ASTM E2168-10(2016)
(Classification)Standard Classification for Allowance, Contingency, and Reserve Sums in Building Construction Estimating
Standard Classification for Allowance, Contingency, and Reserve Sums in Building Construction Estimating
SIGNIFICANCE AND USE
4.1 When preparing construction, project, and program cost estimates, it is often necessary to make monetary provision for change or risk, or both, or other exigencies where information is incomplete.
4.2 Such allowance, contingency or reserve sums are employed by many persons engaged in the planning, delivery, and financing of construction work.
4.3 These users include owners, developers, facilities programmers, cost planners, estimators, schedules, architects and engineers, specification writers, operating and maintenance staff, manufacturers, educators, financial managers, and comptrollers.
4.4 Usage:
4.4.1 These sums are especially appropriate when performing the following activities:
Cost budgeting;
Conceptual, design, and construction cost estimating;
Preparing complete forecast cost for economic evaluation,
investment analysis, and approval; and
Controlling cost during planning, design, and construction.
4.4.2 In any of these activities a needed requirement, or component, of the planned construction can be known while the defined solution, design or specification, for providing this may not. The usual, and appropriate, response in these situations, is the inclusion of a monetary sum, within an estimate, to provide for this (these) requirement(s).
4.4.3 Such sums may be general or specific in scope, may be planned to be spent or may only be included as possible mitigation for unplanned events and requirements.
4.4.4 To distinguish between these sums, and in recognition of their differing purpose, they are described, and classified here, using the terms allowance, contingency, or reserve.
Note 1: Section 5 includes a generic statement of purpose for each of the three terms and provides a sub-classification that distinguishes between sums included for specific purposes and for non-specific, that is, general purposes. In cost budgeting, conceptual and design estimating especially, an estimator may intuitively recognize...
SCOPE
1.1 This classification establishes a classification for allowance, contingency, and reserve sums used in construction, project, and program estimating.
1.2 This classification applies to all construction work.
1.3 This classification is not based on permanent physical elements of construction (as defined and classified in Classification E1557). Rather, the classification items are cost components common to construction, project, and program estimates.
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Designation: E2168 − 10 (Reapproved 2016)
Standard Classification for
Allowance, Contingency, and Reserve Sums in Building
Construction Estimating
This standard is issued under the fixed designation E2168; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
In building construction estimating the terms allowance, contingency, and reserve are often used
almost interchangeably and are assumed to be universally understood, yet they often mean different
things to different people. Consequently they can be ambiguous in meaning and intent.
Applying these terms, as classified herein, adds a needed precision and rigor in their use as each
term is held to be specific in its meaning, intent, and use.
1. Scope 3. Terminology
3.1 Definitions—For definitions of terms used in this
1.1 This classification establishes a classification for
classification, refer to Terminologies E631 and E833.
allowance, contingency, and reserve sums used in construction,
project, and program estimating.
4. Significance and Use
1.2 This classification applies to all construction work.
4.1 When preparing construction, project, and program cost
estimates, it is often necessary to make monetary provision for
1.3 This classification is not based on permanent physical
change or risk, or both, or other exigencies where information
elements of construction (as defined and classified in Classifi-
is incomplete.
cation E1557). Rather, the classification items are cost compo-
nents common to construction, project, and program estimates.
4.2 Such allowance, contingency or reserve sums are em-
ployed by many persons engaged in the planning, delivery, and
2. Referenced Documents
financing of construction work.
4.3 These users include owners, developers, facilities
2.1 ASTM Standards:
programmers, cost planners, estimators, schedules, architects
E631 Terminology of Building Constructions
and engineers, specification writers, operating and maintenance
E833 Terminology of Building Economics
staff, manufacturers, educators, financial managers, and comp-
E1557 Classification for Building Elements and Related
trollers.
Sitework—UNIFORMAT II
E1804 Practice for Performing and Reporting Cost Analysis
4.4 Usage:
During the Design Phase of a Project
4.4.1 These sums are especially appropriate when perform-
E1946 Practice for Measuring Cost Risk of Buildings and
ing the following activities:
Building Systems and Other Constructed Projects
Cost budgeting;
E2013 Practice for Constructing FAST Diagrams and Per-
Conceptual, design, and construction cost estimating;
Preparing complete forecast cost for economic evaluation,
forming Function Analysis During Value Analysis Study
investment analysis, and approval; and
Controlling cost during planning, design, and construction.
