PMP Practice: Determine a change response to move the project forward

Cedar Volkov is leading a regulatory compliance upgrade for Swift Pulse Labs, a freight transportation company. The project uses a predictive approach due to strict government audit requirements and fixed regulatory deadlines. Midway through execution, a major customer requests adding real-time shipment tracking features, claiming their competitors already offer this capability. The development team suggests switching to an iterative delivery model to incorporate these features quickly, arguing they could deliver tracking in two-week increments. The compliance audit is scheduled in four months, and the current baseline includes all mandatory regulatory changes but no customer-facing enhancements. The sponsor expresses concern about jeopardizing the audit timeline. What should Cedar do?