What Is Contingency Planning? [+ Examples]

Flori Needle

Published: January 13, 2023

The COVID-19 pandemic has shown, more than ever, the importance of being prepared with a contingency plan for the unexpected, especially when it comes to business continuity.

business professional creating a business contingency plan

While some unexpected interruptions can be due to situations outside of your control, some issues arise that may be caused by internal errors. Unexpected problems can also be positive, like a sudden influx of interest in a new product.

Download Now: Free Contingency Plan Template

Regardless of the scenario, it's essential to prepare for everything, and contingency planning helps you do so. This post will explain what contingency planning is, outline the steps you can follow to create your own plan, and give examples that you can use for inspiration.

  • Contingency Planning
  • Business Contingency Plan
  • Making a Contingency Plan
  • Contingency Plan Timeline
  • Contingency Plan Example

Contingency Plan Definition

What is a contingency plan? Simply put, a contingency plan is an action plan designed to help organizations respond to a potential future incident. Think of it as a backup plan, or plan B to guide organizations through a worst-case scenario.

Contingency plans are helpful for all types of organizations, from businesses to non-profits, to government organizations. While these scenarios may never come to fruition, it’s important to have a plan in place so that your team isn’t panicking or scrambling to deal with an unfavorable event at the last minute.

What is contingency planning?

Contingency planning is a proactive process of creating a strategy to help you prepare for any scenario that can affect your business, regardless of the likelihood of its occurrence.

These plans shouldn't focus solely on situations that may harm your business. For example, you may experience a significant increase in revenue during a specific period due to changes in market behavior. This is a good scenario, but you will still need to adapt your operations to scale and appropriately meet the new demands of your growing audience.

Contingency Planning vs. Crisis Management

Contingency planning is also different from crisis management , as it is not a reaction to something that has already happened but more so a plan for if and when something may happen. However, a contingency plan can help you with crisis management when issues arise.

Contingency Planning vs. Risk Management

Risk management is the identification, mitigation, and assessment of potential risks that may affect your organization. This process helps an organization prevent losses before they occur and aids in assessing whether or not certain risks are worth taking. Contingency planning can be a component of risk management since that process helps organizations survive these potential risks.

To ensure your business is prepared for everything, it's crucial to understand how to create a contingency plan.

What is a business contingency plan?

A business contingency plan is a strategy that outlines the steps your business’ teams will take in the event of a crisis occurring. It is essentially the backup plan that goes into action when the worst-case scenario occurs. The goal of your contingency plan is to help your business stay up and running after an issue arises.

Business Continuity Plan vs. Contingency Plan

Although their names vary by few letters, business continuity and contingency plans are different concepts. Continuity is the ability of your business to continue functioning after an incident that has disrupted operations occurs. A contingency plan is an action plan that goes into place if an incident were to happen.

Contingency plans can significantly impact whether your business can achieve continuity. Being able to react and take action during a crisis can dictate whether or not your business can emerge from the other side and continue normal business operations.

You can think of it like this: your continuity plans contain five sections: program administration, governance, business impact analysis, strategies and requirements, and training and testing. If your business also uses contingency plans, it could be part of the strategies and requirements section, which dictates how your business will respond to a crisis if it occurs.

Contingency Planning: How to Make a Business Contingency Plan

Creating a contingency plan is responding to the question of "What if?"

What if your storefront floods? Or what if your supplier goes out of business? The responses to the what-ifs are contingency plans. These scenarios aren't necessarily going to happen, but if there is a possibility that they'll affect your business, you're prepared if they do.

Below we'll discuss the steps that go into contingency planning.

Contingency Planning in 7 Steps

1. identify critical business functions..

This first step is the most important aspect of your planning, as it sets the tone for why your plans need to exist in the first place.

During this phase, identify all critical areas essential to keeping your business up and running every day. As these operations are imperative to success, you need to have plans to ensure that these operations continue, regardless of whatever scenarios arise.

You can think of it like this: these critical areas keep your business up and running on a day-to-day basis. Other areas are important, but these are the main functions that keep you afloat. Given this, you want to be prepared for anything and everything that may happen that can affect the critical areas, whether positive or negative. Contingency planning is exactly that.

Identifying these areas helps you move on to the next step as you begin brainstorming possible scenarios that can impact them.

2. Conduct a scenario assessment.

Once you've identified the critical operations of your business, you'll want to conduct a scenario assessment to identify situations that will affect these functions and put stress on your day-to-day operations.

For example, if your business operates out of a storefront, keeping your storefront up and running is a critical area of your business's success. Maybe you launch a new product that attracts more interest than you thought, and you need to deal with higher in-store traffic and a lack of products to satisfy the market. While it is a positive situation that will draw in more revenue, it can still have negative repercussions for your business if you don't deal with it when it happens.

You can think of this stage as similar to a risk assessment, but the possibilities are positive and negative. It may be helpful to meet with people who work in these critical areas and understand what they think may cause interruptions to their job duties and barriers to their success. Ask them how they feel situations will impact them and how they would deal with each scenario.

If you come up with a long list of threats, you can prioritize them based on their likelihood of occurring and how significant their impact would be on your business.

3. Create contingency plans for each scenario.

During this phase, you'll create contingency plans. Begin with the highest priority "threats," or those most likely to occur and most likely to cause significant stress to your business.

Outline the scenarios, people to inform, and the roles and responsibilities involved parties will have when they respond. We'll go over an example below, but a helpful template to follow can be:

  • Outlining the scenario,
  • Determine the probability of it occurring,
  • Explain how you'll prepare ahead of time,
  • Detail what the response will be if and when it happens.

Once you've created your plans, distribute them to key stakeholders in each scenario, so everyone understands what they are responsible for and can prepare ahead of time.

4. Get your plan approved.

Once you’ve come up with a desired plan of action, it’s time to get approval from stakeholders and management. If you’re creating both department-level and company-wide plans, this is especially important. Your plan won’t be a success unless there is buy-in from key members of your team and management. Once all parties agree that the course of action described in the contingency plan works for everyone, you can move forward with confidence.

5. Share the plan with your team.

Once your plan is approved, it’s time to distribute it. Putting it in a shared folder accessible to everyone creates transparency and makes it readily available if the time comes.

Make sure the parties involved know what they’re responsible for in the plan, that way you can execute the plan seamlessly should the worst-case scenario occur.

6. Test your plans.

As with all plans, it's essential to continuously test (more on that in the next section) and update them over time. As businesses scale and change, your business needs will likely change, and specific scenarios will no longer have as significant of an impact. There may also be new scenarios to plan for that you hadn't anticipated or thought of when you were a smaller operation.

It can be helpful to create a timeline that you'll use to spend dedicated periods reviewing your plans, testing them, and communicating with the necessary stakeholders about any changes you've made to the plans.

7. Update your plan as needed.

Consider your contingency plan a work in progress. You’ll need to adapt it as new risks arise and to ensure it still makes sense for your business needs. Whenever a new manager or executive joins the team, be sure to share it with them as needed so they know what (if anything) is expected of them.

Contingency Planning Timeline

As planning is always an involved process, you may be wondering how much time you should devote to each step. Let's discuss a timeline below.

Week One: Identify Key Operations

Give yourself about a week to identify the operational areas essential for business function. You likely already know what these areas are, but you want to do enough research to identify them all.

Weeks Two & Three: Brainstorm Scenarios

Take two to three weeks to brainstorm the scenarios you're going to create plans for. Spend as much time as possible speaking to the necessary stakeholders to understand their ideas about the scenarios and how they'd like them dealt with. You'll want to conduct probability assessments and market research to understand if your competitors have ever dealt with something similar. You want to make sure you have all the necessary information before drafting your plan, so this step should be the longest.

Week Four: Draft Plan

Give yourself a week to draft your plans. The first two steps should give you all the information you need, so the third step is simply fine-tuning your research and creating the final plan. You can also share what you've created with your stakeholders and iterate on what you have based on their feedback.

The final step to creating your plan, maintaining and testing, is a continuous effort. As mentioned above, your business will likely be impacted by different things at different times, so it's always important to review plans and ensure they still relate to your needs. For example, maybe you plan to do quarterly reviews and training so new hires, and existing employees, are all on the same page.

Contingency Planning Example

business contingency plan steps

It may be helpful to have an example of a contingency plan, so we'll go over one below. The examples are of a positive and negative situation, so you can get a sense of how a plan applies to both.

Contingency plan example

Contingency Planning Mistakes to Avoid

Even with the best intentions, your contingency plan may get off to a rocky start. Here are some common mistakes to avoid when creating one of your own.

Not securing executive buy-in first.

Before you can get your team or department onboard, you must get buy-in from the executive team. Otherwise, you risk creating a doomed plan from the start.

Get their feedback on potential risks and other factors that may impact guidelines in the plan. Having executive support from the start ensures the plan put forth is approved and also can motivate those at the department level to buy-in as well.

Failure to cover multiple scenarios.

When assessing potential risks and scenarios, it’s important not to cut corners or slack. Scenario planning is key to your contingency plan’s success. All potential risks should be taken into account. You can rank them by likelihood, but you should by no means leave less likely events out. Otherwise, you leave yourself vulnerable should the event happen.

Think about how many businesses were affected by supply chain issues during the pandemic. Most probably never predicted such a catastrophe, but the ones that had a plan in place for such an obstacle were better prepared.

Set it and forget it.

It’s really easy to get comfortable once your contingency plan is in place — after all, if you did your due diligence from the start, you’re ready to tackle any obstacle thrown your way.

Unfortunately, it’s not a one-and-done process. A contingency plan should be looked at as a living document and updated as needed. Your business needs will change over time and so will its obstacles and risks.

Create Business Contingency Plan

All in all, contingency plans help you prepare for a host of what-if scenarios, whether they happen or not. As you never want to be caught in a challenging situation, being prepared is the best thing you can do to ensure your business continues to succeed, regardless of whatever happens along the way.

As the saying goes, better safe than sorry .

Editor's note: This post was originally published in November 2021 and has been updated for comprehensiveness.

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Use this contingency plan template to communicate risk, prevention, and mitigation measures in your company.

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Enterprises are often defined by how they deal with events that are out of their control. For example, how you react to a disruptive technology or cope with a sudden change in the markets can be the difference between success and failure.

Contingency planning is the art of preparing for the unexpected. But where do you start and how do you separate the threats that could do real harm to your business from the ones that aren’t as critical?

Here are some important definitions, best practices and strong examples to help you build contingency plans for whatever your business faces.

What is a contingency plan?

Business contingency plans, also known as “business continuity plans” or “emergency response plans” are action plans to help organizations resume normal business operations after an unintended interruption. Organizations build contingency plans to help them face a variety of threats, including natural disasters, unplanned downtime, data loss, network breaches and sudden shifts in customer demand.

A good place to start is with a series of “what if” questions that propose various worst-case scenarios you’ll need to have a plan for. For example:

  • What if a critical asset breaks down, causing delays in production?
  • What if your top three engineers all quit at the same time?
  • What if the country where your microprocessors are built was suddenly invaded?

Good contingency plans prioritize the risks an organization faces, delegate responsibility to members of the response teams and increase the likelihood that the company will make a full recovery after a negative event.

Five steps to build a strong contingency plan

1. make a list of risks and prioritize them according to likelihood and severity..

In the first stage of the contingency planning process, stakeholders brainstorm a list of potential risks the company faces and conduct risk analysis on each one. Team members discuss possible risks, analyze the risk impact of each one and propose courses of action to increase their overall preparedness. You don’t need to create a risk management plan for every threat your company faces, just the ones your decision-makers assess as both highly likely and with a potential impact on normal business processes.

2. Create a business impact analysis (BIA) report

Business impact analysis (BIA) is a crucial step in understanding how the different business functions of an enterprise will respond to unexpected events. One way to do this is to look at how much company revenue is being generated by the business unit at risk. If the BIA indicates that it’s a high percentage, the company will most likely want to prioritize creating a contingency plan for this business risk.

3. Make a plan

For each potential threat your company faces that has both a high likelihood of occurring and a high potential impact on business operations, you can follow these three simple steps to create a plan:

  • Identify triggers that will set a plan into action: For example, if a hurricane is approaching, when does the storm trigger your course of action? When it’s 50 miles away? 100 miles? Your teams will need clear guidance so they will know when to start executing the actions they’ve been assigned.
  • Design an appropriate response: The threat your organization prepared for has arrived and teams are springing into action. Everyone involved will need clear, accessible instructions, protocols that are easy to follow and a way to communicate with other stakeholders.
  • Delegate responsibility clearly and fairly: Like any other initiative, contingency planning requires effective project management to succeed. One proven way to address this is to create a RACI chart . RACI stands for responsible, accountable, consulted and informed, and it is widely used in crisis management to help teams and individuals delegate responsibility and react to crises in real time.

4. Get buy-in from the entire organization—and be realistic about cost

Sometimes it can be hard to justify the importance of putting resources into preparing for something that might never happen. But if the events of these past few years have taught us anything, it’s that having strong contingency plans is invaluable.

Think of the supply chain problems and critical shortages wreaked by the pandemic or the chaos to global supply chains brought about by Russia’s invasion of Ukraine. When it comes to convincing business leaders of the value of having a strong Plan B in place, it’s important to look at the big picture—not just the cost of the plan but the potential costs incurred if no plan is put in place.

5. Test and reassess your plans regularly

Markets and industries are constantly shifting, so the reality that a contingency plan faces when it is triggered might be very different than the one it was created for. Plans should be tested at least once annually, and new risk assessments performed.

Contingency plan examples

Here are some model scenarios that demonstrate how different kinds of businesses would prepare to face risks. The three-step process outlined here can be used to create contingency plans templates for whatever threats your organization faces.

A network provider facing a massive outage

What if your core business was so critical to your customers that downtime of even just a few hours could result in millions of dollars in lost revenue? Many internet and cellular networks face this challenge every year. Here’s an example of a contingency plan that would help them prepare to face this problem:

  • Assess the severity and likelihood of the risk: A recent study by Open Gear showed that only 9% of global organizations avoid network outages in an average quarter. Coupled with what is known about these attacks—that they can cause millions of dollars in damage and take an immeasurable toll on business reputation—this risk would have to be considered both highly likely and highly severe in terms of the potential damage it could do to the company.
  • Identify the trigger that will set your plan in action: In this example, what signs should decision-makers have watched for to know when a likely outage was beginning? These might include security breaches, looming natural disasters or any other event that has preceded outages in the past.
  • Create the right response: The organization’s leaders will want to determine a reasonable recovery time objective (RTO) and recovery point objective (RPO) for each service and data category their company faces. RTO is usually measured with a simple time metric, such as days, hours or minutes. RPO is a bit more complicated as it involves determining the minimum/maximum age of files that can be recovered quickly from backup systems in order to restore the network to normal operations.  

