PRINCE2F People: organizations, teams, and leadership Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
⚠ Common exam trap
PeopleCert often tests the misconception that the Project Manager can handle tolerance breaches independently, but PRINCE2 strictly requires escalation to the Project Board via an Exception Report when any tolerance is 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
In PRINCE2, when a project is forecast to exceed its cost tolerance, the Project Manager must escalate the issue to the Project Board via an Exception Report. This is because the Project Manager does not have authority to exceed tolerances; the Project Board must decide whether to approve a revised Business Case, adjust tolerances, or terminate the project. Option C correctly follows the PRINCE2 principle of management by exception.
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
The Business Case may still be viable; the Board decides.
- ✗
Continue and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing without escalation violates management by exception.
- ✓
Raise an Exception Report to the Project Board and await their direction
Why this is correct
Escalation via Exception Report is the correct response.
- ✗
Increase the project budget to absorb the additional cost
Why it's wrong here
The PM cannot unilaterally increase the budget; that requires Project Board approval.
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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.