PRINCE2F People: organizations, teams, and leadership Practice Question
A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
⚠ Common exam trap
PeopleCert often tests the distinction between reporting (Highlight Report) and escalation (Exception Report), trapping candidates who think a simple status update suffices when tolerances are breached.
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 manager forecasts that a stage will exceed its cost tolerance, they must escalate the issue to the Project Board by raising an Exception Report. This is because tolerances are delegated limits, and exceeding them requires board-level decision-making, not just reporting or self-authorization. The Exception Report triggers an Exception Plan to recover or adjust the project.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Report the overrun in the next Highlight Report
Why it's wrong here
Highlight Reports are routine; an Exception Report is needed for immediate escalation.
- ✓
Raise an Exception Report to the Project Board
Why this is correct
Correct action: escalate immediately via Exception Report.
- ✗
Close the project as the Business Case is no longer viable
Why it's wrong here
Only the Project Board can decide to close the project based on the Exception Report.
- ✗
Increase the stage budget and continue
Why it's wrong here
Exceeding stage cost tolerance requires an exception report to the Project Board for a decision on budget increase; the Project Manager lacks authority to unilaterally raise the stage budget. This option is tempting because increasing the budget appears to resolve the overspend directly, and it would be correct if the Project Manager held delegated authority to adjust the stage budget within the agreed tolerance, but PRINCE2 reserves that authority for the Project Board.
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