PRINCE2F PRINCE2 Practices Practice Question
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 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
When a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board immediately via an Exception Report — this is PRINCE2's management by exception principle. The Project Manager cannot unilaterally exceed tolerances (C), continue without escalation (B), or close the project without Board decision (D).
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
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 immediately via an Exception Report. This is management by exception.
- ✗
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 PRINCE2's management by exception principle.
- ✗
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 project budget. Changes to project-level tolerances require Project Board authorisation.
- ✗
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 and decide whether to continue, change direction, or close.
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Same concept, more angles
8 more ways this is tested on PRINCE2F
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. 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?
medium- A.Increase the stage budget using the change budget and continue with the current Stage Plan
- B.Close the project immediately as the Business Case is no longer viable
- ✓ C.Raise an Exception Report to the Project Board and await their direction before proceeding
- D.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why C: 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.
Variation 2. 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?
medium- A.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
- B.Close the project immediately as the Business Case is no longer viable
- C.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
- ✓ D.Raise an Exception Report to the Project Board and await their direction before proceeding
Why D: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report — this is PRINCE2's management by exception principle. The Project Manager cannot unilaterally decide to exceed tolerances; that requires Project Board authorisation. Option A is wrong because the PM cannot increase the budget without Project Board approval. Option B is wrong because closing the project is not the appropriate response to a stage tolerance breach; the Project Board may decide to close if the Business Case is no longer viable. Option C is wrong because continuing without escalation violates management by exception.
Variation 3. A project is forecast to exceed its cost tolerance at the project level. What should the Project Manager do?
medium- A.Update the Business Case to reflect the new costs
- ✓ B.Raise an Exception Report to the Project Board
- C.Continue as planned and inform the Project Board in the next Highlight Report
- D.Use the risk budget to cover the extra cost
Why B: When project-level tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
Variation 4. A project is forecast to exceed its cost tolerance at stage level. What should the Project Manager do first?
medium- A.Increase the stage budget and continue
- B.Close the project as the Business Case is not viable
- ✓ C.Raise an Exception Report to the Project Board
- D.Wait until the next Highlight Report
Why C: In PRINCE2, when a project forecasts exceeding its stage-level cost tolerance, the Project Manager must first 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 delegated tolerance; the Project Board must decide on corrective action, such as approving a revised plan or closing the project. Option C is correct as it aligns with the PRINCE2 principle of management by exception.
Variation 5. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
hard- A.Close the project immediately as the Business Case is no longer viable
- B.Continue with the current plan and report the cost overrun in the next Highlight Report
- ✓ C.Raise an Exception Report to the Project Board and await their direction
- D.Increase the budget to absorb the additional cost and continue with the current plan
Why C: In PRINCE2, when a project 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 tolerances are delegated limits, and exceeding them requires a decision from the Project Board to either approve a deviation, change the plan, or take corrective action. Continuing without escalation violates the management by exception principle.
Variation 6. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
hard- A.Close the project as the Business Case is no longer viable
- B.Continue with the current Plan and report in the next Highlight Report
- C.Increase the project budget to absorb the additional cost
- ✓ D.Raise an Exception Report to the Project Board
Why D: When a forecast indicates that a stage or project tolerance will be exceeded, the Project Manager must escalate via an Exception Report to the Project Board. This is management by exception.
Variation 7. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
medium- A.Continue with the current plan and adjust the budget in the next stage
- B.Close the project immediately
- ✓ C.Issue an Exception Report to the Project Board
- D.Reduce the scope to stay within budget without informing the Board
Why C: Management by exception dictates that when a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. Continuing without escalation is not allowed.
Variation 8. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
hard- A.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
- ✓ B.Raise an Exception Report to the Project Board and await their direction before proceeding
- C.Close the project immediately as the Business Case is no longer viable
- D.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is the principle of management by exception.
JA
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.