How to plan and manage reserves effectively

Three categories comprise the major project manager (PM) responsibility. To be successful, he/she has to control quality, schedule and budget. When these come together inside an agreement with a customer/sponsor, all is well. NASA has been transitioning from the paradigm of implementing a few "large" (> SIB) projects to one of more "smaller" (< $600M) cost-and-time-constrained projects. Of course, science results of the highest caliber are the basis of all agreements. In other words, cheaper, faster, better are still fundamental... to wit, quality, schedule and budget. The challenge for modem PM's is clear. To maximize the likelihood of success, the PM needs a strong buffer of margin and reserves. However, having a buffer does not necessarily translate into understanding whether it is enough, or how and when to release/spend reserves. Thus, a PM needs a well-developed reserves management plan, a.k.a. cash flow planned inside the time boundaries to defeat threats. A technique is offered to plan for cash flow of reserves that can pay great dividends in confidence and eventual success.