Question

A project has consumed $400,000 of its $500,000 budget, but a recent market shift means the product will no longer meet customer needs and cannot be sold. Completing the remaining work will cost another $100,000, and the finished product is now expected to generate no revenue. Reworking the concept would require a new $250,000 project that is forecast to generate $600,000 in revenue. What should the project manager recommend to the sponsor?

Accepted Answer

Recommend terminating the current project and pursuing the reworked concept, since the already-spent $400,000 is a sunk cost that should not influence the decision

Answer

Finish the current project because $400,000 has already been spent and abandoning it would waste that investment

Answer

Continue the current project but reduce quality to save the remaining $100,000 in costs

Answer

Delay any decision until the full $500,000 budget has been spent so the project can be formally closed