A food distribution company coping with an unexpected shortage

If your core business has complex supply chains that run through different regions and countries, monitoring geopolitical conditions in those places will be critical to maintaining the health of your business operations. In this example, we’ll look at a food distributor preparing to face a shortage of a much-needed ingredient due to volatility in a region that’s critical to its supply chain:

  • Assess the severity and likelihood of the risk: The company’s leaders have been following the news in the region where they source the ingredient and are concerned about the possibility of political unrest. Since they need this ingredient to make one of their best-selling products, both the likelihood and potential severity of this risk are rated as high.
  • Identify the trigger that will set your plan in action: War breaks out in the region, shutting down all ports of entry/exit and severely restricting transport within the country via air, roads and railroads. Transportation of their ingredient will be challenging until stability returns to the region.
  • Create the right response: The company’s business leaders create a two-pronged contingency plan to help them face this problem. First, they proactively search for alternate suppliers of this ingredient in regions that aren’t so prone to volatility. These suppliers may cost more and take time to switch to, but when the overall cost of a general production disruption that would come about in the event of war is factored in, the cost is worth it. Second, they look for an alternative to this ingredient that they can use in their product.

A social network experiencing a customer data breach

The managers of a large social network know of a cybersecurity risk in their app that they are working to fix. In the event that they’re hacked before they fix it, they are likely to lose confidential customer data:

  • Assess the severity and likelihood of risk: They rate the likelihood of this event as high , since, as a social network, they are a frequent target of attacks. They also rate the potential severity of damage to the company as high since any loss of confidential customer data will expose them to lawsuits.
  • Identify the trigger that will set your plan in action: Engineers make the social network’s leadership aware that an attack has been detected and that their customer’s confidential information has been compromised.
  • Create the right response: The network contracts with a special response team to come to their aid in the event of an attack and help them secure their information systems and restore app functionality. They also change their IT infrastructure to make customer data more secure. Lastly, they work with a reputable PR firm to prepare a plan for outreach and messaging to reassure customers in the event that their personal information is compromised.

The value of contingency planning 

When business operations are disrupted by a negative event, good contingency planning gives an organization’s response structure and discipline. During a crisis, decision-makers and employees often feel overwhelmed by the pile-up of events beyond their control, and having a thorough backup plan helps reestablish confidence and return operations to normal.  

Here are a few benefits organizations can expect from strong contingency plans:

  • Improved recovery times: Businesses with good plans in place recover faster from a disruptive event than companies that haven’t prepared.  
  • Reduced costs—financial and reputational: Good contingency plans minimize both financial and reputational damage to a company. For example, while a data breach at a social network that compromises customer information could result in lawsuits, it could also cause long-term damage if customers decide to leave the network because they no longer trust the company to keep their personal information safe.
  • Greater confidence and morale: Many organizations use contingency plans to show employees, shareholders and customers that they’ve thought through every possible eventuality that might befall their company, giving them confidence that the company has their interests in mind.

Contingency plan solutions

IBM Maximo Application Suite is an integrated cloud-based solution that helps businesses respond quickly to changing conditions. By combining the power of artificial intelligence (AI) , Internet of Things (IoT) and advanced analytics, it enables organizations to maximize the performance of their most valuable assets, lengthen their lifespans and minimize costs and downtime.

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What is a contingency plan? A guide to contingency planning

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A business contingency plan is a backup strategy for your team or organization. It lays out how you’ll respond if unforeseen events knock your plans off track—like how you’ll pivot if you lose a key client, or what you’ll do if your software service goes down for more than three hours. Get step-by-step instructions to create an effective contingency plan, so if the unexpected happens, your team can spring into action and get things back on track.

No one wants Plan A to fail—but having a strong plan B in place is the best way to be prepared for any situation. With a solid backup plan, you can effectively respond to unforeseen events effectively and get back on track as quickly as possible. 

A contingency plan is a proactive strategy to help you address negative developments and ensure business continuity. In this article, learn how to create a contingency plan for unexpected events and build recovery strategies to ensure your business remains healthy.

What is contingency planning?

What is a contingency plan .

A contingency plan is a strategy for how your organization will respond to important or business-critical events that knock your original plans off track. Executed correctly, a business contingency plan can mitigate risk and help you get back to business as usual—as quickly as possible. 

You might be familiar with contingency plans to respond to natural disasters—businesses and governments typically create contingency plans for disaster recovery after floods, earthquakes, or tornadoes. 

But contingency plans are just as important for business risks. For example, you might create a contingency plan outlining what you will do if your primary competitors merge or how you’ll pivot if you lose a key client. You could even create a contingency plan for smaller occurrences that would have a big impact—like your software service going down for more than three hours.

Contingency planning vs risk management

Project risk management is the process of identifying, monitoring, and addressing project-level risks. Apply project risk management at the beginning of the project planning process to prepare for any risks that might come up. To do so, create a risk register to identify and monitor potential project risks. If a risk does happen, you can use your risk register to proactively target that risk and resolve it as quickly as possible. 

A contingency plan is similar to a project risk management plan or a crisis management plan because it also helps you identify and resolve risks. However, a business contingency plan should cover risks that span multiple projects or even risks that could affect multiple departments. To create a contingency plan, identify and prepare for large, business-level risks.

Contingency planning vs crisis management

Contingency planning is a proactive approach that prepares organizations for potential emergencies by implementing pre-planned risk mitigation strategies. It involves identifying threats and crafting strategies in advance. 

Crisis management , on the other hand, is reactive, focusing on immediate response and damage control when a crisis occurs. While contingency planning sets the stage for effective handling of emergencies, crisis management involves real-time decision-making and project management during an actual crisis. Both are important for organizations and businesses to maintain their stability and resilience.

Contingency plan examples

There are a variety of reasons you’d want to set up a contingency plan. Rather than building one contingency plan, you should build one plan for each type of large-scale risk or disaster that might strike. 

Business contingency plan

A business contingency plan is a specialized strategy that organizations develop to respond to particular, unforeseen events that threaten to disrupt regular operations. It's kind of like a business continuity plan, but there's one key difference. 

While business continuity plans aim to ensure the uninterrupted operation of the entire business during a crisis, a business contingency plan zeroes in on procedures and solutions for specific critical incidents, such as data breaches, supply chain interruptions, or key staff unavailability. 

A business contingency plan could include:

Strategies to ensure minimal operational disruption during crises, such as unexpected market shifts, regulatory compliance changes, or severe staff shortages.

Partnerships with external agencies that can provide support in scenarios like environmental hazards or public health emergencies.

A comprehensive communication strategy with internal and external stakeholders to provide clear, timely information flow during crises like brand reputation threats or legal challenges.

Environmental contingency plan

While severe earthquakes aren’t particularly common, being unprepared when “the big one” strikes could prove to be catastrophic. This is why governments and businesses in regions prone to earthquakes create preparedness initiatives and contingency plans.

A government contingency plan for an earthquake could include things like: 

The names and information of the people designated to handle certain tasks in advance to ensure the emergency response is quick and concise

Ways to educate the public on how to respond when an earthquake hits

A timeline for emergency responders.

Technology contingency plan

If your business is particularly data-heavy, for example, ensuring the safety and cybersecurity of your information systems is critical. Whether a power surge damages your servers or a hacker attempts to infiltrate your network, you’ll want to have an emergency response in place.

A business’s contingency plan for a data breach could involve: 

Steps to take and key team members to notify in order to get data adequately secured once more

The names and information of stakeholders to contact to discuss the impact of the data breach and the plan to protect their investment

A timeline to document what is being done to address the breach and what will need to be done to prevent data breaches in the future

Supply chain contingency plan

Businesses that are integral parts of the supply chain, such as manufacturing entities, retail companies, and logistics providers, need an effective supply chain contingency plan to continue functioning smoothly under unforeseen circumstances.

These plans hedge against supply chain disruptions caused by events like natural disasters or technological outages and help organizations reduce downtime and ensure real-time operational capabilities. 

A supply chain contingency plan could include:

Secure critical data and systems while promptly notifying key team members, such as IT staff and management, for immediate action.

A predetermined list of essential stakeholders, including suppliers, customers, investors, and authorities, should be contacted to inform them about the disruption and steps being taken.

A detailed timeline is essential for documenting the immediate response and outlining long-term strategies to prevent future disruptions in the supply chain.

Pandemic contingency plan

In the face of a global health crisis, a pandemic contingency plan is vital for organizations in healthcare, retail, and manufacturing. This plan focuses on mitigation strategies to minimize operational disruptions and ensure the safety of employees while maintaining business continuity. 

A pandemic response plan could include:

A comprehensive health and safety protocol for employees, which integrates regular health screenings, detailed risk analysis, and emergency medical support as key components.

Flexible work arrangements and protocols for remote operations and digital communication.

A list of key personnel and communication channels for immediate response and coordination.

Regularly reviewing and adapting the pandemic contingency plan as part of an ongoing disaster recovery plan to address evolving challenges and lessons learned.

How to create a contingency plan

You can create a contingency plan at various levels of your organization. For example, if you're a team lead, you could create a contingency plan for your team or department. Alternatively, company executives should create business contingency plans for situations that could impact the entire organization. 

As you create your contingency plan, make sure you evaluate the likelihood and severity of each risk. Then, once you’ve created your plan—or plans—get it approved by your manager or department head. That way, if a negative event does occur, your team can leap to action and quickly resolve the risk without having to wait for approvals.

1. Make a list of risks

Before you can resolve risks, you first need to identify them. Start by making a list of any and all risks that might impact your company. Remember: there are different levels of contingency planning—you could be planning at the business, department, or program level. Make sure your contingency plans are aligned with the scope and magnitude of the risks you’re responsible for addressing. 

A contingency plan is a large-scale effort, so hold a brainstorming session with relevant stakeholders to identify and discuss potential risks. If you aren’t sure who should be included in your brainstorming session, create a stakeholder analysis map to identify who should be involved.

2. Weigh risks based on severity and likelihood

You don’t need to create a contingency plan for every risk you lay out. Once you outline risks and potential threats, work with your stakeholders to identify the potential impact of each risk. 

Evaluate each risk based on two metrics: the severity of the impact if the risk were to happen and the likelihood of the risk occurring. During the risk assessment phase, assign each risk a severity and likelihood—we recommend using high, medium, and low. 

3. Identify important risks

Once you’ve assigned severity and likelihood to each risk, it’s up to you and your stakeholders to decide which risks are most important to address. For example, you should definitely create a contingency plan for a risk that’s high likelihood and high severity, whereas you probably don’t need to create a contingency plan for a risk that’s low likelihood and low severity. 

You and your stakeholders should decide where to draw the line.

4. Conduct a business impact analysis

A business impact analysis (BIA) is a deep dive into your operations to identify exactly which systems keep your operations ticking. A BIA will help you predict what impact a specific risk could have on your business and, in turn, the response you and your team should take if that risk were to occur. 

Understanding the severity and likelihood of each risk will help you determine exactly how you will need to proceed to minimize the impact of the threat to your business. 

For example, what are you going to do about risks that have low severity but high likelihood? What about risks that are high in severity, but relatively low in likelihood? 

Determining exactly what makes your business tick will help you create a contingency plan for every risk, no matter the likelihood or severity.  

[inline illustration] Business impact analysis for a contingency plan (example)

5. Create contingency plans for the biggest risks

Create a contingency plan for each risk you’ve identified as important. As part of that contingency plan, describe the risk and brainstorm what your team will do if the risk comes to pass. Each plan should include all of the steps you need to take to return to business as usual.

Your contingency plan should include information about:

The triggers that will set this plan into motion

The immediate response

Who should be involved and informed?

Key responsibilities, including a RACI chart if necessary

The timeline of your response (i.e. immediate things to do vs. longer-term things to do)

[inline illustration] 5 steps to include in your contingency plan (infographic)

For example, let’s say you’ve identified a potential staff shortage as a likely and severe risk. This would significantly impact normal operations, so you want to create a contingency plan to prepare for it. Each person on your team has a very particular skill set, and it would be difficult to manage team responsibilities if more than one person left at the same time. Your contingency plan might include who can cover certain projects or processes while you hire a backfill, or how to improve team documentation to prevent siloed skillsets. 

6. Get approval for contingency plans

Make sure relevant company leaders know about the plan and agree with your course of action. This is especially relevant if you’re creating team- or department-level plans. By creating a contingency plan, you’re empowering your team to respond quickly to a risk, but you want to make sure that course of action is the right one. Plus, pre-approval will allow you to set the plan in motion with confidence—knowing you’re on the right track—and without having to ask for approvals beforehand.

7. Share your contingency plans

Once you’ve created your contingency plans, share them with the right people. Make sure everyone knows what you’ll do, so if and when the time comes, you can act as quickly and seamlessly as possible. Keep your contingency plans in a central source of truth so everyone can easily access them if necessary.

Creating a project in a work management platform is a great way of distributing the plan and ensuring everyone has a step-by-step guide for how to enact it.

8. Monitor contingency plans

Review your contingency plan frequently to make sure it’s still accurate. Take into account new risks or new opportunities, like new hires or a changing business landscape. If a new executive leader joins the team, make sure to surface the contingency plan for their review as well. 

9. Create new contingency plans (if necessary)

It’s great if you’ve created contingency plans for all the risks you found, but make sure you’re constantly monitoring for new risks. If you discover a new risk, and it has a high enough severity or likelihood, create a new contingency plan for that risk. Likewise, you may look back on your plans and realize that some of the scenarios you once worried about aren’t likely to happen or, if they do, they won’t impact your team as much.

Common contingency planning pitfalls—and how to avoid them

A contingency plan is a powerful tool to help you get back to normal business functions quickly. To ensure your contingency planning process is as smooth as possible, watch out for common pitfalls, like: 

Lack of buy-in

It takes a lot of work to create a contingency plan, so before you get started, ensure you have support from executive stakeholders. As you create your plan, continuously check in with your sponsors to ensure you’ve addressed key risks and that your action plan is solid. By doing so, you can ensure your stakeholders see your contingency plan as something they can get behind.

