Reserve analysis that is a topic that is part of cost. It plays a vital role when you are doing risk and it is also part of your estimation you need to estimate your results and answers. So, this is a topic that I would like to actually cover at past or part of an estimation rather than data analysis technique. Just to give you an overview of how the whole book or the chapter concept of estimation works. The Reserve analysis compares the amount of the contingency reserves remaining to the amount of risk remaining at any time in the project in order to determine if the remaining reserves are adequate. So, we want to first of all do a reserve analysis to identify that kind of a risk that we have estimated Based on the activity or the verb breakdown structure or the project and then you want to make sure continuously on the project that yes this reserves are good enough for our all mitigation plan.

Reserve analysis conducted prior to developing a baseline after the initial risk identification analysis and response planning have taken place. So, without response planning for the response is what you want to do and this is what the risk is called risk mitigation comes in and obviously, it is not free the cost is there will there will be a cost for all mitigation and all responses. So, this is what you will be estimating contingency reserves are the estimated So, we have two kinds of reserves one is a contingency reserve and other is a management reserve. The contingency reserves are the estimated estimates duration of the scheduled baseline. When you are estimating your activities you have to define the conditions Begin si reserved, which are allocated for identified risks that are accepted. Very important, you may say I have this risk district This is this could go wrong, this could go wrong, this could go wrong, but it does not mean that all your risk and everything will be accepted.

And this is where the decision making will come in this is where the risk register and the whole risk cycle will come in where you will be doing the qualitative analysis and the quantitative analysis and the response risk contingency reserves are associated with known unknown there are two concepts known unknown unknown. The contingency reserves are I know, the risk. I know that could what could go wrong, but obviously, it's a future uncertain event. I don't know what kind of an impact would it would have. So rain could happen. I don't know what kind of an impact that may happen.

So training would be required. So I know that what could go wrong, but I don't know what would be the impact so We need to minimize the impact while having a contingency reserve. So, reserves are associated with known unknown, which may be estimated to account for this unknown amount of river minimization response as more precious, precise information about the project becomes available, that contingency reserve may be used reduced or eliminated. So, if you see it is to determine the appropriate amount of the cost and schedule contingency both will be identified. While you are doing a three point estimates you will be going into identifying all what could go wrong in your assumptions, constraints and the race and then those will be identified those which will be approved and will become part of your contingencies. This The purpose is to allocate suitable amount of time and cost to meet the project schedule.

It's a periodic activities that you would be doing again and again, develop the cost estimates develop the schedule work Over time, create budget funds over time conduct risk identification analysis planning, estimate the amount of the risk reserves that you would be requiring for schedule and cost periodically check for the remaining one it is if you could see it is linked with estimation duration, estimating costs, estimation budget control cost and monitor risk. So, it is part of your rescue schedule and duration estimation. Without this you cannot estimate properly because you need to know what kind of reserves need could be done prior developing the baselines. So, we have contingency reserves set aside for known risk events. Use for response to minimize the impact part of the baseline and part of the budget if the risk would happen if you see the trigger of the risk, you could use this thing.

Management reserves is the next part of the reserves. These reserves at a specified amount of the project budget With help for management control purposes and are reserved for unforeseen risks I have future is uncertain. We are we don't know what's gonna happen in the future. Yes with all the efforts with all the bear benchmarking brainstorming focus groups call document analysis reserves, we have identified some risk, but still something could go wrong which is beyond our understanding, this is where this management reserves comes in. Management reserve is to cover management control purposes This is to without for management control purposes and are reserved to unforeseen value that is within the scope of the project. Management reserve is not included in my in the schedule and cost baseline.

It is not available to the project manager if something unforeseen happen, we need to go and take an approval to you this budget cost estimates may include contingency reserves. Time called contingency allowances to account for cost uncertainty during cost control is of analysis used to monitor the status of contingency and management results are for the project to determine if the reserves are still needed, any additional reserves needed to be requested. During a control costs process you will be actually going into the detail that what additional cost, you might need a much budget you might need to minimize it. If as you work on the project progresses, you might need to reevaluate something could go down, something could go up, but this is what your resolve an answer. If the identified risks do not occur, the unused contingency reserve may be removed from the project budget to free up the resources for other projects or operations.

For your budget, it is very good. This is a key piece that you have in the reserves. You would not be given a reserve which you don't think No, I would say this could happen rain could happen training could happen machine could break down employee could do this and blah and you have all this kitty again this you had this impact analysis and you identify your estimates. So, when you have this, this is given to you as a kitty. Now, this is not happening. So, this will reserve will be moved from our from this contingency reserves.

This is very important concept that if you end up with every risk you need to identify that timeline you need to identify the trigger you need to identify the risk activity that is on the risk. If that activity has passed as part of the contingency reserve that reserves part of the reserves the contingency amount will may be removed from your at the contingencies, contingency reserves are added to the costing to manage risk, cost overruns error associated with costing but these other two things. Let's go next and how see the budget is To be associated in this case. Thank you