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Manage by Exception

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This is a term that people who are new to PRINCE2 will most likely not have heard before. As it is important that you understand it, I will start a simple explanation and then give you the PRINCE2 definition. When it comes to factors like time, cost, and scope, the Project Manager has some tolerance to play with before they have to advise the Project Board that there is or might be a problem (e.g., costs could change ±10%). If the problem is small and it remains within the tolerances (e.g. the costs increase by 2% – less than the 10% tolerance), then the Project Manager can deal with it and doesn’t have to alert the Project Board and take up their time. The details of this process in explored in the Progress theme.

Manage by Exception is used by each level in the Project Organization to manage the level below. The layer below should only notify the above management layer if there is a big issue that is outside their tolerance. The PRINCE2 name for a big issue is Exception, which means the issue is outside the agreed tolerance.

Now, imagine you are sitting on the Project Board. If everything is going OK, you won’t hear from the Project Manager other than for the regular reports during a stage and at the end of the stage, unless there is an exception, hence the term Manage by Exception. When an exception occures, the Project Managers sends an Exception Report to the Project Board.

The PRINCE2 definition for Manage by Exception is as follows: A PRINCE2 project has defined tolerances for each project objective to establish limits of delegated authority.

PRINCE2 lists 6 tolerances that can be set. These are:

Here are examples only for Quality, Scope, Risk and Benefit, as Time and Cost are easier to understand:

To summarize: Manage by Exception provides the above management layer with a system to manage and control the lower management layer, and they don’t need to be bothered by each small issue.

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discussion icon Written by Frank Turley (his LinkedIn profile)