PRINCE2F PRINCE2 Processes 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 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 closing the project immediately is not the correct response; the Business Case may still be viable, and the issue should be escalated first. Option B is wrong because the Project Manager cannot increase the budget without Project Board approval. Option D is wrong because continuing without escalation violates management by exception; the PM must escalate immediately.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Close the project immediately as the Business Case is no longer viable
Why it's wrong here
Closing the project immediately is not the correct response; the PM must escalate to the Project Board.
- ✗
Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why it's wrong here
The PM cannot increase the budget without Project Board approval; this violates management by exception.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
Raising an Exception Report is correct because when a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board for direction. This follows the management by exception principle.
- ✗
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. The Project Manager must immediately escalate the issue via an Exception Report, not wait until the next Highlight Report.
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