Management by Exception is a fundamental principle within PRINCE2, a widely used project management methodology.
Delegated Authority and Tolerances: In PRINCE2, a project is divided into three levels of decision-making and management: Directing: The Project Board holds the highest authority and makes strategic decisions. Managing: The Project Manager oversees day-to-day activities and manages the project. Delivering: The Project Team executes tasks and delivers project outputs. Each level has defined tolerances for project objectives (such as time, cost, quality, scope, risk, and benefit). These tolerances establish limits of delegated authority. For instance: Quality Tolerance: Imagine creating a new mobile phone. You want the keyboard to work for an average user for 7 years, with a tolerance of ±5%. Scope Tolerance: The project can decide which “nice-to-have” requirements to include, but must include the mandatory requirements. Benefit Tolerance: Benefits (measurable improvements for stakeholders) must align with expectations. Risk Tolerance: If a risk exceeds the set tolerance level, the Project Board must be notified. Manage by Exception: The principle ensures efficient communication and minimizes unnecessary reporting. Project Managers handle routine matters without involving the Project Board unless there’s an exception (issue outside agreed tolerances). When an exception occurs, the Project Manager sends an Exception Report to the Project Board. If everything is going well, the Project Board hears from the Project Manager only during regular reports or when exceptions arise. Hence the term “Manage by Exception.” Remember, PRINCE2 emphasizes effective management while minimizing unnecessary bureaucracy