Fallback. Plan B. Safety net. Whatever you call it, having a second option for when things don’t go as expected is always a good idea. This is what’s broadly known as a contingency plan.
There’s no shame in having a contingency plan in place. And it certainly doesn’t mean you don’t have confidence in your first option. It just means you’re sensible: markets are unstable; disasters happen; politics change, technology fails. Contingency plans are loved by seasoned leaders who know that no project — no matter how well organized — is entirely without risk.
Having a backup option (or options) in place not only dramatically decreases the risk of a complete project or business failure, but it also shows you’re practicing due diligence. If things do go wrong, having a pre-planned escape route helps you stay calm, collected, and prepared for your team.
What is a contingency plan?
Contingency plans are a part of your risk management strategy. Risk management is all about identifying, avoiding, mitigating, and accepting risk. A contingency plan is about developing a procedure to deal with any likely situation once it occurs.
They’re often created to help organizations respond to negative events. Governments create them to respond to natural disasters or economic crises. Businesses create them to deal with situations that could impact their financial livelihood, reputation, or legal responsibility. But, unlike a crisis management strategy or a mitigation plan, contingency plans aren’t always a response to negative events.
There are positive contingency plans, too. For example, when a business achieves far higher sales than it had anticipated, an advertising campaign goes viral, or teams can release software early. The contingency plan, in this case, helps the business take full advantage of the opportunity, rather than failing to act quickly enough to success.
In short, a contingency plan is a proactive strategy to help you deal with any kind of disruptive event, positive or negative.
How to create a contingency plan
Step 1: Draft your plan
Work out the risks & opportunities
Start by asking yourself ‘what if?’ and go from there. Do some research to identify any key threats or opportunities (you may want to create a SWOT diagram for this). Speak to people across the organization to get a fuller picture. Risks and opportunities can be external and internal, so make sure you cover as many bases as possible.
You should create a contingency plan for each threat/opportunity you identify, starting out with the most critical/likely, then progressing to plans for lesser threats or opportunities.
Identify and prioritize your resources
Work out what’s available to you, such as resources, budget, and tools, then organize it in order of importance. It’s also useful to note where these resources are, so you can access everything quickly in the event of an emergency. This includes the contingency plan itself.
Identify who will need to be involved and what they need to do
You may need to enlist the help or guidance of people outside of your direct team, including external specialists. For example, if there’s a cybercrime attack, you’ll need to work with the IT team more closely than normal, which means pulling them from their regular schedule and applying them to the plan. You need each managers input and agreement.
Work out when, where and how it will happen.
Have guidelines for managing and reporting during the implementation. This includes a reporting process in place for customers, stakeholders, and PR teams.
Fine-tune your plan
Go over your plan and see whether you can spot any alternative routes. Your contingency plan can have several different versions; a little flexibility is a good thing. Don’t forget to assess the risks of your contingency plan, too: work out if there are any weak points or dates that, if missed, could cause problems.
Step 2: Share your plan
Once approved, share the final version with all relevant internal parties. Make sure it’s properly communicated throughout the organization, so everyone can act fast if it needs to be implemented.
Step 3. Revisit the plan
Businesses, markets, employees, and resources change. Be sure to visit your plan periodically to ensure it’s fully up to date. You should also use this opportunity to check for any new threats or opportunities.
3 challenges you need to understand
- Getting everyone to understand their importance. Because contingency plans deal with ‘what if’ scenarios, many view them as a luxury. But remember, a contingency plan is a vital component of any risk strategy and could be the thing that saves your business or project.
- Convincing managers to invest time in them. Managers and team members can become overconfident in Plan A, and therefore don’t put in due time or effort into developing a practical Plan B because they think it takes time away from developing Plan A. Risk management can be a hard sell when under tight deadlines.
- Making sure everyone knows about them. It doesn’t matter how detailed your plan is if no one knows about it. Make sure each member understands how to find and follow the plan. Lack of awareness or buy-in could cause serious delays.
Creating a contingency plan may seem like a luxury, but failing to have a backup puts your project or business in undue risk. The time you put in now will pay off if you do ever need it — and if you don’t, you’ll still have peace of mind and look like an experienced manager who knows how to take smart risks.
Using the right tools can help your contingency plan creation run smoothly. Taking advantage of cloud-based project management software means you can create your strategy and house it right alongside your projects. Wikis are an excellent and easily accessible place everyone can access — no matter where they’re working from. And, in the event that you need to spring into action with a plan B, you’ll be able to track changes and monitor progress in real-time.