Contingencies are potential risk response actions that will only be implemented if some triggering event or condition has shown that the risk probability has gone from unlikely to likely. When the risk analysis (qualitative and quantitative) has been completed, risks that are high impact but low probability should be addressed with a contingency. The contingency is an alternate project plan. The contingency is developed (at least the first few steps) for the unlikely condition when that risk does occur.
This alternate plan normally has some detrimental attributes as compared to the normal plan (it costs more, it takes longer). If the alternate plan was better than the normal plan, the project team should switch to the alternate plan immediately. The detrimental attributes need to be acknowledged and if the contingency plan is implemented, the risk register will need to be updated to reflect any new risks that are a result of the contingency plan.
In addition to developing an alternate plan, a project condition should be selected to act as a trigger indicator. If the trigger condition occurs, it indicates that the risk has changed from unlikely to likely (or present). When the trigger indicates that the risk in now likely, it is time to make a project change and implement the contingency plan
Triggers are routinely monitored by the project leader and Core Team. These will be tracked at team meetings to see if they indicate the need to implement a contingency plan. Effective triggers have these characteristics:
· Appropriate for the type of risk
· Timely to allow implementation of alternate plan
· Discrete – a clear indication of the triggering event, no ambiguity
· Documented so that the team knows what they should be tracking