Management reserve

Money held above the cost baseline for exposure nobody identified during planning, released by the sponsor or the funding body and never by the project manager.

A management reserve covers the trouble nobody named. It cannot be tied to a specific risk, so it is usually set as a percentage of the total budget drawn from what similar work has historically needed, rather than calculated from an analysis. Holding it above the cost baseline is the whole mechanism: the project manager cannot reach it, releasing any of it is a governance decision, and an approved release enlarges the baseline rather than being absorbed quietly inside it. Whoever controls the reserve controls how much unplanned commitment can happen without a conversation.

See also

Contingency reserve

Money held inside the cost baseline, or time held inside the schedule baseline, for risks already identified, assessed and priced, and drawn on by the project manager as they occur.

Term
Cost baseline

The approved, time phased budget a project is measured against, made up of the priced work packages plus their contingency reserve, and excluding management reserve.

Term

Where this comes up

Contingency reserve vs management reserve: what sits inside the baseline, and who releases it

Contingency reserve sits inside the cost baseline, for risks already named and priced. Management reserve sits above it, for the ones nobody named. Level and authority, not size.

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