4.6. Plan and Manage Finance
💡 First Principle: Financial management on a project is forward-looking risk management, not backward-looking bookkeeping — the enablers here are almost entirely about anticipating variance and reserving for it, not just tracking spend after the fact.
Enablers: analyze project financial needs, quantify risk and contingency financial allocations, plan spend tracking throughout the life cycle, plan financial reporting, anticipate future finance challenges, monitor financial variations and work with the governance process, and manage financial reserves.
The distinction between contingency reserves (for known, identified risks) and management reserves (for unknown, unidentified risks) is a frequently tested nuance: contingency reserves are typically within the project manager's authority to use as identified risks materialize, while management reserves usually require sponsor/governance approval to release.
⚠️ Exam Trap: Using contingency and management reserves interchangeably in a scenario answer. The exam tests whether you know which reserve responds to a known risk that materialized versus an entirely unforeseen event.
