Dilemma 7:  Facilitation payments - Dilemma

You are Buildwell’s Project Manager working on the construction of a road for the NRA.  

Buildwell has purchased some new asphalt laying plant from another country.  The shipment is delayed, and it is now critical to the construction programme that the plant arrives within the next two days, otherwise Buildwell will be liable to the NRA for significant damages for delay. 

Buildwell’s Transport Manager informs you that the plant has finally arrived in your country, but that the customs official has not granted the import clearance.  You explain the urgency, and ask the Transport Manager personally to go to the customs office.  He does so.  He then rings you from the customs office and says that he has been told by the customs official that it will normally take four weeks to clear, but that Buildwell can use an expedited procedure, and get it cleared today for an expediting fee of $250 paid in cash.  If the plant takes four weeks to clear, the damages payable by Buildwell to the NRA for delay will be $10,000 per day, totalling $28,000.  There would in addition be Buildwell’s irrecoverable extra costs on site.  Payment of this $250 expediting fee so as to save these damages and extra costs seems an attractive option.

Consider what you should do, and then go to the analysis on the next page.