PRINCE2F Business Case and Organizing Practice Question
A project is nearing the end of a stage. The project manager forecasts that the stage will exceed its cost tolerance by 10 percent due to an unexpected increase in material prices. The project manager has already updated the Business Case to reflect the new costs. What should the project manager do NEXT?
⚠ Common exam trap
The trap here is thinking that updating the Business Case or simply informing the board replaces the formal requirement to produce an Exception Report and escalate through the correct channel.
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
✓
Produce an Exception Report and escalate to the project board
When a stage is forecast to exceed its tolerances, the project manager must escalate the issue by producing an Exception Report. The project board then decides on the appropriate action, which may include approving an Exception Plan, changing tolerances, or stopping the project. Updating the Business Case alone is not enough; the formal escalation is required to maintain management by exception.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Inform the project board and wait for their decision
Why it's wrong here
Simply informing the board is not sufficient. PRINCE2 requires the project manager to produce an Exception Report and escalate the forecast breach through the agreed escalation procedure. The board then decides whether to approve an Exception Plan, change tolerances, or take other action. Informing without following the formal escalation steps would leave the project without proper governance.
- ✗
Request a change to the project's cost tolerance
Why it's wrong here
The project manager does not have the authority to request a change to project-level cost tolerance directly; that is a decision for the project board. The correct first step is to escalate the exception. The board may then decide to adjust tolerances as part of its response, but the project manager must not presume that outcome or bypass the escalation process.
- ✓
Produce an Exception Report and escalate to the project board
Why this is correct
When a forecast breach of stage tolerances occurs, the project manager must produce an Exception Report and escalate it to the project board. The report describes the situation, options, and a recommendation. The board then decides how to proceed, which may include requesting an Exception Plan. This is the correct application of the PRINCE2 principle of management by exception.
- ✗
Update the stage plan and continue without escalation
Why it's wrong here
The project manager cannot unilaterally update the stage plan to absorb a breach of tolerance. Tolerances are set by the project board, and exceeding them requires escalation. Continuing without escalation would violate management by exception and could lead to uncontrolled cost overruns. The stage plan can only be updated within the delegated tolerances.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PeopleCert exam blueprint
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