Manage by Exception is one of the seven fundamental principles in PRINCE2 7 that establishes a governance framework enabling efficient decision-making and resource allocation throughout a project. This principle creates clear boundaries of delegated authority through the use of tolerances, which de…Manage by Exception is one of the seven fundamental principles in PRINCE2 7 that establishes a governance framework enabling efficient decision-making and resource allocation throughout a project. This principle creates clear boundaries of delegated authority through the use of tolerances, which define the permissible deviation from planned targets for aspects such as time, cost, scope, quality, risk, and benefits.
The core concept involves setting tolerance levels at each management layer within the project. When work proceeds within these agreed tolerances, the responsible manager has autonomy to make decisions and manage day-to-day activities. However, when a forecast indicates that tolerances will be exceeded, this triggers an exception, requiring the matter to be escalated to the next higher authority level for guidance.
This approach offers several key advantages. First, it promotes efficient use of senior management time by freeing higher-level managers from routine decisions, allowing them to focus on strategic matters while being assured that significant issues will be brought to their attention. Second, it provides clear accountability at each level, as managers understand their decision-making boundaries. Third, it enables faster decision-making at appropriate levels, preventing bottlenecks that would occur if every decision required senior approval.
In practice, the Project Board sets tolerances for the Project Manager at the stage level. The Project Manager then delegates work to Team Managers with their own tolerances for work packages. If any manager forecasts breaching their tolerances, they must raise an exception report to their superior, who then decides on the appropriate course of action.
This principle requires that tolerances are clearly defined and communicated at the start of each stage or work package. It creates a management by exception culture where escalation occurs only when genuinely needed, making project governance both effective and efficient.
Manage by Exception - PRINCE2 Foundation V7 Complete Guide
What is Manage by Exception?
Manage by Exception is one of the seven PRINCE2 principles that establishes a framework for governance and accountability within a project. It defines clear tolerances for delegated authority, allowing team members to operate autonomously within agreed boundaries while escalating issues only when those boundaries are threatened or breached.
Why is Manage by Exception Important?
This principle is crucial for several reasons:
1. Efficient Use of Management Time Senior managers are freed from day-to-day decisions, allowing them to focus on strategic matters. They only need to intervene when situations exceed defined limits.
2. Clear Accountability Each management level understands their decision-making authority and knows when escalation is required.
3. Empowerment Team members can make decisions within their tolerance levels, promoting ownership and faster decision-making.
4. Appropriate Governance The principle ensures proper oversight while avoiding micromanagement.
How Does Manage by Exception Work?
The principle operates through a system of tolerances set at each management level:
Corporate/Programme Level: Sets project tolerances for the Project Board Project Board Level: Sets stage tolerances for the Project Manager Project Manager Level: Sets work package tolerances for Team Managers
Exception Process: When a tolerance is forecast to be exceeded, an exception occurs. The manager must: 1. Raise an Issue to the next management level 2. The higher authority may request an Exception Report 3. An Exception Plan may be created to replace the current plan
Exam Tips: Answering Questions on Manage by Exception
Key Points to Remember:
• Tolerances are set by the level above, not by the person working within them • Exception handling involves escalation before tolerances are actually breached, when a breach is forecast • The Project Board sets stage tolerances; the Project Manager works within them • Corporate or Programme Management sets project tolerances for the Project Board
Common Question Types:
1. Scenario questions - You may be given a situation where tolerances are threatened. Look for answers involving escalation to the appropriate level.
2. Definition questions - Know that this principle is about delegation with defined limits, not about handling exceptions as problems.
3. Tolerance questions - Remember all six tolerance areas (Time, Cost, Quality, Scope, Risk, Benefits).
Watch Out For:
• Answers suggesting the Project Manager sets their own tolerances - this is incorrect • Options implying all decisions must go to the Project Board - this contradicts the principle • Choices suggesting tolerances are optional - they are fundamental to this principle
Remember This Formula: Tolerance = Planned value +/- permitted deviation
When answering exam questions, always consider WHO sets the tolerance, WHO works within it, and WHAT happens when it is forecast to be exceeded. The correct answer will typically involve proper escalation to the management level that granted the authority.