Select the option that expresses the given sentence in indirect speech.

The project director stated, “We will not be able to complete the renovation by this month, which is a major setback for all of us, but we will allocate extra resources to expedite our progress in the upcoming phase.”

Correct Answer: The project director stated that they would not be able to complete the renovation by that month, which was a major setback for all of them, but that they would allocate extra resources to expedite their progress in the upcoming phase.

To convert a sentence from direct speech into indirect (reported) speech when the reporting verb is in the past tense ("stated"), we must follow standard grammatical rules for shifting pronouns, tenses, and demonstratives:

1. Pronoun shifts:
- "We" changes to "they"
- "all of us" changes to "all of them"
- "our progress" changes to "their progress"

2. Tense / Modal shifts:
- The modal verb "will" changes to "would" ("will not be able" → "would not be able", "will allocate" → "would allocate").
- The present tense verb "is" changes to the past tense verb "was" ("which is a major setback" → "which was a major setback").

3. Demonstrative shifts:
- "this month" changes to "that month"

Applying all these necessary changes yields the correct sentence in indirect speech:
"The project director stated that they would not be able to complete the renovation by that month, which was a major setback for all of them, but that they would allocate extra resources to expedite their progress in the upcoming phase."