Which type of reserves are controlled by the project manager and owner to cover major unforeseen risks?

Management reserves are funds set aside to address unforeseen risks or events that may impact the project, which are not accounted for in the original project plan. They are typically controlled by the project manager and owner, allowing them to respond effectively when unexpected issues arise.

The primary purpose of management reserves is to provide a flexible cushion that can be tapped into when significant risks materialize, ensuring that the project can continue moving forward without considerable delays or compromises in quality. Since these reserves are not allocated to specific risks or tasks, they enable project leaders to make strategic decisions on a case-by-case basis as circumstances develop.

In contrast, contingency reserves are specifically allocated for identified risks that have been assessed and are likely to occur. Operational reserves and budget reserves may refer to different aspects of project management and do not share the same characteristic of being controlled directly by the project manager for unforeseen risks. Instead, they are more permanent allocations or budgetary considerations not set aside for unexpected challenges.