Notably, most supervisors might view the management reserve as excess profit. It is a justifiable interpretation but only if the reserve is not used by the end of this project (Kerzner, 2009, p 644). However, in the case of Scott contract, the reserve is justifiably at Jerry’s disposal. Despite the conflict that may arise between Jerry and his boss, he should seek intervention from the general manager in order to keep the project afloat.
Despite the project facing sundry challenges in all matters cash flow, it is just but a temporary problem. The bathtub period is expected to last for a few months and afterward returns realized for a period of at least five years (Kerzner, 2009, p 652). With this stated, it is vital for the key personnel to remain in the project. For this to happen, it is important that the project manager make the decision to support them on overhead.
The idea to approach the customer for with the problem is very tempting. However, this will not help the company with marketing. The customer will view the company as unable to deal with crucial problems without always asking for assistance (Kerzner, 2009, p 660). Therefore, if the company could afford to run the project without the assistance of the customer, then it is advisable that they proceed without their help.
In the event that there was cost overrun, as the customer, I would fully take responsibility for the additional expenses. This is because as the customer it is my responsibility to take care of the cost incurred while the project is underway and more so if the cost incurred would enhance the quality and returns of my product.
It is expected that in the event there was an underrun, the project manager would use the resources resulting from the unspent resources instead of billing the extra cost to the customer. This would result to good customer relation. In addition, it is traditional to use underruns for other necessities of the project.
References
Kerzner. H., (2009). Project management: a systems approach to planning, scheduling, and controlling
