A project is forecast to exceed its cost tolerance. What should the Project Manager do first?
Correct. Escalate via Exception Report.
Why this answer
D is correct because PRINCE2 requires the Project Manager to escalate any forecast deviation beyond tolerance to the Project Board via an Exception Report. This triggers a formal decision process, ensuring the board can authorize corrective action before the situation worsens.
Exam trap
The trap here is that candidates may think the Project Manager can simply request more tolerance or continue reporting normally, failing to recognize that PRINCE2 mandates immediate escalation via an Exception Report when tolerance is forecast to be exceeded.
How to eliminate wrong answers
Option A is wrong because asking for more tolerance bypasses the formal escalation process; the board can only grant tolerance after receiving an Exception Report and assessing the situation. Option B is wrong because closing the project is a premature, drastic action that ignores the PRINCE2 principle of continued business justification and the board's authority to decide on project continuation. Option C is wrong because continuing with the current plan and waiting for the next Highlight Report violates the management by exception principle; the Project Manager must escalate immediately when tolerance is forecast to be exceeded, not defer reporting.