Why Contingency Plan is Important in Software Development

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Why Contingency Planning is Important in Software Development

Both of them indeed had a plan but I bet no one had followed their plans to the tee in the real world. Because no matter how perfect your plan seems, unexpected things ought to happen along the way, and how a company reacts to these events tells a lot about what their outcomes might be. Companies need to adapt when their plans fail in the real world. And that happens more often than you can imagine.

A few years ago, people wrote off the companies who take global pandemics and government lockdowns into consideration while planning their moves. But, it all paid off in times of crisis. Why? Because they had a good contingency plan.

Now, what is this contingency plan, and why does a custom software development company need to have one in their quiver? We are going to talk all about it along with how to create a sound contingency plan in this blog. So without any further ado, let’s jump right into it.

What is a Contingency Plan in Software Development?

A contingency plan is a plan that enables the organization to deal with problems that may arise during the development, testing, and production of a software product. The purpose of a contingency plan is to ensure that there are procedures in place so that if something goes wrong, the organization can handle it.

As software development continues to evolve, so do the risks associated with it. For example, in earlier years, most software projects were developed by a single individual who was responsible for all aspects of the project from start to finish.

Today, however, software development teams consist of multiple people working together on individual projects or group projects together to develop a single product or service. This type of development requires different types of contingencies than those required during an individual project because parts may be added or removed at any time during its life cycle depending on customer needs or other factors outside of your control (such as changing market conditions).

Why is a Contingency Plan Important?

The purpose of a contingency plan is to identify and mitigate risks. A contingency plan is essential for software development projects that involve multiple stages of development and delivery. A good contingency plan will help you avoid costly delays, lost revenue, or other negative consequences that could occur due to a crisis or disaster.

A contingency plan should be in place for any project start-up or major event that may affect the business, such as a new website launch or data breach. A thoroughly planned contingency strategy will help you stay on track to achieve your business goals.

It also helps you to manage changes in your software development team, and ensure that changes are done as smoothly as possible. Not only does a contingency plan enlists all the potential risks impacting your project, but it also includes all the steps that need to be taken if these risks happen, including:

  • Establishing a test environment.
  • Identifying who should take ownership of each risk, and who will hold the responsibility for handling that risk.
  • Developing a solution for each risk, if needed.
  • Determining how long it will take to implement each proposed solution (If the solution needs more time than originally anticipated).
  • Taking actions when appropriate (e.g., canceling meetings or rescheduling meetings).

How to write a contingency plan for your business in 5 simple steps?

Now that you know the importance of having a sound contingency plan ready then why wait, know right now how you can come up with one in just five simple steps.

1. Map out essential processes

The first and foremost thing you need to do is make a list of every single process that is crucial to your business and for the betterment of your customers. For example, if you have an ecommerce business then your list might look something like this –

  • Security system
  • Payment methods
  • Easy website navigation
  • Mobile compatibility
  • Shopping Cart and Checkout Process
  • Calls to Action
  • Customer support
  • Shipping and delivery processes


2. Create a list of risks for each process

Now, let’s consider the shipping and delivery process and what could go wrong in this process that could disrupt your business.

  • The vehicle full of delivery packages might get involved in an accident
  • The package gets damaged during the delivery
  • The package gets lost at a distribution center
  • The package is delivered to the wrong address

And these are just the simple things. Anything could go wrong, if you think about it you might have experienced a few or heard about similar incidents from others too. You rely on this process but due to a human error or some sort of emergency, your entire business might easily get disrupted.

3. Evaluate the potential impact and likelihood of each risk

Once you identify the potential risk for each fundamental process, it’s time to evaluate the chances of its happening. For example, the chances of customers receiving the damaged products are higher than the chances of your delivery vehicle getting involved in an accident. You can also look up the past industry data for reference.

And then you must evaluate that if these risks occur then how much impact will it have on your business? This is what businesses say about qualitative risk assessment. Here, you evaluate each risk and then rate them on a scale from 1-100 and then multiply them by the percentage of chances on how likely it is for them to occur.

4. Calculate costs and contingency reserves, and identify issues to mitigate

I know the qualitative risk assessment is a common approach but still, not many businesses use them. Why? Because today, companies prefer to use predictive models that can warn the companies about the potential risks. That is good for big trend shifts in the industry, not for some small and more practical shifts or changes in your fundamental processes. Because this is more of a practical approach to risk assessment.

Now, after assessing each potential risk, you must evaluate how much it might cost your business. To get a better understanding, you can simplify this assessment into four categories:

  • The full potential loss from the event
  • Expected loss from the event
  • Cost of response (post-event)
  • Cost of mitigation (pre-event)

This will help you estimate the potential costs of any unexpected event. You can then make an informed decision about your budgeting contingency reserves for the project and yearly budgets.

Now let’s say for some reason your ecommerce site is down, your loss will be the number of online sales revenue per hour multiplied by the expected downtime. Now, you have to make assumptions, make one realistic assumption and then consider a worst-case scenario. Now, if you have hosting services then they too will charge you for restoring your site then that fee will also be considered as your response cost.

Now, this event is likely to happen so you must have enough reserves up to your sleeve when the event occurs. Apart from that, you can also take some preventive measures like installing a good security system with a firewall and two-factor authentication. But remember you have to consider all of these costs in your budget.

After all, a very close budget assumption is the first emergency response and prevention. Without enough budget at your disposal, no one can take any steps to deal with the situation.

5. Create a response plan for prioritized events

You must have a clear response plan ready for each potential risk. Every company has a standard operating procedure in place to counter the risks. And to create one for you, answer the following questions –

  • What is it that you can do ahead of time to prevent or minimize the risks or adverse effects of an event?
  • When the event occurs, what should be your immediate response to minimize the impact or control the damage?

The specifics of your answers will depend particularly on your company’s situation, ambitions, and adopted methodologies.


The scope of the project is the most important thing to take into consideration when you are designing your plan. Also, it would take a whole lot of forethought and precision to analyze potential risks and come up with a contingency plan for each one of them.

It is also recommended that you prepare more than one contingency plan for unexpected events, in case one plan fails, you can immediately put another plan into motion. This will come in handy to hold things together when they are falling apart due to some unforeseen events.

You must always employ skilled professionals in your team. Such people can handle pressure and know how to deal with adversity. This will only help you increase the chances of getting your business through the crisis and successfully attaining your goals.

Son Chu

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