The answer is to raise an Exception Report to the Project Board and await their direction before proceeding. This is correct because in PRINCE2, stage tolerances represent the delegated authority limit set by the Project Board; when a cost tolerance exceeded exception report is forecast, the Project Manager has lost the authority to continue within that stage without explicit Board approval. The Controlling a Stage process specifically mandates escalation via an Exception Report for any deviation beyond agreed tolerances, making this a critical governance checkpoint. On the PRINCE2 Foundation exam, this scenario tests your understanding of the escalation chain and the distinction between issues (handled within tolerance) and exceptions (outside tolerance). A common trap is selecting "take corrective action" or "create a plan" independently, but the key rule is that the Project Manager cannot proceed without Board direction. Memory tip: think "Tolerance = Territory" — once you exceed the border, you must call headquarters for new orders.
PRINCE2F People: organizations, teams, and leadership Practice Question
This PRINCE2F practice question tests your understanding of people: organizations, teams, and leadership. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
During the Controlling a Stage process, the Project Manager identifies that the project is forecast to exceed the agreed cost tolerance for the current stage. What should the Project Manager do?
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 their direction before proceeding
Option D is correct because PRINCE2's Controlling a Stage process requires the Project Manager to escalate any forecast deviation beyond the agreed stage tolerance to the Project Board via an Exception Report. The Project Manager cannot proceed without the Board's direction, as the tolerance is a delegated authority limit set by the Board.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
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 project budget to absorb the additional cost and continue with the current Stage Plan
Why it's wrong here
The Project Manager cannot unilaterally increase the budget.
✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
A cost tolerance breach does not automatically mean the Business Case is unviable.
✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing without escalation violates management by exception.
✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
This is the correct escalation procedure per management by exception.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
PeopleCert often tests the misconception that the Project Manager can handle tolerance breaches by continuing and reporting later, but PRINCE2 mandates immediate escalation when tolerance is forecast to be exceeded.
Detailed technical explanation
How to think about this question
In PRINCE2, stage tolerance is a specific threshold set by the Project Board in the Stage Plan. When a forecast breach occurs, the Project Manager must raise an Exception Report detailing the deviation, impact, and options, and then the Board issues an Exception Plan to either adjust the stage or close the project. This ensures that the Board retains control over significant deviations, preventing unauthorized scope creep or budget overruns.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A practitioner preparing for the PRINCE2F exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
People: organizations, teams, and leadership — This question tests People: organizations, teams, and leadership — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Raise an Exception Report to the Project Board and await their direction before proceeding — Option D is correct because PRINCE2's Controlling a Stage process requires the Project Manager to escalate any forecast deviation beyond the agreed stage tolerance to the Project Board via an Exception Report. The Project Manager cannot proceed without the Board's direction, as the tolerance is a delegated authority limit set by the Board.
What should I do if I get this PRINCE2F question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A project is forecast to exceed its cost tolerance for the current stage. What should the Project Manager do?
medium
A.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
B.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
C.Close the project immediately as the Business Case is no longer viable
✓ D.Raise an Exception Report to the Project Board and await their direction before proceeding
Why D: In PRINCE2, when a stage is forecast to exceed its cost tolerance, the Project Manager must escalate the issue to the Project Board by raising an Exception Report. This is because the Project Manager does not have authority to exceed the agreed tolerance; the Project Board must decide whether to approve a revised plan or take other corrective action. Option D correctly follows the PRINCE2 exception management process.
Last reviewed: Jun 30, 2026
Question Discussion
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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.
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