In PRINCE2 7, tolerances are a fundamental mechanism for managing constraints within the Plans practice. Tolerances define the permissible deviation from planned targets before escalation to the next management level becomes necessary. They provide a practical framework for delegating authority whi…In PRINCE2 7, tolerances are a fundamental mechanism for managing constraints within the Plans practice. Tolerances define the permissible deviation from planned targets before escalation to the next management level becomes necessary. They provide a practical framework for delegating authority while maintaining appropriate control over project delivery.
PRINCE2 establishes tolerances across six key performance targets: time, cost, quality, scope, risk, and benefits. Each tolerance level creates boundaries within which the responsible manager can operate autonomously. When a forecast indicates that tolerances may be exceeded, the manager must escalate the situation through an exception report.
The tolerance hierarchy flows through three levels. Corporate or programme management sets project tolerances for the Project Board. The Project Board then delegates stage tolerances to the Project Manager. Finally, the Project Manager may establish work package tolerances for Team Managers.
Effective use of tolerances enables management by exception, a core PRINCE2 principle. This approach allows senior management to focus on strategic decisions rather than routine project activities. Managers at each level can make decisions within their delegated authority, promoting efficiency and faster decision-making.
When setting tolerances, several factors require consideration. Tolerances should reflect the organisation's risk appetite and the project's complexity. Tighter tolerances provide greater control but require more management oversight. Looser tolerances offer flexibility but increase exposure to deviation from plans.
Practical application involves documenting tolerances in the Project Initiation Documentation for project-level constraints and in Stage Plans for stage-level boundaries. Work Package descriptions capture team-level tolerances. Regular monitoring through checkpoint and highlight reports ensures deviations are identified early.
The Plans practice emphasises that tolerances must be realistic and achievable. Setting unattainable tolerances undermines the entire control framework, leading to frequent escalations and diminished confidence in project governance.
Using Tolerances to Manage Constraints
Why Is This Important?
Tolerances are fundamental to effective project management in PRINCE2. They enable decision-making at appropriate levels, prevent micromanagement, and ensure that escalation only occurs when necessary. Understanding how tolerances work is essential for both managing projects efficiently and passing the PRINCE2 Foundation exam.
What Are Tolerances?
Tolerances are the permissible deviation from a plan that is allowed before the deviation needs to be escalated to the next level of management. They define the boundaries within which a manager can operate before they must refer decisions upward.
In PRINCE2, tolerances can be set for six aspects of project performance:
• Time - How much earlier or later than planned • Cost - How much under or over budget • Quality - Variation in quality specifications • Scope - Variation in what is delivered • Benefits - Variation in expected benefits • Risk - Variation in risk exposure
How Tolerances Work in PRINCE2
Tolerances operate across all management levels:
Corporate/Programme Level: Sets project-level tolerances for the Project Board
Project Board Level: Sets stage-level tolerances for the Project Manager within the project tolerances
Project Manager Level: Sets work package tolerances for Team Managers within stage tolerances
When a tolerance is forecast to be exceeded, this triggers an exception. The manager must then escalate to their superior through an exception report.
Managing by Exception
Tolerances enable the PRINCE2 principle of manage by exception. This means:
• Managers have clear authority within defined limits • Senior management time is used efficiently • Problems are escalated appropriately • Decision-making happens at the right level
Setting Tolerances
Tolerances should be: • Realistic and achievable • Measurable and specific • Appropriate to the level of risk • Documented in plans
Zero tolerance means no deviation is permitted and every variance must be escalated.
Exam Tips: Answering Questions on Using Tolerances to Manage Constraints
1. Remember the six tolerance areas: Time, Cost, Quality, Scope, Benefits, and Risk. Questions often ask you to identify which tolerances apply in scenarios.
2. Understand the escalation chain: Know that tolerances flow downward (corporate to project to stage to work package) and exceptions flow upward.
3. Link tolerances to manage by exception: Many questions connect these concepts. Tolerances are the mechanism that makes managing by exception possible.
4. Know what triggers an exception: An exception occurs when a forecast shows tolerances will be exceeded, not when they are already exceeded.
5. Recognize who sets tolerances for whom: The Project Board sets stage tolerances, and the Project Manager sets work package tolerances.
6. Watch for scenario questions: These often describe a situation where cost or time is threatened and ask what action should be taken based on tolerance levels.
7. Remember that tolerances provide flexibility: They allow managers to handle minor variations themselves while ensuring significant issues are addressed at appropriate levels.
8. Be aware of zero tolerance implications: When zero tolerance is set, any variation requires escalation to the higher authority.