The project manager should first ask the customer for their priorities regarding the requirements for the second milestone in order to understand the reasons behind the customer's request and how it aligns with their overall project goals. This can help the project manager to identify which requirements are most important to the customer and which ones can be delayed or modified.
The project manager should also go back to the development team and discuss which second milestone requirements can be performed in the first quarter. The team may be able to identify which requirements can be accelerated or modified to meet the customer's desired outcome in the first quarter. This can help the project manager to develop a plan that meets the customer's needs while minimizing the impact on the overall project schedule and cost.