Manufacturing Project Portfolio & Capex worked example

Project Contingency Cost at 46% probability-weighted occurrence: a worked example

What does the result look like when probability-weighted occurrence reaches 46%? The full calculation is worked below with real intermediate numbers. A project manager setting a defensible contingency reserve before locking a capital project budget.

The inputs for this scenario

  • Identified project risk line items: 12 risks (unchanged)
  • Average cost exposure per risk: 8,500 $/risk (unchanged)
  • Probability-weighted occurrence: 46 % (raised for this scenario; the documented default is 40)
  • Management reserve floor: 20,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Contingency = risk items x average exposure per risk x occurrence% + management reserve) to the inputs above produces each figure below.
  • At this operating point the engine returns 66,920 $ for total project contingency cost, the number this scenario is built around.
  • At this operating point the engine returns 5,577 $ / piece for project contingency cost per unit.
  • At this operating point the engine returns 46,920 $ for variable project contingency cost.
  • At this operating point the engine returns 20,000 $ for fixed project contingency cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where probability-weighted occurrence sits at 40% and the headline result is 60,800 $, this scenario comes in 10.07% above the baseline at 66,920 $.
  • A figure at this level is achievable when probability-weighted occurrence is genuinely sustained, not just peaked for a shift. It only prices risks you have identified; the management reserve is your only buffer against unknown-unknowns, so a thin risk register understates true exposure.

Results at a glance

  • Total project contingency cost: 66,920 $ (headline result)
  • Project contingency cost per unit: 5,577 $ / piece
  • Variable project contingency cost: 46,920 $
  • Fixed project contingency cost adder: 20,000 $

Run it with your numbers

  • Every input above is editable in the live Project Contingency Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.