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
Incorrect. The Project Manager does not have the authority to increase the stage budget; exceeding tolerance requires escalation.
- ✗
Close the project as the Business Case is not viable
Why it's wrong here
Incorrect. Closing the project is a decision for the Project Board, not the first action of the Project Manager when tolerance is forecast to be exceeded.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
Correct. An Exception Report is raised to inform the Project Board of the forecast deviation and seek their direction.
- ✗
Wait until the next Highlight Report
Why it's wrong here
Incorrect. Waiting for the next Highlight Report delays escalation; the Project Manager should immediately raise an Exception Report.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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