The answer is that the Project Manager can make decisions within agreed tolerances, and this is the correct statement because management by exception in PRINCE2 is fundamentally about delegating authority up to a defined limit. When tolerances are set for time, cost, quality, scope, risk, and benefits, the Project Manager has the freedom to manage the project without constant oversight, as long as forecasts remain within those boundaries. The concept of tolerance management by exception is tested on the PRINCE2 Foundation exam to ensure you understand that escalation only occurs when a tolerance is forecast to be exceeded, not after it has been breached. A common trap is confusing delegation with abdication—management by exception does not mean ignoring the project; it means knowing when to escalate. A useful memory tip is to think of tolerances as a “decision zone”: inside the zone, the manager decides; outside the zone, the manager escalates.
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 TWO statements about PRINCE2's management by exception are correct?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
If a tolerance is forecast to be exceeded, the Project Manager must escalate
Management by exception means delegating authority within tolerances and escalating when tolerances are forecast to be exceeded.
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.
✗
Tolerances apply only to time and cost
Why it's wrong here
Tolerances also apply to scope, quality, risk, and benefits.
✗
The Project Manager sets the project's tolerances
Why it's wrong here
The Project Board sets tolerances.
✓
If a tolerance is forecast to be exceeded, the Project Manager must escalate
Why this is correct
Correct: escalation via Exception Report is required.
Related concept
Read the scenario before looking for a memorised answer.
✗
The Project Board is involved in all day-to-day decisions
Why it's wrong here
The Board is not involved in day-to-day decisions; that's management by exception.
✓
The Project Manager can make decisions within agreed tolerances
Why this is correct
Correct: the PM works within tolerances set by the Board.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
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.
Use explanations to understand the rule behind the answer.
TExam Day Tips
→Underline the problem statement mentally.
→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 PRINCE2F exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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: If a tolerance is forecast to be exceeded, the Project Manager must escalate — Management by exception means delegating authority within tolerances and escalating when tolerances are forecast to be exceeded.
What should I do if I get this PRINCE2F question wrong?
Identify which PRINCE2F exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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. Which THREE of the following are correct about the PRINCE2 progress practice?
hard
✓ A.Highlight Reports are produced by the Project Manager for the Project Board.
B.The Project Manager sets stage tolerances for the project.
C.Tolerances are only set at the project level, not at the stage level.
✓ D.The Project Board uses management by exception to control the project.
✓ E.Checkpoint Reports are produced by Team Managers for the Project Manager.
Why A: Option A is correct: the Project Board uses management by exception, setting tolerances and only intervening when breached. Option C is correct: Checkpoint Reports are from Team Manager to Project Manager. Option D is correct: Highlight Reports are from Project Manager to Project Board. Option B is incorrect because tolerances are set for each stage, not just at project level. Option E is incorrect because the Project Manager does not set stage tolerances; the Project Board does.
Variation 2. Which TWO of the following statements about the Progress practice are correct?
hard
A.An Exception Report is produced by the Project Manager when the project is closed early.
B.An Exception Plan is used to replace the Project Plan when the project exceeds its tolerances.
✓ C.The Project Manager sets tolerances for the Team Managers.
D.Highlight Reports are produced by the Project Manager for the Project Board at stage end.
✓ E.The Project Board sets tolerances for the Project Manager.
Why C: Tolerances are set for each management level, and Exception Plans are created when tolerances are forecast to be exceeded.
Variation 3. Which TWO of the following are correct statements about tolerance in PRINCE2?
medium
✓ A.The Project Board sets stage tolerances for the Project Manager
✓ B.If a stage tolerance is exceeded, the Project Manager must escalate
C.Tolerances apply only to time and cost
D.The Project Manager can never change tolerances without Board approval
E.Tolerances are set only at project level
Why A: Tolerances are set for each management level; the Project Board sets stage tolerances. The Project Manager can reallocate tolerance within a stage if the total is not exceeded.
Last reviewed: Jun 21, 2026
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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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