4.4.2 In any of these activities a needed requirement, or
This classification is under the jurisdiction of ASTM Committee E06 on component, of the planned construction can be known while
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
the defined solution, design or specification, for providing this
on Building Economics.
may not. The usual, and appropriate, response in these
Current edition approved May 1, 2016. Published May 2016. Originally
situations, is the inclusion of a monetary sum, within an
approved in 2001. Last previous edition approved in 2010 as E2168 – 10. DOI:
10.1520/E2168-10R16.
estimate, to provide for this (these) requirement(s).
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
4.4.3 Such sums may be general or specific in scope, may be
contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
planned to be spent or may only be included as possible
Standards volume information, refer to the standard’s Document Summary page on
the ASTM website. mitigation for unplanned events and requirements.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E2168 − 10 (2016)
4.4.4 To distinguish between these sums, and in recognition events and other risks that are external to, and are not directly
of their differing purpose, they are described, and classified controllable within, a project plan.
here, using the terms allowance, contingency, or reserve. 5.2.3 Reserve—A sum, usually held by management (client)
to be disbursed only when project requirements are changed.
NOTE 1—Section 5 includes a generic statement of purpose for each of
Used to provide insurance against a project or program failing
the three terms and provides a sub-classification that distinguishes
to complete on budget or for the revision of a budget in the case
between sums included for specific purposes and for non-specific, that is,
general purposes. In cost budgeting, conceptual and design estimating
of changed management or program direction and requirement.
especially, an estimator may intuitively recognize the need for a general
NOTE 2—For the purposes of the classification an internal environment
purpose sum. This recognition comes in the absence of any known specific
is that which exists within an organization. An internal environment may
requirement other than the need to ensure the estimate total is a reasoned
readily allow cost control through revision of design or specification, or
forecast of a reasonable bid result.
both. External environment changes impact the project cost and may be
4.5 This classification defines allowance, contingency, and
the result of contractual obligation, uncovered site conditions or changed
reserve sums as items common to construction, project, and
legislation, for example. External environment changes may allow little or
program estimates through planning, design, construction, and no opportunity for mitigation.
completion. The terms are sufficiently generic to be applied in
5.3 Secondary Classification:
all forms of construction work.
5.3.1 Each of the Primary Classifications may be further
sub-classified as:
5. Basis of Classification
5.3.2 Specific—Where the content of a sum is uniquely
5.1 Classification Criteria: identified and the sum is calculated solely for that distinct
5.1.1 The selected classification of terms is based on the purpose, and
following criteria. The terms shall: 5.3.3 Non-Specific—Where the content of a sum is only
broadly identified and the sum is calculated for application to
Be readily distinguishable one from the other,
Be simple and must identify their properties and usage directly,
that general purpose.
Be appropriate in all forms of construction financial activities, and
Allow a distinction between the environments (internal or external)
NOTE 3—Reference should also be made to Practice E1946, which
within which they are applied.
describes a formal methodology for estimating the amount of each sum.
NOTE 4—For examples of specific allowance items refer to Practice
5.2 Primary Classification:
E1804.
5.2.1 Allowance—A sum of money that is intended to be
5.4 Classifications in Context:
spent on the planned scope of work. Used in the absence of
5.4.1 Placing these classifications in the context of typical/
precise knowledge, and estimated, to the best of one’s abilities,
to ensure a full and complete estimate. Allowances cover generic usage provides an additional understanding of the
distinctions between the classified terms.
