Jory MacKay on September 03, 2025 Why every project needs a contingency plan (and how to make one)
No one wants to plan for failure. But even with the most detailed plans, the best people, and a healthy budget, projects can (and do) go wrong. And that’s not to mention outside factors you don’t have any control over.
With projects increasingly threatened by inflation, cyber risks, and worldwide conflict, it’s important to have a “Plan B” in place.
A contingency plan is a series of pre-planned actions a team takes in response to an event that impacts a project. While most teams are brilliant at project planning and basic risk management, a contingency plan takes this one step further by ensuring everyone is ready to act if things go wrong.
Jump to a section:
In this article, we’ll explore the importance of having a project contingency plan, how and when to use one, and use examples from real-world deliveries to show why they’re so effective at keeping projects on track.
What is a contingency plan? What should they include?
A contingency plan is a series of pre-planned actions that can be taken in response to an event that impacts a project.
Contingency plans are common in all walks of life, not just projects. Many companies create plans for events such as natural disasters, staffing shortages, and unexpected financial situations.
Contingency plans are heavily linked to a project risk’s management process, where risks are identified and responses are planned.
For the most dangerous or impactful risks, a contingency plan ensures you have a series of agreed actions ready to be implemented if things go wrong.
Let’s dive deeper and break down the key characteristics of a project contingency plan with a real-life example.
1. Risks
All projects face risks, which, if they occur, can impact its success. The first component of any contingency plan is a risk that’s identified as a threat to the project.
Real Life Example: A project to set up a new company payroll system identifies a risk of network connectivity loss to the main production server.
2. Risk analysis
Not all risks are born equal. Each must be analyzed to determine its likelihood and impact. The greater the threat, the more in-depth and practiced a contingency plan should be.
Real Life Example. The project team analyzes the risk of connectivity loss and the impacts on the project.
In the past 12 months, there have been eight instances of employees losing connection to key services, equating to ~two days of lost time per incident. During this time, no project configuration activities could be undertaken. Therefore, it’s classed as a medium risk.
3. Action plan
The next part of the contingency plan is to identify actions that could be taken in the event the risk occurs. There could be more than one action, depending on the severity of the event.
Real Life Example. The project team agrees that in the event of connectivity loss to the production server, a connection to the backup server should be established instead. This is completed by notifying the hosting provider, who offers a 20-minute turnaround at a cost of $1,000.
4. Communication plan
When something goes wrong, project teams must keep their stakeholders up to date. Alongside an action plan, it’s best practice to create a communication plan, including who will be notified, when, and how often while the contingency plan is in place.
Real Life Example. The project team identifies a list of stakeholders to notify in the event of a production server outage. They agree that communications will be sent out via email and instant messenger, with a call to the IT and HR Directors if an escalation is needed.
5. Contingency plan trigger point
Once the risk, action plan, and communication plan are known, it’s important to agree when the contingency plan should be invoked. This should be quantifiable to ensure objective decisions are made.
Real Life Example. The project team agrees that the network connectivity contingency plan would be used if the production server is down for more than two working hours.
6. Project impacts
In most instances, when something goes wrong and a contingency plan is operated, there’s an impact to project timelines, costs, benefits, or a mixture of the three. A contingency plan clearly calls out the expected impacts, so all stakeholders are aware up front of the consequences of invoking the contingency plan.
Real Life Example. A loss of connectivity is estimated to impact the project timeline by two days. Instead, the contingency plan can be invoked in 20 minutes, at a cost of $1,000 to return the connectivity using the backup server. This is made clear to key project stakeholders in the event it needs to be actioned.
The 5 main benefits of having a contingency plan
Outside of being able to pivot quickly, there are a number of other benefits contingency plans bring, such as:
- Avoids business slowdowns during disruptions. While it’s easy to focus on the project-level benefits, contingency plans also help keep business operations turning. It’s inevitable that things will go wrong at some point, but contingency plans ensure the bumps in the road are minimized.
- Boosts team and company resiliency. When a project gets derailed, it can negatively impact your team’s morale. A contingency plan builds confidence and resilience, with everyone clear on what to do to bounce back quickly.
- Reduces the financial cost of emergencies and issues. Whether it’s lost revenue, increased costs, or legal penalties, it can get expensive when disaster strikes. Contingency plans mitigate financial losses, helping you get back on steady footing before you have to shell out thousands of dollars.
- Creates trust with stakeholders and investors. Stakeholders, investors, and shareholders want to know businesses are ready to weather the storms they may face. For your project, having contingency plans in place can give stakeholders confidence in your ability to deliver.
