In the context of the PRINCE2 7 Progress practice, Forecasting and Escalation are the twin mechanisms that enable the principle of 'Manage by Exception'.
Forecasting is the forward-looking aspect of project control. While monitoring analyzes what has already occurred, forecasting assesses what is …In the context of the PRINCE2 7 Progress practice, Forecasting and Escalation are the twin mechanisms that enable the principle of 'Manage by Exception'.
Forecasting is the forward-looking aspect of project control. While monitoring analyzes what has already occurred, forecasting assesses what is likely to happen regarding the remaining work. During the 'Controlling a Stage' process, the Project Manager continually updates the Stage Plan with actual progress gathered from Team Managers via Checkpoint Reports. They then estimate the time and cost required to complete the remaining work. This generates a predicted outcome for the stage and the project against the performance targets (time, cost, quality, scope, benefits, and sustainability). As long as this forecast remains within the agreed tolerances, the Project Manager continues to manage the work.
Escalation occurs immediately when forecasting indicates that a tolerance is effectively broken. In PRINCE2, you do not wait for the limit to be exceeded; you escalate as soon as the forecast shows it will be. If a Stage Level tolerance is threatened, the Project Manager must escalate the issue to the Project Board.
The process typically involves:
1. Analysis: The Project Manager assesses the deviation's impact.
2. Exception Report: The situation and recommendation are documented in an Exception Report.
3. Decision: The Project Board reviews the report. They may approve an Exception Plan (replacing the current plan) or provide other directions.
4. Higher Escalation: If the forecast suggests Project Level tolerances will be breached, the Project Board must further escalate to Corporate, Programme Management, or the Customer.
Essentially, forecasting provides the data required to recognize when the current plan is no longer valid, and escalation ensures the decision on how to proceed is moved to the appropriate authority level.
Forecasting and Escalation: PRINCE2 Practitioner v7 Guide
Introduction to Forecasting and Escalation In PRINCE2, the Progress practice is driven by the principle of Manage by Exception. This relies heavily on the ability to forecast future performance and escalate issues to the appropriate management level only when agreed limits (tolerances) are predicted to be breached. Without accurate forecasting and timely escalation, the project governance structure fails, leading to uncontrolled deviations.
Why is it Important? Projects rarely go exactly according to the initial plan. Importance lies in: 1. Early Warning: It allows the Project Board to take corrective action before a deviation becomes unrecoverable. 2. Efficient Governance: It ensures senior management is not bothered by minor issues (within tolerance) but is immediately involved when significant deviations (exceptions) occur. 3. Control: It maintains the validity of the Business Case by ensuring time, cost, and quality remain within acceptable bounds.
What are they? Forecasting is the assessment of the remaining work combined with actual progress to predict the final status of a Work Package, Stage, or Project. It answers the question: "Based on what we know now, will we finish within the agreed limits?" Escalation is the process of transferring decision-making authority to the next higher level of management when a forecast indicates that tolerances will be exceeded.
How it Works: The Escalation Path The process moves up the hierarchy based on which tolerance is threatened:
1. Team Level (Work Package Tolerance): The Team Manager monitors progress. If they forecast that the Work Package tolerances (time/cost/quality) will be exceeded, they raise an Issue to the Project Manager. They do not write an Exception Report.
2. Project Manager Level (Stage Tolerance): The Project Manager assesses issues and progress (via Checkpoint Reports). If the PM forecasts that the Stage Tolerance will be exceeded, they must: - Create an Exception Report. - Send it to the Project Board. Note: The PM handles deviations within stage tolerance without escalating, though they may report them in Highlight Reports.
3. Project Board Level (Project Tolerance): The Project Board reviews the Exception Report. If the deviation is contained within Project Tolerance, the Board decides on the next step (usually requesting an Exception Plan). However, if the Board forecasts that Project Tolerance will be exceeded, they must escalate to Corporate, Programme Management, or the Customer.
Exam Tips: Answering Questions on Forecasting and Escalation When facing Practitioner scenarios regarding this topic, use the following checklist:
1. Check the Timeline (Forecast vs. Actual): PRINCE2 is proactive. Look for keywords like "predicts,""estimates," or "forecasts." You do not wait until you have overspent to escalate; you escalate as soon as you forecast that you will overspend.
2. Identify the Level of Authority: - If a Team Manager has a problem, the answer usually involves raising an issue or advising the PM. - If the Project Manager has a problem exceeding Stage Tolerance, the answer must involve an Exception Report. - If the Project Board sees Project Tolerances threatened, they must notify Corporate/Programme management.
3. Distinguish Report vs. Plan: A common trap is confusing the Exception Report with the Exception Plan. - The Exception Report describes the problem and options. It is sent to the Board to ask for a decision. - The Exception Plan is the new plan created after the Board approves the recommendation to replan. Do not select an answer that suggests creating an Exception Plan before the Board has seen the Report.
4. Immediate Action vs. Investigation: If a scenario states an issue has just emerged, the PM's first step is usually to investigate the impact (Impact Analysis) before escalating. However, if the impact analysis is already done and tolerance is clearly breached, the immediate action is to escalate (Exception Report).