events and activities that are normally internal and so are
directly controllable within the project plan. 5.4.2 Table 1 is a tabulation of the basic properties, events
5.2.2 Contingency—A sum of money that is provided to and methods defined for allowances, contingencies, and re-
cover the occurrence of unintended departures from the serves as typically applied in the building construction indus-
planned scope of work. Used in the absence of precise try. This table identifies the key differences, and some
knowledge, and estimated, to the best of one’s knowledge to similarities, makes for easy identification of the generic prin-
ensure that a financial buffer is available within a budget. ciples driving the classifications, and so allows consistent
Contingencies assist in mitigating the effects of unplanned application. It also draws attention to the need for a subsidiary
TABLE 1 Classification of Allowance, Contingency, and Reserve—Typical Application
Allowance Contingency Reserve
1. Intend to spend? Yes No No
2. Applied to work actions that are: Intended Unintended At Client Discretion
3. Expenditure is effected by:
Internal Change Yes No No
External Change No Yes No
Management (Client) Change No No Yes
4. Is an integral part of:
Construction Estimate Yes No No
Project Estimate Yes Yes No
Program Estimate Yes Yes Yes
5. Commitment Sanctioned by:
Consultants Yes No No
Project Manager Yes Yes No
Management (Client) Yes Yes Yes
6. Calculated on the basis of:
Past Personal/Corporate Experience Yes Yes Yes
Statistical Analysis of Past Projects Yes Yes Yes
Probabilistic Assessment of Change Yes No No
Probabilistic Assessment of Risk No Yes No
Management Policy No No Yes
E2168 − 10 (2016)
cost classification that is typically part of a generic Work 5.5.3 Program Estimate—An estimated cost that includes
Breakdown Structure.
all Client Costs in addition to the Project Estimate(s) that are
collectively part of the main Program of Work, that is, an
5.5 Subsidiary Classification:
overall management estimate including project estimate(s), and
5.5.1 Construction Estimate—An estimated cost for the
other program delivery, operation and maintenance, estimates.
construction work including all trade costs and the prime
A program estimate may include both specific and non-specific
contractors’ Field Requirements and Office Overhead & Profit:
reserve(s).
that is, an estimate of construction work intended to forecast
the amount of a reasonable bid figure. A construction estimate
NOTE 5—These subsidiary classifications, while not obviously needed
may include both specific and non-specific allowance(s).
to classify allowances, contingences, and reserves, are important to
5.5.2 Project Estimate—An estimated cost that includes
understanding the context in which they are used.
Design and Project Management Fees & Disbursements, and
other costs, in addition to the Construction Estimate, that are
6. Keywords
discretely packaged as a total project: that is, a total estimate
6.1 allowance; budgeting; building economics; classifica-
includes acquisition costs, construction work, fees (profes-
tion; construction estimating; contingency; cost control; cost
sional and legal), expenses, and any other disbursements. A
estimating; cost planning; cost risk; reserve; UNIFORMAT II
project estimate may include both specific and non-specific
contingency(s).
APPENDIXES
(Nonmandatory Information)
X1. GUIDANCE NOTES
X1.1 These guidance notes are included to aid in under- be treated that way and so must be included in a unique section
standing the application of the classification terms. A simple or category of their own. In architectural building parlance, an
and relatively common arrangement used in building construc- allowance is sometimes described as provision for a deferred or
tion has been used, within the mandatory information as Table evolving design decision.
1, describing a common usage. Appendix X2 provides an NOTE X1.1—This summary methodology and its distinction between
the specific and the non-specific also applies to contingencies and
example of its application within the transportation construc-
reserves.
tion sector.
X1.5 Project Level—A project manager, whose responsibil-
X1.2 Most especially with design construction estimates
ity is to deliver a project “on time and within budget,” will
there is a need to make provision for the, as yet, undefined
make provision within the project estimate for risk items when
detail. It is necessary to make allowance for this if an estimate
advising management of their financial exposure. This may be
total is to be a reasoned forecast of construction cost. An
done by including a contingency sum within the total forecast
estimate based on complete drawings and specifications will
project cost. Although estimated in several possible ways
include only those allowances specifically prescribed in that
contingency sums should reflect both the upside and down side
documentation. Both specific allowances and non-specific
of identified project risks. Contingencies are reasoned sums
allowances may be required, particularly during the early
that take into account the probability of occurrence of such
design stages.
identified risks. Such sums may likely be included for funds
appropriation purposes and are only to be expended, as needed,
X1.3 Table 1 considers just three levels of a typical Work
against those risks.
