International Project Management Association (IPMA) Practice Exam

In project management, a contingency plan is primarily used for:

1. Increasing scope

2. Implementing positive changes

3. Mitigating identified risks

4. Cutting project costs

The correct answer is: Mitigating identified risks

A contingency plan is a proactive approach in project management that is designed to address potential risks that have been identified during the planning phases. This plan lays out specific actions to be taken in response to various risk scenarios, thus ensuring that the project can continue towards its objectives in the face of uncertainties or unforeseen events. By having a well-defined contingency plan, project managers can reduce the impact of negative risks or threats, allowing for a more resilient project execution process. It serves as a safety net to manage the consequences of risks effectively, ultimately minimizing disruptions and helping to keep the project on track. While other options reflect different aspects of project management, they do not capture the fundamental purpose of a contingency plan. Increasing project scope can lead to uncontrolled changes, implementing positive changes is more aligned with change management, and cutting project costs does not inherently connect to managing identified risks. The contingency plan is distinctly focused on preparing for and mitigating risks, making it an essential tool in risk management strategies.