Bias against “Plan B” thinking

Some company cultures don’t like to think of Plan B—they like to throw everything they have at Plan A and hope it works. But thinking this way can actually expose your team to more risks than if you proactively create a Plan B.

Think of it like checking the weather before going sailing so you don’t accidentally get caught in a storm. Nine times out of ten, a clear sunny day won’t suddenly turn stormy, but it’s always better to be prepared. Creating a contingency plan can help you ensure that, if a negative event does occur, your company will be ready to face it and bounce back as quickly as possible. 

One-and-done contingency plans

It takes a lot of work to put a contingency plan together. Sometimes when you’ve finished, it can be tempting to consider it a job well done and forget about it. But make sure you schedule regular reminders (maybe once or twice a year) to review and update your contingency plan if necessary. If new risks pop up, or if your business operations change, updating your contingency plan can ensure you have the best response to negative events.  

[inline illustration] The easiest ways to prevent contingency plan pitfalls (infographic)

You’ve created a contingency plan—now what?

A contingency plan can be a lot of work to create, but if you ever need to use it, you’ll be glad you made one. In addition to creating a strong contingency plan, make sure you keep your plan up-to-date.

Being proactive can help you mitigate risks before they happen—so make sure to communicate your contingency plan to the team members who will be responsible for carrying them out if a risk does happen. Don’t leave your contingency plan in a document to collect dust—after creating it, you should use it if need be!

Once you’ve created the plan, make sure you store it in a central location that everyone can access, like a work management platform . If it does come time to use one of your contingency plans, storing them in a centrally accessible location can help your team quickly turn plans into action.

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The Product Marketers Guide to Launching a New Product

contingency plan for new product launch

Launching a new product is a multi-dimensional endeavor that requires meticulous planning and strategic execution. Product marketing, at its core, involves bridging the gap between product development, marketing, and sales. A successful product launch isn’t just about unveiling a new item; it’s about crafting a compelling narrative that resonates with the target audience and creates a lasting impact.

Preparing for the Launch: Laying the Foundations

The preparation phase lays the foundation for a triumphant launch. It begins with comprehensive market research and customer profiling, ensuring a deep understanding of industry trends, customer pain points, and preferences. This essential analysis sets the stage for aligning your product with the target audience. By identifying your ideal customers and crafting strategies to reach them, you create a solid groundwork for a successful product launch.

Competitor analysis is a cornerstone of effective product launches. It provides valuable insights into industry benchmarks, successful tactics, and market positioning. This understanding enables you to position your product uniquely, whether you’re entering a saturated market or pioneering a new space. By knowing where you stand among competitors, you can create a strategic approach that stands out and resonates with your audience.

Clear objectives serve as the guiding stars throughout the launch journey. Setting specific, measurable, achievable, relevant, and time-bound (SMART) goals ensures that every effort is purposeful and aligned with the broader business objectives. A product launch is not a singular event but a part of your overall business strategy. These objectives help in creating a cohesive strategy that guides every decision, ensuring that your efforts are streamlined and purpose-driven.

A well-structured launch timeline and budget are the blueprints that keep your launch on track and resources optimized. It’s a roadmap that ensures every task and activity is assigned a timeline, from concept to execution. Additionally, a carefully allocated budget safeguards against resource limitations, enabling you to allocate resources effectively for marketing, advertising, and other critical aspects of the launch. Whether you’re launching a B2B product or targeting a broader consumer base, a well-defined timeline and budget provide the structure needed for a successful and impactful launch.

Crafting the Value Proposition: Connecting with Customers

Crafting the value proposition is an art that distills your product’s essence into a compelling message. The process begins with identifying the unique selling points (USPs) that differentiate your product from others in the market. These USPs encapsulate the features, benefits, or qualities that make your product stand out. Aligning these USPs with customer benefits and pain points ensures that your proposition resonates with the target audience on a profound level. By demonstrating how your product addresses their needs and solves their challenges, you create a relatable and impactful value proposition.

Weaving these elements into a compelling brand story adds emotional depth to your value proposition. A brand story is more than just a marketing tool; it’s the narrative that embodies your product’s journey and resonates with the values and aspirations of your audience. It’s about forging a connection that goes beyond transactional interactions. A well-crafted brand story positions your product in a larger context, creating an emotional resonance that builds trust and loyalty.

Building Launch Assets: Enhancing Visual Appeal and Content

Building launch assets involves a blend of visual appeal and engaging content. Designing captivating product packaging and branding materials aligns with your brand’s identity and values. It’s the first impression your product makes, and it should capture the essence of your brand while conveying the product’s value. Compelling multimedia content, including videos, images, and infographics, further enhances your product’s allure. In today’s digital age, visual content is a powerful tool that can effectively communicate complex information, evoke emotions, and create lasting impressions.

In addition to visual assets, designing optimized landing pages and product pages is crucial for a seamless user experience. These pages are virtual storefronts where potential customers interact with your product. User-friendly design, clear navigation, and persuasive content are essential to guide visitors from curiosity to conversion. Well-optimized landing pages that align with your messaging and branding create a cohesive and immersive online experience. Furthermore, interactive elements and captivating visuals on product pages can help potential buyers explore the product’s features and benefits in depth.

Planning the Go-to-Market Strategy: Navigating Sales Channels and Collaborations

Navigating the go-to-market (GTM) strategy requires a careful selection of sales channels, pricing strategies, and collaborations. Online platforms, retail outlets, distributors, and various sales channels present unique opportunities and challenges. Choosing the right approach depends on factors such as your target audience’s preferences, your product’s nature, and your overall business goals. For B2B product launches or consumer-focused releases, selecting the right sales channels sets the stage for success.

Determining pricing and promotion strategies is a delicate balance that influences how your product is perceived by the market. Pricing sets the perceived value of your product, and it should be aligned with customer expectations while considering your production costs and profit margins. Strategic promotion tactics can increase visibility and drive demand. Balancing discounts, bundles, and limited-time offers can create a sense of urgency and attract potential customers.

Collaborations with channel partners and influencers amplify your reach and credibility. Partnering with distributors, retailers, or other complementary businesses can extend your product’s distribution network. Influencers, with their established audiences and credibility, can help showcase your product to a wider audience. Collaborations can enhance your product’s visibility, generate buzz, and leverage existing networks to create a successful launch.

Internal Alignment and Training: Synchronizing Efforts

Internal alignment is the cornerstone of a cohesive launch effort. All departments, from marketing and sales to product and support, need to work in harmony to ensure a successful launch. Effective communication and coordination are essential to prevent disjointed efforts and conflicting messaging. This alignment ensures that every team member understands the product’s value proposition, target audience, and launch strategy.

Training sales and support teams is critical for a seamless customer experience. Sales teams must be equipped with in-depth product knowledge, enabling them to confidently convey the product’s features, benefits, and value proposition to potential buyers. Support teams need to be prepared to assist customers and address inquiries effectively. Cross-functional coordination among departments ensures that marketing, sales, product, and support teams are aligned in their efforts and messaging.

Pre-Launch Marketing Activities: Creating Anticipation and Buzz

Creating anticipation and building excitement before the launch is essential to capture the audience’s attention. Teaser campaigns, sneak peeks, and pre-orders generate buzz and curiosity. Teasers can include intriguing visuals, cryptic messages, or countdowns that pique interest and create a sense of anticipation. Offering pre-orders or early access programs allows eager customers to be among the first to experience your product. These strategies can create a sense of exclusivity and incentivize early adoption.

Engaging with influencers and media outlets amplifies your product’s reach and credibility. Influencers, with their established audiences and authentic voices, can provide genuine endorsements and recommendations. Media engagements, such as interviews or guest articles, position your product as an industry leader and generate media coverage. These activities expand your product’s visibility and build excitement among potential customers.

The Launch Day: Coordinating Activities and Responding

The launch day is the culmination of extensive planning and preparation. Coordinating activities ensures that everything unfolds seamlessly, from online events to physical launches. It’s a moment of excitement, and proper execution is essential to make a memorable impression. Monitoring real-time customer feedback is crucial for refining strategies on the fly. Engaging with customers on social media, addressing inquiries, and showing appreciation for their support can further enhance the launch day experience.

Additionally, addressing technical glitches or challenges swiftly is paramount. In the fast-paced digital landscape, unforeseen technical issues can arise. Ensuring a swift response and resolution demonstrates your commitment to customer satisfaction and minimizes any negative impact on the launch experience. A successful launch day goes beyond the product; it’s about the overall experience you provide to your customers.

Post-Launch Activities: Sustaining Momentum and Enhancing Retention

After the launch, sustaining momentum is essential for continued success. Analyzing launch performance against established key performance indicators (KPIs) provides insights into the effectiveness of your strategies. It helps identify what worked well and where improvements are needed. Continuous marketing and sales efforts maintain the momentum created during the launch phase. Consistent communication with your audience, sharing success stories, and delivering valuable content keep your product in the spotlight.

Customer retention efforts focus on enhancing loyalty and building long-term relationships. Offering post-launch promotions, exclusive offers, and loyalty programs can incentivize repeat purchases and foster brand loyalty. Engaging with customers through personalized communications, surveys, and feedback loops allows you to continuously improve your product based on their preferences and needs.

Handling Challenges and Learning: Building for Future Success

Challenges are inevitable, but they also offer opportunities for growth and learning. Identifying common launch pitfalls and developing contingency plans prepares you to navigate unforeseen challenges. Post-launch reviews play a vital role in assessing the launch’s overall success and identifying areas for improvement. Reviewing the entire launch process, from planning to execution, sheds light on what went well and what could be refined for future launches.

In the dynamic landscape of product launching, this guide equips product marketers with the insights and strategies needed for a successful product launch. From the initial stages of preparation to the culmination of the launch and beyond, mastering these elements sets the stage for a triumphant market entry.

Ready to launch your product with confidence and impact? Let Aventi Group be your strategic ally in navigating the complex landscape of product marketing and launch. Contact us today to discover how we can elevate your product launch to new heights.

contingency plan for new product launch

Zoe Quinton

After working in fiction publishing for 15 years, Zoe Quinton started as a product marketing consultant with Aventi Group in 2018. When she’s not reading for either work or pleasure, you can find her drinking good coffee, gardening, or spending time with her family at their home in Santa Cruz, California.

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Product Launch Strategy: A Comprehensive Guide for Success

Productboard Editorial

What is a Product Launch Strategy? 

Getting a product to market successfully takes significant planning and research, resources, and time. With so much invested in transforming an innovative idea into a tangible offering, it’s not enough to build the product—you need consumers to buy it.

A product launch strategy is a comprehensive plan designed to jumpstart, accelerate, and scale product adoption once something hits the market. It involves a series of coordinated actions and decisions to create awareness, generate interest, and appeal to specific target audiences. From market research, positioning, and messaging to pricing, distribution, and promotional activities, the goal is to make an impactful, positive first impression, and maximize the product’s chances of success against competitors. 

Why is a Product Launch Strategy Important?

As the blueprint for introducing products to market in a purposeful and organized way, the product launch strategy provides a framework for aligning various aspects of the launch. It ensures that efforts are coordinated and resources are optimized, and that all aspects of the product roadmap are reflected as the product becomes a reality. 

Without a well-defined strategy, a product launch will lack direction, risking miscommunication, inconsistent messaging, and wasted resources. A carefully crafted strategy helps build anticipation, showcase the unique value of the product, capture the attention of the target audience, and establish a solid foundation for sustained success. It’s essential for upping the chances of a new product’s initial acceptance—and its total lifetime.

Benefits of having a Product Launch Strategy

A product launch strategy isn’t a checklist; it’s a pathway to profit that deeply influences the overall success of introducing something new to market. Key benefits include:

  • Clarity and direction that helps cross-functional teams understand roles and responsibilities, goals, timelines, and expectations.
  • Consistent and cohesive messaging across all communication channels, reinforcing the product’s value proposition and brand identity, and making it easier for prospects to understand and remember.
  • Proactive risk mitigation that helps PMs anticipate potential challenges, and that includes contingency plans to minimize any roadblocks to launch.
  • Deeper market understanding through thorough market research, ensuring that what’s delivered is relevant and truly resonates with potential customers.
  • Efficient resource allocation that’s clearly connected to outcomes, preventing unnecessary work and improving ROI across the product’s lifecycle .
  • Competitive positioning that highlights unique selling points and directly addresses consumer needs, allowing the product to stand out in a crowded space.
  • Post-launch steps for sustained success that supports ongoing marketing efforts, customer feedback, and product improvements.

What’s the Difference Between a Product Launch Strategy and a Product Launch Plan?

In short, a product launch strategy sets down the guiding principles and objectives of a release, while a product launch plan translates those principles into actionable steps for the product team to follow.

The product launch strategy outlines the overall approach and goals for introducing a new product. It establishes the target audience, positioning, messaging, and the overall market landscape. It’s a handbook for how the product will be presented to the market and how it will expand and function over time, with a focus on the broader context and vision for the launch.

On the other hand, a product launch plan is a more detailed, tactical document that’s built from the overarching strategy. It breaks down the strategy into specific actions, tasks, and timelines, and includes granular details such as specific marketing tactics, communication channels, budget allocations, and responsibilities assigned to different team members or departments. The launch plan is essentially the step-by-step guide that operationalizes the strategy.

Components of an Effective Product Launch Strategy 

While a product launch strategy can vary quite a bit depending on the nature of the product and the industry being served, core pieces include:

  • Conducting thorough research to understand the target market, customer needs, preferences, and existing competitors. 
  • Clearly defining the target audience for the product by understanding the demographics, behaviors, and preferences of the intended consumers.
  • Articulating the unique value proposition of the product, like what sets it apart from competitors, and how it addresses specific needs or problems for the target audience.
  • Determining the positioning of the product in the market, from how it fits into the existing portfolio and landscape, and what key messages should be emphasized to communicate those outcomes.
  • Developing a comprehensive messaging strategy that communicates the key benefits of the product, from compelling taglines to product descriptions and other promo assets.
  • Creating a complete timeline that outlines the sequence of activities leading up to the launch and after. This includes pre-launch teasers, the launch itself, and post-launch efforts.
  • Determining the distribution and pricing strategy based on market research, production costs, and perceived value. 
  • Planning promotional activities and assets to generate awareness and interest, such as digital marketing, traditional advertising, PR, content marketing, and social media.
  • Developing training and enablement programs for sales and CS teams and equipping them to accurately communicate the product’s features and benefits.
  • Establishing key performance indicators (KPIs) to measure success of the launch, like sales goals, usage thresholds, and website traffic.
  • Anticipating potential challenges and identifying potential risks, as well as outlining strategies to address them promptly.