Breakdown Structure—program, project, and construction—
and the cost estimates within them. Each rolls up into the other,
X1.6 Program Level—A prudent client may also make
with program being the top level. In Table 1, it is assumed that
provision for changes in overall program direction, changes in
responsibility for maintaining these levels within budget is
requirement, and other discretionary or unavoidable changes. A
delegated down from management/client (program), to project
management reserve is the usual approach. For purposes of this
manager (project), to consultant (construction), although each
discussion, a program may include several projects but only
level has an oversight responsibility for their subordinate’s
one reserve. Such reserves are controlled by the client and the
actions. Table 1 uses this hierarchy.
amount may be based on company policy, calculation, or the
X1.4 Construction Level—When summarizing estimates recommendation of others. Again it is a measure of possible
specific allowances are usually included within the section to exposure and is for use in the event that the client needs to
which they apply, that is, an allowance for rock excavation change the program’s direction. Similar in many respects to a
would be included within the appropriate trade or elemental contingency the name reserve identifies the party concerned
category. Non-specific allowances, by their very nature, cannot with its control.
E2168 − 10 (2016)
FIG. X1.1 Cash Sums – The Three-Way Test
X1.7 A simple chart summarizing the distinction and choice
between the three terms, Allowance, Contingency, and
Res
...
This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E2168 − 10 E2168 − 10 (Reapproved 2016)
Standard Classification for
Allowance, Contingency, and Reserve Sums in Building
Construction Estimating
This standard is issued under the fixed designation E2168; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
In building construction estimating the terms allowance, contingency, and reserve are often used
almost interchangeably and are assumed to be universally understood, yet they often mean different
things to different people. Consequently they can be ambiguous in meaning and intent.
Applying these terms, as classified herein, adds a needed precision and rigor in their use as each
term is held to be specific in its meaning, intent, and use.
1. Scope
1.1 This classification establishes a classification for allowance, contingency, and reserve sums used in construction, project, and
program estimating.
1.2 This classification applies to all construction work.
1.3 This classification is not based on permanent physical elements of construction (as defined and classified in Classification
E1557). Rather, the classification items are cost components common to construction, project, and program estimates.
2. Referenced Documents
2.1 ASTM Standards:
E631 Terminology of Building Constructions
E833 Terminology of Building Economics
E1557 Classification for Building Elements and Related Sitework—UNIFORMAT II
E1804 Practice for Performing and Reporting Cost Analysis During the Design Phase of a Project
E1946 Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects
E2013 Practice for Constructing FAST Diagrams and Performing Function Analysis During Value Analysis Study
3. Terminology
3.1 Definitions—For definitions of terms used in this classification, refer to Terminologies E631 and E833.
4. Significance and Use
4.1 When preparing construction, project, and program cost estimates, it is often necessary to make monetary provision for
change or risk, or both, or other exigencies where information is incomplete.
4.2 Such allowance, contingency or reserve sums are employed by many persons engaged in the planning, delivery, and
financing of construction work.
4.3 These users include owners, developers, facilities programmers, cost planners, estimators, schedules, architects and
engineers, specification writers, operating and maintenance staff, manufacturers, educators, financial managers, and comptrollers.
4.4 Usage:
This classification is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
Economics.
Current edition approved May 1, 2010May 1, 2016. Published August 2010May 2016. Originally approved in 2001. Last previous edition approved in 20062010 as
E2168 – 06.E2168 – 10. DOI: 10.1520/E2168-10.10.1520/E2168-10R16.
For referenced ASTM standards, visit the ASTM website, www.astm.org, or contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E2168 − 10 (2016)
4.4.1 These sums are especially appropriate when performing the following activities:
Cost budgeting;
Conceptual, design, and construction cost estimating;
Preparing complete forecast cost for economic evaluation,
investment analysis, and approval; and
Controlling cost during planning, design, and construction.
4.4.2 In any of these activities a needed requirement, or component, of the planned construction can be known while the defined
solution, design or specification, for providing this may not. The usual, and appropriate, response in these situations, is the
inclusion of a monetary sum, within an estimate, to provide for this (these) requirement(s).
