A budget contingency plan is a budgetary allocation set aside for an occurrence in the future, in most cases a problem, an emergency or any unexpected expense that needs to be addressed as quickly as possible for a business to resume normal operations. (Baccarini, 2004). A budget contingency plan helps in risk and losses mitigation. It also helps in controlling the main budget performance in a case where the costs are higher than the sales. It is also helpful in cases where an organization is operating while straining its resources and it needs to get back to its usual operation mode.
In the event where a fire consumes the current offices of the business and destroys everything, the company will need temporary offices so as to continue with operations. A budget contingency plan can be put in place, putting into considerations the prices or rent of temporary offices the company may want to settle in after a crisis of fire (Federal Emergency Management Agency (FEMA), 2005).
In the event where many computers or general electronic machines which include printer's breakdown and form a major use to an organization, a budget contingency plan can be put in place. It is done so that if any of them breaks down, the firm will devise a way of acquiring another one without delay or hassle and the operations will continue normally (Federal Emergency Management Agency (FEMA), 2005).
References
Baccarini, D. (2004, September 1). Estimating Project Cost Contigency-A Model And Exploration Of Research Questions. Retrieved March 25, 2014, from http://www.arcom.ac.uk/-docs/proceedings/ar2004-0105-0113_Baccarini.pdf: http://www.arcom.ac.uk
Federal Emergency Management Agency(FEMA). (2005, March 1). Retrieved March 25, 2014, from http://training.fema.gov/EMIWeb/downloads/is15aSpecialEventsPlanning-JAmanual.pdf: http://training.fema.gov
NC State University. (2014, March 25). Budgeting Guidelines. Retrieved March 25, 2014, from http://research.ncsu.edu/sparcs/budgeting-guidelines/: http://research.ncsu.edu