- Keeps you compliant. For many organizations, especially those in government, financial services, and healthcare, having contingency plans is essential for compliance. This means you avoid the risk of fines while giving regulators confidence that your project is robust and resilient.
When to use a contingency plan (vs. risk management)
Building a contingency plan is great for putting an action plan in place to manage the fallout of a risk. But it’s often mistaken for other processes — including general risk management and crisis management.
Each of these has their own unique benefits, and it’s important to understand the differences and when to use each:
| Risk management | Contingency planning | Crisis management | |
|---|---|---|---|
| Definition | Risk management is the process of identifying and analyzing risks. | Contingency planning is an extension of risk management, creating a “Plan B” for known risks. | Crisis management is a reactive process enacted to respond to, and recover from, unexpected events. |
| What’s involved | Risk management is an ongoing process where teams continually identify risks and analyze their likelihood and impact. | Once a risk is identified, teams work with stakeholders to devise plans for how to respond to risk events. | Crisis management is an accelerated emergency process to control the damage and learn lessons from an unexpected event. |
| When it’s used | Continually throughout a project’s lifecycle to try to predict potential issues. | Used on an ad-hoc basis (as risks are identified), and is implemented if an event occurs. | Used in emergencies when an unexpected event occurs. |
| Who’s involved | Project manager, project stakeholders, subject-matter experts. | Project managers, stakeholders, sponsors, and subject-matter experts from impacted business areas. | Project managers, sponsors, stakeholders, and often specialist crisis management professionals. |
The bottom line is that a contingency plan is essential to ensure you’re prepared and have the ability to quickly pivot as a team when something goes wrong. While many see contingency planning as wasted work (especially when there’s no guarantee a risk will happen in the first place), you’ll be grateful to have one in place if things do go wrong!
4 types of contingency plans you might need for your project
While every project is different, most have common elements that should be planned for.
To help with your contingency planning, and your risk identification, here are some types of contingency plans you should consider putting in place for any project.
1. Resourcing contingency plan
For many projects, loss of critical resources (especially team members and subject-matter experts) can quickly derail your plan. Here are some examples of contingency plans in this area:
- Have the ability to draw resources from other projects
- Use agencies to quickly backfill team members who leave, go sick, or experience personal emergencies
- Use a consultancy with a large resource base to deliver the project instead
2. Technology contingency plan
Pretty much every project is a technology project in one way or another. With technology playing such a crucial role, it’s important to have plans in place for outages, cyberattacks, and unexpected downtime. This could include:
- Setting up system backups and multiple environments
- Diversifying the types of technologies used for key services
- System recovery plans in the event of a cyberattack
3. Supply chain contingency plan
All companies use third-party suppliers to provide materials, technology, people, or consultancy — but what happens if your chosen supply fails? Here are some contingency planning areas to consider:
- Using suppliers that use a range of resilient subcontractors
- Identifying backup suppliers who can step in to support your project
- Contracting with multiple suppliers to create redundancy
4. Environmental contingency plan
With environmental trends such as global warming, some parts of the world are seeing increasingly volatile environmental conditions. This means all projects should consider the impacts of natural disasters and extreme weather, especially those in construction, logistics, and infrastructure. Here’s what to consider:
- Insurance to mitigate losses from extreme weather events
- Alternate logistic channels to move goods
- Connections with emergency responders and public environmental bodies
Contingency plans are much more than an afterthought, they’re a key part of their risk management strategy.
How to create a contingency plan for your next project
Contingency plans are simple in nature, but require proper planning and insights to be truly effective.
Here’s how to get started on creating contingency plans for your next project:
Brainstorm the risks for your focus process
All contingency plans start with risk management, specifically, risk identification.
While taking time to think about what could go wrong is a little doom and gloom, it’s important to identify and document risks to set yourself up for success.
Here are some resources to help:
- Get familiar with common risks. Projects and industries often face the same risks. While experience can help you identify what to look out for, you can get a head start by checking out our common project risks guide.
- Take advantage of subject-matter experts (SMEs). In each area of your project (e.g., tech, procurement, etc.) sit down with experts to identify things that could threaten the success of your project. This is often done through risk identification workshops.
- Refer to previous lessons learned. Lessons learned from previous projects are another great source of info on what could go wrong, and what teams did back then to avoid disaster.
Evaluate and assess the impact and likelihood of each risk
Simply writing down your risks isn’t enough; you need to spend time properly analyzing their potential impact on your project. Risk analysis is a mix of art and science, using your gut feel alongside objective data to quantify the danger of each risk.
