Tolerances are the way that each level of the project maangement team keeps control over the level below. tolerances are described as part of the PRINCE2 Controls component which forms part of the PRINCE2 training courses offered by Knowledge Train.
Another key concept within PRINCE2 is the concept of ‘tolerance’. Tolerance is applied to all plans for elements of both cost and time. This is because it is never possible to predict with absolute accuracy how long things shall take or how much a piece of work shall cost to complete. Therefore, the next highest level of management can apply tolerance to cost and time to each level of plan. The manager responsible for that plan must complete the plan within the tolerance margins set by the next higher level of management. If the tolerances are forecast to be exceeded this matter must be escalated up to the next highest level of authority. This is a key part of ‘management by exception’.
Although the most common elements of tolerance are cost and time, PRINCE2 defines other elements of tolerance:
a: Risk tolerance refers to how much risk the Project Board is prepared to tolerate (‘risk appetite’). If a risk moves above the risk tolerance line, an Exception Report is raised to the Project Board.
b: Benefit tolerance implies setting a range of expected benefits that the project is expected to deliver which would be specified in the Business Case. If the expected benefits fall outside this range, then the Business Case would no longer be regarded as viable.
c: Scope tolerance would come into play when there is no cost or time tolerance and so decisions need to be made about reducing what can be delivered from the project e.g. we can build the house but it won’t have the bathroom fitted. All project requirements should be identified as either ‘must have’ or ‘desirable’ requirements and the difference between them represents scope tolerance.
d: Quality tolerance, in other words, a range of acceptable quality for a product. If a product is forecast to be built or has been built and shall/does not meet its specifications (known as an Off-Specification), then this might be accepted by the Project Board in the form of a Concession.
This article was taken from the booklet Concise PRINCE2™ (PRINCE2 ™ is a Trade Mark of the Office of Government Commerce) which was offered to students as part of the PRINCE2 training course (version 2005) by Knowledge Train. This booklet has been based on OGC (PRINCE2™) material. Reproduced under licence from OGC.
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