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In project management budgeting there is sometimes some leeway put into the budget for things that could potentially go wrong, this is often called a
In project management budgeting there is sometimes some leeway put into the budget for things that could potentially go wrong, this is often called a "reserve" or "management reserve" this is usually a set amount of funds set aside for the project team to use in case the project encounters unforseen expenses. In most cases this is done to alleviate the management team from having to find funds to use to cover the additional expense as the money is already there for most, if not all of it. There are some benefits to using a reserve in a project. The main one being budget control, having a reserve in place helps you and your team keep your budget under control. The reserve means that the company is well-prepared for anything that might arise and it wont affect operations of anything else. Having a reserve also heavily helps with risk management. At the end of the project if the reserve was not use, this would put the compaines budget in the positives which could help the company if something were to happen as they have extra money budgeted for a project that never got used. If a project were to
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