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?
⚠ Common exam trap
It's easy for candidates to assume the Project Manager can absorb small cost overruns within their delegated authority, but PRINCE2 strictly requires escalation whenever forecast costs exceed the agreed stage tolerance, regardless of the amount.
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
In PRINCE2, when a Project Manager forecasts that stage tolerances will be exceeded, they must escalate the issue to the Project Board via an Exception Report. This triggers an Exception Plan process, allowing the Board to decide whether to approve revised tolerances or take corrective action. The Project Manager cannot proceed without direction, as tolerances are a delegated authority limit.
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
This is the correct escalation procedure.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
The Project Board decides on viability, not the Project Manager.
- ✗
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.
- ✗
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.
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Same concept, more angles
3 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 project is forecast to exceed the agreed cost tolerance for the current stage. What should the Project Manager do?
medium- A.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
- 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.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why C: When a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is management by exception.
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.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.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why B: When a stage is forecast to exceed its cost tolerance, the Project Manager must escalate the issue to the Project Board via an Exception Report. This is the embodiment of PRINCE2's management by exception principle. The Project Board then decides whether to approve a revised Stage Plan or take other action. Option A is incorrect because the Project Manager cannot increase the budget without Project Board approval. Option C is incorrect because viability of the Business Case is assessed by the Project Board, not unilaterally by the Project Manager. Option D is incorrect because escalating via a Highlight Report only reports progress, not exceptions; exceptions require an Exception Report.
Variation 3. 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.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
- 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.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why C: According to the management by exception principle, when a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. The Project Manager cannot unilaterally increase the budget or ignore the breach.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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