In the context of PRINCE2 7, the principle of 'Manage by Exception' is fundamental to efficient project governance, enabling appropriate delegation of authority without losing control. It ensures that distinct layers of management (Corporate, Project Board, Project Manager, and Team Manager) have d…In the context of PRINCE2 7, the principle of 'Manage by Exception' is fundamental to efficient project governance, enabling appropriate delegation of authority without losing control. It ensures that distinct layers of management (Corporate, Project Board, Project Manager, and Team Manager) have defined boundaries within which they can operate autonomously.
This principle relies on setting 'tolerances' against six performance targets: time, cost, quality, scope, benefits, and risk. A tolerance is the permissible deviation above and below a plan's target. The flow of authority operates as follows: Corporate or Programme management sets project-level tolerances for the Project Board; the Project Board delegates stage-level tolerances to the Project Manager; and optionally, the Project Manager sets work package tolerances for Team Managers.
Under this system, as long as work is forecast to remain within agreed tolerances, the lower management layer proceeds without needing constant approval from above. This allows the Project Board to adopt an 'eyes on, hands off' approach, saving senior management time and reducing administrative burden. They are only involved when a specific issue arises—an 'Exception'.
An Exception occurs when a forecast indicates that a tolerance is likely to be exceeded. At this specific point, the lower level must escalate the situation immediately (typically via an Exception Report) to the next higher level for a decision. This mechanism ensures that senior management intervention is reserved for significant deviations that jeopardize the project's success criteria, rather than routine monitoring. Ultimately, applying this principle builds trust, clarifies accountability, and prevents micromanagement.
Guide to the PRINCE2 Principle: Manage by Exception
Introduction In PRINCE2 v7, the principle of Manage by Exception is the mechanism that allows for efficient use of senior management time. It creates a bridge between the different levels of the project management team (Corporate, Project Board, Project Manager, Team Manager) by defining distinct boundaries of authority. Rather than requiring regular progress meetings to authorize every small step, management sets limits; as long as performance remains within these limits, the lower level can proceed independently.
What is it? Manage by Exception is the practice of delegating authority from one management level to the next by setting Tolerances against six aspects of performance. An 'Exception' occurs only when there is a forecast that these tolerances will be exceeded.
The Six Aspects of Performance Tolerances can be set for: 1. Cost: (e.g., +/- 10% of the budget) 2. Time: (e.g., +/- 2 weeks on the completion date) 3. Quality: (e.g., ranges in acceptance criteria) 4. Scope: (e.g., permitted variation in requirements, such as MoSCoW) 5. Risk: (e.g., limits on the aggregated value of threats) 6. Benefits: (e.g., minimum acceptable improvement)
Why is it Important? Without this principle, projects suffer from either micromanagement (senior management getting involved in every detail) or a lack of control (senior management finding out about problems too late). It ensures that decisions are made at the right level and that the Project Board is only bothered when their decision-making authority is actually required.
How it Works: The Hierarchy of Delegation 1. Corporate/Programme to Project Board: Sets Project Tolerances. If these are forecast to be breached, the Project Board must escalate upwards. 2. Project Board to Project Manager: Sets Stage Tolerances. If the PM forecasts the stage will go outside these limits, they must raise an Exception Report to the Board. 3. Project Manager to Team Manager: Sets Work Package Tolerances. If the Team Manager forecasts a breach, they raise an Issue to the PM.
Exam Tips: Answering Questions on Manage by Exception When answering Practitioner questions regarding this principle, focus on the following strategies:
1. Identify the Hierarchy Level: Read the scenario carefully to determine which level of tolerance is at risk. Is it a Work Package delay (Team Manager issue) or a Stage budget overrun (Project Manager exception)? Select the answer that aligns with the correct level of escalation.
2. Forecast vs. Actual: PRINCE2 emphasizes being proactive. An exception is raised based on a forecast breach, not just after the breach has happened. Look for answers that suggest reporting immediately upon realizing a tolerance will be exceeded.
3. Within vs. Without Tolerance: If a problem arises (e.g., a cost increase) but the project is still within the +/- tolerance range, an Exception Report is not required. The Project Manager should handle it within their authority (perhaps by trading off scope or using the risk budget). Choose answers that reflect solving the problem locally if it is within tolerance.
4. The Exception Plan: If a Stage Exception occurs, the Project Board will usually ask for an Exception Plan. This replaces the remainder of the current plan. In exam questions, ensure you don't confuse an Exception Plan (used for recovery) with an Exception Report (used for alerting).