1. We should not be concerned that CitySoft is focusing on cost, operational control, systems, and quality at the expense of company growth. CitySoft must understand its cost measurement structure, implement consistent quality control systems, understand pricing and financial data, and demand a level of control and consistency across the various locations of company in order to grow and remain profitable. A fixed-fee cost structure is imperative to maintain cost control, especially as clients routinely request changes without a formal mechanism to track its additional cost and process impact. Fixed-fee (fixed bid) projects require strong project management to keep projects profitable. Any added costs not captured in the initial contract fee will ultimately affect the bottom line. Without a thorough understanding of cost structure and project variation, it is nearly impossible to obtain a fixed-fee that can remain relevant throughout the duration of the project. 2. As a business model refinement strategy, CitySoft should begin to collect market related statistical data to decide what kind of business it wants to be: Internet service provider or custom consulting. Project management systems can be broadly categorized into two branches: project development, and maintenance service. On a one time basis, cost estimation for a new development project in fixed-fee format should include overhead, and for maintenance projects the time and material format would help to address CitySoft’s cost management system issues. On the ongoing basis, the lessons learned in each project should be incorporated into the above mentioned formats, bringing a mature cost management system to CitySoft. CitySoft will then be able to determine the amount of direct labor spent on each business area. CitySoft should also break down its fixed and variable costs into a format that would