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?
⚠ Common exam trap
PRINCE2F often tests the misconception that the Project Manager can simply adjust the budget or continue and report later, confusing tolerance breaches with routine progress reporting.
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 forecast indicates that a stage-level tolerance (such as cost) will be exceeded, the Project Manager must escalate the issue to the Project Board by raising an Exception Report. This is because tolerances are delegated limits of authority; exceeding them means the Project Manager no longer has the authority to proceed without Board approval. The Exception Report presents the situation, options, and a recommendation, allowing the Board to decide whether to stop, change, or continue the project. Option C correctly reflects this mandatory escalation procedure.
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 forecast breach of stage cost tolerance is handled by escalating to the Project Board via an exception report, which decides whether to continue, amend or stop; the Project Manager cannot unilaterally close the project. It is tempting because tolerance breach threatens the Business Case, and closing would be correct if the Board had already judged the Business Case no longer viable.
- ✗
Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why it's wrong here
Reporting the overrun later ignores the stage cost tolerance breach, which must trigger an Exception Report to the Project Board for a decision. Highlight Reports cover routine progress within tolerance. Escalating via Exception Report is required once a forecast exceeds an agreed tolerance.
- ✓
Raise an Exception Report to the Project Board and await their direction before proceeding
Why this is correct
A forecast breach of stage-level cost tolerance constitutes an exception, so the Project Manager must escalate via an Exception Report and await Project Board direction rather than acting unilaterally. This satisfies the stem's tolerance-breach constraint, preserving the Board's authority over stage boundaries.
- ✗
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; only the Project Board authorises additional funding. Forecast breach of stage cost tolerance demands an Exception Report. Budget increases would be correct only after the Board approves an Exception Plan addressing the deviation.
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Last reviewed September 2026 · checked against the official PeopleCert exam blueprint
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.