Officials at Dundas Manufacturing have just completed a post-implementation audit of a distribution center that was built two years ago at a cost of $1.5 million. The marketing group had proposed the warehouse investment, arguing that it would improve sales by increasing product quality and improving customer service. The expected rate of return on this investment was 18%. However, the actual return to date has fallen far below this estimate and is even below the company's cost of capital of 11%.

The post-implementation audit asserts that the managers proposing this investment were ambitious to the point of being reckless in making the estimates underlying the project's proposals and concludes that the investment should never have been made.

In response, the two managers who proposed the project argue that the proposal was a good one on the basis of estimates that seemed sound at the time. However, several unforeseen events, including the entry of a new competitor into the market, caused results to be lower than expected. Moreover, the two managers argue that results would have been even worse for the company if the investment had not been made. How would you deal with this situation?