Tolerance Management is a vital concept within PRINCE2's Progress Theme that provides flexibility in project execution while maintaining appropriate governance. Tolerances are the permissible deviation from a plan that a management level can accept without necessitating escalation to the next manag…Tolerance Management is a vital concept within PRINCE2's Progress Theme that provides flexibility in project execution while maintaining appropriate governance. Tolerances are the permissible deviation from a plan that a management level can accept without necessitating escalation to the next management level. They embody PRINCE2's 'management by exception' principle, enabling efficient use of management time while ensuring that projects remain controlled. Tolerances are established at multiple levels within a project: Project Board sets project tolerances, Project Manager sets stage tolerances, and Team Managers receive work package tolerances. These tolerances can be defined across six aspects: time (scheduling allowances), cost (budget flexibility), quality (acceptable quality variations), scope (product feature flexibility), risk (risk exposure thresholds), and benefit (variation in expected benefits). Tolerance Management enables appropriate delegation of authority, allowing each management level to focus on their primary responsibilities without constant oversight from above. It creates a clear framework for escalation when issues exceed defined tolerances, ensuring that significant problems receive attention from the appropriate management level. This approach promotes proactive management by requiring managers to anticipate potential variance rather than simply reacting to issues after they occur. Throughout the project lifecycle, Tolerance Management requires regular monitoring and reporting to identify potential tolerance breaches early, facilitating timely corrective actions. This systematic approach prevents minor issues from escalating into major problems that could threaten project success, making it a cornerstone of effective project governance within the PRINCE2 methodology.
Tolerance Management in PRINCE2 Foundation
Introduction to Tolerance Management
Tolerance Management is a critical aspect of the Progress Theme in PRINCE2, focusing on establishing acceptable deviation limits before escalation is required. Understanding this concept is essential for effective project management and success in your PRINCE2 Foundation exam.
What is Tolerance Management?
Tolerance in PRINCE2 refers to the permissible deviation from a plan's objectives that a management level can accept before the situation must be escalated to the next management level. Essentially, it's the leeway given to project managers before they need to report issues upward.
PRINCE2 identifies six tolerance types: 1. Time: Allowable variation in schedule (e.g., +/- 2 weeks) 2. Cost: Acceptable deviation in budget (e.g., +/- 5%) 3. Quality: Permissible range in quality criteria (e.g., system response time between 1-3 seconds) 4. Scope: Flexibility in product requirements (e.g., implementing 20-25 features) 5. Risk: Acceptable variation in aggregated risks (e.g., risk exposure up to $50,000) 6. Benefit: Allowable range in expected benefits (e.g., cost savings between 8-12%)
Why is Tolerance Management Important?
Tolerance Management serves several crucial purposes:
• It provides clear decision-making authority boundaries • It enables delegation while maintaining control • It reduces unnecessary escalations, saving management time • It promotes proactive management of deviations • It ensures issues are addressed at the appropriate level • It supports the PRINCE2 principle of 'Manage by Exception'
How Tolerance Management Works
Tolerance Management operates through several key mechanisms:
1. Setting Tolerances: Each management level sets tolerances for the level below. The Project Board sets project tolerances for the Project Manager, who in turn sets stage tolerances for Team Managers.
2. Monitoring Progress: Regular checkpoints assess whether work remains within tolerances.
3. Exception Management: When a tolerance breach is forecast, an Exception Report is created and escalated to the next management level.
4. Exception Plan: If needed, an Exception Plan is developed to replace the current plan, addressing how to bring the work back on track.
5. Tolerance Hierarchy: Project tolerances must be within program tolerances, which must be within corporate or portfolio tolerances.
Exam Tips: Answering Questions on Tolerance Management
• Remember all six tolerance types: Time, Cost, Quality, Scope, Risk, and Benefit. Questions often ask you to identify these correctly.
• Understand the escalation path: Know that tolerance breaches are escalated upward (Team Manager to Project Manager to Project Board).
• Recognize tolerance limits vs. actual overruns: Tolerances are about forecast overruns, not just current status.
• Connect with 'Manage by Exception': Many questions link tolerance management to this key PRINCE2 principle.
• Know the documentation: Exception Reports and Exception Plans are used when tolerances are forecast to be exceeded.
• Focus on who sets tolerances: Higher management levels set tolerances for lower levels - this relationship is frequently tested.
• Differentiate between project, stage and team tolerances: Understand how these differ in scope and application.
• Pay attention to trigger words: Terms like 'forecast breach,' 'exception,' 'escalation,' and 'deviation' often signal tolerance management questions.
• Apply practical judgment: Some scenario-based questions require you to determine if a situation represents a tolerance breach.
When answering exam questions, carefully analyze the scenario to identify if tolerances are being approached or exceeded, who should be informed, and what actions should be taken according to PRINCE2 methodology.