What percentage of the budget and project duration do most companies recommend setting aside for unknown risks if there is no past experience?

Most companies recommend setting aside approximately 15% of the budget and project duration for unknown risks, particularly in the absence of past experience. This practice acknowledges the inherent uncertainty and variability in project execution, especially when dealing with new projects or unfamiliar tasks where historical data cannot guide risk estimation.

The rationale behind allocating this percentage stems from the recognition that unknown risks can significantly impact project success. By reserving 15%, project managers create a buffer to address unforeseen issues that may arise, thus helping to mitigate potential negative effects on the project’s schedule and costs. This approach fosters a proactive risk management strategy, aligning with best practices in project management by ensuring that there are sufficient resources available to handle unexpected challenges without derailing the overall project objectives.

This level of contingency allows organizations to operate with a degree of flexibility, empowering them to respond effectively when surprises occur, thereby enhancing the likelihood of project success.