PRINCE2F PRINCE2 Processes Practice Question
A project is forecast to exceed its stage cost tolerance. What is the Project Manager's first action?
⚠ Common exam trap
Many candidates think they can 'fix' the overrun internally or report it later, but PRINCE2 mandates immediate escalation via an Exception Report when 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
According to PRINCE2, when a project manager forecasts that stage costs will exceed the agreed stage tolerance, the first action is to raise an Exception Report to the Project Board. This is because the project manager must escalate the deviation immediately, as they do not have authority to exceed tolerance without board approval. The Exception Report informs the board of the situation and options, allowing them to decide on 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.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
Stage cost tolerance is breached, so the Project Manager cannot authorise corrective spend within delegated limits. Escalating via an Exception Report to the Project Board transfers the decision to the level holding the tolerance, satisfying PRINCE2's management-by-exception principle.
- ✗
Continue the stage and report the overrun in the End Stage Report
Why it's wrong here
Continuing the stage and merely reporting the overrun at the End Stage Report delays escalation past the point where the Project Board can still control the deviation. It is tempting because reporting is a genuine PRINCE2 control, but the End Stage Report is produced at a stage boundary, whereas a forecast tolerance breach must be raised immediately.
- ✗
Request a change to the project budget from the Senior User
Why it's wrong here
The Senior User represents user interests and holds no budget authority, so cannot approve additional funds; a forecast breach of stage cost tolerance is escalated to the Project Board, which owns the business case and budget. Requesting budget changes is tempting because tolerances are financial, but the Project Board, not the Senior User alone, authorises them.
- ✗
Proceed with the next stage early to save time
Why it's wrong here
Starting the next stage early bypasses the End Stage Assessment and the Project Board's authority to authorise the next stage, and it ignores the tolerance breach rather than escalating it. It is tempting because schedule pressure makes parallel working look attractive, but accelerating delivery is only valid once the stage boundary has been properly approved.
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