PRINCE2F PRINCE2 Practices Practice Question
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
⚠ Common exam trap
Many exam-takers confuse Highlight Reports (for within-tolerance status updates) with Exception Reports (for tolerance breaches), leading them to choose Option B instead of escalating immediately.
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
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, and exceeding them requires a formal exception plan for approval. The Project Manager cannot unilaterally continue, close, or increase the budget, as these actions violate the management by exception principle.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
Correct action under management by exception.
- ✗
Continue with the current plan and report the overrun in the next Highlight Report
Why it's wrong here
This violates management by exception; escalation is required immediately.
- ✗
Close the project immediately
Why it's wrong here
The Business Case may still be viable; the Project Board decides.
- ✗
Increase the project budget to absorb the additional cost
Why it's wrong here
The Project Manager cannot unilaterally increase the budget.
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