PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance at the project level. What should the Project Manager do?
⚠ Common exam trap
PRINCE2F often tests the difference between a Highlight Report (routine progress within tolerance) and an Exception Report (tolerance breach requiring escalation), catching candidates who pick the 'inform the Board later' option.
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, cost tolerance at the project level is a defined boundary agreed in the Project Initiation Documentation and delegated by the Project Board to the Project Manager. When a forecast shows the project will exceed that tolerance, the Project Manager has no authority to proceed within the current mandate and must escalate by raising an Exception Report. The Exception Report presents the situation, options, and a recommended corrective action so the Project Board can decide whether to authorize a new plan or stop the project.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Update the Business Case to reflect the new costs
Why it's wrong here
Updating the Business Case documents revised costs but does not address the tolerance breach itself; the Project Manager must escalate the exception to the Project Board. It is tempting because the Business Case records justification, but revision alone neither authorises nor resolves the overspend.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
Raising an Exception Report to the Project Board satisfies the PRINCE2 requirement to escalate a forecast breach of project-level cost tolerance. The Project Manager cannot unilaterally revise the project budget or tolerances; only the Board can authorise a new baseline or corrective direction, so formal exception escalation is mandatory.
- ✗
Continue as planned and inform the Project Board in the next Highlight Report
Why it's wrong here
A forecast breach of project cost tolerance is an exception that must be escalated immediately, not deferred to the next Highlight Report. It is tempting because Highlight Reports are the routine progress route, but they cannot substitute for timely exception reporting.
- ✗
Use the risk budget to cover the extra cost
Why it's wrong here
The risk budget covers identified threats' responses, not tolerance breaches; a forecast overspend beyond project cost tolerance is an exception requiring escalation. It is tempting because it holds contingency funds, but it is not a mechanism for absorbing cost overruns.
Go deeper
Related to this question
About these practice questions
This PRINCE2F question is part of Courseiva's 1,189-question bank — original exam-style content with full explanations and wrong-answer analysis, never real exam questions or exam dumps. Learn why practice questions differ from exam dumps →
JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PeopleCert exam blueprint
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.