PRINCE2 Management By Exception

One of our students recently sent an email with several questions about management by exception within a PRINCE2 project. We thought it useful to repeat the answers here:
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PRINCE2 Management By Exception

Exception plan “replaces” the existing stage plan

QUESTION: An Exception plan “replaces” the existing stage plan. I see that this has been interpreted differently by authors – the Exception plan is placed within the same management stage or becomes the stage plan for a new management stage. Which is correct?

  • Suppose a project has 3 stages, and that an exception plan is approved during the 3rd stage – you now have 4 stages since the last stage has been split into two, partially run with the original stage 3 plan, while the ‘fourth’ stage is run via the exception plan which in effect becomes the fourth stage plan.
  • The reason is because an EXA is the same as an ESA with the only difference being to agree or not an Exception Plan.

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Management stage in a project

QUESTION: Can an internal product from a management stage in a project become an external product in a later stage in the same project?

  • Yes it can. The reason being is that the definition of an external product is EITHER one which is needed in the current stage but it’s creation is outside the management control of the current stage (for example it is being created by another group/organisation,
  • OR it is a product that is needed for the current stage but that product ALREADY EXISTS (it may have been created by THIS project, or by another project, or by another group/organisation).

Stage and project tolerances

QUESTION: If an issue causes both stage and project tolerances to be exceeded, will the PM produce 2 different Exception reports – one to be sent to the board and one for review by corporate/program management?

  • The PM would send an exception Report to the project board. If the report shows that both stage and project are forecast to exceed tolerances, then the project board may want to discuss this further with the PM first, but ultimately it is the project board that will either send the exception report to corporate/programme management as is, or modify it with their own thoughts in some way.

There is a lot of confusion about the exception process, so let me clarify one more option that MAY occur given the above paragraph.

Suppose the PM can see that that both project and stage tolerances are forecast to be exceeded, BUT, that he can see that corrective action CAN be taken which would blow stage tolerance but that such an exception plan would bring the project BACK into tolerance…..then what?

My answer to this circular argument, is that the project board would ask for a stage-level exception plan and review it at an EXA, hopefully approve it and continue on.

A smart Executive would also inform corporate/programme management to keep them in the picture…