Exception Report Template

Exception Report: [Project name], [Stage N or project], YYYY-MM-DD

An exception report tells the project board (or the next level of authority) that a tolerance is forecast to be exceeded, explains why, sets out the options with their effect on the plan and the business case, and recommends one. The board then decides. It is the core of "management by exception": the project manager runs the stage inside delegated limits and escalates only when those limits will be broken. The structure is aligned with the exception report management product described in PRINCE2 7 (PeopleCert, 2023) and works for any project with delegated tolerances. Replace every [bracketed] value and every row marked Example.

Document control

Approvals

Revision history

The worked example continues the fictional Brackwell Vale Housing Trust Tenant Services Portal (see project/highlight-report). Stage 3, Build and migrate, has a budget of 520,000 EUR with +/-8% cost tolerance (41,600 EUR) and a planned end of 2027-05-21 with +/-2 weeks time tolerance. Project tolerances are +/-5% cost on 1,180,000 EUR (59,000 EUR) and +4 weeks time.

1. Exception title and summary

Title: [Short title, for example "Stage 3 cost and time forecast to exceed tolerance"]

[Summary]

Example: Stage 3 cost is forecast at 571,000 EUR, 51,000 EUR (+9.8%) over budget against a tolerance of +/-8%, and the stage end is forecast at 2027-06-11, 3 weeks late against a tolerance of +/-2 weeks. The cause is the volume of poor-quality legacy tenancy records found in work package WP-07. Three options are assessed. The project manager recommends option B: migrate current tenancies only and keep the historic repairs archive read-only in the old system, which returns the stage to within tolerance.

2. Cause of the exception

Example: Full profiling of the legacy housing system (product PRD-35) showed that 38% more tenancy and repairs records need manual cleansing than the 2% sample used for the WP-07 estimate. Risk RSK-014 was raised in highlight report 4. By week 11 the cleansing burn-down showed the team clearing records at the planned rate against a much larger backlog, and the forecast crossed both tolerances.

3. Consequences of the deviation

4. Options

4.1 Effect on risks and the business case

5. Recommendation

Recommended option: [Option and reasons]

Decision requested: [Approve option, approve exception plan preparation, change tolerances]

Example: Option B. It keeps both stage and project within tolerance, protects the go-live date for current tenants, and the business case stays viable. Historic repairs are consulted for fewer than 1 in 50 calls according to the contact centre's sample, which the senior user should confirm. The board is asked to approve option B and to ask the project manager to produce an exception plan for stage 3 with a revised budget of 534,000 EUR and end date 2027-05-28, the 14,000 EUR coming from the project risk budget.

6. Lessons

• [Lesson]
• Example: Estimate migration effort from full data profiling, not a sample, and make profiling a product of the stage before.

7. Board decision record

8. Related templates

• Highlight report, where the risk was first reported
• Work package, whose tolerance the team manager escalated
• End stage report, which records the exception at the stage boundary
• Change control for changes that cause an exception
• RAID log and Decision log
• Business case to recheck viability

Glossary

• Tolerance: the permitted deviation from a plan target before the next level of authority must be told.
• Exception: a forecast that a tolerance will be exceeded.
• Exception plan: a plan that replaces the current stage or project plan after the board accepts an option.
• Project risk budget: money set aside to fund responses to risks; the board controls how it is used.
• Premature closure: stopping the project in a controlled way before its planned end.

Standard and licence note

Structure aligned with the exception report management product and the "manage by exception" principle of PRINCE2 7 (Managing Successful Projects with PRINCE2, 7th edition, PeopleCert, 2023). PRINCE2 is cited by name only: no text, tables or figures from the publication are reproduced, and the headings, wording, decision flow and the fictional Brackwell Vale example are original. Official text: PeopleCert, purchase or licensed access: https://www.peoplecert.org/prince2. PRINCE2 is a registered trademark of PeopleCert. Check the current edition and your organisation's governance rules before use. Template licence: MIT.