Tactics to Creating a Successful Product Launch Strategy

Understanding the market and target audience, crafting a compelling value proposition, strategically positioning the product, and developing clear and cohesive messaging: four steps to success, when built on the foundation of a thoughtful and well-rounded plan. 

1. Pre-Launch Activities

Before the official introduction of the product, the goal is to build anticipation, generate awareness, and lay the groundwork for a seamless and impactful product launch. Success starts with market research, audience identification, setting a strategic launch timeline, and creating promotional tactics. But it also takes solid messaging, positioning, and competitive intel—in addition to a narrative that speaks directly to the target audience.

1. Writing a Compelling Story

A product’s story—or, how it’s discussed and placed within a market—should highlight the unique value of the offering. It goes beyond listing features, instead creating a clear connection between the product and user benefit, solution and pain point. A compelling story is an authentic and aspirational tool, and sets the stage for a memorable and impactful product launch that resonates with the target audience.

4. Product Promotion in Multiple Channels

The most effective product promotions are diverse and deliberate. Businesses that make a coordinated effort to advertise and create awareness for new products across platforms and channels will have a broader reach, and an expanded pool of prospects to engage.

3. Making Use of Influencer Marketing

Influencer marketing is a widespread and growing way to do one-to-many marketing and advocacy in the same motion. By partnering with creators or professionals who have significant online followings and platforms to promote and endorse products, businesses add credibility to their claims while generating awareness, building trust, and creating interest. 

How to Create a Product Launch Strategy

5 essential stages of a product launch strategy.

Here are five essential stages (with steps) to guide you through the process of creating an effective product launch strategy.

Market Research and Analysis

  • Conduct thorough market research to understand the industry, target audience, and competitive landscape.
  • Identify market trends, customer needs, and potential gaps in the market.
  • Analyze competitor product launches to learn from successes and failures.

Define Your Target Audience

  • Clearly define the target audience based on insights gathered from market research.
  • Develop detailed buyer personas to understand the demographics, behaviors, and preferences of ideal customers.
  • Tailor the product and launch strategy to address the specific needs and pain points of the target audience.

Craft a Compelling Value Proposition

  • Clearly articulate the unique value that the product brings to the market.
  • Define the key benefits and advantages that set the product apart from competitors.
  • Ensure that any value propositions resonate with the identified needs of the target audience.

Develop a Comprehensive Launch Plan

  • Create a detailed launch plan that outlines the sequence of activities leading up to and following the product launch.
  • Specify the marketing channels, promotional tactics, and communication strategies.
  • Set a realistic timeline for each phase of the launch, considering factors such as pre-launch teasers, the launch event, and post-launch follow-ups.

Determine Metrics and Measurement

  • Establish key performance indicators (KPIs) to measure the success of the product launch.
  • Define specific goals related to sales, customer acquisition, brand awareness, and other relevant metrics.
  • Regularly monitor and analyze the performance data to assess the effectiveness of the launch strategy and make informed adjustments.

Common Reasons Why Product Launch Strategies Fail

Product launch strategies can fail for a variety of reasons, whether environmental, conditional, or unintentional. A successful strategy requires a holistic approach that considers everything with the potential to influence market reception.

Often, unsuccessful launches are rooted in a lack of market understanding and insufficient audience research, both of which result in unclear value propositions and ineffective messaging. Poor timing, subpar promotional efforts, and reluctance to adapt with feedback are equally damaging, as is underestimating the competition.

But the fastest route to failure is misaligning pricing with perceived value—something that’s much easier to avoid when businesses invest in understanding their audience’s goals, pain points, and limitations up front.

Post-Product Launch Strategy

The post-product launch strategy phase is crucial for sustaining momentum, addressing customer feedback, and creating long-term success. It should enable cross-functional teams to:

  • Actively gather and analyze customer feedback to identify areas for improvement, and iteratively enhance the product based on user experiences and preferences.
  • Maintain consistent marketing efforts to keep the product in the spotlight, share success stories, and provide updates to reinforce the product’s value.
  • Provide robust customer support to address inquiries and issues promptly, and engage with customers through various channels to build loyalty.
  • Continuously monitor and assess key performance indicators (e.g., sales, customer satisfaction scores, market share) to gauge the product’s ongoing success.
  • Explore opportunities for product line extensions, additional features, or entry into new markets.
  • Stay vigilant to changes in the market, industry trends, and competitor efforts, and be able to adapt the product strategy accordingly.
  • Foster a sense of community among users through forums, social media, or other platforms, as well as encourage user-generated content and discussions to enhance the product’s ecosystem.
  • Explore collaborations with other businesses or influencers to expand reach and appeal, and seek out partnerships to introduce new perspectives and opportunities for growth .
  • Regularly reassess the product’s pricing strategy and positioning in the market to ensure alignment with customer perceptions and the evolving competitive landscape.
  • Maintain a long-term vision for the product’s evolution and success by continuously innovating and evolving to stay ahead.

Success Metrics

It’s important to align whatever metrics a product is measured by with the overall objectives of the launch (and the business overall). A mix of short-term and long-term metrics will give PMs a comprehensive view of the product’s success and its total impact on the business. 

Regularly monitoring and analyzing these metrics will also provide insight into the effectiveness of the launch strategy, and inform adjustments and improvements over time. Here’s a list of metrics to consider:

Sales Performance

  • Total sales revenue
  • Sales growth rate

Customer Acquisition

  • Number of new customers
  • Customer acquisition cost (CAC)
  • Conversion rates from leads to customers

Market Share

  • Percentage of market share gained
  • Competitive positioning in the market

Customer/Prospect Engagement

  • Website/campaign page traffic
  • Social media engagement (likes, shares, comments)
  • Email open and click-through rates

Product Adoption

  • Number of product sign-ups or registrations
  • Rate of product adoption among target users

Customer Satisfaction

  • Net Promoter Score (NPS)
  • Customer feedback and reviews
  • Customer support ticket volume and resolution time

Brand Awareness

  • Brand mentions and sentiment on social media
  • Media coverage and PR mentions
  • Website and social media follower growth

Return on Investment (ROI)

  • ROI on marketing and promotional activities
  • ROI on overall product development and launch costs

Product Performance

  • User engagement with key product features
  • Product performance metrics (e.g., app downloads, usage frequency)

Retention Rates and Strategic KPIs

  • Customer retention rates
  • Churn rates
  • Completion of specific strategic goals outlined in the product launch strategy

Feedback/Reviews

Feedback and reviews are pivotal for a product’s success and perception. Integrating them into your launch strategy requires thoughtful consideration. Key aspects include timing—gathering pre-launch feedback and encouraging post-launch reviews. Choose appropriate feedback channels, align with user personas, and provide incentives. 

Establish a responsive mechanism for addressing concerns and integrate feedback into product development. Regularly monitor, analyze, and promote positive feedback. Educate users on sharing feedback, employ moderation, and view this as a long-term strategy for continuous improvement and customer satisfaction.

Promotions Post-Launch

Post-launch promotions are vital for maintaining momentum and maximizing a product’s impact. Things like limited-time offers create urgency, while bundle offers provide increased value, and referral programs incentivize customers to share reviews and recommendations. Business should also implement: 

  • Cross-sell and upsell campaigns to promote additional purchases
  • Exclusive access rewards for specific customer actions
  • Loyalty programs, flash sales, and social media contests
  • Ongoing email marketing, partnerships, and product demonstrations to target specific and new segments 
  • Customer-focused events, both virtual and in-person, to foster ongoing user engagement and positive relationships beyond the initial launch.

Productboard: You Partner In Creating an Effective Product Launch Strategy

Productboard is a comprehensive product management platform , ideal for creating flexible, thorough product launch strategies. By providing a centralized hub for all product-related information, Productboard integrates user persona details and ongoing user feedback, helping PMs gain a deep, detailed understanding of customer needs that can evolve alongside shifts in demand. 

With features like roadmap planning and idea management, teams can strategically prioritize and plan product launches with confidence that both broad context and details are being captured and considered. Productboard’s analytics and performance tracking enable consistent, data-driven decision-making, and iterative development support allows teams to refine strategies based on real-time updates. 

Leading businesses in every industry rely on Productboard to drive cross-functional visibility, foster transparency, and bring clarity to the product launch strategy process. Start a free trial today to see how your business can build products that see accelerated adoption and sustained success with every launch.

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How to plan a killer product launch

How to plan a killer product launch in 6 steps

Planning a great product launch just got easier, thanks to expert advice from long-time product marketers and our free product launch template.

Aileen Horgan

Let’s say your product team is about to launch the next big thing. Everyone is excited by what this new product can do, so you send out a press release while the members of your sales team get ready to sign orders and spend their year-end bonuses.

But nothing happens. Or, more accurately, what happens is terribly disappointing. Sales are slow. Customer interest is minimal. And adoption rates are just not what anyone had hoped they would be.

The problem may not be the product. It’s time to take a good hard look at your launch plan.

Should you go big… or go home?

If you have a truly breakthrough product, you need a break-through-the-clutter launch. A press release and a prayer aren’t going to cut it. According to Jonathan Chan of Foundr, a firm that provides resources for novice entrepreneurs, studies estimate  as many as 70 percent of product launches fail .

Ask yourself if the world really wants what you’re offering. For every wildly successful gordito from Taco Bell there are a dozen long-forgotten apps, New Cokes, and other products that flopped due to consumer apathy.

Launching a new product (or completely overhauling an existing one) will have a big impact on your organization. It’s also an opportunity to develop a long-lasting relationship with customers, both new and existing. So think of the product launch as the start of a journey, one that could dramatically boost the exposure and awareness of your brand. If successful, it’s going to lead to more sales, more customers, and a stronger bottom line for your business. Not to mention those year-end bonuses.

It all starts with a launch machine that’s up and running even before your product is ready.

Nail the positioning and messaging

The thing about new products is no one knows much about them. That’s both a blessing (because you get to position your product however you want) and a curse (because you’re starting from scratch in terms of creating awareness).

Before you even think about launching, collect all the background you can find about the new product. Describe what the new product or service does, how it works, and the research that went into its creation. If available, list any competing products, customer insights or customer-requested features.

From there, you can draw important conclusions to fundamental questions about the idea behind the product:

  • What problem is it meant to solve?
  • Why should it be solved?
  • How will the product solve it?
  • How does it compare to similar products?

The answers to these questions form the backbone of your product’s positioning in the marketplace. But what about messaging?

As a marketer, you’re a storyteller and ambassador, advocating for your product and articulating unique points of view that differentiate your product in the market. At Atlassian, marketers work closely with product managers to find the story. We ask ourselves “Why will customers and non-customers care? Will press or analysts care? If so, why?” This is a slight variation on “ 5 whys” analysis  and is very helpful in uncovering deeper value.

A few years ago, we got hip to the message house technique as a way to organize our thoughts around how people will relate to our products and why. As a bonus, it keeps the customer top-of-mind in all our marketing activities (not just product launches) and ensures everyone from marketers to developers to executive stakeholders can talk about the product in a consistent way.

Message House Template

Decide how you’ll measure (and pay for) success

Many launches fail not because of bad products, but because of insufficient resources. As you plan your product launch, calculate how much money and people power it will take to reach your target audience and sustain the launch. Or, if you’re like teams at Atlassian, your task is to figure out the most effective way to spend the already-determined budget.

Deciding what tactics will be effective starts with defining your launch’s success metrics. Are you looking to earn press mentions? Draw first-time visitors to your website? Build buzz on social media? Of course, we want it all. But unless you’re armed with a magic wand and fairy dust, your best bet is to choose just one or two metrics to obsess over – then plan launch activities accordingly.

Try a “ goals, signals, and measures ” exercise. This technique helps your team determine the launch’s high-level goal, how you’ll know if you’re on the right track, and the targets you’re aiming for.

Use a product launch plan template

As you begin planning and executing your product launch, good communication becomes critical. One easy way to solve the communications challenge is by posting all pertinent information in a central location. This ensures every member of your team has access to the same, most up-to-date information and resources.

Team members don’t waste time searching for information, discussing assigned tasks, and wondering about product details or requirements. Links provide easy access to important information on issues. This makes the process as easy as checking Facebook, but much more productive.

At Atlassian, we improve communication and consistency throughout any product launch by using templates, which allow us to eliminate all the disconnected documents, texts and spreadsheets that clog up the product launch process. Instead, you end up with planning pages that present your launch plan at a high level while putting the down-in-the-weeds details a mouse click away.

Each time we launch a new product, it involves dozens of people across several departments. Using templates for our launch plans helps keep team members on the same page (literally) throughout the project, and saves the launch lead from having to reinvent the wheel.

Product launch plan template in Confluence

A solid template includes space to map launch activities to developers’ tasks and includes a summary at the top so stakeholders have a big-picture view of the launch plan’s status. And don’t forget to specify roles and responsibilities so the members of your cross-functional marketing, public relations, and design team can work together seamlessly.

Get a reality check on your launch roadmap

Before the product launch, sketch out a roadmap that visualizes the streams of work, making sure the timeframes are logical.

Once your product launch roadmap is complete, share it with your marketing team, the product leader, and other stakeholders. Ask them to poke holes in the plan and to suggest improvements. Are you solving the right problems in the preferred order? Is the roadmap realistic? Do you have the right team? Go through a few iterations and update your goals and roadmap accordingly.

Even after you’ve translated the roadmap into action items, you can (and should) continue to ask for feedback. Make sure  product requirements  are in place for development team members and that they’re easy-to-access. That way, developers can quickly reference them and everyone else can refer to them as the launch progresses.

Turn action items into… well,  action

Your product launch can include a range of tactics and activities. A grand announcement event is almost essential. Whether it’s virtual, live, or a mix of both, you can make it even more exciting with a contest, a product giveaway or discount, and appearances by important influencers.

Promote the event and launch with email blasts, blog posts, and a full range of marketing materials. You can keep the excitement rolling after the grand announcement with ongoing promotional support and educational materials, demos and events that support the product and its benefits. Keep a step-by-step checklist of what needs to happen on launch day so no detail gets forgotten amid the chaos.

