Youve been given the critical assignment of selecting the si

You\'ve been given the critical assignment of selecting the site for your company\'s new plant. After months of negotiations with landowners, numerous cost calculations, and investments in ecological, social, and community impact studies, you are about to recommend building the new plant on the Lansing River site. Now, just 15 minutes before your big presentation to top management, you discover a possible mistake in your calculations: site purchase costs appear to be more than you calculated—nearly 10% over budget. You don\'t have time to recheck all your figures, so you\'re tempted to just go ahead with your recommendation and ignore any discrepancies. You\'re worried that management won\'t approve the purchase if you can\'t present a clear, unqualified solution. You also know that many projects run over their original estimates, so you can probably work the extra cost into the budget later. On your way to the meeting room, you make your final decision. In a few paragraphs, explain the decision you made.

Solution

The decision is to go ahead with the presentation to the top management . During the presentation it is important to present to the top management that the site purchase costs have been estimated at more than 10% over the actual budget . It has to be clearly explained to the management that the 10% higher cost is quoted to make provisions for any unforeseen expenses or to meet any other contingencies to be able to smoothly complete the purchase transaction of the land. The management should be made aware that any purchase involves a small variation in the purchase costs and the 10% higher costs is just to accomodate this variation and hopefullythe purchase of land is completed within the allocated budget and the excess budget left can be made use of in meeting other expenses during the new plant execution .