A company uses a two-year budgeting cycle. Requirements for a new capability are defined but solution design is only starting, and the manager fears the final solution will exceed the budget. What should the project manager do next to anticipate budget impacts?

Developing a Work Breakdown Structure (WBS) and performing activity-based cost estimating is the most effective next step. The WBS decomposes the project into manageable work packages, and activity-based costing provides detailed estimates for each, allowing for a more accurate and comprehensive budget. This proactive approach helps identify potential budget overruns early in the design phase. Using earned value methods is premature as solution design is only starting, and there's no actual work progress to measure against. Performing scenario planning is valuable but should follow a more detailed understanding of the work through a WBS. Consulting peers and using historical data can provide high-level estimates but won't offer the detailed breakdown needed to anticipate specific budget impacts for a new, evolving solution.