According to the PMBOK® Guide, specifically within the Develop Schedule and Control Schedule processes, the project manager must use schedule compression and resource optimization techniques when faced with resource gaps and delays.

Resource Leveling: This is a resource optimization technique used when shared or critical required resources are available only at certain times or in limited quantities, or have been over-allocated (as seen with the engineering staff moved to Project Y).

Effect: It adjusts the start and finish dates based on resource constraints. While it balances the demand for resources, it often causes the original critical path to change, usually resulting in a delayed project finish date.

Fast Tracking: This is a schedule compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration.

Effect: Because the project manager cannot hire more staff (Crashing is not viable due to cost constraints), they must find ways to overlap existing work. Fast tracking does not increase costs but does increase risk and can lead to rework.

Comparison with Other Options:

Fast tracking and crashing (B): While these are both schedule compression techniques, the prompt explicitly states that hiring more workforce is not a viable option. Crashing almost always results in increased costs (overtime, extra resources), making this choice incorrect.

Crashing and applying leads and lags (C): Again, Crashing is ruled out by cost constraints. While leads and lags are used in sequencing, they do not address the resource over-allocation issue described.

Scheduling tools and applying leads and lags (D): These are general components of schedule management but do not provide a specific solution for the dual problem of resource unavailability and a failing timeline.