Manage by exception
A project defines tolerances for each objective at each level of management, and delegates authority within them. A level reports upward only when a tolerance is forecast to be exceeded — that is an exception.
Why it is like this
It makes senior management's time scale: the board governs by decision points and exceptions rather than by attendance, which is what allows a project board to run several projects.
Not to be confused with
Management by silence, or escalating after the fact. The trigger is a forecast breach, not an actual one — escalating once the tolerance is already blown removes the board's options.
In practice
Tolerances are set on time, cost, quality, scope, benefits and risk — six of them, not just the first two.
Source: Managing Successful Projects with PRINCE2, 7th edition (PeopleCert, 2023) — PRINCE2 7, §3 — principles: manage by exception. Read on .
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Odd one out Check yourself
Three of these are correct about manage by exception. Which is not?
Show the answer
The project manager escalates once the tolerance has actually been exceeded
Waiting for the actual breach is the common failure. The board needs the warning while it can still act.