Reserve Analysis for a Vacation

Posted on August 11, 2009 by

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Emma and her family are planning to take a one-week vacation that they believe will cost $2000. However, Emma and her husband decide to set aside 10% more, for a total of $2200, since they guess there could be some unknowns that will end up making the vacation cost more as has happened the last several years. This is an example of Reserve Analysis. If Emma’s husband decides to take along an extra $500 in case the car breaks down while they are on vacation, this amount is a Contingency Reserve—it’s been set aside in case a specific risk event (car breaking down) occurs. If the family places some money in a reserve in case they change their mind about the vacation scope (for example, instead of going to a free state park one day, they decide to go to an expensive amusement park), that money is called a Management Reserve.

Reserves can be set aside for time in addition to cost. Although Emma’s family calculates that it will be a three-hour drive to get to Grandma’s house, they tell Grandma to expect them after three-and-a-half hours of driving so in case they need to stop somewhere Grandma won’t become too worried.

There are four processes in the fourth edition PMBOK® that include Reserve Analysis—Estimate Activity Durations, Estimate Costs, Determine Budget, and Monitor and Control Risks. Also see the earlier posting of Reserve Analysis (posted February 11, 2009).