PRINCE2F Practice Question: Overview of PRINCE2 and the project environment
A project manager is reviewing a project that has been running for three months. The business case was approved with a cost tolerance of +/- 10%. The project has already spent 95% of the budget but has only completed 40% of the scope. The project board is meeting to decide the project's fate. The project manager should advise the board to:
⚠ Common exam trap
PeopleCert often tests the misconception that a project can be saved by simply requesting more budget or monitoring costs, but PRINCE2 demands that the business case be re-evaluated when tolerance is breached, and if it is no longer viable, the project must be closed.
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
✓
Recommend closure of the project because the business case is no longer viable
The project has consumed 95% of the budget while delivering only 40% of the scope, making the original business case no longer viable. PRINCE2 requires continuous business justification; if the costs outweigh the benefits, the project should be closed. The project manager must advise the board to close the project as continuing would waste further resources.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Request a budget increase and complete the project
Why it's wrong here
Requesting more budget without an exception plan bypasses the board's tolerance-based control and the business case reassessment. It is tempting because additional funding could complete the scope, but PRINCE2 requires the board to approve an exception plan addressing the breached cost tolerance first.
- ✗
Continue as planned but monitor costs more tightly
Why it's wrong here
Costs have already breached the +/-10% tolerance, so continuing as planned ignores the tolerance breach and the board's control point. It is tempting because tighter monitoring feels prudent, but PRINCE2 requires an exception plan once a stage or project tolerance is exceeded, not passive observation.
- ✓
Recommend closure of the project because the business case is no longer viable
Why this is correct
Spending 95% of budget against only 40% of scope breaches the approved +/-10% cost tolerance, so the business case no longer holds. Recommending closure lets the board stop further investment rather than continue a project whose forecast benefits cannot justify remaining spend.
- ✗
Proceed with an exception plan without board approval
Why it's wrong here
An exception plan must be approved by the project board before implementation; proceeding without that approval breaches PRINCE2 governance. It is tempting because an exception plan is the correct response to a tolerance breach, but the board must authorise it first, which this option omits.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PRINCE2F practice question is part of Courseiva's free PeopleCert certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PRINCE2F exam.