True or False: Contingency funding consists of both budget reserves and management reserves.

Contingency funding is indeed comprised of both budget reserves and management reserves, making the statement true. Budget reserves are allocated funds set aside specifically to address identified risks that could potentially impact the project’s budget. These are typically planned for predictable risks that the project manager may anticipate during the project lifecycle.

On the other hand, management reserves are meant for unforeseen risks, also known as unknown unknowns. They are not earmarked for specific risks but serve as a buffer for unexpected issues that may arise. The purpose of having both types of reserves is to ensure that a project can respond appropriately to various scenarios, allowing for flexibility and adaptability when managing costs associated with risks. By including both budget and management reserves, a project manager can better safeguard the project's financial integrity and increase the likelihood of successful project delivery.