You are a qualified accountant in practice, and you lead a team providing management consultancy services. In recent years your practice has undertaken several assignments on manufacturing efficiency improvements for a medium-sized, quoted group of companies. It operates through a number of divisions, but line responsibility appears complicated, and so significant control rests with four semi-autonomous regional directors. The authority of these directors is enhanced by their seats on the group’s main board.
You have cultivated a good working relationship with the regional director with whom you are in contact most frequently. Three weeks ago that regional director asked you to investigate, as a matter of urgency, a particular project, Project A. He had been irritated to be told, informally, of the likely deferral of the agreed delivery date for the components on this sophisticated design-and-build contract. Project A comes within the regional director’s responsibility primarily because of the location of the factory that makes the key components.
Once on site, your team had discovered a range of difficulties with the project, starting with fundamental design faults and extending deep into the manufacturing processes. It is clear that various contracts will be breached, and litigation is likely to follow. Your team has produced a prioritised list of actions and begun working to establish a revised schedule to take the project to completion.
At a recent meeting, you gave the regional director and the factory manager your estimate that the delay to Project A will be a minimum of three months. You indicated that extra direct costs are likely to be £7 million to £10 million. This is before any potential claims for compensation. On the instructions of the regional director, your team has been working on a formal...