This Guest paper was submitted for publication and is copyright to Roger L. Parish, PMP, © 2013.
published here August 2013.
It is an update to the paper, "PMBOK® Guide Fourth Edition - Unraveling Project Reserves", published by the author in March 2010.

PART 1 | Introduction | Adding Time Contingency Reserves
Project Performance (Earned Value) Reporting
A Final Thought for PMI and the PMBOK® Guide | Conclusion

Adding Time Contingency Reserves

While the method described above enables one to incorporate the cost contingency reserve into the project schedule and performance baseline, it does not accommodate a time contingency reserve to absorb the impact of tasks that take longer than expected.

To add a time contingency, one can add a buffer activity at the end of a sequence of activities, as shown in Figure 6. This method was first introduced in the Guide's 3rd Edition and was called a "buffer activity" that "is intentionally placed at the end of the network path for that group of schedule activities."[23] This idea, while dropped from the Guide's 4th Edition, has been resurrected and expanded upon in the 5th Edition. In its simplest implementation dealing only with time, this buffer is its own separate dependent activity that has an allowed-for duration, but has no actual work or budget attached.

For example, a shipyard that is building a ship for a client may have made realistic estimates regarding the duration of the component activities, and it may have put them in the project schedule that way (shown as "Planned-for delivery date" in Figure 6). A network analysis tells the shipyard when it should expect to complete the ship.

Figure 6 - In-line contingency planning
Figure 6 - In-line contingency planning

However, the project manager anticipates that severe weather may stop work at various times during the build. A buffer activity that accounts for the number of days expected to be lost due to weather delays can be added at the end of the project or a major portion of the project (e.g., just before a major milestone, like flooding the dry dock) using a buffer or dummy activity. The date the shipyard commits to delivering the ship to the customer is based on the inclusion of the buffer time. However, the shipyard manages the schedule to its own internal time estimates, and manages the consumption of contingency time from the time buffer over the life of the project.

This approach to adding a time contingency is now made clear in the Guide's 5th Edition in Chapter 6, Time Management, Figure 6-19.[24] The Guide has gone even further and put labels on what I previously recommended. These buffers are now called either feeding buffers or a project buffer. While these terms are not defined in the Guide's Glossary, they are explained in the text as:

"[A] buffer placed at the end of the critical chain…is known as the project buffer and protects the target finish date from slippage along the critical chain. Additional buffers, known as feeding buffers, are placed at each point where a chain of dependent activities that are not on the critical chain feeds into the critical chain."[25] (Emphasis added.)

Adding Time and Cost Contingency Reserves

To be truly effective, one should have strategies for implementing both time and cost contingency reserves. This can be done in at least two ways. One is to add contingency reserve activities (i.e., feeding buffers and/or a project buffer) to workflows at strategic locations in the schedule, as shown in Figure 6, and also assign a monetary amount/budget to them. This would allow them to accommodate both the time and cost contingencies.

Another way this could be done would be to use a hybrid model that incorporates techniques shown in both Figures 5 and 6. That is, cost contingencies could be placed in their own separate section, as shown in Figure 5, and time contingencies could be incorporated as buffer activities that are in-line with the work, as shown in Figure 6. Using this approach, budget could be evenly distributed to the project over time, while time would be attached to discrete workflows.

Introduction  Introduction

23. Ibid
24. PMBOK® Guide 5th Edition, p178, Figure 6-19
25. Ibid, p178, para
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