A disadvantage of contingency funds is:
A)A recognition that the future contains both knowns and unknowns and the problems that might arise will impact the budget.
B)It is difficult to ascertain across what project activities contingency funds should be applied.
C)That application to the contingency fund gives an early warning signal of a potential overdrawn budget.
D)That provision is made in the company plans for an increase in project cost.

Question

Quizplus · Accepted Answer

The disadvantage of contingency funds is that it may be difficult to determine which project activities the funds should be applied to. This can lead to inconsistent application and potential misallocation of funds. The other options listed are not disadvantages of contingency funds.

A Disadvantage of Contingency Funds Is