PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
⚠ Common exam trap
Test-takers frequently think the Project Manager can handle cost overruns within their authority by adjusting the plan or reporting later, but PRINCE2 strictly requires escalation when tolerances are forecast to be exceeded, emphasizing the board's role in approving changes to tolerances or the plan.
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 project forecasts exceeding 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 the authority to exceed tolerances without explicit approval. The Project Board then decides on corrective actions, such as revising the plan or adjusting the Business Case.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
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.
- ✗
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.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
Correct. Escalation via Exception Report is required.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
A cost overrun does not automatically make the Business Case unviable.
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