PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
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.
When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is management by exception. The PM cannot increase the budget or continue without escalation.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Close the project immediately as the Business Case is no longer viable.
Why it's wrong here
Closing the project immediately is premature because exceeding cost tolerance does not automatically invalidate the Business Case; the PRINCE2 principle of continued business justification requires the Project Manager to assess whether the forecast overspend can be recovered through an exception plan or revised tolerances. This option is tempting because it mirrors the correct action when the Business Case is genuinely no longer viable—for example, if the project’s benefits are permanently eroded beyond recovery—but here the trigger is only a forecast breach, not a confirmed loss of viability.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding.
Why this is correct
When a stage tolerance is forecast to be exceeded, the PM must escalate immediately via an Exception Report. This is 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; that requires Project Board approval.
- ✗
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.
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