PRINCE2F Practice Question: Overview of PRINCE2 and the project environment
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
The PM must escalate via an Exception Report to the Project Board.
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
Why it's wrong here
Closing the project is premature: a forecast breach of cost tolerance is an exception, so the Project Manager escalates it to the Project Board, which may request an Exception Plan. Closing applies once objectives are met or the project is no longer viable, not merely when a tolerance is threatened.
- ✗
Continue and report later
Why it's wrong here
Continuing without escalation breaches the tolerance principle: once a forecast exceeds cost tolerance, the Project Manager must raise an exception report immediately, not wait for the next Highlight Report. Reporting later is tempting because routine progress reporting happens at fixed intervals, but exceptions demand prompt escalation.
- ✓
Raise an Exception Report
Why this is correct
Cost tolerance breach means the stage or project plan can no longer be delivered within its agreed limits, so the deviation must be escalated to the Project Board. The Exception Report documents the cause, impact and options, enabling the Board to decide whether to authorise a revised plan.
- ✗
Increase the project budget
Why it's wrong here
The Project Manager cannot unilaterally increase the budget; only the Project Board authorises additional funding, typically via an Exception Plan after an exception is raised. The forecast breach must be escalated first. Increasing the budget is tempting because it appears to resolve the overspend directly.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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.