Single-Source Control Module and a Sub-Tier Fire
A project manager is delivering a seven-month, $1.1 million upgrade to a sterile filling line for a pharmaceutical manufacturer. The line cannot be validated without a custom control module from a single-source supplier. The module is priced at $240,000 under a fixed-price contract with liquidated damages of $2,000 per day, capped at 10 percent of the contract value. The supplier quoted 14 weeks but now says a fire at its sub-tier plant will push delivery to 20 weeks. The project schedule has zero float on the commissioning path. The internal engineering team proposes substituting an off-the-shelf PLC and building a bypass, which would cost about $90,000 and add five weeks for design and revalidation; the quality unit warns that the change would trigger a regulatory variation submission. The risk register lists 'single-source control module delay' as low probability/high impact but contains no quantified contingency. The steering committee meets in 48 hours.
1. How should the PM assess and quantify this risk before the steering committee?
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The PM should treat this as a live risk, not a supplier excuse. First, verify the sub-tier event and obtain a written recovery schedule with evidence: fire report, revised lead time, sub-tier capacity and the supplier's recovery actions. Second, quantify the delay. The slip is six weeks against the 14-week quote. At $2,000 per day, 42 days would be $84,000, but the cap is 10 percent of $240,000, which is $24,000. The recoverable liquidated damages are therefore only $24,000, far below the likely cost of six weeks' delay. The PM should also check whether the fire is a force majeure event; if it is, even that $24,000 may not be payable. Third, estimate the real cost of delay: idle commissioning team, lost production, regulatory variation costs and any consent deadline exposure. Compare that with the bypass option at $90,000 plus five weeks and revalidation. Fourth, update the risk register with probability, schedule impact, cost impact, expected monetary value and an owner. The absence of quantified contingency is itself a governance gap that the committee needs to see.
2. What risk response and procurement actions should the PM recommend?
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Recommend a dual-track response. Track one: hold the supplier to a contractual recovery plan with weekly milestones, executive escalation and a right to audit sub-tier progress. Issue a formal notice that preserves the client's rights without destroying the relationship, and take legal advice before doing so. Track two: fund a small design study for the off-the-shelf PLC bypass so the option is real, but do not release full revalidation until the data justify it. This buys information and schedule protection without committing to a five-week revalidation and a regulatory variation prematurely. Present a decision tree to the steering committee: wait for supplier recovery, switch to the bypass, or run a hybrid, each with cost, schedule and regulatory risk. Set a decision gate, for example two weeks, and release contingency only against defined triggers. Do not simply accept the 20-week date, and do not authorise the bypass purely to look decisive-five weeks plus a variation may not beat a credible supplier recovery. The procurement action is to convert the supplier's verbal assurance into a measurable, enforceable commitment.
3. What quality and regulatory considerations must be included in the decision?
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Any design change needs formal change control, a risk assessment, validation and possibly a regulatory variation. The PM must not allow the team to install a bypass and 'validate later'; that would create a compliance breach and could invalidate the line's qualification status. Quality and regulatory affairs must be in the decision meeting, not informed afterwards. The PM should ask for the variation submission lead time and the evidence package required, then treat that lead time as part of the bypass option's true duration. The decision record should state why the chosen path is acceptable, what validation evidence will be produced and who approves it. If the supplier recovery path is chosen, the PM still needs incoming inspection, traceability and change verification for the replacement module. Quality is not a schedule trade-off that the PM can make alone; the committee should see the regulatory consequence explicitly before deciding.