- A
Close the project immediately as the Business Case is no longer viable
Why wrong: 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.
- B
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why wrong: Continuing without escalation when a tolerance is forecast to be exceeded violates PRINCE2's management by exception principle.
- C
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 management by exception.
- D
Increase the project budget to absorb the additional cost and continue with the current Stage Plan
Why wrong: The Project Manager cannot unilaterally increase the project budget. Changes to project-level tolerances require Project Board authorisation.
Quick Answer
The correct answer is to raise an Exception Report to the Project Board and await their direction before proceeding. This is because PRINCE2 operates on management by exception, meaning the Project Manager is only allowed to work within the agreed cost tolerance for the stage; once that tolerance is forecast to be exceeded, it becomes an exception that must be escalated. The Exception Report formally notifies the Project Board of the breach, providing options and recommendations, and the Project Manager cannot take corrective action—such as increasing the budget or continuing without approval—until the Board authorizes a new tolerance level or a revised plan. On the PRINCE2 Foundation exam, this scenario tests your understanding of the Controlling a Stage process and the escalation rules for tolerances; a common trap is assuming the Project Manager can adjust the budget independently or simply continue monitoring. A useful memory tip is to think of the Exception Report as the “red flag” that stops the stage until the Board decides—never exceed tolerance without permission.
PRINCE2F Practice Question: Overview of PRINCE2 and the project environment
This PRINCE2F practice question tests your understanding of overview of prince2 and the project environment. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
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
Option C is correct. 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 continuing without escalation violates management by exception. Option D is wrong because closing the project is not the appropriate response to a stage tolerance breach.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
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
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.
- ✓
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.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
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.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Trap categories for this question
Scenario analysis trap
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.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
- Use explanations to understand the rule behind the answer.
TExam Day Tips
- Underline the problem statement mentally.
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A practitioner preparing for the PRINCE2F exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
Got this wrong? Here's your next step.
Identify which PRINCE2F exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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FAQ
Questions learners often ask
What does this PRINCE2F question test?
Overview of PRINCE2 and the project environment — This question tests Overview of PRINCE2 and the project environment — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Raise an Exception Report to the Project Board and await their direction before proceeding — Option C is correct. 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 continuing without escalation violates management by exception. Option D is wrong because closing the project is not the appropriate response to a stage tolerance breach.
What should I do if I get this PRINCE2F question wrong?
Identify which PRINCE2F exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
Same concept, more angles
6 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. A project is forecast to exceed its cost tolerance at the project level. What should the Project Manager do first?
medium- A.Escalate to the Programme Manager
- B.Revise the Project Plan and continue
- ✓ C.Raise an Exception Report to the Project Board
- D.Close the project
Why C: When a project is forecast to exceed its cost tolerance at the project level, the Project Manager must first escalate the deviation to the Project Board by raising an Exception Report. This is because the Project Board holds the authority to approve changes to tolerances or authorize corrective actions, and the Project Manager cannot unilaterally revise the plan or close the project. The Exception Report provides the Board with the necessary information to make an informed decision on how to proceed.
Variation 2. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
medium- A.Close the project
- B.Continue and report later
- ✓ C.Raise an Exception Report
- D.Increase the project budget
Why C: The PM must escalate via an Exception Report to the Project Board.
Variation 3. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
medium- A.Report in the next Highlight Report
- B.Increase the project budget
- ✓ C.Raise an Exception Report
- D.Close the project
Variation 4. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
medium- A.Continue and report in the next Highlight Report
- ✓ B.Raise an Exception Report to the Project Board
- C.Increase the budget to cover the overrun
- D.Close the project immediately
Why B: According to the management by exception principle, exceeding tolerance must be escalated to the Project Board via an Exception Report.
Variation 5. A project is forecast to exceed its cost tolerance. What should the Project Manager do first?
medium- ✓ A.Issue an Exception Report to the Project Board
- B.Update the Business Case to reflect the new cost
- C.Close the project as it is no longer viable
- D.Approve additional budget using contingency
Why A: According to PRINCE2's management by exception, when a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
Variation 6. A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
hard- A.Continue and report in the next Highlight Report
- ✓ B.Raise an Exception Report to the Project Board
- C.Close the project
- D.Increase the stage budget and continue
Why B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
Last reviewed: Jun 21, 2026
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.
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