Your construction project is in month 18 of a 30-month schedule. A new environmental regulation has been enacted that requires additional soil remediation procedures for your project site. The regulation applies retroactively to work already completed. Your legal team estimates compliance will add $1.2M in costs and 3 months to the schedule. You have management reserve of $800K and schedule reserve of 6 weeks. The contract includes a force majeure clause and regulatory change provisions. Your CFO wants to minimize financial impact, your customer is concerned about schedule, and your legal counsel advises documenting everything for potential claims. What is your best course of action as the project manager?

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Accepted Answer

The correct answer is B. Option B is correct because a regulatory change affecting project scope and requirements requires formal change control processing in a predictive environment. The change is not optional—it's a compliance requirement affecting baselines. Using management reserve (within PM authority) plus requesting additional funding appropriately addresses the financial gap. Invoking the regulatory change contract provision protects the schedule baseline and maintains customer relationships by following agreed contract terms. This approach maintains predictive control discipline. Option A (force majeure) is incorrect because regulatory changes, while external, are typically not considered unforeseeable events that suspend contracts—the contract specifically has a regulatory change provision for this scenario. Option C attempts to absorb a mandatory scope change through schedule compression, which risks quality and increases risk unnecessarily. Option D treats a scope change as merely a risk event and suggests using contingency reserve (meant for risk events) rather than proper change control—this is a definitive change requiring baseline modification, not a workaround situation.

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