Whatever the final list of activities and tactics you use to launch your new product, remember it all starts with audience-focused planning and the right preparatory steps. Those are not only the keys to a smooth launch, they mean you’ll have fewer meetings and status reports. You’ll work faster and more efficiently. And at every step, you’ll know the plan is on target, or you’ll know what to do to get it back on target.

The result will be a launch that works. As long as the product isn’t, say, a reformulated version of Coke.

Set yourself up for success with our collection of page templates for Confluence. Not a Confluence user? No worries: they’re available in PDF form, free of charge.

Browse templates

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A practical guide to creating a contingency plan

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The vast majority of failed projects and bankrupt companies had a plan and followed it. So why do these projects and companies end up failing?

Unexpected things happen that companies don’t plan for, and many fail to adapt in time.

The key: having a sound contingency plan. A contingency plan is all about expecting the unexpected and preparing to deal with worst-case scenarios ahead of time. This article will cover why you need a contingency plan, and walk you through step-by-step instructions for creating one. We’ll also provide a contingency planning template you can implement and use on monday.com immediately.

What is a contingency plan?

A contingency plan is a predefined set of actions that you will implement in response to specific future events that put your project or business at risk.

A simple example of a contingency plan is to back up all your website data. That way, if your website gets hacked, it will be easy to restore the data after regaining access and changing passwords.

Without that backup, the team might have to recreate the entire website from memory or build a website from scratch . That’s a significant expense and can mean several extra days (or weeks!) of downtime.

A contingency plan is about managing and lowering risk and setting yourself up for speedy disaster recovery.

What are the two types of contingencies in project management?

monday.com makes budget contingency planning visual

There are two types of contingencies that you should plan for: budget contingency & schedule contingency.

  • Budget contingency is an additional amount of money that you allocate to your budget, so you can cover extra costs that might come up as the project progresses. If you don’t have a contingency budget, you might run into an unexpected cost that could send you over budget and risk the profit margin of your project.
  • Schedule contingency is an additional amount of time that you bake into your project schedule, to allow for any unexpected delays or hiccups in your project progress. Without schedule contingency, you risk running over your project deadlines and disappointing stakeholders.

Contingency plan examples

Here are a few examples of how contingency planning could help save the day, no matter what happens:

Project contingency plan

Imagine that a key team member unexpectedly leaves the project. If you were contingency planning for this scenario, you might outline the following steps you could follow if you lost a key project team member:

  • Identify who will take over the tasks of the departing team member, and what tasks still need doing
  • Assess if any additional resources will be needed (such as an additional part-time project member from another team)
  • Provide training sessions for other team members to ensure they can step in effectively
  • Notify any stakeholders about the change and how it will be managed to minimize disruption and offer reassurance.

Business continuity plan

How about if a natural disaster disrupted operations at your primary office location? Could your business cope? With a continuity plan in place, you’ll turn things around quickly:

  • Make sure all your employees have access to the necessary tools and systems so that they can work remotely if necessary
  • Regularly back up all essential data to the cloud, and have a data recovery plan in place, in the event of loss of the hardware in your primary office
  • Identify backup office space or plan for remote work options if the primary location becomes inaccessible
  • Define communication channels that you’ll use in the event of a major disruption so that you can reach your employees to provide updates and instructions on how to proceed

Supply chain contingency plan

Do all your logistics depend on a few key suppliers? Then you should have a supply chain contingency plan in place, in case of unexpected production or shipping delays.

  • Have more than one supplier for critical components, so this becomes less of a business risk.
  • Maintain a buffer stock of your essential components, so that production won’t be held up by supplier delays
  • Find a shipping company that offers expedited shipping options in case you have an urgent need
  • Update your supplier contract to include penalties for delays and a procedure for resolving any disputes

Why contingency planning is important

contingency planning is easier with monday.com boards

Murphy’s Law specifies that anything that can go wrong will go wrong. And any experienced project planner knows how true that is! Contingency planning can make or break your business:

It helps mitigate risk.

Contingency planning helps to identify potential risks and get ahead of them with a proactive plan. That way, even when things go wrong, you can minimize the disruption to operations and reduce your financial losses.

It makes your business more resilient.

Having a contingency plan in place enables you to respond to the unforeseen more effectively, adapt to changing conditions, and recover from setbacks more efficiently.

It keeps you compliant.

In many industries, contingency planning is mandated by regulatory requirements, so you’ll need these plans in place to avoid penalties and maintain good legal standing.

It increases customer trust.

Customers trust businesses that handle disruptions effectively. The ability to respond quickly and effectively when things go wrong will help build your reputation for great customer service.

Looking for a tool to make contingency planning easier? With monday.com, you can store all your contingency plans in a central location, communicate changes with stakeholders, and create automated workflows in response to unexpected events.

What are the characteristics of a good contingency plan?

Your contingency plan should include the following components:

List of risks

Begin by making a thorough identification of potential risks that could realistically occur. Depending on what kind of contingency plan you’re putting together, these could be all the risks that could impact your business, or the risks that could delay or disrupt a specific project or product.

For example, in terms of business-level contingency planning, you could list out:

  • Natural disasters
  • Technological failures
  • Economic downturns
  • Supply chain disruptions
  • Sudden market changes

Response options

Your plan should then outline various responses that you could choose between, for each risk you’ve identified. These might be:

  • Actions to mitigate the risk
  • Ways to transfer the risk to another party (e.g. by buying insurance)
  • Ways to accept and manage the risk

Plan of action

For each risk and response option, you should then add in a plan of action, including:

  • Steps to take
  • Who is responsible for each step
  • Any resources you’ll need
  • Any need to coordinate with other stakeholders or third parties

Communication management protocols

You’ll also want to make sure that you have a plan in place to communicate effectively with all stakeholders, including:

  • Who needs to be notified
  • The channels you’ll use for communication
  • How often you’ll send out updates
  • Any useful templates to use for messages

Trigger points

Decide in advance when you’ll activate a specific contingency response. For instance, you might have a particular threshold beyond which you’ll move to a contingency plan — such as the severity level of a natural disaster. You should also define who has the authority to make these decisions, and how the decision will be made (by committee or by chain of command, for instance.)

Testing and review

To keep your plan up to date, you should schedule regular tests and reviews. For instance, for a natural disaster contingency plan, you might want to run a drill once a year, to practice your response procedures and make sure that everything works as it should.

How to create a contingency plan

Let’s cover the basic contingency planning process and detail how to get yours up and running.

1. Map out essential processes.

What processes are essential to your business and safely delivering your product or service to customers?

If you’re a manufacturing company that ships directly to consumers, a simplified process list might look something like this:

  • Getting raw materials from suppliers
  • Manufacturing process
  • Freight and shipping
  • Packaging and warehousing
  • Last-mile delivery

Looking at this list, you can see how vulnerable it is to natural disasters or even minor human errors.

Create an overview of every crucial process in your organization.

2. Create a list of risks for each process.

Once the process list is created, consider what might disrupt business continuity.

What can go wrong with each of these critical processes?

Let’s look at an example of what could go wrong with “last-mile delivery” …

  • The driver can deliver single or multiple packages to the wrong address.
  • The package can be damaged during delivery.
  • The package could get lost at a distribution center.
  • A truck full of packages could be involved in an accident.
  • A flood could cripple the road system in a specific area.
  • The driver could get delayed because a moose wants to lick salt splatter off the car (seriously, it’s a thing ).

And that’s only a preliminary list. Once you start thinking about it, you’ll realize how many things you rely on to avoid going wrong, even for fundamental processes.

Every business process is vulnerable to some sort of emergency or human error and requires a solid risk management process .

3. Evaluate the potential impact and likelihood of each risk.

Once the risks are identified, it’s essential to determine how they could impact your business.

Are they likely to happen? How large will the impact on your business if they do occur?

Most companies use “qualitative risk assessment” to do this.

PMI uses the following risk exposure assessment table — also called the probability impact matrix — to evaluate … the probability and impact of potential risks.

Risk impact probability table from PMI

( Image Source )

First, rate the severity of the impact on a scale from 1–100. Then, multiply with a percentage based on how likely it is to occur.

4. Calculate costs and contingency reserves, and identify issues to mitigate.

The quantitative risk assessment approach is less common — but more practical — to assess the potential cost of each risk.

How much would each risk potentially cost your business? To get a better overview, add these 4 columns to the risk register template :

  • Full potential loss from the event
  • Expected loss from the event
  • Cost of response (post-event)
  • Cost of mitigation (pre-event)

Quantitative risk register example in monday UI

This means you can make an educated decision when budgeting contingency reserves into project plans and yearly budgets.

During the risk analysis , estimate the potential costs of the adverse event.

EXAMPLE: if your online store goes down, multiply the average online sales revenue per hour with expected downtime. Make one pessimistic and one realistic estimate.

Your hosting service may also have a flat fee for restoring sites, which would be your response cost. If these costs are unreasonably high and the event is likely, estimate the costs of a mitigation effort. In this case, it could be a firewall and extra procedures, like 2-factor authentication, an important security system , for all employees.

Budget in those costs. An accurate budget is the first part of emergency response and prevention. Without enough cash, your team won’t be able to put any response plans into action.

5. Create a response plan for prioritized events.

Create a response plan for events by exploring the following questions:

  • What can be done ahead of time to minimize any adverse effects on the event? For example, backing up data, carrying extra stock, or having more employees on call.
  • What can be done immediately after the event to minimize the impact? For example, ordering more from a secondary supplier, rerouting another vehicle, or bringing in on-call staff.

The specifics depend on your company’s unique processes and situation.

6. Share the contingency plan.

A contingency plan only works if it’s used when things go wrong—and that means that everyone in your organization knows to reach for the plan in times of trouble. To make sure that happens:

  • Identify who needs to be aware of and involved in contingency planning.
  • Choose appropriate communication methods for each stakeholder group. For instance, department heads may need specific meetings to focus on their section of the plan. Key employees might need a training session.
  • Create the plan in an accessible, centralized location, such as a monday.com board. That way, everyone involved can access the plan, and you can keep it updated at all times.
  • Encourage feedback on the plan, such as running an employee survey to check understanding and seek ideas for changes and improvements.
  • Post reminders and updates on your shared internal communication channels.

7. Monitor and review the contingency plan.

If you want your contingency plans to protect your business, you have to keep them up to date. That means you’ll need to schedule regular reviews of the plan to check that it’s still relevant and aligned with your changing business.

Remember to communicate updates or revisions to all relevant stakeholders, and provide opportunities for additional training if needed.

Manage your contingency planning process with monday.com

Having your business contingency plan on paper is an excellent place to start. But it won’t translate to how your entire company will tackle a crisis.

That’s where monday.com comes in. Our flexible digital workspace gives you everything necessary to ensure everyone follows the contingency plan when they need to.

Use our pre-built contingency plan template to get you started 

Make sure that no employee is left clueless during a crisis. Our contingency plan template has everything you need to start the planning process.

With our pre-built template, you can feel confident you’re following best practice contingency planning, so your business will run smoothly even in the case of unexpected events.

Use integrations to notify someone of an event automatically 

use automation to keep stakeholders up to date on your contingency plan

With monday.com’s powerful integrations and automations, you can respond to unfavorable events more quickly.

For example, you can immediately create and assign a work item whenever a customer submits a bug report.

This approach helps avoid another potential problem: customer service failing to report bug reports to your development team.

Monitor project status at all times in dashboards to avoid bottlenecks and domino effects.

manage your contingency planning with monday.com dashboards

The best time to start acting is before a catastrophic event that puts your entire project or business at risk.

To do that, your management team needs a clear understanding of the project’s status at all times.

Use the 30,000-foot view every manager needs to avoid predictable project delays and failures and check that project controls are working properly.

Contingency plans are a must-have.

When starting a project or business, most people plan according to the status quo. Unfortunately, that’s a best-case scenario and not helpful in the real world.

A contingency plan helps you prepare for worst-case scenarios and keep your project afloat, should anything go wrong.

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Contingency planning: 4 steps to prepare for the unexpected

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What is contingency planning?

Why is contingency planning important, 4 steps to develop a contingency plan.

Most days at work are business as usual — you hope. Unfortunately, there are also days where nothing seems to go right. Sometimes, these hiccups are just part of running an organization. And some days, they can be a major disruption in your work.

Because your clients and customers are relying on you to deliver as promised, it’s critical that you have a backup plan in place. There’s no way to prevent all mishaps from occurring, but you can minimize their impact with a little strategic planning .

Rather than waiting for the worst-case scenario to play out, companies — and individuals — can put together a contingency plan. This helps to ensure that normal business operations continue as smoothly as possible.

Learn what a business contingency plan is, why you should have one, and how to start planning in this article.

Contingency planning is a part of a business’ risk management strategy. It’s how companies foresee potential disruptions to the business. 

Contingency planning is an action plan put in place to help individuals, teams, and organizations minimize disruption. In common terms, we think of this as “plan B.” Contingency plans are less about how to mitigate negative events and more about proactively developing problem-solving skills.

While traditionally, contingency planning have been an area of focus for managers and organizations, there are many benefits for individuals as well.

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To understand contingency planning, it’s best to take a broad view. Sure, when companies have a crisis management plan in place, everyone sleeps a little better at night. It’s nice to know that you’ll know what to do if something happens.

But in life — as well as in business — the only real constant is change. As Tina Gupta, VP of Talent and Employee Experience at WarnerMedia puts it , “Change is not something to solve for.” Fear of change and uncertainty leads people to hide from it, interpreting every bit of rough air as a sign of an impending crash.

When you embrace a future-minded perspective , you no longer have to be afraid of uncertainty. Contingency planning becomes a strategy to be proactive instead of reactive . It’s an exercise in looking for ways to thrive instead of survive. 

BetterUp calls this type of person a future-minded leader . Rather than running from potential threats or pretending everything is fine, they cultivate an agile mindset . These people combine optimism, pragmatism, and the ability to envision the future (or, what positive psychologists call prospection ).

Contingency planning example:

Let’s look at how WarnerMedia has been able to embrace contingency planning as a tool to build a psychologically safe environment.

Conducting a risk assessment

Before you can create a contingency plan, you need to identify the risks that may impact your business. The best way to do this is with the support of your team. Hold a brainstorming session where you can talk through recent experiences, upcoming initiatives, and common pitfalls.

