How will you complete the project....

Assumptions can be a lot. But the cause of everything is an incorrect project managment from the time of the kickoff to the end. But the past must be reviewed after you proceed with the present to achieve the future. Ways to take there are a lot and it will depends on the current situation. At the end, the thing to understand is: there are people on top of you, call them steering committee, project governace team, project directive team or whatever that must decide on the matter, not the project manager. Your accountability as project manager is to generate, distribute, present in a meeting all the needed to information to decide if the project must be killed, continued, put on hold. For doing that you have to coordinate the needed activities between the right subject matter experts and stakeholders.

I think it is important to consider the circumstances in which the project reached this situation. I tend to think such a situation is possible probably because of an Act of God. If that was indeed the case, the project can be recovered with fresh baselines and CCB approvals. Most contracts would have the Force Majeure clause.
On the other hand, it would be very difficult to retrieve the project if several initial indications of baseline variations were missed or any acts of omission or commission were subsequebtly detected. This would most likely severely shake the customer's faith in the project team's ability to deliver. In this case, I suppose a negotiated project closure may be the only way ahead - alongwith considerable reputation costs. A very unfortunate situation indeed.

The project needs to be re-planned with the realistic scope, costs, resources, timeline, risks need to be re-assessed with mitigation measures. Then the new project baseline need to be discussed with the project sponsor, or owner and approved.

There is no much information on how the project reached such status, but very important lessons learned is to have regular project status reports with the team, suppliers, etc and assess the status as per the approved baseline, and immediately take actions in case there is a deviation from the baseline.

Hi Sergio,
My reference to Point of total assumption as per PMBOK – is a point at which the seller has consumed all the fees and now has to bear all the costs.

My question to the stalwarts was, when you are faced with such a scenario, in case you have to continue on the project – what are the lessons, besides calling for meetings to highlight the budget issues.

Agreed that, there were inaccuracies at the time of estimation. To give you a real perspective, a large IT services company has undertaken a government banking project so that it can win subsequent other projects.