Question

Your construction project is building a manufacturing facility in an emerging market. Six months into the 24-month schedule, the host country implements new environmental regulations requiring additional emissions control systems not included in your original scope. Compliance will add $3.5M to the $28M budget and extend the schedule by four months. However, your contracts with the client contain a clause stating that regulatory changes are the client's responsibility. The client's legal team argues that these regulations were proposed (but not enacted) before contract signing, so you should have anticipated them. The client refuses to approve a change request and demands you absorb the costs. Senior management wants to maintain the client relationship for future opportunities worth an estimated $200M. What should you do?

Accepted Answer

Conduct a legal review to determine if the proposed regulations constituted sufficient notice, then proceed based on contractual obligations regardless of relationship impact

Answer

Escalate to senior management with a recommendation to absorb the costs to preserve the strategic client relationship and future business opportunities

Answer

Document the regulatory change as a client-responsible item per the contract, submit a formal change request, and prepare for dispute resolution if the client continues to refuse

Answer

Negotiate a compromise where your organization absorbs half the costs and schedule impact to demonstrate partnership while protecting contract terms

PMP Practice Question: Business Environment — Predictive, Hard

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