What is Reserve Analysis?
Reserve analysis sizes and then monitors the project's buffers: contingency reserve for identified risks (inside the baseline, PM-controlled) and management reserve for true unknowns (outside the baseline, management-released). Sizing methods run from percentage rules to EMV sums to Monte Carlo percentiles.
The monitoring half is the underrated part: comparing reserve remaining against risk remaining. Plenty of reserve with most risk retired is comfort; thin reserve with the riskiest phase ahead is a warning that arrives early enough to act on.
Worked example
A tunnel project sets contingency at the P80 Monte Carlo value ($14M) and holds $6M management reserve above it. At the halfway review: $9M contingency left, but the high-risk river crossing is still ahead, carrying $8M of the register's remaining EMV. Reserve analysis calls it honestly — nominally fine, actually tight — and the team pre-negotiates access to management reserve before the crossing starts.