The answer is to raise an Exception Report and await direction from the Project Board. This is correct because PRINCE2 operates on the principle of management by exception, where tolerances define the boundaries of delegated authority; when a forecast exceeds tolerance, the Project Manager has no authority to continue without board-level escalation. On the PRINCE2 Foundation exam, this scenario tests your understanding of the escalation chain and the difference between corrective action within tolerance versus formal exception reporting. A common trap is selecting an answer where the Project Manager tries to fix the issue independently, but the rule is clear: exceeding tolerance always triggers an Exception Report, not a revised plan. Remember the memory tip: “If tolerance is breached, the Board must be reached.”
PRINCE2F PRINCE2 Practices Practice Question
This PRINCE2F practice question tests your understanding of prince2 practices. 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.
A project is forecast to exceed its cost tolerance. What should the Project Manager do?
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 and await Project Board direction.
C is correct because when a project forecasts exceeding its cost tolerance, the Project Manager must escalate the issue to the Project Board via an Exception Report. This is a PRINCE2 management by exception principle: tolerances are delegated limits, and exceeding them requires board-level decision-making, not unilateral action by the Project Manager.
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 as the Business Case is no longer viable.
Why it's wrong here
A cost overrun does not automatically mean the Business Case is unviable.
✗
Increase the project budget using the change budget.
Why it's wrong here
The Project Manager cannot increase the budget without Project Board approval.
✓
Raise an Exception Report and await Project Board direction.
Why this is correct
The Project Manager must escalate via an Exception Report.
Related concept
Read the scenario before looking for a memorised answer.
✗
Continue with the plan and report the overrun in the next Highlight Report.
Why it's wrong here
Continuing without escalation violates management by exception.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse the Project Manager's authority to manage within tolerances with the ability to handle breaches, leading them to choose 'continue and report later' (D) or 'use change budget' (B), when PRINCE2 mandates immediate escalation via an Exception Report.
Detailed technical explanation
How to think about this question
In PRINCE2, tolerances are set for each management stage and for the project as a whole. The Project Manager operates within delegated tolerances; if a forecast breach occurs, they must produce an Exception Report detailing the cause, impact, and options. The Project Board then decides whether to approve a revised plan, adjust tolerances, or close the project. This mechanism ensures that the Business Case remains viable and that decisions are made at the appropriate level.
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.
TExam Day Tips
→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 exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
PRINCE2 Practices — This question tests PRINCE2 Practices — 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 and await Project Board direction. — C is correct because when a project forecasts exceeding its cost tolerance, the Project Manager must escalate the issue to the Project Board via an Exception Report. This is a PRINCE2 management by exception principle: tolerances are delegated limits, and exceeding them requires board-level decision-making, not unilateral action by the Project Manager.
What should I do if I get this PRINCE2F question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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 →
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 stage cost tolerance. What should the Project Manager do?
medium
A.Close the project immediately as the Business Case is no longer viable
B.Increase the project budget to absorb the additional cost and continue with the current Stage Plan
✓ C.Raise an Exception Report to the Project Board and await their direction before proceeding
D.Continue with the current Stage Plan and report the cost overrun in the next Highlight Report
Why C: When a tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report to seek direction.
Variation 2. A project is forecast to exceed its stage 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.Close the project
D.Increase the cost tolerance and continue
Why B: When tolerance is forecast to be exceeded, the Project Manager must raise an Exception Report to the Project Board.
Variation 3. A project is forecast to exceed its stage cost tolerance. What should the Project Manager do?
medium
✓ A.Raise an Exception Report to the Project Board and await directions
B.Increase the stage budget by using the project's change budget
C.Continue with the current plan and report the overrun in the next Highlight Report
D.Close the project as the Business Case is no longer viable
Why A: According to PRINCE2's management by exception principle, if a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board via an Exception Report. The PM cannot exceed tolerance without authorization.
Last reviewed: Jun 24, 2026
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