Question

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.

Answer 1

Answer: B) it is difficult to ascertain across what project activities contingency funds should be applied.

Step-by-step explanation:

Contingency funds are needed to make sure that a company remains stable by being able to use these funds to take care of emergency needs as opposed to getting loans at short notice.

Contingency funds however have the disadvantage of being difficult to apply because it is difficult to ascertain across what project activities contingency funds should be applied.

If a project is going awry, determining exactly which part to apply the contingency funds has always been a hassle because knowing exactly where to apply the funds to, to get the project stable is not an easy task abd one could end up applying it to the song part therefore bringing doom to the project.