Clarifying Some Key Points

Here are a few revision notes on some of the items in the checklist. As with the other chapters on processes and themes, this section focuses on a few of the areas which can be the source of misunderstanding or concern. For each subject area if, when you’ve read a few sentences, you’re sure you’re already clear on the point, just skip the rest and move on to the next heading.

Understanding exception management

The problem with exception management is that it’s easy! You may be looking for something really difficult that’s a unique PRINCE2 concept, but actually exception management is normal everyday management.

I’ve done a lot of work over the years with police forces, and I often like to use police examples to illustrate things. So, is the Commissioner of the Metropolitan Police visiting every police station in London today to check everything is okay? No, of course not. The Commissioner is busy (we hope) doing important police management stuff, not trudging around the police stations. The Commissioner expects that everything is going okay and that he or she will be told quickly if something significant happens, such as a major crime. So, too, with the project. At stage level, the Project Board has approved the plan and appointed a Project ‘Manager’ to run things on a day-to-day basis. The Project Board members now assume everything is going okay – to plan – and have told the Project Manager to report back to them quickly (with an Exception Report) if anything goes significantly off track. They’ve specified exactly what ‘significantly’ means, too, and those limits (upper and lower) are the tolerances.

Some people learning PRINCE2 struggle a bit at first with lower tolerance limits, especially with tolerances on time and cost. They can see why you need to tell the Project Board quickly if a stage is going to be very late or cost much more, but can’t see why there’s a need to report immediately if something is cheaper or faster. The reason for the reporting is that the board may need to tell others. For example, if the stage and then the whole project are going to finish early, other business areas may need to be warned so that they can take advantage of it. Equally, if the stage or perhaps the whole project is going to come in significantly under budget, then the Finance Director may need to be told the good news and that money will now be freed up for other things.

Underspends and early delivery are not normally as sensitive as being late or over budget, but do note carefully the ‘normally’ in that statement. Consequently the tolerance may not be as tight on the lower end of the band. So, for the stage budget, a projected overspend may be subject to a limit of 5 per cent before it’s notified, but a project underspend has to be 15 per cent before it needs to be reported. [P2FD Ch17 Setting unequal tolerances]

Finally, on exception management, you need to be particularly clear on the management levels. Tolerance can be set at three levels and is always set by the level above. Those words, ‘level above’, should spring into your mind as soon as you see the words ‘exception management’ or ‘tolerances’. The tolerance is the limit the level above has set to instruct the level below when to report something. You can see tolerances as delegated authority, because that’s exactly what they are. To take stage tolerance as an example again, the Project Board (level above) is saying to the Project Manager, ‘Go away and get on with this stage, and you can do that management within these limits. If you forecast at any time that you’re going to exceed a limit in either direction, you must come back to us immediately.’

To emphasise the ‘level above’ idea, project tolerance is not set by the Project Board; you need to be clear about this. Project tolerance is set by corporate or programme management and is an instruction and authority to the Project Board. Stage tolerance is set by the Project Board and passed on to the Project Manager, while Work Package tolerance is set by the Project Manager for the Team Manager. Similarly, exceptions are notified back up to the level above. If a Team Manager detects that a tolerance is going to be exceeded, he or she notifies the Project Manager (usually using an issue). The Team Manager doesn’t jump a management level and notify the Project Board. If the project goes into exception, the Executive will inform programme or corporate management – the level above the project. [P2FD Ch17 Using Tolerance at Different Levels]

Knowing your time- and event-driven controls

Most PRINCE2 controls are event driven; the control kicks in when something happens. For example, the exception procedure is event driven and will be initiated if a projection indicates that a tolerance limit will be exceeded. The End Stage Assessment (ESA) is event driven and happens when the event of end stage occurs. If the stage is slightly delayed, then a planned ESA will be slightly delayed, and if the stage completes slightly early, then the Project Board will meet early for the ESA.

There are just three time-driven controls. Two are the progress reports, which are produced at set intervals – the Highlight Report (Project Manager to Project Board) and the Checkpoint Report (Team Manager to Project Manager). The Project Manager may choose to hold regular meetings with Team Managers, and such meetings are the third time-driven control.