PRINCE2F PRINCE2 Practices Practice Question
During the Controlling a Stage process, the Project Manager identifies that the stage's cost tolerance is forecast to be exceeded. According to PRINCE2, what should the Project Manager do?
⚠ Common exam trap
Many exam-takers confuse an issue that is within tolerance (handled by the Project Manager) with one that is forecast to exceed tolerance (requiring escalation), or mistakenly think the change budget can be used to cover any cost overrun.
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 their direction before proceeding
According to PRINCE2, when a stage's cost tolerance is forecast to be exceeded, 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 Stage Plan or take other corrective action. Continuing without escalation or making unauthorized adjustments violates the management by exception principle.
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 using the change budget and continue with the current Stage Plan
Why it's wrong here
The Project Manager cannot unilaterally increase the stage budget; changes to tolerances require Project Board approval.
- ✗
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; the Project Board must assess the situation.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
When a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
- ✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing without escalation when a tolerance is forecast to be exceeded violates management by exception.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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