- A
The Project Manager sets project tolerances for the Project Board
Why wrong: Project tolerances are set by the Project Board or higher management, not by the PM.
- B
Tolerances are set for each management level
PRINCE2 defines tolerances at project, stage, and work package levels.
- C
If a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board
This is the core of management by exception: escalation when tolerances are breached.
- D
The Project Board sets stage tolerances for the Project Manager
The Project Board authorizes stage tolerances, within which the PM operates.
- E
Management by exception means that no reports are required unless a tolerance is exceeded
Why wrong: Regular Highlight Reports and Checkpoint Reports are still required; management by exception defines when to escalate beyond normal reporting.
Quick Answer
The correct answer is that the Project Board sets stage tolerances for the Project Manager, as this directly reflects the PRINCE2 manage by exception principle tolerances. This principle establishes a hierarchy of delegated authority: the Project Board defines project and stage tolerances, the Project Manager sets work package tolerances for team managers, and escalation only occurs when a tolerance is forecast to be exceeded. On the PRINCE2 Foundation exam, this concept tests your understanding of how control is distributed without micromanagement, and a common trap is confusing who sets which tolerance—remember, the Project Board owns the higher-level tolerances, not the Project Manager. A useful memory tip is “Board above, Manager below”: the Board sets project and stage tolerances, while the Manager sets work package tolerances, ensuring exceptions are escalated upward only when necessary.
PRINCE2F PRINCE2 Practices Practice Question
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.
Which THREE of the following statements about the PRINCE2 principle 'Manage by Exception' are correct?
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
Tolerances are set for each management level
Options A, B, and D are correct. Manage by Exception means setting tolerances for each level and only escalating when they are exceeded. The Project Board sets stage tolerances for the PM. The PM sets work package tolerances for team managers. Options C and E are false: the PM does not set project tolerances (Project Board does), and management by exception does not eliminate reporting — it defines when escalation is needed.
Key principle: NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
The Project Manager sets project tolerances for the Project Board
Why it's wrong here
Project tolerances are set by the Project Board or higher management, not by the PM.
- ✓
Tolerances are set for each management level
Why this is correct
PRINCE2 defines tolerances at project, stage, and work package levels.
Related concept
Static NAT maps one inside address to one outside address.
- ✓
If a stage tolerance is forecast to be exceeded, the Project Manager must escalate to the Project Board
Why this is correct
This is the core of management by exception: escalation when tolerances are breached.
Related concept
Static NAT maps one inside address to one outside address.
- ✓
The Project Board sets stage tolerances for the Project Manager
Why this is correct
The Project Board authorizes stage tolerances, within which the PM operates.
Related concept
Static NAT maps one inside address to one outside address.
- ✗
Management by exception means that no reports are required unless a tolerance is exceeded
Why it's wrong here
Regular Highlight Reports and Checkpoint Reports are still required; management by exception defines when to escalate beyond normal reporting.
Common exam traps
Common exam trap: NAT rules depend on direction and matching traffic
NAT is not only about the public address. The inside/outside interface roles and the ACL or rule that matches traffic are just as important.
Detailed technical explanation
How to think about this question
NAT questions usually test address translation, overload/PAT behaviour, static mappings and whether the right traffic is being translated. Read the interface direction and address terms carefully.
KKey Concepts to Remember
- Static NAT maps one inside address to one outside address.
- PAT allows many inside hosts to share one public address using ports.
- Inside local and inside global describe the private and translated addresses.
- NAT ACLs identify traffic for translation, not always security filtering.
TExam Day Tips
- Identify inside and outside interfaces first.
- Check whether the scenario needs static NAT, dynamic NAT or PAT.
- Do not confuse NAT matching ACLs with normal packet-filtering intent.
Key takeaway
NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Real-world example
How this comes up in practice
A small business has 20 workstations on the 192.168.1.0/24 network and one public IP from its ISP. The router uses PAT (NAT overload) so all 20 devices share one public address using different source ports. NAT questions test whether you understand the four address terms and which direction each translation applies.
What to study next
Got this wrong? Here's your next step.
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related PRINCE2F NAT questions on configuration and troubleshooting.
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FAQ
Questions learners often ask
What does this PRINCE2F question test?
PRINCE2 Practices — This question tests PRINCE2 Practices — Static NAT maps one inside address to one outside address..
What is the correct answer to this question?
The correct answer is: Tolerances are set for each management level — Options A, B, and D are correct. Manage by Exception means setting tolerances for each level and only escalating when they are exceeded. The Project Board sets stage tolerances for the PM. The PM sets work package tolerances for team managers. Options C and E are false: the PM does not set project tolerances (Project Board does), and management by exception does not eliminate reporting — it defines when escalation is needed.
What should I do if I get this PRINCE2F question wrong?
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related PRINCE2F NAT questions on configuration and troubleshooting.
What is the key concept behind this question?
Static NAT maps one inside address to one outside address.
About these practice questions
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Same concept, more angles
1 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. Which TWO statements about tolerances in PRINCE2 are correct?
hard- A.Tolerances are only for cost and time
- B.Tolerances apply at project level only
- ✓ C.Tolerances are defined for each management stage
- D.Tolerances are set by the Project Manager
- ✓ E.If a tolerance is forecast to be exceeded, the Project Manager must escalate via an Exception Report
Why C: Tolerances are defined for each stage by the Project Board, and the Project Manager may only deviate within that tolerance without escalation. They are set for time, cost, scope, quality, risk, and benefits.
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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