PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
⚠ Common exam trap
A common mistake is to think the Project Manager can handle cost overruns within their own authority or by simply reporting later, but PRINCE2 mandates 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 project forecasts exceeding its cost tolerance, the Project Manager must escalate the issue to the Project Board via an Exception Report. This is because tolerances are delegated authority limits; exceeding them requires the Project Board's decision to either approve a revised plan or take corrective action. Option D correctly follows the PRINCE2 exception management process, ensuring governance and control are maintained.
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
A cost tolerance breach does not automatically mean the Business Case is unviable; the Project Board must assess.
- ✗
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.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
This is the correct action when a stage tolerance is forecast to be exceeded.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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