Project management is fast-paced and not entirely predictable, which means project managers are often faced with tight deadlines, sudden scope changes, and client demands, amongst a variety of other disruptions. When things don’t go as planned, having a contingency plan in place can mean the difference between continued success or project failure.
In this blog, we’ll explore what a contingency plan is, why it’s essential, and how you can create an effective contingency plan to mitigate risks and save any projects from going downhill.
What is a Contingency Plan?
A simple contingency plan is a pre-planned strategy designed to address unforeseen events or emergencies that could disrupt a project or business operation. With a view to project management, a contingency plan provides a guide for quick action to ensure the smooth continuation of operations.
What Are the Benefits of Having a Contingency Plan?
Having a contingency plan is useful for project managers on many fronts, especially in creative agencies where timelines can fluctuate and often many stakeholders are involved. Here are the key benefits:
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Reduced Project Risks: A good contingency plan helps project managers identify potential risks well before a crisis hits, which means that the risk of projects derailing is significantly reduced.
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Faster Response Times: A business contingency plan ensures that the time it takes to recover from an unexpected turn of events is faster as teams know precisely what steps to take.
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Improved Client Relations: If you can show your clients that you are armed with a contingency plan, they will feel confident in your team and in your ability to carry their project through without being thrown off by unexpected turns.
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Resource Allocation: Project risks often involve team members calling in sick or leaving the company entirely. Planning for how you will redistribute resources is, therefore, an essential part of a contingency plan. Preplanning for a shift in resources means you will have backup when needed, and your project won’t go into a tailspin.
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Enhanced Decision Making: Creating a contingency plan is essentially creating a zero-panic policy because no one needs to fret about what to do next. It’s all written down in the contingency plan so your project team can make informed decisions quickly, reducing the likelihood of stress-induced mistakes.
What’s the Difference Between a Contingency Plan and a Risk Management Plan?
The terms “contingency plan” and “risk management plan” are often used interchangeably, but they are actually two distinct concepts. Here’s the difference:
Risk Management Plan:
A risk management plan is a more general concept and broader than a contingency plan. It focuses on identifying, analyzing, and assessing potential risks that could affect a project.
Contingency Plan:
A contingency plan, on the other hand, is more involved. It outlines specific actions to be taken in response to the risks that have been identified in the risk management plan. A key distinction between a risk response and a contingency plan is that risk responses are about planning and addressing risks in advance, whereas contingency plans are about having a back-up plan ready if things go wrong.
In other words, the point of a risk management plan is to proactively reduce the likelihood of issues, whereas a contingency plan focuses on addressing the impact of those issues if they occur.
Contingency Plan Examples
To understand how contingency plans work in practice, let’s take a look at some contingency plan examples in the context of project management:
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Client Change of Direction: Even experienced project managers experience clients suddenly changing the direction of a mid-project campaign. The contingency plan for a case like this could include identifying key team members who can quickly pivot to accommodate the change and determining how far timelines and budgets can be stretched to accommodate changes.
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Team Member Leaves: A contingency plan for a team member's temporary or permanent absence could include planning backup personnel and ways to redistribute workloads to minimize project delays.
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Budget Overruns: A contingency plan for a project exceeding its allocated budget might involve negotiating with the client for additional funding or cutting down on non-essential deliverables.
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Technology Failures: A contingency plan for technology failures could include backup equipment or a third-party vendor to temporarily maintain the project’s progress.
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External Factors (e.g., Natural Disasters): Part of your contingency plan should address how the agency will continue working if there’s a disruption from external factors like an earthquake, flooding, or power outage. This could involve working from remote locations or activating disaster recovery plans.
How to Create a Contingency Plan
Creating an effective contingency plan involves the following key steps:
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Conduct a risk assessment: Working with your team, identify all the potential risks to the project. Thinking about similar projects you’ve run in the past can help.
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Create a risk matrix: Plot the risks on a risk matrix to determine their likelihood and impact and, based on this, document which risks need to be prioritized.
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Develop response strategies: For each contingency measure:
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Define and document the triggers that will activate them
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Assign specific team members responsible for implementing each response
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Document estimated costs and resource requirements
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Create a communication plan: For each identified risk, document escalation procedures and which team members should report to whom. You should have a shared document with contact information for all employees and stakeholders to keep people updated without delay.
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Monitor contingency plans: It’s important to keep your contingency plan up to date. Many things, like team members and processes, can change, and your contingency plan needs to be changed along with them.
Contingency Planning Pitfalls and How to Avoid Them
There are some common pitfalls that can render a great contingency plan ineffective. Here’s what they are and how to avoid them:
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Lack of Flexibility: A contingency plan needs to account for many possibilities. Although you cannot document every single possible risk in every shape or form it can take place, making your contingency plan flexible means you are not relying on one rigid plan, which may not help you in a particular crisis.
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Overlooking Minor Risks: Major risks should be prioritized, but don’t entirely overlook small risks. As you create your contingency plan, consider whether some smaller risks could snowball into more significant risks if action is not taken.
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Poor Communication: Your contingency plan is only as good as the people who implement it. Once you have created your contingency plan, share it with all relevant parties, ensure they are well informed, and have access to a master document involving all aspects of the plan.
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Failing to Test the Plan: The best way to know if your contingency plan will hold up under pressure is to simulate a crisis and see how well it mitigates it.
How Can Workamajig Support Your Contingency Plan?
Workamajig is a project management tool designed specifically for creative agencies. Here’s how it is an invaluable asset for creating and executing contingency plans:
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Centralized Project Data: Workamajig centralizes all project information in one place, which means that everyone who needs to access your contingency plan, track progress, and make necessary adjustments can do so.
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Real-Time Communication: Workamajig’s communication and collaboration tools ensure that your team is updated and aware when details of a contingency plan need to be implemented.
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Resource Management: If you suddenly need to switch around resources, Workamajig’s resource management software will coordinate everything for you. This allows you to quickly and efficiently reallocate resources.
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Timeline Management: With Workamajig’s timeline tools, you can track project deadlines, ensuring that any delays are caught early. This will enable you to activate your contingency plan before delays spiral out of control.
All in all, Workamajig ensures that your contingency plan is implemented effectively, helping you stay on track even when you face the unexpected.
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Originally published March 17, 2025.
