PRINCE2F PRINCE2 Practices Practice Question
Which TWO statements about PRINCE2's management by exception are correct?
⚠ Common exam trap
The trap is assuming tolerances apply only to time and cost, or that the Project Manager sets project-level tolerances, when in fact PRINCE2 covers six tolerance areas and the Board sets project tolerances.
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
✓
If a tolerance is forecast to be exceeded, the Project Manager must escalate
Option C is correct because under PRINCE2's management-by-exception principle, the Project Manager must escalate to the next management level (the Project Board) as soon as it is forecast that an agreed tolerance will be exceeded, rather than waiting for the breach to occur. Option E is correct because management by exception delegates authority to the Project Manager to make day-to-day decisions autonomously as long as actual and forecast performance remains within the agreed tolerances. Option A is wrong because PRINCE2 defines six tolerance areas — time, cost, scope, quality, risk, and benefit — not just time and cost. Option B is wrong because the Project Board sets project-level tolerances (and the corporate/programme layer sets programme or corporate tolerances); the Project Manager may propose them but does not set them. Option D is wrong because the whole point of management by exception is that the Project Board is not involved in day-to-day decisions, only in exception situations and at stage boundaries.
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
PRINCE2 tolerances cover six aspects — time, cost, scope, quality, risk and benefit — so restricting them to time and cost misstates the method. It is tempting because time and cost are the most visible constraints, and a narrower tolerance set would be correct only if the project's other aspects were delegated without limits.
- ✗
The Project Manager sets the project's tolerances
Why it's wrong here
Tolerances are set by the layer above — corporate or programme management for project tolerances, and the Project Board for stage tolerances — not by the Project Manager being controlled. It is tempting because the Project Manager proposes and works within them, and setting them would be correct only where that role also owns the directing layer.
- ✓
If a tolerance is forecast to be exceeded, the Project Manager must escalate
Why this is correct
Tolerance defines the delegated authority boundary; once a forecast breach is detected, the Project Manager cannot unilaterally proceed. Escalation to the next management level, typically the Project Board, preserves the management-by-exception principle by ensuring decisions beyond delegated tolerance are made by those who own the business case.
- ✗
The Project Board is involved in all day-to-day decisions
Why it's wrong here
Management by exception delegates day-to-day decisions to the Project Manager, escalating only when tolerances are forecast to be breached, so board involvement in routine decisions contradicts the principle. It is tempting because the board owns the project's direction, and such involvement would be correct under a non-delegated, directive governance model.
- ✓
The Project Manager can make decisions within agreed tolerances
Why this is correct
Tolerances define the permissible deviation from planned targets, so the Project Manager may act autonomously within them without escalating. This satisfies the scenario's requirement for a correct statement about management by exception, since escalation to the Project Board occurs only when a tolerance is forecast to be exceeded.
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Same concept, more angles
3 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 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: Highlight Reports are produced by the Project Manager for the Project Board to report progress and issues. Option D is correct: The Project Board uses management by exception, setting tolerances and only intervening when breaches occur. Option E is correct: Checkpoint Reports are produced by Team Managers for the Project Manager to report progress at the work package level. Option B is incorrect because the Project Board sets stage tolerances, not the Project Manager. Option C is incorrect because tolerances are set at both project and stage levels.
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: Option C is correct because in PRINCE2 the Project Manager is responsible for agreeing work packages with Team Managers, which includes setting the tolerances (time, cost, scope, risk, quality, benefit) within which each Team Manager must deliver. Option E is correct because the Project Board agrees the Project Manager's tolerances at the level of the project, defining the limits of delegated authority within which the Project Manager can manage the stage and project. Option A is wrong because an Exception Report is produced by the Project Manager to escalate a forecast breach of stage or project tolerances to the Project Board, not specifically when a project is closed early. Option B is wrong because an Exception Plan does not replace the Project Plan; it replaces the current Stage Plan (or, in some cases, the Project Plan) only for the remaining part of the project, and only after Project Board approval. Option D is wrong because Highlight Reports are produced by the Project Manager for the Project Board at the end of each reporting period (typically monthly), not at stage end — stage end reporting is covered by the End Stage Report.
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: In PRINCE2, the Project Board sets stage tolerances for the Project Manager as part of the 'Manage by Stages' principle. This allows the Project Manager to manage the stage within defined tolerances without needing to escalate every minor deviation, ensuring delegated authority is clear and controlled.
JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PeopleCert exam blueprint
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