Simplilearn Solutions (Global R.E.P. ID 3147) (http://www.simplilearn.com) provides project management training through a blended learning model of classroom training and online learning.
Features of Simplilearn’s PMP training (blended model – classroom and online)
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CAPM Online Training: 3-month online training for $129.99 only
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PMP online training courses start from $99.99 onwards for Standard PMP online training course with 4 PMP simulation tests online. Each PMP mock test is of 4 hours with 200 real-life PMP exam prep questions.
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Transcript for Project Risk Management, Risk Reserve:
Look at this slide carefully. I have already explained in Cost Management chapter about control account. Also, I did explain work package in scope
management chapter.
Nevertheless, let me give you a quick recap. Work packages are last level of classification in a Work Breakdown structure (ie WBS). Below Work packages, you
only have activities in a WBS.
Since, managing cost at each work package level is quiet inconvenient, generally more than one work packages are clubbed together to create a control
account. Costs are managed at control account level. When I say cost is managed at control account level, means, how much was planned for work packages
within that control account, how much is actually spent etc are accounted at that level.
As you can see, first the cost of all activities, add up to the cost of the work packages and work packages cost add up to the control account cost. There
can be multiple control accounts in a project. Now, once the project cost is calculated, some reserve is added to take care of any uncertainties.
Why this reserve is added, because, you might have made some assumption to calculate the cost of the activities and by adding some reserve, you can want to
take care of uncertainties. In this case, make a note that you are accounting for the assumptions made and it can also be said that this reserve takes care
of known uncertainties. This reserve is also called contingency reserve.
Once the planned cost is arrived, another reserve gets added and that’s called management reserve. Now, why is this needed? Well, by adding contingency
reserve you have taken care of known uncertainties and by adding management reserve you take care of unknown uncertainties.
But on what basis do you add unknown uncertainties, the answer is its totally based on experience or what we also call in PMI language Expert Judgment.
Visit http://www.simplilearn.com/ to prepare for Project Management Professional PMP certification.
Duration : 0:2:49
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