PRINCE2F Practice Question: Overview of PRINCE2 and the project environment
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 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 appropriate first response. Option B is wrong because continuing without escalation violates management by exception. Option D is wrong because the Project Manager cannot increase the budget without Project Board approval.
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 an appropriate first response to a stage tolerance breach; the Project Manager should escalate via an Exception Report.
- ✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Continuing with the current Stage Plan without escalation 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
Correct. When a tolerance is forecast to be exceeded, the Project Manager must raise an Exception Report to the Project Board and await direction.
- ✗
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; that requires Project Board authorization.
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