Every seasoned project manager knows from experience that projects rarely go exactly to plan. I learned the need for a solid contingency plan the hard way.
Early in my career, I would plan out a project on paper and would be convinced that I had all bases covered. But sometimes, the first unexpected challenge would rear its head from the starting gates—my perfect plan was ruined already. Then I would scramble around with the project team to deal with the fire as best we could.
This type of work invariably takes the focus off of the work that should be happening on a project, and risks you losing the trust of clients and stakeholders early on.
Enter contingency plans.
What is a contingency plan?
Contingency plans spell out actions that should be taken if an identified risk becomes reality.
Contingency plans are typically created at the start of a project—but not necessarily. A project manager will work with the team to develop step-by-step action plans for the most impactful risks identified and then do the same if new risks are identified as the project progresses.
Contingency plans also come in less formal guises. For example, when releasing a new big feature on a software platform, it’s wise to have developed a rollback plan. This means that if any problems arise from the release deemed too impactful to stay in place for any time, the team can quickly revert the platform to its pre-release state. In this case, the rollback plan is a type of contingency plan item.
Contingency plan vs. mitigation plan
As we mentioned, contingency plans are reactive—they’re meant to lay a plan for responding to an anticipated issue.
On the other hand, a mitigation plan is proactive and more about minimizing the chances of risks becoming issues in the first place.
However, the two are closely linked, and contingency plans in larger project management environments are directly related to risk plans.
Why do you need contingency planning in project management?
Put simply, you need contingency planning in project management to ensure projects go as smoothly as possible and to maximize the chances of project success.
Without a contingency, when things go wrong (which they almost certainly will), time, money, quality, morale, and trust are lost in the process of fixing things.
Contingency plans are most needed on high-risk, larger projects. Larger projects have more moving parts and are, by definition, more complex. Thus, there is a high chance of something happening that would have a high negative impact. Having a clear plan of action for big risks that turn into issues can be the difference between project failure and success.
Conversely, if you’re working on a very small project that you have done many times before with a client and technology you know well, you probably don’t need to develop a contingency plan. In this case, risk is low, and spending time on a contingency plan would probably be wasted time and money.
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5 steps to create and manage an effective contingency plan
1. Assess the identified risks for high impact
Review the risk register you have created, and select the risks that need to be included in a contingency plan. You can do this by assessing risks based on likelihood, impact, and severity.
While you ideally want to include all risks, start with the most impactful ones and work down the priority order. This is because often contingency planning can take a back seat in the haze of a busy project, so it’s wise to focus on the most important risks first.
2. Create the contingency steps
Work with your team and stakeholders to play a series of ‘what if’ scenario games for each risk register item selected. This is best completed as part of a focused workshop, so you can have everyone’s full attention. It’s important to get people in the zone of contingency thinking.
Here are some actions to take in this workshop:
- Create a row on a whiteboard or virtual whiteboard that starts with a risk
- Ask the team to imagine that the risk has become a reality.
- Note down the triggers that would invoke a contingency plan needing to go into action, in a separate column.
- Discuss with the group how they would react and what steps must be taken to resolve the issue.
- Note the key steps, sequence, and owners in a separate column next to each risk.
- Play back the contingency steps and confirm with the group that there are no steps missing, then move on to the next risk.
It’s important to involve a wide array of stakeholders, as each will know how particular issues should be resolved. Never underestimate who you need to develop contingency plans with.
3. Get approval from senior stakeholders and clients
Once a contingency plan is complete and you have team consensus, the next step is to seek approval from the senior stakeholders and clients. These are the folks who ultimately are the arbiters of risk tolerance for any project.
Set up a dedicated session to take them through the plan. This is important because when contingency plan overviews are tacked onto the end of another meeting, they can be skimmed over too quickly due to lack of time or, quite frankly, interest.
Make sure to communicate the importance of running through the plan for approval and make the session happen.
4. Circulate and socialize the contingency plans
Once approved, make sure to circulate the contingency plans to everyone involved in the project. Do your best to ensure that everyone is acutely aware of this plan, knows where to find it and what each of their responsibilities are for any given issue.
A slightly annoying but effective way to check that you’ve socialized the plan enough is to gamify spot checks so that people know the risks and plans. For example, create a project game with a leaderboard where you randomly ask a project team member to name the top three risks on the risk register and what the contingency plan is. You can award points to those who answer best and keep score, awarding a small fun prize to the most accurate people.
It sounds corny, but a common issue with contingency plans is that they are forgotten once created, approved and circulated. A good project manager will ensure they’re not.
5. Treat contingency plans as living documents
Contingency plans are mostly created at the start of projects, but it’s a mistake to consider them complete once the first version is created. As with risk registers, contingency plans should be classed as living documents that are constantly reviewed and updated as projects progress.
For longer projects, it’s wise to set up monthly risks and contingency plan review sessions with the project team. You will run through the current risks and contingency plans and determine if the assessment and details are still accurate or if anything needs tweaking, adding, or even removing.
When any changes are made, re-approval should be sought from senior stakeholders and clients, documented in writing.
Contingency plans are critical
Contingency plans are a critical element for large high-risk projects. They allow project teams to think about worst-case scenarios for identified risks and develop a plan that will enable them to resolve any issues as effectively and efficiently as possible.
Make contingency plans a staple for your high-risk projects. Even if you don’t need to deploy them, you can sleep soundly at night knowing that a plan is in place.
If you do end up deploying a contingency plan, you will be sure that you’re resolving issues in the most timely and comprehensive manner, in a way that your stakeholders and clients approve of and maximizing the chance of keeping your project on time and on budget.