency plan vs. mitigation plan

In project management, contingency plans and mitigation plans are both essential tools for managing risks and ensuring the successful completion of projects. While these plans are often used interchangeably, there are key differences between them that make them better suited to specific use cases.

A contingency plan is a backup plan designed to address unexpected events or risks that could impact the project’s timeline, budget, or quality. A contingency plan is typically implemented when a specific risk event occurs, and it outlines a series of actions to be taken to mitigate the impact of the event.

A common use case for a contingency plan is during a marketing campaign, as there are many variables that could impact the project’s timeline, such as changes in budget, workload capacity, or overall scope. A contingency plan would outline steps to be taken to ensure the project remains on budget, the staff isn’t overworked, and the scope doesn’t creep out of hand.

In contrast, a mitigation plan is designed to proactively identify and address risks before they occur. A mitigation plan outlines strategies to reduce the likelihood of a risk event occurring and minimize its impact if it does occur.

A common use case for a mitigation plan is in the technology or marketing space, where risks such as cybersecurity breaches, user experience issues, or product launch delays can impact project success. A mitigation plan would outline strategies to minimize the likelihood of these risks occurring, such as implementing security protocols or conducting user testing, as well as steps to minimize their impact, such as developing a communication plan to manage customer expectations.

The key difference between a contingency plan and a mitigation plan is that a contingency plan is reactive, while a mitigation plan is proactive. Contingency plans are used to address risks that have already occurred, while mitigation plans are used to prevent risks from occurring in the first place.

Another difference is that contingency plans are usually more detailed and specific than mitigation plans, as they are developed in response to a specific risk event. Mitigation plans, on the other hand, are typically more high-level and strategic, as they are developed to address a broad range of potential risks.

In summary, contingency plans and mitigation plans are both critical tools for managing risks and ensuring the successful completion of projects. While they are often used interchangeably, their differences in focus and approach make them better suited to specific use cases. Understanding the differences between these two plans is essential for project managers to effectively manage risks and ensure project success.

4 steps to create a contingency plan

When preparing your contingency plan, consider these four guidelines:

1. Identify triggers

Identify what specific event or events need to happen to trigger the implementation of the plan.

2. Determine the who, what, when, where, and how

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.

3. Establish communication norms

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?

4. Monitor and adapt

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 properly 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 assessment hasn’t been properly conducted, it’s impossible to prepare a viable contingency plan.

Contingency planning with Wrike

In summary, creating a contingency plan is crucial to successfully navigate the ever-changing landscape of project management. With the right tools, such as Wrike’s project management software, creating and implementing a contingency plan is easier than ever before.

Wrike makes it easy to prepare for the unexpected by allowing teams to create and manage contingency plans with ease. With features such as real-time collaboration, automated alerts, and customizable templates and workflows, teams can use Wrike to quickly identify triggers, determine the who, what, when, where, and how of each step, establish communication norms, and monitor and adapt the plan as necessary.

With Wrike’s software, contingency planning becomes a seamless part of risk management, allowing teams to navigate challenges with confidence and keep projects on track. Wrike offers a great risk analysis template to help you get up and running. Plus, with Wrike’s built-in reporting and analytics, teams can identify potential risks and trends, allowing them to make informed decisions and prevent issues before they occur.

Whether you’re planning a complex website launch or managing a large-scale project, Wrike’s project management software is the perfect solution to help you prepare for the unexpected. Try Wrike today and experience the ease and confidence of proactive risk management.

What Is a Contingency Plan in Project Management?