4.4.3 Such sums may be general or specific in scope, may be planned to be spent or may only be included as possible mitigation
for unplanned events and requirements.
4.4.4 To distinguish between these sums, and in recognition of their differing purpose, they are described, and classified here,
using the terms allowance, contingency, or reserve.
NOTE 1—Section 5 includes a generic statement of purpose for each of the three terms and provides a sub-classification that distinguishes between sums
included for specific purposes and for non-specific, that is, general purposes. In cost budgeting, conceptual and design estimating especially, an estimator
may intuitively recognize the need for a general purpose sum. This recognition comes in the absence of any known specific requirement other than the
need to ensure the estimate total is a reasoned forecast of a reasonable bid result.
4.5 This classification defines allowance, contingency, and reserve sums as items common to construction, project, and program
estimates through planning, design, construction, and completion. The terms are sufficiently generic to be applied in all forms of
construction work.
5. Basis of Classification
5.1 Classification Criteria:
5.1.1 The selected classification of terms is based on the following criteria. The terms shall:
Be readily distinguishable one from the other,
Be simple and must identify their properties and usage directly,
Be appropriate in all forms of construction financial activities, and
Allow a distinction between the environments (internal or external)
within which they are applied.
5.2 Primary Classification:
5.2.1 Allowance—A sum of money that is intended to be spent on the planned scope of work. Used in the absence of precise
knowledge, and estimated, to the best of one’s abilities, to ensure a full and complete estimate. Allowances cover events and
activities that are normally internal and so are directly controllable within the project plan.
5.2.2 Contingency—A sum of money that is provided to cover the occurrence of unintended departures from the planned scope
of work. Used in the absence of precise knowledge, and estimated, to the best of one’s knowledge to ensure that a financial buffer
is available within a budget. Contingencies assist in mitigating the effects of unplanned events and other risks that are external to,
and are not directly controllable within, a project plan.
5.2.3 Reserve—A sum, usually held by management (client) to be disbursed only when project requirements are changed. Used
to provide insurance against a project or program failing to complete on budget or for the revision of a budget in the case of
changed management or program direction and requirement.
NOTE 2—For the purposes of the classification an internal environment is that which exists within an organization. An internal environment may readily
allow cost control through revision of design or specification, or both. External environment changes impact the project cost and may be the result of
contractual obligation, uncovered site conditions or changed legislation, for example. External environment changes may allow little or no opportunity
for mitigation.
5.3 Secondary Classification:
5.3.1 Each of the Primary Classifications may be further sub-classified as:
5.3.2 Specific—Where the content of a sum is uniquely identified and the sum is calculated solely for that distinct purpose, and
5.3.3 Non-Specific—Where the content of a sum is only broadly identified and the sum is calculated for application to that
general purpose.
NOTE 3—Reference should also be made to Practice E1946, which describes a formal methodology for estimating the amount of each sum.
NOTE 4—For examples of specific allowance items refer to Practice E1804.
5.4 Classifications in Context:
5.4.1 Placing these classifications in the context of typical/generic usage provides an additional understanding of the distinctions
between the classified terms.
5.4.2 Table 1 is a tabulation of the basic properties, events and methods defined for allowances, contingencies, and reserves as
typically applied in the building construction industry. This table identifies the key differences, and some similarities, makes for
easy identification of the generic principles driving the classifications, and so allows consistent application. It also draws attention
to the need for a subsidiary cost classification that is typically part of a generic Work Breakdown Structure.
5.5 Subsidiary Classification:
E2168 − 10 (2016)
TABLE 1 Classification of Allowance, Contingency, and Reserve—Typical Application
Allowance Contingency Reserve
1. Intend to spend? Yes No No
2. Applied to work actions that are: Intended Unintended At Client Discretion
3. Expenditure is effected by:
Internal Change Yes No No
External Change No Yes No
Management (Client) Change No No Yes
4. Is an integral part of:
Construction Estimate Yes No No
Project Estimate Yes Yes No
Program Estimate Yes Yes Yes
5. Commitment Sanctioned by:
Consultants Yes No No
Project Manager Yes Yes No
Management (Client) Yes Yes Yes
6. Calculated on the basis of:
Past Personal/Corporate Experience Yes Yes Yes
Statistical Analysis of Past Projects Yes Yes Yes
Probabilistic Assessment of Change Yes No No
Probabilistic Assessment of Risk No Yes No
Management Policy No No Yes
5.5.1 Construction Estimate—An estimated cost for the construction work including all trade costs and the prime contractors’
Field Requirements and Office Overhead & Profit: that is, an estimate of construction work intended to forecast the amount of a
reasonable bid figure. A construction estimate may include both specific and non-specific allowance(s).
