PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance at stage level. What should the Project Manager do first?
⚠ Common exam trap
Watch out — candidates often confuse the Project Manager's authority to manage day-to-day issues with the need to escalate tolerance breaches, leading them to incorrectly choose Option A (increasing the budget) or Option D (delaying escalation).
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
In PRINCE2, when a project forecasts exceeding its stage-level cost tolerance, the Project Manager must first escalate the issue to the Project Board by raising an Exception Report. This is because the Project Manager does not have authority to exceed the delegated tolerance; the Project Board must decide on corrective action, such as approving a revised plan or closing the project. Option C is correct as it aligns with the PRINCE2 principle of management by exception.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Increase the stage budget and continue
Why it's wrong here
A stage-level cost tolerance breach must be escalated to the Project Board, which owns the stage boundary; the Project Manager cannot authorise extra budget. Increasing budget is the Project Board's action when it approves an exception plan within overall project tolerance.
- ✗
Close the project as the Business Case is not viable
Why it's wrong here
A cost forecast breach alone does not invalidate the Business Case; premature closure bypasses the Project Board's exception assessment. Closing is correct only when the Board judges the Business Case no longer viable after reviewing an exception plan.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
A forecast breach of stage-level cost tolerance is a forecast exception, so the Project Manager must escalate it to the Project Board, which decides how to respond. Raising the Exception Report is the first action, preceding any corrective plan or revised business case.
- ✗
Wait until the next Highlight Report
Why it's wrong here
Forecast tolerance breach is an exception that must be raised immediately, not deferred; Highlight Reports are regular progress communications, not escalation channels. Waiting suits routine reporting cycles where no tolerance is threatened and no decision is pending.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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