CAPM (Certified Associate in Project Management) Practice Exam

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What is contingency reserve?

A fund allocated for project changes and amendments
A budget within cost baseline or performance measurement baseline for accepted risks and developed responses
An additional budget for unforeseen risks and activities outside the project scope
Funds set aside for emergencies and unexpected costs

The correct answer is: A budget within cost baseline or performance measurement baseline for accepted risks and developed responses

Contingency reserve is a budget within the cost baseline or performance measurement baseline that is specifically allocated for known risks and developed responses. It is intended to cover the cost impact of identified risks that have been accepted in the project management plan. This reserve is not for project changes or amendments (Option A), activities outside the project scope (Option C), or general emergencies and unexpected costs (Option D). The correct answer, Option B, best describes the purpose and usage of contingency reserve in project management.