5.5.2 Project Estimate—An estimated cost that includes Design and Project Management Fees & Disbursements, and other
costs, in addition to the Construction Estimate, that are discretely packaged as a total project: that is, a total estimate includes
acquisition costs, construction work, fees (professional and legal), expenses, and any other disbursements. A project estimate may
include both specific and non-specific contingency(s).
5.5.3 Program Estimate—An estimated cost that includes all Client Costs in addition to the Project Estimate(s) that are
collectively part of the main Program of Work, that is, an overall management estimate including project estimate(s), and other
program delivery, operation and maintenance, estimates. A program estimate may include both specific and non-specific reserve(s).
NOTE 5—These subsidiary classifications, while not obviously needed to classify allowances, contingences, and reserves, are important to
understanding the context in which they are used.
6. Keywords
6.1 allowance; budgeting; building economics; classification; contingency; construction estimating; contingency; cost control;
cost estimating; cost planning; cost risk; reserve; UNIFORMAT II
APPENDIXES
(Nonmandatory Information)
X1. GUIDANCE NOTES
X1.1 These guidance notes are included to aid in understanding the application of the classification terms. A simple and relatively
common arrangement used in building construction has been used, within the mandatory information as Table 1, describing a
common usage. Appendix X2 provides an example of its application within the transportation construction sector.
X1.2 Most especially with design construction estimates there is a need to make provision for the, as yet, undefined detail. It is
necessary to make allowance for this if an estimate total is to be a reasoned forecast of construction cost. An estimate based on
complete drawings and specifications will include only those allowances specifically prescribed in that documentation. Both
specific allowances and non-specific allowances may be required, particularly during the early design stages.
X1.3 Table 1 considers just three levels of a typical Work Breakdown Structure—program, project, and construction—and the cost
estimates within them. Each rolls up into the other, with program being the top level. In Table 1, it is assumed that responsibility
for maintaining these levels within budget is delegated down from management/client (program), to project manager (project), to
consultant (construction), although each level has an oversight responsibility for their subordinate’s actions. Table 1 uses this
hierarchy.
E2168 − 10 (2016)
X1.4 Construction Level—When summarizing estimates specific allowances are usually included within the section to which they
apply, that is, an allowance for rock excavation would be included within the appropriate trade or elemental category. Non-specific
allowances, by their very nature, cannot be treated that way and so must be included in a unique section or category of their own.
In architectural building parlance, an allowance is sometimes described as provision for a deferred or evolving design decision.
NOTE X1.1—This summary methodology and its distinction between the specific and the non-specific also applies to contingencies and reserves.
X1.5 Project Level—A project manager, whose responsibility is to deliver a project “on time and within budget,” will make
provision within the project estimate for risk items when advising management of their financial exposure. This may be done by
including a contingency sum within the total forecast project cost. Although estimated in several possible ways contingency sums
should reflect both the upside and down side of identified project risks. Contingencies are reasoned sums that take into account
the probability of occurrence of such identified risks. Such sums may likely be included for funds appropriation purposes and are
only to be expended, as needed, against those risks.
X1.6 Program Level—A prudent client may also make provision for changes in overall program direction, changes in requirement,
and other discretionary or unavoidable changes. A management reserve is the usual approach. For purposes of this discussion, a
program may include several projects but only one reserve. Such reserves are controlled by the client and the amount may be based
on company policy, calculation, or the recommendation of others. Again it is a measure of possible exposure and is for use in the
event that the client needs to change the program’s direction. Similar in many resp
...
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