Quick Answer
The answer is to raise an Exception Report to the Project Board. This is correct because PRINCE2 mandates management by exception, meaning the Project Manager is only empowered to work within agreed tolerances; when a forecast shows the cost tolerance will be exceeded, the manager must immediately escalate the issue rather than attempting corrective action independently. The Exception Report triggers a formal decision from the Project Board, who can authorize a new plan or adjust tolerances, ensuring governance is maintained. On the PRINCE2 Foundation exam, this question tests your understanding of the escalation chain and the precise role of tolerances in delegated authority. A common trap is confusing an Exception Report with a Highlight Report or assuming the manager should fix the problem first—remember, the manager manages within tolerance, not beyond it. Memory tip: think of an Exception Report as the “red flag” you wave when the budget line is breached, forcing the board to steer the ship.
This PRINCE2F practice question tests your understanding of prince2 practices. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
A project is forecast to exceed its cost tolerance. What should the Project Manager do first?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "first"
Why it matters: Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Ask the Project Board for more tolerance
Why wrong: Formal escalation via Exception Report is required first.
Close the project
Why wrong: Closing the project is a decision for the Project Board.
Continue with the current plan and report in the next Highlight Report
Why wrong: Escalation is immediate, not delayed.
Raise an Exception Report to the Project Board
Correct. Escalate via Exception Report.
Answer choices
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
D is correct because PRINCE2 requires the Project Manager to escalate any forecast deviation beyond tolerance to the Project Board via an Exception Report. This triggers a formal decision process, ensuring the board can authorize corrective action before the situation worsens.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Ask the Project Board for more tolerance
Why it's wrong here
Formal escalation via Exception Report is required first.
Close the project
Why it's wrong here
Closing the project is a decision for the Project Board.
Continue with the current plan and report in the next Highlight Report
Why it's wrong here
Escalation is immediate, not delayed.
Raise an Exception Report to the Project Board
Why this is correct
Correct. Escalate via Exception Report.
Clue confirmation
The clue word "first" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
The trap here is that candidates may think the Project Manager can simply request more tolerance or continue reporting normally, failing to recognize that PRINCE2 mandates immediate escalation via an Exception Report when tolerance is forecast to be exceeded.
Detailed technical explanation
In PRINCE2, tolerance is a delegated authority limit set by the Project Board; exceeding it requires an Exception Report, which includes the impact, options, and a recommendation. The board then decides whether to revise tolerance, approve a corrective plan, or close the project. This mechanism ensures that the Project Manager does not unilaterally exceed delegated authority, maintaining control at the appropriate management level.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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FAQ
PRINCE2 Practices — This question tests PRINCE2 Practices — Read the scenario before looking for a memorised answer..
The correct answer is: Raise an Exception Report to the Project Board — D is correct because PRINCE2 requires the Project Manager to escalate any forecast deviation beyond tolerance to the Project Board via an Exception Report. This triggers a formal decision process, ensuring the board can authorize corrective action before the situation worsens.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Yes — watch for: "first". Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Read the scenario before looking for a memorised answer.
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Same concept, more angles
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. What should the Project Manager do?
mediumWhy B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is management by exception.
Variation 2. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
hardWhy D: When a forecast indicates that a stage or project tolerance will be exceeded, the Project Manager must escalate via an Exception Report to the Project Board. This is management by exception.
Variation 3. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
mediumWhy C: Management by exception dictates that when a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. Continuing without escalation is not allowed.
Variation 4. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
hardWhy B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is the principle of management by exception.
Variation 5. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
mediumWhy B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. Option C is correct.
Variation 6. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
mediumWhy B: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. This is management by exception. The PM cannot increase the budget or continue without escalation.
Variation 7. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
mediumWhy A: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
Variation 8. A project is forecast to exceed its cost tolerance. What should the Project Manager do?
mediumWhy C: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report.
Last reviewed: Jun 24, 2026
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