This type of risk assessment can't protect you from being surprised. Tomorrow will hold unexpected events, many of which never happened before in your organization (months-long pandemic shutdowns anyone?) Instead think of this assessment as surfacing the things you can prepare for and opening up everyone's imagination to the range of possible obstacles and outcomes. This will prime the pump for awareness, a flexible mindset, and solution-seeking orientation.

Don’t make the mistake of limiting the meeting to just managers. Your entry-level employees and individual contributors will have a lot of insight as to what could happen — and how to handle it.

Companies often make strategic planning an annual event, but you should review your contingency plan more frequently. Risk assessment should ideally be a natural part of planning for every new initiative.

contingency-planning-team-writing-on-a-whiteboard

Here are 4 steps to develop a contingency plan for your team:

1. Identify the triggers

What are the risks? The first step in contingency planning is knowing which scenarios you’re preparing for. It’s impossible to predict everything, but chances are you can think of one (or ten) worst-case scenarios that would throw operations off.

Put these scenarios in order of likelihood. The most probable and important ones will form the backbone of your contingency plan.

2. Examine the situation

In your hypothetical scenario, what would be the most likely course of action? Write that down, but be sure to ask: is it the best course of action? If your new plan is significantly different from what you’ve done before, you’ll want to talk it over with your leaders.

Get your team involved in this stage of the process. One of the benefits of planning in advance is that you have time to brainstorm responses. If the disruption has happened before, ask them what they did to resolve it and what they wish they had done differently.

3. Determine who needs to know

Once you’ve created a viable plan, determine who the stakeholders are. Identify who needs to know as soon as plans change and who will be responsible for kicking plan B into gear. If anyone needs to authorize purchases, provide access to resources, or otherwise support the plan, make sure that they know as well. 

contingency-planning-team-having-a-discussion

4. Practice

If you can, do a practice run of your disaster recovery plan. The specifics will vary depending on the “disaster,” but running through the plan is a useful exercise. It will help you spot areas that you might not be able to predict in advance.

For example, when the coronavirus pandemic sent millions of workers into lockdown, companies that already had remote work policies in place were in the ideal position for the change. Companies that relied on brick-and-mortar workplaces had to quickly develop strategies to ensure remote team members had the technology and support they needed to work from home for an extended period of time. 

How to maintain a contingency plan

In general, it’s a good idea to review your contingency plan on (at minimum) an annual basis. However, there may be other events that might trigger a review of your recovery strategies.

There are three main parts to your plan: the trigger (or unexpected event), the planned course of action, and the people involved. If any of these change, you’ll want to update your plan. 

For example, moving to a new system, platform, or workflow would cause a change in both your Plan As and Plan Bs. If you hire for a new role that sits between functions, that may change the people involved.

Final thoughts

Your business continuity plan isn’t just an exercise in preparedness. It’s an opportunity to help your teams learn how to become more agile and creative problem solvers.

Everyone, from a project management team developing a contingency plan for rolling out a new sales incentive, an IT team planning for a new system to go live, or a manager coaching an employee through creating a contingency plan for meeting work deadlines, needs to develop this skill. In a time of uncertainty and constant change, thinking through possible problems and alternatives in advance is part of life. 

Gupta of WarnerMedia says that empowering her team through coaching has helped them "move from overwhelm to thriving through change." When they trust themselves, the company, and the plan, employees become more confident. They’re more willing to take risks and trust each other.

When things go awry, your plan won’t just minimize the potential impact. It will empower your team to thrive in uncertainty as they respond to whatever gets thrown their way.

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Allaya Cooks-Campbell

With over 15 years of content experience, Allaya Cooks Campbell has written for outlets such as ScaryMommy, HRzone, and HuffPost. She holds a B.A. in Psychology and is a certified yoga instructor as well as a certified Integrative Wellness & Life Coach. Allaya is passionate about whole-person wellness, yoga, and mental health.

It depends. Understanding the contingency theory of leadership

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Marketing Contingency Planning

by Ian Linton

Published on 1 Jan 2021

A marketing contingency plan can help a small business protect revenue, profitability and customer relationships by preparing for unexpected events. The sudden arrival of a powerful new competitor, a problem in your supply chain, the resignation of an important sales representative, a virus attack on your website or the discovery of a major product defect can have serious consequences. If you have a contingency plan in place, you can respond quickly to changes and protect your company against the risk of business and financial damage.

The starting point for a marketing contingency plan is awareness of the risks. You should make a list of potential vulnerabilities in your marketing program, focusing on items that are outside your control. Changes in economic conditions, for example, could impact your customers’ spending power and hit sales of your products. Changes in personnel at key accounts could weaken the customer relationships you have developed and open opportunities for competitors. A major marketing campaign or massive price cut by a competitor could lead to loss of business. By working through a series of “what happens if” scenarios, you can identify areas where you need to prepare a response.

When you have identified the vulnerabilities, you must monitor conditions to try to get an early warning of any increase in risk. Ask your sales team to meet regularly with key clients and look for signs of competitive activity. Check industry publications for competitive advertising and look for details of new products or special offers on their websites. Monitor the performance of your suppliers to ensure that they can maintain continuity of supply and meet your quality standards.

Your contingency plan should set out the actions you will take in the event of a threat or problem. If a competitor cuts prices, set out the prices your team can offer to maintain the volume of sales. If an important customer moves business to a competitor, identify customers or prospects where you could increase business to cover the loss. Set out your procedures for dealing with a product defect and a possible recall campaign. If an important member of your sales team leaves, identify a replacement and prepare a training program to bring that representative up to speed. Identify alternative sources of important components in case one of your suppliers has delivery or quality problems.

When the plan is complete, share it with members of the sales and marketing team so that they are aware of their role in monitoring risk and responding to threats. Appoint a member of the team to keep the plan up to date by incorporating any new research or important information from the field.

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The Art of Managing New Product Transitions

New product launches are highly complex and can pose major challenges to companies. But managing the interplay between product generations can greatly increase the chances for success.

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  • Project Management

Faster time to market and shorter product life cycles are pushing companies into more frequent product transitions, requiring managers to confront the potential rewards and challenges associated with product introductions and phaseouts. Several studies show that most new products fail in the marketplace for a variety of reasons, 1 and both academics and practitioners have identified strategies for improving the chances of success. 2 With a few exceptions, these studies focus on the success of a single product. 3 However, companies often struggle with product transitions even when the new product meets all the requirements for success. Consider, for example, two consecutive generations of high-volume microprocessors that we observed at Intel Corp., the U.S. semiconductor manufacturer. For the sake of this discussion, we will refer to the products as X and Y. (See “About the Research.”)

About the Research

Our research is based on a three-year study between 2001 and 2004 at Intel Corp. on the risks and drivers affecting product transitions. We conducted about 40 semi-structured interviews with managers in supply chain management, demand forecasting, sales, marketing and product development. After studying multiple historical and current product transitions at Intel, we learned that smooth transitions are difficult to achieve. The complexity of demand and supply dynamics causes tremendous uncertainty before a product launch that is not fully resolved until several quarters after it. We observed that functional teams across the organization had access to specific information (for example, about macroeconomic conditions in Asia or the availability of a particular part) that had significant bearing on the relative demand and supply of old and new products. However, the lack of a formal mechanism to aggregate and utilize such diverse information frequently caused misalignment. We saw the need for a new process to overcome this obstacle. The process we designed begins with defining a specific market objective. Subsequent steps involve identifying and measuring a set of factors across departments for each product (old and new) to assess product drivers and risks; exploring possible risks arising from interactions between products using the transition grid; and developing a transition playbook, including prevention and contingency strategies with which to manage and mitigate transition risks.

Intel originally designed X as a transitional product to pave the way for a stronger performance trajectory than was occurring with the previous platform. While X itself performed only slightly better than the previous generation at launch, its design allowed for performance gains later based on a wide array of computing benchmarks. Intel planned to move a substantial portion of the market to X and then complete the transition to Y, which offered similar performance at lower cost.

Unfortunately, the transition to X did not go smoothly. With capacity in place to support a moderately strong ramp up, early production led to excess inventory. X’s failure to meet customers’ needs and inability to usurp sales from its predecessor resulted in continued demand and short supply for the prior product. Consequently, competitors succeeded at increasing unit sales of their products.

Intel quickly realized that there were problems with X’s components and pricing strategy. Management seized upon several measures to improve sales, including rebates, but X continued to languish. As the introduction of Y approached, the company started an ambitious marketing campaign and price cut to spur sales and regain market share. These actions led to record demand for Y, exceeding all expectations. With limited production capacity, Intel struggled to meet demand for some products within the Y family. Finally, after several months, Intel succeeded in balancing demand and supply, eventually regaining the market share it had lost.

Coordinating supply and demand between two product generations can be a difficult and costly problem. Although Intel’s Y met all the requirements for a successful product introduction, marketing and pricing decisions enacted in response to limited market acceptance of X significantly shaped the outcome of the Y launch. Intel’s operations management team did its best to satisfy customers through the transition. However, customers were frustrated by supply shortages, and the transition had substantial costs: lost revenues from discounting Y, marketing campaign expenses, significant investments in capital equipment and expedited shipping.

If the success of a single product is highly uncertain and can pose a major challenge to companies, the interplay between generations of products greatly increases the level of complexity. For example, when General Motors Corp. redesigned its Cadillac Se-ville and Eldorado models in 1992, supply and demand problems followed. Based on its initial forecasts, GM had allocated half of the capacity of its Detroit-Hamtramck plant to the redesigned Cadillacs, with the remainder going to Buicks and Oldsmobiles. But demand quickly exceeded supply, leading to the loss of thousands of potential customers. By the time GM was able to produce enough of the most popular models, the damage had already been done. 4 Cisco Systems Inc. had a similar experience in early 1998 with the launch of product 3S-0, which was designed to appeal to the lower end of the market. Unfortunately, because of its impressive performance-price ratio, it cannibalized sales from higher-end products. As a result, sales of higher-end products suffered, but the new product revenue did not compensate for the lost sales. 5

Companies must learn to manage transitions to sustain their competitive advantage. Our field studies at Intel show that while numerous factors affect the rate and success of product transitions, inadequate information sharing and coordination among groups is one of the more important challenges to successful transitions. 6 Lack of information can prevent managers from adequately assessing the state of the transition and impair the effective design and implementation of contingency planning in the face of unexpected changes. For instance, during Intel’s product X-Y transition, the marketing team did not thoroughly investigate the production capacity upside to support the new marketing plan for product Y, leading to supply shortages.

The alignment of actions and decisions across different internal groups and across organizations helps level expectations and synchronize responses across the various teams involved in the transition, thereby improving the company’s ability to anticipate and react to environmental changes. The ability to adapt to change while meeting market objectives is a critical aspect of managing product transitions. To promote alignment across groups and the development of prevention and mitigation strategies, we have developed a framework and a process for helping managers make decisions during product transitions.

Using our framework, managers can design and implement appropriate policies to ramp up sales for new products and ramp down sales for existing products, balancing the supply and the demand for both so that combined sales can grow smoothly. (See “Smooth and Troubled Product Transitions.”)

Smooth and Troubled Product Transitions

contingency plan for new product launch

View Exhibit

New product transitions should be organized to allow companies to increase sales over time without disrupting sales or profitability. When transitions are rocky, total revenues decline.

contingency plan for new product launch

Although the approach does not eliminate the uncertainty of product transitions, it provides managers with an overall understanding of the risks and challenges and suggests possible courses of action. Early experience suggests that the process can lead to more robust, efficient and effective product transitions. 7

Managing Product Transitions

The process of managing product transitions begins by identifying specific market objectives. Once these have been selected, companies need to understand the product drivers and risks and conduct a factor assessment, which involves monitoring and measuring the factors affecting both old and new products. The process also necessitates a detailed analysis of the risks arising from interactions between products and the development of a transition playbook, which amounts to a catalog of primary and contingency strategies for preventing and mitigating transition risks. As market conditions change, managers need to be prepared to initiate the process again.

Identifying Product Drivers and Risks

Our research on multiple generations of products at Intel suggests numerous factors that affect the adoption rate and success of a new product. The factors fall into two general categories of risks and drivers: demand and supply. Although either a demand risk or a supply risk can lead to a complete product failure, successful product introductions depend on a balance between demand and supply. Demand risks reflect the market’s uncertainty about a new product (for example, concerns about product attributes and transition policies). Supply risks often stem from the challenges of utilizing new manufacturing processes or product designs, or the difficulties of producing and distributing the product. Across demand and supply risks, we focused on a set of factors that influence the success of product transitions. (See “Product Drivers and Risk Factors.”)

Product Drivers and Risk Factors

contingency plan for new product launch

Eight factors significantly contribute to demand and supply risk during product transitions.

contingency plan for new product launch

The eight factors cover most of the risks affecting the adoption rate of a new product. They encompass product features (product capability); process features (internal execution); supply chain features (external alignment and execution); managerial policies (pricing, timing and marketing); and externalities (environmental indicators and competition).

Although organizations may have access to detailed information about the product drivers and the risk factors affecting them, individual functional groups rarely have a complete picture of the overall forces impacting a product introduction. Our process provides a method for developing a cross-organizational transition assessment. This structured and repeatable process benchmarks the prospects and sales forecasts of new products against the experience of current and prior generations of products.

Assessing Relevant Factors

Effective planning depends on collaboration and shared insight across the organization. If the best information is distributed among many different groups, the most one can expect is disjointed decisions. During the factor assessment phase, managers conduct a complete evaluation of the risks impacting a product, highlighting the different challenges. This provides managers with an opportunity to make decisions based on specific information.

To assess the actual values of specific factors, it is necessary to interview key players in functional groups involved in managing the new product (including marketing, sales, planning and forecasting). Each group scores all eight factors from their particular vantage point, using a five-point scale (with one very favorable and five very unfavorable). The scores can be compared with baselines from past products. Since different functional groups typically have privileged understanding and information about specific areas, each group scores every factor and documents the reasons motivating their scores. Sharing the comments and consolidating the information provides everyone with an understanding of how each group assesses the overall risks for a given product. After meeting with all groups, a cross-functional product management team can develop a composite score for each factor, providing a simple metric for the state of a product. (See “Mapping Intel’s Transition from X to Y.”)

