PRINCE2F People: organizations, teams, and leadership Practice Question
A project is forecast to exceed its cost tolerance for the current stage. What should the Project Manager do?
⚠ Common exam trap
A common mix-up: candidates think the Project Manager can adjust the budget or delay reporting, but PRINCE2 strictly requires immediate escalation via an Exception Report when tolerances are forecast to be exceeded.
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
In PRINCE2, when a stage is forecast to exceed its cost tolerance, the Project Manager must 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 agreed tolerance; the Project Board must decide whether to approve a revised plan or take other corrective action. Option D correctly follows the PRINCE2 exception management process.
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 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. Only the Project Board can change tolerances.
- ✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing without escalation when a tolerance is forecast to be exceeded 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 Project Board must decide.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
Correct. The PM must escalate immediately via an Exception Report.
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