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 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.
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 project budget. Changes to project-level tolerances require Project Board authorisation.
- ✓
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.
- ✗
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.
- ✗
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.
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