6 Key Aspects of Contingency Plans That Work

Posted by  Mark Baars

Running a company has its fair share of perks, but it can also be stressful too. All companies encounter risks from time to time, and managing risk can be unpleasant. One of the most important things that execs can do is to sit down and assess the company's potential risks, then create a contingency plan — a "plan B" — should any of those things happen. Doing a risk assessment can feel painful and scary. However, it can allow project leaders to create a contingency plan that is thorough, executable and carefully thought out.

For execs in charge of a project, let me point out characteristics of contingency plans that have been known to save projects.

1. All Actions Have a Specified Owner
If there are actions outlined in a contingency plan, the plan should be very specific about who is responsible of carrying out that action. Each action should have a necessary outcome, and the specified person should be in charge of carrying out the action until the desired outcome has been reached.

2. They Are Living Documents
All contingency plans should be living documents. This must be updated and adapted as a project grows. While I believe it's important to state and gauge all potential limitations and threats upfront, it's also key to update the contingency plan as the scope, goals and so on change.

3. They Require Minimal Decision-Making
The best contingency plans require minimal decision-making. When our teams are in crisis mode, they don't have the time or the clarity to focus on making smart, well-considered decisions. When drafting a contingency plan, make all possible decisions ahead of time. This will ensure that no decisions are made in a rush or in reaction to the event, and they're planned and reasoned.

4. They Have a List of "What If" Scenarios
The heart of the contingency plan is the list of "what if" scenarios. Contingency plans should not just be made to handle one or two things that could possibly go wrong. Instead, we believe it's crucial to sit down and create a list of viable examples of what could go wrong, using real-world details and ideal contingency management execution. It should also be written in an clear, actionable way so that team members know what to do should one of the things that are listed occur.

5. They Are Tested
The best contingency plans have been tested to see if they work. While testing contingency plans can take time and money, it is important to measure contingencies for mission-critical projects. This can help us detect solutions that were flawed or ineffective, and help us come up with better ideas for handling situations.

6. They Offer Suggestions for Changes that Would Streamline Problem Detection and Repair
Great contingency plans contain a list that can help organizations easily detect problems and repair them quickly. This section can be divided into the technology required, skills needed, communication protocols and reporting structures within the organization. Also, consider including a set of ideal recommendations paired with other suggestions if the organization runs into budgetary, time or labor constraints.

Managing a project can be scary, but we don't have to be overwhelmed by the risk of failure or disaster. Instead, create a thorough, well-executed contingency plan and ensure that every challenge is ultimately surmountable. 

Do you want to execute more profitable projects, optimize your resource utilization, bill with precision and win more business? Talk to Unit4 today to put a PSA to work for your business or download our whitepaper ‘10 challenges how Professional Services Organizations can improve’.

Mark Baars

Mark Baars

Mark is an industry data analyst spotting the latest trends in business, finance, IT and education. At Unit4 Mark delivers relevant market insights and aims to support CFOs, CIOs, controllers and business leaders to resolve their daily challenges.

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