Question

You are managing a predictive government defense project under a firm-fixed-price contract. Six months into the 18-month effort, a new federal regulation is published that requires significant changes to data encryption standards for all systems handling classified information. Your project was 95% compliant with the old standards, but the new regulation requires hardware replacements and software re-engineering affecting 40% of completed work. The contracting officer has confirmed this constitutes a changes in law provision under the contract. Your executive sponsor is pressuring you to absorb the changes within the existing budget to preserve the company's reputation with this client. What is the MOST appropriate course of action?

Accepted Answer

Document the regulatory change as a contract change request, quantify the cost and schedule impact using bottom-up estimating, and submit a request for equitable adjustment to the contracting officer

Answer

Re-baseline the project to absorb the regulatory changes by reducing quality testing and documentation activities while maintaining the original delivery date

Answer

Implement the regulatory changes immediately to maintain schedule, then negotiate cost recovery with the client after demonstrating good faith compliance

Answer

Conduct a make-or-buy analysis to determine if outsourcing the encryption components could minimize cost impact and preserve the project baseline

PMP Practice Question: Business Environment — Predictive, Hard

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