Mapping Intel’s Transition From X to Y

In transitioning from product X to product Y, Intel’s primary market objective was to recover market share lost by X. The transition was built on four main factors. On the demand side, the product/platform pricing risk fell from high (for X) to medium (for Y) based on lower component costs and price cuts that accompanied the launch of Y. The risk linked to marketing indicators also improved, from medium to low, since the price-performance ratio made Y an attractive mainstream product. In addition, external alignment improved from medium to low as customers, many of whom had resisted X, looked forward to using Y. On the supply side, risk associated with internal execution rose (from low to medium) for two main reasons: Capacity for producing Y was limited, and the higher-speed products in the Y family reduced factory output. (Since Y was larger than X, it required more factory runs to produce the same number of units.) Overall, the factor assessment process highlighted the differences between the two products: There was high demand risk for X, whereas for Y there was little demand risk but some new supply risk.

Based on this analysis, it should not have been surprising that Y would cannibalize sales of X. In fact, that is what happened: Intel faced shortages of Y and excess inventory of X. An effective strategy for Intel would have been to set a higher price for Y rather than offering it at a discount. As contingencies, Intel could have lowered the price of X in hopes of promoting sales and allocated more manufacturing capacity to Y. Such actions would have rebalanced demand between the two products both in the short term and in the long term. Although price discounting and a marketing campaign potentially might have helped X, using them on Y led to shortages.

Intel recouped its lost market share in the quarters following the launch of Y, so the transition achieved some success. However, the lack of supply strained customer relationships, and by pushing factories to the limit and operating with insufficient inventory, Intel’s operating costs rose during that period.

contingency plan for new product launch

Since managerial and environmental changes continually impact product sales, updating factor assessments allows managers to identify risky areas and evaluate the results of previously implemented strategies. In our experience, however, updating information too frequently can be a distraction since it often takes time for strategies to kick in. Frequent updates may also induce managers to take premature or unnecessary actions. The frequency of updates should depend on the industry in question and the life expectancy of the products. For example, in high tech, the appropriate interval between updates might be monthly, whereas in other industries it might be no more than every quarter or any time a significant change occurs in one of the factors (such as competitors launching a marketing campaign or lowering their prices). Managers should balance the availability of new information and the amount of time required for decisions to have a measurable impact.

Looking Across Product Generations

To understand the risks of a transition from one product to another, it is important to evaluate the interplay between products. A simple method for doing this is to study the interactions between demand and supply risks for the products. Using the composite factor analysis, managers can assess an overall demand risk and an overall supply risk for each product by assigning weights to each factor that composes demand and supply, and then creating a weighted average. For example, by comparing the overall demand risk of a given product to a threshold value, managers can rate the risk above that level as high and below it as low. As a result, the demand and supply risks for either the old or the new product can be either high or low. For any product transition, there are 16 possible combinations of risks, which can be represented in something we call a transition grid. (See “A Sample Transition Grid: Demand and Supply Risks of Two Products.”)

A Sample Transition Grid: Demand and Supply Risks of Two Products

contingency plan for new product launch

The table below provides a snapshot assessment of a typical transition. When both products have high demand or supply risks, the product interactions may further intensify the risks. For example, demand risk is high for both generations of products in rows 10, 14, 15 and 16, suggesting that managers need to monitor inventories closely.

contingency plan for new product launch

Generally, comparative rankings of demand and supply risks indicate that risks for the new product have a stronger impact on profitability than risks for the old product and that companies have less ability to manage demand risks than supply risks. Therefore, demand risks and new product risks tend to have higher risk scores than supply risks and old product risks, respectively. Based on comments from the functional groups, transition team members can use these comparisons to gain insight into key questions, including: Are we producing the right products? Can we meet customer demand? And do customers want the products we supply?

Positioning a particular product transition within the grid enables transition teams to look beyond a single product and evaluate the potential impact that products may have on each other. Even when only one of the products is prone to supply or demand risks, managers should consider potential demand cannibalization and spillover effects on the other product as well as the potential for supply imbalances.

Developing a Transition Playbook

Companies often resort to contingency strategies to rescue a product after it is launched. However, their ability to rescue a product using contingency strategies is limited. 8 Factor analysis and the transition grid provide strategic and tactical assessment tools for anticipating potential challenges in launching new products. However, they do nothing to generate specific strategies or fallback alternatives when the original plans don’t materialize. By assessing the state of a transition early on, companies can gain an overall understanding of the risks impacting the transition and factors requiring immediate attention, allowing them to adopt prevention strategies.

Rather than having to react to problems in the heat of battle, companies can use prevention strategies to help identify the levers that may have the most direct impact on the outcomes they are trying to achieve. Some levers can impact several high-risk factors at once, but only in a longer time frame. As such, these holistic levers target the product road maps rather than the immediate transition. Others affect specific factors that hinder supply or demand during the transition at hand. Managers considering prevention strategies need to consider cost as well as ease of implementation, recognizing which levers are available and which ones they control. For example, companies can have strong influence over pricing, the timing of product introductions, product capability and internal execution but only indirect control over what their competitors do. Managers need to be mindful that prevention strategies can have unintended consequences; once they signal a new strategy, competitors might follow suit.

Weighing these kinds of considerations in advance allows managers to address potential weaknesses before they become crippling. Although a well-designed strategy often takes several factors into account, companies are frequently most vulnerable to factors they have the least control over and rely too heavily on the factors they can control most easily. For instance, a company might have several different ways to mitigate the risk of a supply problem caused by development or production issues. One option may be to increase prices, thereby reducing the likelihood that the products customers order are out of stock. This approach could shift demand to the future, but it may prompt customers to buy competing products. In considering their options, companies need to evaluate the costs. Rather than increase prices, the company may be better off outsourcing capacity to other producers. But that is not always feasible in light of concerns about proprietary information and lead times. To preserve the option of using outsourcing as a contingency strategy when the need arises, companies may need a corresponding prevention strategy to line up alternative resources ahead of time.

Once companies complete their transition risk assessments, managers can create playbooks containing relevant transition scenarios, prevention strategies and contingency strategies. A good playbook identifies events or scenarios that lead to major risks, assesses the impact these events may have on new and current products and lays out prevention and contingency strategies for the transition team. (See “A Sample Transition Playbook.”)

A Sample Transition Playbook

contingency plan for new product launch

A transition playbook identifies relevant scenarios and maps their impact on old products (OP) and new products (NP) to outline possible prevention and contingency strategies. Scenarios should be developed in response to risks identified in the factor assessment and the transition grid.

contingency plan for new product launch

Even well-planned and well-executed product transitions often require strategy updates. By mapping out prevention strategies, risks and contingency strategies in advance, a transition playbook can minimize risks. It allows managers to monitor key supply and demand risk indicators, so they can make strategy revisions and invoke contingency strategies as needed.

Although companies place enormous emphasis on new product introductions, products with many successful attributes still experience difficulty when they interact in unexpected ways with current products. Transition mapping provides a structured approach to collecting information and coordinating actions across the organization. It pulls together the key differences in perspectives from different functional groups, saving companies from some of the second-guessing and manipulation that often occurs when important information is revealed later. While our process was developed at Intel and has been used successfully in transitions there, it can be applied broadly to different settings. The implementation details will change depending on the industry, the company and the product, but the overall methodology will stay essentially the same.

EVALUATING PRODUCT INTERACTIONS is central to the success of product transitions. By anticipating risks, companies can seek ways to align their products. Playbooks can help managers develop robust prevention and contingency strategies to deal with the supply and demand risks identified by the transition grid. They can help managers see potential shifts in the business environment before they occur, allowing managers to make timely adjustments that are particularly critical for products with short life cycles and long production delays.

About the Authors

Feryal Erhun is an assistant professor of management science and engineering at Stanford University, in Palo Alto, California. Paulo Gonçalves is an assistant professor of management science at the University of Miami, in Coral Gables, Florida. Jay Hopman is a strategic analyst and researcher at Intel Corp., in Folsom, California. Comment on this article or contact the authors through [email protected].

1. See, for example, G.S. Lynn and R.R. Reilly, “Blockbusters: The Five Keys to Developing Great New Products” (New York: HarperBusiness, 2002); E.E. Bobrow and D.W. Shafer, “Pioneering New Products: A Market Survival Guide” (New York: Irwin, 1987); and R.M. McMath and T. Forbes, “What Were They Thinking?” (New York: Crown Business, 1998).

2. See R.G. Cooper, “How New Product Strategies Impact On Performance,” Journal of Product Innovation Management 1, no. 1 (January 1984): 5–18.

3. See N.P. Trepanning, “Understanding Fire Fighting in New Product Development,” Journal of Product Innovation Management 18, no. 5 (September 2001): 285–300. See also C. Billington, H.L. Lee and C.S. Tang, “Successful Strategies For Product Rollovers,” Sloan Management Review 39, no. 3 (spring 1998): 23–30.

4. M.L Fisher, J.H. Hammond, W.H. Obermeyer and A. Raman, “Making Supply Meet Demand in an Uncertain World,” Harvard Business Review 72, no. 3 (May–June 1994): 83–93.

5. The Cisco Systems transition example is based on a 2001 white paper, “Strategizing for Success: Cisco Systems Overcomes a Product Transition Dilemma,” ZDNet UK, London, February 20, 2001, http:// whitepapers.zdnet.co.uk/0,39025945,60045032p-39000468q,00.htm.

6. Billington, Lee and Tang corroborate this finding and present a high-level process for managing new product transitions. They recommend dual-product rollovers (that is, introducing the new product before the end of life of the old one) for transitions with high demand and supply risks and solo-product rolls (the new product introduction concurring with the old product’s end of life) for low demand and supply risk environments. Oftentimes, however, the industry dictates the choice of solo versus dual roll. Dual-product roll is standard in the high-tech industry where product platforms are common, even for products with low demand and supply risks. Further, the process proposed by Billington, Lee and Tang does not provide much insight into tactical and operational decisions regarding pricing, capability, marketing budgets or product deployment, all of which can have a substantial impact in the success of a transition.

7. We tested the transition mapping process, particularly the factor analysis process, using a large-scale product transition at Intel. For this transition, Intel’s central business planning group felt that sales of the new product would come in fairly strong. Defining x as the realistic “whisper” estimate among forecasters, a figure of roughly 1.2x was circulated to drive supply. Meanwhile, estimates aggregated from the geographical sales organizations suggested lower sales, ranging over time from 0.65x to 0.9x. Based on the results of the factor analysis and historical sales in the same product family, the transition mapping team predicted that sales were unlikely to exceed 0.93x and would likely be lower. The drivers for this recommendation included solid evidence that component cost would reduce demand early in the transition and that the complexity of the new platform posed significant supply risk. Sales forecasts were revised downward from 1.2x prior to the launch to about 0.9x six weeks after launch and then dropped even lower. By the beginning of the second quarter after launch, the forecast, informed by the transition mapping process, was trimmed to 0.79x for the first two quarters’ total sales. This helped avoid overbuilding supply for the new product while maintaining sufficient stocks of the old product. The process also supported decisions, such as increasing the marketing budget, that helped drive product sales early in the life cycle.

8. For example, refer to H.L. Lee and C. Billington, “Managing Supply Chain Inventory: Pitfalls and Opportunities,” Sloan Management Review 33, no. 3 (spring 1992): 65–73; or G.A. Zsidisin, A. Panelli and R. Upton, “Purchasing Organization Involvement in Risk Assessments, Contingency Plans, and Risk Management: An Exploratory Study,” Supply Chain Management 5, no. 4 (2000): 187–198.

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The Essentials of Contingency Planning and Estimating Contingency for Any Project

By Kate Eby | April 3, 2023

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Contingency planning helps your project team deal with project risks if they happen. We’ve gathered expert tips on creating effective contingency plans and the best tools to help determine the appropriate amount of contingency for any project. 

Included on this page, you’ll find step-by-step guidance to prepare a contingency plan , the top challenges in preparing and using contingency plans , and information on how to determine the right amount of contingency for a project . In addition, you can find a downloadable project contingency plan template to help get you started.

What Is Contingency Planning in Project Management?

Contingency planning is what your project team does to prepare for specific risks that might happen during a project. A contingency plan might include extra funds, extra staff, or steps to take if a particular issue arises. 

Erika Andresen

Contingency planning is “surviving disruptions,” says Erika Andresen, a business continuity and resilience expert, author, and Founder of EaaS Consulting . “It’s determining the priorities and making strategic decisions about how and when and where you're going to spend money and time in order to prepare for those things.”

Melody Smith

“I consider it to be the ‘what if?’” says Melody Smith, a human resources and information systems consultant and CEO and Principal Consultant with New Jersey-based CAM Consulting Solutions . “I am the ‘what if?’ person. It drives people crazy. What if this happens? It may not; let's hope it doesn't. But it is being prepared to know that something is always going to happen, and because something is going to happen, you want to be able to have a plan of attack on how to address it, as far as making sure you have enough resources.”

What Is Project Contingency?

Project experts usually refer to project contingency as the resources set aside as part of contingency planning. These are extra financial or staff resources or extra project time that your team might need to use if a risk happens.

One form of project contingency is cost contingency . These are extra funds allotted to the project for the team to spend if certain risks happen. Another more common form of project contingency is contingency time . This is extra time built into a project schedule to account for project risks.

Experts say that project contingency, both contingency time and cost contingency, is needed in all but the smallest projects.

What Is Contingency Time in Project Management?

Contingency time is extra time that project leaders build into the overall schedule of a project. The project team can use this extra time to deal with the impacts of certain risks and avoid missed deadlines or contract penalties.

Experts sometimes use other terms that mean the same thing as contingency tim e, such as schedule contingency, time contingency, schedule buffer, schedule margin, and schedule float .

Diane Davidson

“Very rarely do most projects deliver on time,” says Diane Davidson, Owner of Clever Fox Advisory , a strategic planning consultancy focused on improving finance operations. “Now, I'm not talking years late, but there’s typically at least a week or two-week delay. Something always comes up. Somebody who's very important goes on vacation.”

Davidson says she builds in contingency time on almost all projects. “If we finish early, before using all contingency time, great! We save money on the project,” she says. “But if we don't finish early, then you don't have to worry about me coming back to you to say, ‘Hey, I need more money to finish this project.’ The project will still finish on budget.”

Dos and Don’ts for Establishing Contingency Time in a Project Schedule

Experts recommend a number of best practices for establishing contingency time in a project schedule. Many of these practices focus on ensuring that contingency time is visible in the project schedule. This helps the team use contingency time appropriately.

