1. How did ABI handle forecast risk?

2. Were ABI’s Stanhope site costs in Table 2 derived by a top-down or bottom-up process? Why?

3. What are the answers to Steve White’s questions?

4. What other factors are relevant to this issue?

5. How do the changes in assumptions mentioned by the other managers affect the proposal?

It was a cold, gray October day as Jim Wickes pulled his car into ABI’s corporate offices parking lot in suburban Detroit. The leaves, in yellows and browns, swirled around his feet as he walked into the wind toward the lobby. “Good morning, Mr. Wickes,” said his secretary as he came into the office. “That proposal on the Stanhope project just arrived a minute ago. It’s on your desk.” “Good morning, Debbie. Thanks. I’ve been anxious to see it.” This was the day Jim had scheduled to review next year’s supplemental capital request and he didn’t want any interruptions as he scrutinized the details of the flexible manufacturing project planned for Stanhope, Iowa. The Stanhope proposal, compiled by Ann Williamson, PM and managerial “champion” of this effort, looked like just the type of project to fit ABI’s new strategic plan, but there was a large element of risk in the project. Before recommending the project to Steve White, executive vice president of ABI, Jim wanted to review all the details one more time.