Plan Tolerance is a key concept within the PRINCE2 methodology that provides a controlled flexibility in project plans. Tolerances are the permissible deviation above and below a plan's target for time and cost without escalating the deviation to the next management level. They represent the discre…Plan Tolerance is a key concept within the PRINCE2 methodology that provides a controlled flexibility in project plans. Tolerances are the permissible deviation above and below a plan's target for time and cost without escalating the deviation to the next management level. They represent the discretion or leeway granted to the project manager by the project board regarding the acceptable variance from the agreed targets.
The concept of tolerances is essential as it acknowledges that estimating with complete precision is rarely possible in project management. By establishing tolerances, PRINCE2 creates a governance framework that balances control with flexibility. Six types of tolerances are defined in PRINCE2: time, cost, quality, scope, risk, and benefit tolerance.
Tolerances operate at every level of the planning hierarchy. For example, the corporate or programme management sets project tolerances for the project board, who then establish stage tolerances for the project manager, who in turn sets work package tolerances for team managers. This cascading structure ensures that decision-making happens at the right level—when a tolerance is forecast to be exceeded, the matter is escalated to the appropriate management level for resolution.
Effective use of tolerances prevents micromanagement by higher authorities while still maintaining appropriate oversight. It also provides clear triggers for escalation and decision-making, helping to prevent 'management by crisis.' The setting of tolerances should be realistic, taking into account the level of uncertainty and risk in the project, and they should be documented in the respective plans. Regular monitoring and forecasting help identify potential tolerance breaches early, allowing for proactive management responses.
PRINCE2 Plan Tolerance: Comprehensive Guide
Understanding Plan Tolerance in PRINCE2
Plan Tolerance is a critical concept within the Plans Theme of PRINCE2 that establishes acceptable deviation limits for project objectives. This guide will help you grasp the importance, mechanics, and examination aspects of Plan Tolerance.
What is Plan Tolerance?
Plan Tolerance represents the permissible deviation from a plan's objectives before escalation becomes necessary. It acts as a buffer zone that allows project managers to handle minor variances before involving higher management levels.
In PRINCE2, tolerances are typically set for six areas: - Time: Acceptable schedule delays - Cost: Allowable budget variations - Quality: Acceptable quality criterion deviations - Scope: Permitted variation in product features - Risk: Agreed limits for aggregated risks - Benefits: Acceptable variation in expected benefits
Why Plan Tolerance is Important
Plan Tolerance serves several crucial purposes:
1. Enables delegation: Provides a controlled environment for empowering teams 2. Promotes efficiency: Prevents unnecessary escalations for minor issues 3. Supports exception management: Creates clear thresholds for when escalation is required 4. Enhances control: Allows management by exception 5. Improves decision-making: Provides clarity on when decisions need elevation
How Plan Tolerance Works
Plan Tolerance operates on a hierarchical basis within PRINCE2:
1. Setting tolerances: Each management level sets tolerances for the level below - Corporate/Programme Management sets Project Tolerances for the Project Board - Project Board sets Stage Tolerances for the Project Manager - Project Manager sets Work Package Tolerances for Team Managers
2. Monitoring against tolerances: - Regular tracking of project performance against established tolerances - Forecast-based monitoring to anticipate potential tolerance breaches
3. Exception process: - When a tolerance breach is forecast, an Exception Report is created - The management level above reviews the situation - An Exception Plan may be requested to address the issue
Exam Tips: Answering Questions on Plan Tolerance
1. Remember the hierarchy: - Know which management level sets tolerances for which level below - Understand that tolerances cascade down through management layers
2. Know all six tolerance types: - Time, Cost, Quality, Scope, Risk, and Benefits - Be able to provide examples of each
3. Understand the exception process: - Exception Report is created when tolerance breach is forecast - Exception Plans detail recovery actions - Recognize that exceeding tolerance is not necessarily project failure
4. Connect to other themes: - Link tolerances to the Progress theme (monitoring and control) - Connect to the Risk theme (risk tolerance) - Relate to the Change theme (change budget as cost tolerance)
5. Application questions: - In scenario-based questions, identify which tolerance is at risk - Determine the correct escalation path based on the management level - Recognize when an Exception Report should be initiated
6. Common misconceptions to avoid: - Tolerance is not merely acceptable failure—it's a controlled delegation mechanism - Tolerances are not arbitrary—they should be based on risk assessment and business case - All tolerances must be measurable and clearly defined
Remember that Plan Tolerance is fundamental to PRINCE2's "management by exception" principle, which aims to use management time efficiently while maintaining appropriate control.