Here is the correct way to establish contingency time:

  • Conduct Risk Analysis: Your team should establish contingency time based on a detailed and formal analysis of risks and how they might impact the schedule.
  • Make Contingency Time Visible in the Project Schedule: Contingency time must be visible in the project schedule. You can add it to specific project phases or to the overall project. Either way, set aside a specific amount of time, usually in days or weeks, and label it as contingency time .

Experts also warn of common pitfalls with contingency time. Here are some practices to avoid when adding contingency time to your project schedule:

  • Hiding Contingency Time: Team members should always clearly label contingency time in the project schedule. Never lengthen certain phases of a project — or an entire project schedule — without identifying what parts of that schedule the team considers to be contingency time. In other words, contingency time should not be hidden.
  • Confusing Contingency Time with Management Reserve: Contingency time is not the same as management reserve . Some organizations use the term management reserve to define extra time and resources that management might decide that a project or an organization needs in general. Company leaders hold these resources in reserve to account for risks that are difficult to quantify or that relate to other larger organizational issues. This is different from contingency time within a project.

How Much Contingency Should a Project Have?

Experts sometimes recommend adding a rough estimate of contingency to projects. Most often this is contingency time. When estimating the amount in this way, experts most often recommend adding 20 percent of extra time to a project for contingency. 

For example, if a project is expected to take 200 hours, the team would add an additional 40 hours for contingency time. 

Davidson says project leaders must be careful not to add too little contingency time — or contingency costs — to a project.

“I've seen where people have a 12-month project, and they’ll say: ‘We’ll build in an extra week,’” says Davidson. “Well, that’s not even a day per month. Or ‘This is a $6 million project — let's put in another $20,000. That’s two days of work for the number of people.

“Twenty percent [of added contingency] is what I've typically found,” she says.

Precise Ways to Figure Out Appropriate Contingency for a Project

For many projects, experts do not recommend using a broad contingency estimate. Instead, project leaders should estimate contingency with more precise tools. Some options include team estimates, Monte Carlo simulations, and phase contingency estimates.

Here are some more precise ways to estimate contingency time:

  • Team Estimates: Project leaders can ask the project team to provide three estimates of the time they think they will need to finish a project or each stage of a project. The three estimates include the time needed if everything goes perfectly, the time needed if there are several problems and issues, and the most likely time. The project leaders can then establish a good estimate of contingency needed based on all of those estimates.
  • Monte Carlo Simulations: Monte Carlo simulations are complex models that predict the probability of different outcomes based on a large number of variables. Project managers use these simulations to determine the most likely length and cost of a project. Monte Carlo simulations are highly complex, which is why they are often performed with software. Financial experts also use Monte Carlo simulations to determine the most likely possibility of how an investment might perform over time. 
  • Phase Contingency Estimates: Many experts recommend that project teams make detailed estimates of contingency amounts for each major phase of a project. These estimates are based on the risks that could happen during each specific phase. The team might also establish contingency for each subphase of a project. For instance, it might establish a contingency amount for the time it will take to get permits for a construction project. “I think the most important elements of a contingency plan are to determine the project phases and pad the hours during the more complex stages of the program,” Davidson says. For a software development project, she continues, “This is typical during the development and testing phases. The planning and closing phases usually do not involve as much overhead and can be shortened as needed.” Expert Tip: Always remember to label contingency amounts as contingency time within each phase, experts say. The phase shouldn’t just be lengthened from 10 weeks to 12 weeks without indicating where contingency time has been added.

When to Use a Project Management Contingency Plan

Experts recommend creating a contingency plan for any risk that could have a significant impact on a project or organization. After your team identifies project risks and conducts a thorough risk analysis, it should begin creating a contingency plan.

It’s important to understand that contingency plans can be created only for risks that your team identifies. A contingency plan cannot be created for risks that your team has not identified or would have no ability to identify or foresee.

Contingency Plan vs. Risk Management

Project risk management is the practice of identifying, managing, and mitigating risks in projects. A contingency plan is one part of project risk management. Other parts of project risk management include creating a risk log and assigning owners to risks. 

To learn more about project risk management, see this comprehensive guide on risk management planning .

Contingency Plan vs. Mitigation Plan

Mitigation plans and contingency plans are similar but not identical. A mitigation plan helps you reduce the likelihood or impact of a risk, while a contingency plan helps you map the response to a risk once it occurs. 

In general, a contingency plan focuses on quickly and appropriately dealing with a risk after it happens, while a mitigation plan focuses on preventative measures that make a risk less impactful or less likely to occur.

Elements of a Project Management Contingency Plan

A contingency plan should have several basic elements to help your team respond to risks when they happen. Those elements include a risk probability assessment, details on triggers for an event, and an overall response strategy.

Other important elements include a timeline for the contingency plan and a plan for communicating with important organizational leaders and project team members about the specific risk and contingency plan.

Learn more about the important elements of a contingency plan in this helpful guide to contingency planning.

How to Prepare a Project Management Contingency Plan, Step by Step 

Experts recommend that your project team follow a number of basic steps to create a good contingency plan. First, identify and prioritize risks. Next, create and share your contingency plan. Finally, continually monitor and review your plan. 

Here are the main steps of preparing a project management contingency plan:

  • Identify the Risks: Your team will need to identify all risks that might impact your project. 
  • Prioritize Risks: Your team will assess all the risks that it has identified. Determine which risks are most likely to happen or could have the largest impact on the project, and use these findings to organize risks from highest to lowest priority. .
  • Create a Plan: Your team will create a detailed contingency plan to deal with any risks that your team identifies as important. The plan should include how your team will address the risk when it happens. It will also assign responsibilities for tasks as part of the plan. 
  • Share the Plan: Once a tentative plan has been created, your team will share it with external stakeholders and team members. Review their input or suggestions as you improve the plan.
  • Continually Monitor and Review the Plan: Though your plan might be finalized and approved at the beginning of the project, it could still change. As a project progresses, new risks will arise, and risk priorities will shift. Your team should continually review the contingency plan and make changes where needed.

Project Management Contingency Plan Template Example

Project Management Contingency Plan Example

Download a Blank Project Management Contingency Plan Template for Excel | Google Sheets

Download a Project Management Contingency Plan Example for Excel | Google Sheets

Download this completed example project management contingency plan to help you understand contingency plans. You can use this example plan template — with sections on contingency assessment, contingency analysis and evaluation, and mitigation measures — to write a contingency plan for risks in your own project.

Why Are Contingency Plans Important in Project Management?

Contingency plans are vital for managing any project that involves risk. When project managers create contingency plans, they prevent negative risks from derailing or significantly hampering the progress of a project. 

Here are a few of the basic reasons contingency plans are an important part of project management:  

  • They Show Your Team’s Complete Preparation: Contingency plans show stakeholders and project team members that your team is fully prepared to deal with important risks. “I think there’s no project, no activity, nothing that goes as we plan,” Davidson says. “I think we have to understand that it's very nearsighted to take a project, no matter what the duration is, and say, ‘Oh, everything is going to be a sunny day scenario.’ It’s not showing that I'm a really good project manager. A great project manager knows things are going to go off the rails. With people, maybe there’s a learning curve. Maybe people aren't picking things up as quickly — which is fine — so I build time in to assist with that. That's just showing that I understand how to run a project.”
  • They Lower the Risk of a Project Derailing: When risks occur, they can endanger the progress or success of a project. Contingency plans help your team ensure that won’t happen to your project, even when risks occur. “If you have this contingency plan and are able to start to see that things are maybe starting to unravel a bit, the Debbie Downer comes out and you're able to say, ‘We may want to have someone available over the holiday because something may not work,’” says Smith. “You're more forward-thinking. You're saving time, you're saving money, and you're saving resources.”

Challenges of Contingency Planning in Project Management

Although contingency planning has many benefits, some project teams will face challenges when creating and using contingency plans. Challenges include getting buy-in from organizational leaders, being overconfident in an initial plan, and following through on contingency plans.

Here are some common challenges project managers might face during contingency planning:

  • Teams View Contingency Planning as Low Priority: Some people in organizations view contingency planning as a low priority in comparison with other project management work. Project leaders often need to convince them of the importance of contingency planning. “The line I like to use — that I took from somebody else — is, ‘Planning is hard. Explaining why you didn’t is even harder,’” says Andresen. “Because, yes, it's a pain in the butt to do the plan.” But worse, she says, is when a risk becomes a real issue and an important stakeholder asks: “You didn’t even think about this? You kind of knew this was going to happen, or that this was even potentially going to happen, and you decided not to do anything about it?”
  • Organizational Leaders Don’t Prioritize Contingency Planning: Even organizational leaders sometimes don’t understand the importance of contingency planning. Project leaders must work to get buy-in from company leaders and sometimes convince them of the need for contingency budgets. “That's always been my challenge,” Smith says. “How do you influence somebody — the people who have the money, the CEOs, or even the head of departments — that we need this? All they're telling you is, ‘You have to make it work.’ I think that's the piece that's always driven me crazy.”
  • The Team Is Overconfident in Plan A: When your project team is very confident in your overall project plan, they may believe that there’s no need to prepare for certain risks. That can make it difficult for them to work on and support good contingency planning.
  • The Team Spends Too Little Time Identifying Important Risks: Contingency planning doesn’t work when your team doesn’t identify real risks to worry about, of course. Your team must fully examine all possible risks, decide which are most important, and make plans to deal with them.
  • The Team Is Uncertain About What Resources Are Available: Teams might have challenges in understanding how to plan for potential risks and issues if they don’t understand the resources available to help deal with those issues. In those cases, the team might not “really know what to put into a contingency plan,” says Smith, “because you don't know what will be available, You can think of any piece of a project that can possibly go wrong, but if you don't know what other resources you're going to have available, it's a little difficult to be able to put that together.”
  • The Team Has a Plan but Doesn’t Follow It: Some organizations create a contingency plan, and when a risk becomes a reality, they frantically react and ignore the plan. It happens more often than people might think, Andresen says: “If you have a plan, follow it. Don't make the decision not to follow the plan.”

How to Manage a Contingency Budget in Project Management

It’s important to manage a contingency budget well in project management to ensure the project team has all resources it needs to complete a project successfully. Managing a contingency budget means understanding contingency reserves, contingency costs, and contingency funds. 

For more resources and information, see this guide to managing a contingency budget.

Contingency Reserve in Project Management

A contingency reserve is the amount of resources that an organization sets aside to deal with project risks. Most often, project managers allocate funds in a contingency reserve, but some managers may also include staff time.

Organizations will often use estimates and detailed calculations to determine the amount of contingency reserve they need for a project, either in costs, time, or both. 

A common method for determining the amount of contingency reserve is to calculate expected monetary value (EMV) with a quantitative risk matrix . This calculation takes the probability of a risk happening and multiplies that by the estimated financial cost of the risk happening. The calculations for each risk are added together for the total contingency reserve that would be required.

EMV = Probability x Impact 

Tip: Despite the name, expected monetary value can estimate contingency time as well as contingency cost.

The below graphic shows how a team might track its contingency reserve for a project, month by month. It would track the contingency reserve in concert with the project’s total budget and the running costs for the project.

Contingency Cost in Project Management

Contingency cost in project management is a part of the project budget  that is allocated to risk events that are not in the original cost estimate for the project. This money can help reduce the impact of known risks and compensate for unknown risks.

A Contingency Fund in Project Management

In project management, a contingency fund is the amount reserved to cover contingency costs. Also called the contingency reserve , this fund addresses contingency costs, rather than contingency time.

Building Contingency Planning into Project Teams

Project leaders should keep in mind the importance of good contingency planning as they build their project teams. For example, having a team with diverse skill sets and a mix of experience levels will help create a balanced response to risk events.

Here are a few things project managers should keep in mind when building contingency planning into project teams:

  • Create a Team with Diverse Skill Sets: Project managers should consider all skills they will need for a project, including special skills that might factor into various contingency plans for the project. They’ll want to make sure they have the range of skills required for their contingency plans.
  • Assemble a Team with a Mix of Experience Levels: Project managers should consider gathering both junior and senior team members for their projects. This will give them the breadth they need to deal with various risks and issues.
  • Consider Team Skill Sets: Project managers will want to understand and track the exact skills of each of their team members. This will allow them to incorporate those skills into contingency plans. It will also allow them to call on the right person immediately when a risk occurs.

The Importance of Scheduling in Project Contingency Planning

Good contingency planning can happen only when project leaders are transparent and clear about project scheduling. This means clarity on time goals for various phases of the project and what contingency time might be available.

Project managers should also continually monitor the schedule, make changes when necessary, and be transparent with the entire team about those changes.

It’s especially important for project leaders to be transparent about schedule issues and changes with organizational leaders and other important stakeholders.

As a consultant in project management, Davidson says it’s important to have conversations with clients early and often about project scope, budget, and deadlines. “It's better also to prepare because the worst thing you can do is get to the fifth month and say, ‘We're not going to deliver on time,’” she says. “I see more people get in trouble because they don't have the upfront honest conversations in the beginning. They overpromise and underdeliver.”

Effectively Plan for Contingencies with Your Projects with Smartsheet

From simple task management and project planning to complex resource and portfolio management, Smartsheet helps you improve collaboration and increase work velocity -- empowering you to get more done. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed.

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today.

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The Walt Disney Co. and Warner Bros. Discovery announced on Wednesday that the companies will launch a new bundle service this summer that would combine Disney's Hulu and Disney+ streaming services with Warner Bros.' Max app.

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  1. What Is Contingency Planning? [+ Examples]

    Contingency Planning in 7 Steps. 1. Identify critical business functions. This first step is the most important aspect of your planning, as it sets the tone for why your plans need to exist in the first place. During this phase, identify all critical areas essential to keeping your business up and running every day.

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    Companies often make strategic planning an annual event, but you should review your contingency plan more frequently. Risk assessment should ideally be a natural part of planning for every new initiative. 4 steps to develop a contingency plan. Here are 4 steps to develop a contingency plan for your team: 1. Identify the triggers. What are the ...

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  21. Product Launch Contingency Plan Ppt Sample

    Features of these PowerPoint presentation slides: This is a product launch contingency plan ppt sample. This is a four stage process. The stages in this process are immediate launch failure, long term failure, reaction from competition, decrease in income of consumers.

  22. How to Manage Risks in New Product Launch

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