PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
⚠ Common exam trap
PRINCE2 often tests the misconception that the Project Manager can handle tolerance breaches independently or defer reporting, but PRINCE2 mandates immediate escalation to the Project Board 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
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 tolerances are delegated limits; exceeding them requires board-level decision-making. Option B correctly follows the PRINCE2 exception management process, ensuring the board can assess the impact on the Business Case and authorize corrective action.
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 plan 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
This is the correct escalation procedure.
- ✗
Increase the project budget to absorb the additional cost and continue with the current plan
Why it's wrong here
The PM cannot unilaterally increase the budget; that requires Board approval.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
A tolerance breach does not automatically mean the Business Case is unviable.
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Same concept, more angles
3 more ways this is tested on PRINCE2F
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
medium- A.Continue and report in the next Highlight Report
- ✓ B.Raise an Exception Report to the Project Board
- C.Close the project
- D.Increase the cost tolerance and continue
Why B: When tolerance is forecast to be exceeded, the Project Manager must raise an Exception Report to the Project Board.
Variation 2. A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
medium- ✓ A.Raise an Exception Report to the Project Board and await directions
- B.Increase the stage budget by using the project's change budget
- C.Continue with the current plan and report the overrun in the next Highlight Report
- D.Close the project as the Business Case is no longer viable
Why A: According to PRINCE2's management by exception principle, if a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. The PM cannot exceed tolerance without authorization.
Variation 3. A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
medium- A.Close the project immediately as the Business Case is no longer viable
- B.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
- ✓ C.Raise an Exception Report to the Project Board and await their direction before proceeding
- D.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why C: In PRINCE2, when a project manager forecasts that stage costs will exceed the stage tolerance, they 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 tolerance levels; the Project Board must decide on corrective actions, such as approving a revised plan or closing the project. Option C correctly follows the PRINCE2 management by exception principle.
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.