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In today’s economic environment; cost cutting is seen as consolidation strategy, within which an enterprise is continually reviewing its external and internal operations to improve productivity and cash flow. This cost cutting is mainly achieved through, market penetration (selling more of the current products to the existing customer base), market development (selling to new customers in new markets) and product or service development (creating new products or services). The strategic logic is that consolidation and market penetration will generate cash for investment in new markets and new products, which will drive further revenue growth and so on round the circle.

But in recent time, it’s hard for an organization to receive credit and pass on to the consumers. On other hand consumer are in fear of losing their income and restraining their needs for the future time and trying to repay debt. Thus, this vicious circle haunts organization due to supply exceeding the demand, leading to drastic measures by the management to cut cost. First impact is seen at the project level, where capital intensive project are halted or excess contingency funding are reduced.

Currently at U.S. Postal Service all the capital intensive projects have significantly reduced the cap between the contingency costs of acquiring the project from the funding to near zero value. In short term it might work but for strategic point of view it will lead to significant performance issue for capital intensive projects. Hence, as a Project Manager I always come to a point where my analysis of acquiring goods or services should not only at lowest cost possible but also eliminating risk associated with the purchase, which is very difficult to achieve in today’s business scenario.

Best example in from of us is the Peanut Butter manufacturing plant. Upper management knew that their product was contaminated, but instead of making correction the plant compromise the quality and resulted in disaster...