Here are some resources to help:
- Start with the likelihood and impact. Where many teams go wrong is they get focused on the high-impact risks and forget to consider the likelihood. Without a pragmatic sense of likelihood, you might waste time planning for a 1 in 500 year event.
- Analyze each risk fully. The Planio risk management guide is a great resource to help you analyze and plan for different risks — it even includes a free risk management plan template to help you stay organized throughout your project.
Use a business impact analysis to consider the wider implications
While a project manager’s number one priority is delivering their project, when managing risks, it’s also important to think about the impact on the wider business. This is especially true for replacement/upgrade projects where you’re interfering with live systems.
Here are some resources to help:
- Conduct a Business Impact Assessment (BIA). A BIA is a process used to evaluate the effect of a disruption on business operations. It helps identify critical functions to prioritize where to focus contingency planning effort.
- Grow your stakeholder network. Completing a business impact analysis is also a great way to begin making connections with stakeholders across your business. Reaching out to different areas and explaining your project is a great way to build trust and identify additional risks, too.
Prioritize your risks and begin drafting a contingency plan
With your risks identified and analyzed, it’s time to take the most important ones and begin drafting your contingency plans. This includes identifying action plans for each risk, with the biggest risks often requiring two or three actions to manage them fully.
Here are some resources to help:
- Learn to prioritize. Depending on the size of your project, you may have tens or even hundreds of potential risks. As such, it’s important to prioritize them accordingly, using an objective scoring system if possible. Here are some different techniques to help you prioritize effectively.
- Write strong, concrete actions. Many projects suffer from poor action items that cause confusion and delays. To help when writing your contingency plans items, follow the Planio guide to writing better action items.
Define action triggers and communications plans for each risk
All good contingency plans should include defined trigger points and communications plans. This ensures the plans are invoked at the right time and the right stakeholders are involved from the start.
Here are some resources to help:
- Be careful with triggers. Contingency plans often require a pretty significant change of course (and investment), so you would rather not invoke them too early. When deciding on your triggers, make sure they’re pragmatic, so you don’t end up incurring costly expenses for a false alarm.
- Get structured on communications. When kicking off a contingency plan, it’s essentially that all the right people are informed as early, and as clearly, as possible. As such, we’d recommend making a formal communication plan as part of each contingency, clearly defining who will be communicated to, how, and by what method.
Document, share, and gain approval for your contingency plan
Once your contingency plan is drafted, it needs to be shared and approved by your project stakeholders. This also ensures everyone is lined up on the plan if you need to put it into practice.
Here are some resources to help:
- Agree on an owner. As part of identifying each risk, you’ll have assigned an owner as the person responsible for managing the actions. It’s important that this person has reviewed and agreed on the contingency plan, so they’re ready to stand behind it if needed.
- Use Planio to help. Creating, sharing, collaborating, and approving documents is just one area Planio brings real value to high-performing project teams. Planio’s Knowledge Management functionality allows you and your team to collaborate on documents, bringing everyone together in one place to build and agree on contingency plans.
Monitor and update your contingency plans as needed
Like all things in project management, contingency plans aren’t just a one-and-done exercise. As your project develops, it’s important to review and update your contingency plans to ensure they’re fit for purpose and that stakeholders know what to do if the worst happens.
Here’s a golden tip to finish: Rehearse your most important plans. For your most critical risks, it can be valuable to rehearse invoking your contingency plan ahead of time. These mock-scenarios are a staple of good crisis management, ensuring people know what to do in the event of a real emergency!
Final thoughts: Don’t fall for these common contingency planning mistakes
For the best project managers, contingency plans are much more than an afterthought, they’re a key part of their risk management strategy. Without one, your project is living on shaky foundations, without the resilience to battle through if things go wrong.
With our simple 7-step process, it’s easy to enhance your risk management approach and create plan B’s for your most dangerous project risks.
If you’re getting started building your first contingency plan, make sure to avoid these three common mistakes:
- Don’t treat your “Plan B” as a second-rate task. Give it the importance it needs, especially in the early planning stages.
- Take time upfront to get buy-in from stakeholders. Without buy-in, you’ll waste time convincing stakeholders rather than solving problems when you do need to invoke your contingency plan.
- Bring other teams into the process. You don’t know your own blind spots, so use subject-matter-experts to gain a rounded view.
Tools like Planio are perfect for building, sharing, and managing project plans — and contingency plans are no different.
Planio’s features for task, document, team, and communication management enable teams to be more efficient and effective, no matter what the world throws at them.
Try Planio with your own team, free for 30 days (no credit card required!)
