Would you like to inspect the original subtitles? These are the user uploaded subtitles that are being translated: 1 1 00:00:01,160 --> 00:00:03,310 Here is one of the most important principles 2 2 00:00:03,310 --> 00:00:04,423 in project management. 3 3 00:00:05,490 --> 00:00:08,400 A project plan without a sufficient risk reserve 4 4 00:00:08,400 --> 00:00:10,113 is already over budget. 5 5 00:00:11,410 --> 00:00:13,570 So, there should actually be 6 6 00:00:13,570 --> 00:00:16,140 two risk budgets for each project. 7 7 00:00:16,140 --> 00:00:19,795 A risk reserve, and a management reserve. 8 8 00:00:19,795 --> 00:00:22,080 The regular risk budget, 9 9 00:00:22,080 --> 00:00:24,210 sometimes called contingency reserve, 10 10 00:00:24,210 --> 00:00:26,800 is as calculated in the previous sections. 11 11 00:00:26,800 --> 00:00:30,100 The time and money under the control of the project manager. 12 12 00:00:31,320 --> 00:00:35,520 But each project should also have a management reserve. 13 13 00:00:35,520 --> 00:00:37,310 Despite the name however, 14 14 00:00:37,310 --> 00:00:40,540 this is not managed by the project manager, 15 15 00:00:40,540 --> 00:00:43,440 but instead is controlled by the next level up, 16 16 00:00:43,440 --> 00:00:46,083 usually the sponsor or program manager. 17 17 00:00:47,460 --> 00:00:51,650 It's intended for risks outside the control of the project 18 18 00:00:51,650 --> 00:00:54,400 such as program level delays, a recession, 19 19 00:00:54,400 --> 00:00:57,270 mergers, political changes, or other problems 20 20 00:00:57,270 --> 00:01:00,033 that exceed the ability of the project to address. 21 21 00:01:01,620 --> 00:01:04,260 The standard recommended size of the management reserve 22 22 00:01:04,260 --> 00:01:06,298 is 10% of the project budget, 23 23 00:01:06,298 --> 00:01:08,623 or as decided by the organization. 24 24 00:01:10,110 --> 00:01:11,820 But the most important point is, 25 25 00:01:11,820 --> 00:01:13,892 the project manager should never count 26 26 00:01:13,892 --> 00:01:16,849 on the management reserve, mention it, 27 27 00:01:16,849 --> 00:01:19,440 or even admit they know it exists. 28 28 00:01:19,440 --> 00:01:22,030 They should always strive to manage project performance 29 29 00:01:22,030 --> 00:01:25,141 within their regular risk reserve. 30 30 00:01:25,141 --> 00:01:27,590 If the project ever becomes challenged 31 31 00:01:27,590 --> 00:01:31,030 and you are directed to put scope and schedule first 32 32 00:01:31,030 --> 00:01:33,740 and asked how much more budget you need, 33 33 00:01:33,740 --> 00:01:37,180 the management reserve is where the money will come from. 34 34 00:01:37,180 --> 00:01:40,370 But wait until it's offered, and never count on it, 35 35 00:01:40,370 --> 00:01:42,603 or even mention it beforehand. 3058