APF Engineering and Rowntree Pulp and Paper, Inc.

(Case-study # 2 for an adjustment letter)

You are a Project Manager for APF Engineering. Last week, your company finished an
important project for Rowntree Pulp and Paper, Inc. The project was the design and
construction of new safety railings throughout the planer mill in Rowntrees lumber yard
to correct a deficiency found in a recent WCB safety inspection.
This morning you received a letter from Donald Goldberg, General Manager of Rowntree
Pulp and Paper, Inc. Mr. Goldberg is upset with the final bill for the project. He states
that the original price you quoted him was $16,000, but the final bill is for $22,450.
You checked your records and found that Rowntrees Director of Sales, Ms Ghatak,
contacted your Project Engineer, Michael Tran, on the first day of construction to ask
that the original schedule of two weeks be reduced to eight days. She explained that
Rowntree Mills Inc. had just received an important contract for 5 million board feet of
2x4s and, in order to meet the delivery dates, the mill would need to be running three
shifts a day for two weeks. Moreover, they would not be able to complete the order and
ship it on time if APFs project was not completed early.
You consulted Michael Tran and he said that he explained to Ms. Ghatak that such a
change in the schedule would increase the cost of the project by approximately 25% to
cover overtime for labour. According to Mr. Tran, Ms Ghatak said that the additional cost
was fine because Rowntrees contract was sufficiently profitable to justify the additional
expense.
Reply to Mr. Goldbergs letter, bearing in mind that this is a very small project for your
firm but that you took it on because Rowntree is currently negotiating to buy the site next
to its existing plant and build a new facility within the next three years. You would like to
retain the clients goodwill so that you have a good chance at the much bigger contract
in the future.