PRINCE2F Practice Question: Overview of PRINCE2 and the project environment
A project is forecast to exceed its cost tolerance. According to PRINCE2, what should the Project Manager do?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Raise an Exception Report to the Project Board and await their direction before proceeding
According to PRINCE2, when a tolerance (cost, time, scope, or risk) is forecast to be exceeded, the Project Manager must escalate the issue to the Project Board via an Exception Report. The Project Board then decides on corrective action. Option A correctly reflects this escalation procedure. Options B, C, and D are incorrect because the Project Manager cannot unilaterally increase the budget, should not continue without reporting the forecast deviation, and should not close the project immediately without board assessment.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
Escalation via Exception Report is required when a tolerance is forecast to be breached.
- ✗
Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why it's wrong here
The Project Manager cannot unilaterally increase the budget; that requires Project Board approval.
- ✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing without escalation violates management by exception.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
A cost tolerance breach does not automatically mean the Business Case is unviable; the Board decides.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PRINCE2F practice question is part of Courseiva's free PeopleCert certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PRINCE2F exam.