Understanding tolerances in PRINCE2® Project Management | PRINCE2

Every project carries uncertainty. Even with robust planning, circumstances will shift, risks may materialise, and assumptions can change. PRINCE2® Project Management recognises this reality, and one of the ways it keeps projects under control is through tolerances. They give project managers the flexibility to manage day-to-day changes while ensuring project boards retain oversight of major decisions.

This blog explores what tolerances are in PRINCE2 Project Management, how they are applied, and why they are central to effective governance and the manage by exception principle.

What are tolerances in PRINCE2 Project Management?

Tolerances define the permissible deviation from an agreed plan. They act as boundaries within which the project manager can operate without needing further approval, ensuring the project board only becomes involved when deviation exceeds agreed limits.

In practice, tolerances are set around key performance targets such as time, cost, scope, quality, benefits and risk. When a forecast shows that a plan is likely to exceed one of these boundaries, the project manager must escalate the situation. This is known as an exception. This approach strengthens control while avoiding unnecessary involvement from senior stakeholders.

Tolerances are therefore a core part of the methodologies principles because they support clear accountability, structured governance and consistent decision-making across the project lifecycle.

How tolerances support project control

Tolerances are applied at multiple levels within a project, from the overall project plan to individual stages and work packages. This layered structure ensures that every part of the project has meaningful boundaries and appropriate autonomy.

• At project level: The project board agrees the overall tolerances when approving the Project Initiation Document (PID). This sets the expectations for the full duration of the project.
• At stage level: Tolerances provide the parameters for each management stage. Because stage boundaries offer natural review points, tolerances help ensure that risks, performance and forecasts are reassessed regularly before authorising the next phase.
• At work package level: Tolerances give team managers clarity about the limits within which they must deliver. This keeps progress controlled and ensures any risks or delays are visible early.

Together, these levels create a structured approach to project management that supports stability while allowing for flexibility in delivery.

Examples of how tolerances are used

The most common tolerances relate to time and cost. For instance, a project board may authorise a stage with a ±5% cost tolerance or a two-week time tolerance. As long as the project manager forecasts delivery within those boundaries, they can continue without escalation.

However, tolerances can also apply to quality, scope, benefits and risk. A scope tolerance may allow for a minor change without formal change control, while a quality tolerance may permit a small degree of variance if it does not compromise acceptance criteria.

This flexibility helps project teams stay focused on progress rather than bureaucracy, while still ensuring that significant impacts are escalated appropriately.

Tolerances and the manage by exception principle

Manage by exception is one of the defining principles of PRINCE2 Project Management. It ensures that project boards only become involved when necessary and prevents senior leadership from being pulled into day-to-day delivery decisions.

Tolerances make this possible. They provide the limits that define when an issue is ordinary, acceptable, project variation and when it needs escalation. Without tolerances, project boards would either be overloaded with minor updates or unaware of issues until they become critical.

By enabling manage by exception, tolerances help teams stay agile, responsive and efficient while keeping governance consistently aligned with strategic priorities.

Why tolerances are essential

Tolerances do more than streamline governance, they strengthen the overall control environment in several ways:

• They support clarity of roles and responsibilities. Everyone understands exactly what they can approve and when escalation is required.
• They improve forecasting and risk management. Because tolerances require regular review of performance and progress, they help identify risks earlier and ensure issues are dealt with before they escalate.
• They create predictable decision-making. Clear boundaries ensure that choices are made consistently, transparently and in line with agreed parameters.
• They reduce unnecessary oversight. Senior stakeholders are only required to intervene when variance threatens the viability of the plan, which increases efficiency across the project.

For organisations operating large or complex programmes, these advantages contribute to smoother delivery, improved communication and reduced project strain.

Common challenges when using tolerances

While tolerances bring significant benefits, they must be set thoughtfully. Some challenges include tolerances that are too tight, leaving project managers with little flexibility to respond to normal variation; tolerances that are too wide, which may lead to late escalation; and tolerances that are inconsistently applied across stages or work packages.

To avoid these, project boards should base tolerances on realistic forecasts and risk assessments, ensuring they reflect the nature of the work, the experience of the team, and the organisation’s risk appetite.

Bringing tolerance-based control into practice

Tolerances are a practical tool that help maintain control while empowering project managers. When well-designed, they bring balance: enough autonomy to manage delivery effectively, and enough governance to ensure the project remains aligned with strategic goals.

Understanding tolerances is crucial for anyone studying PRINCE2 Project Management or applying the method in real-world environments. They shape decision-making, risk management and project reporting, and they underpin one of the methodology’s most powerful governance mechanisms.

By applying tolerances effectively, project professionals can enhance visibility, maintain stability, and deliver projects with confidence.

Explore our PRINCE2 Project Management training to build the skills and confidence to manage projects with clarity, structure and control.