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
Watch out — candidates often confuse the Highlight Report (used for routine progress within tolerance) with the Exception Report (mandatory for forecast tolerance breaches), leading them to incorrectly select Option B.
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 direction
PRINCE2 dictates that when a project manager forecasts a deviation beyond the stage's cost tolerance, they must raise an Exception Report to the Project Board. The Project Board then decides on corrective action, such as approving a revised plan or closing the project. This ensures governance and control over the project's financial limits.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Increase the stage budget and continue with the current plan
Why it's wrong here
The Project Manager cannot unilaterally increase tolerances; that requires Project Board approval.
- ✗
Continue with the plan and report the overrun in the next Highlight Report
Why it's wrong here
Escalation must be immediate via an Exception Report, not delayed until the next Highlight Report.
- ✓
Raise an Exception Report to the Project Board and await direction
Why this is correct
This follows management by exception: the PM escalates when tolerances are forecast to be breached.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
Closing the project immediately is premature because exceeding stage cost tolerance does not automatically invalidate the Business Case; the Project Manager must first assess whether the deviation can be managed via an Exception Plan. This option is tempting because a fundamental breach of tolerance can indeed threaten viability, and if the Business Case were genuinely no longer viable, escalating for premature closure would be the correct action under PRINCE2’s exception management process.
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