I’m in Exception – what does it mean?

This is a question I quite often get asked on the Monday morning of a course. Unless the students come from a PRINCE2 background it can normally take a little while to get your head around this idea of exception. I am going to help you answer this question.

So, what is it?

Well quite simply it’s a status. If you are saying a plan or a work package is in exception it means that the plan or work package no longer has approval. The reason for this is that it is now forecasted to exceed the tolerances agreed – it’s in exception. This means the exception needs to be reported up the way.

How does it work?

Well let’s look at how the exception process works. Starting at the lowest management level in a PRINCE2 team structure – the Team Manager and how we can end up going all the way to Corporate or Programme management when things don’t go to plan.  To do this I am going to use the project scenario of building a dream house.

The Dream House Project

The Agreement with Corporate or Programme Management.

During the Initiation of the project the Project Manager will prepare a Project Plan for the entire project. The Project Plan is an outline of what we are looking to see happen throughout the duration of the project. It is a high-level plan that shows all the major work that needs to be delivered. The plan will also show the number of stages (gates) that will happen in the project. The Project Plan will show the overall timescales and costs for the project that Corporate or Programme management are happy to commit to but it will also show the tolerance that the Project Board have been given.  Let’s say for the dream house scenario the project has been broken up into 5 management stages and has an overall planned timescale of 9 months and an agreed spend of $100,000.  Corporate or programme have also agreed some tolerance with the Project Board. These tolerances are the deviations away from planned times and costs that they are comfortable with and happy for the Project Board to make the decisions within. So, for this project the tolerances for time and costs are 9 months +/- 1 month and $100,000 +/- $10,000.

The Agreement with the Project Board

Let’s say you are the Project Manager for my dream house scenario. As the Project Manager, you would prepare a Stage Plan (based on the outline for that stage in the Project Plan) for approval by the Project Board. That Stage Plan would show all the Work Packages that the Team Managers are going to deliver in the stage and provide details on the planned targets for time and costs for the stage. Let’s say the planned timescale for the next stage is 6 weeks and the planned spend is $20,000. The Project Board agree that they are happy to commit those targets but they are also happy to give you some tolerance as well. So, what is agreed in the plan is a target timescale of 6 weeks but +/- 4 days and a target spend of $20,000 +/- $2000. As a Project Manager, you now have an approved Stage Plan and you can now get to handing work out and doing what you do best – managing projects!

The Agreement with the Team Manager

Now the stage is up and running as a Project Manager you can start handing out work to be delivered by the Team Managers. This is done in PRINCE2 by having an agreement on the work that needs to be delivered, the timescales available, the costs available, the quality expected of the products, the reporting arrangements, the escalation procedures between the Project and Team Managers etc. This agreement is called the Work Package.  Once agreed the Team Manager is saying that they can deliver that Work Package so they take responsibility for that work. Now as well as agreeing on the above the Project Manager can also give the Team Managers tolerance. Let’s say one of the Work Packages is to fit the kitchen in the dream house. The Project and Team Manager will agree on the Work Package. This is where the Project Manager can also agree tolerances for the Team Manager and this information would be captured in the Work Package. What you’ve agreed with the Team Manager in the Work Package is that it will take 2 weeks to fit the kitchen +/- 2 days and the agreed cost is $8000 +/- $500. The Team Manager can now get on with what they are good at – fitting a kitchen!  So that’s all the agreements now in place for every management level in the project. In part 2 we will look at the exception process and how it works based on these agreements.

The Team Manager and the issue

We have seen that what you had agreed with the Team Manager in the Work Package is that it will take 2 weeks to fit the kitchen +/- 2 days and the agreed cost is $8000 +/- $500. Once the Team Manager has agreed to this they will get on with the work.  Now let’s say that half way through the work the Team Manager arrived for work but no one else from their team has. Once the Team Manager considers this they find out that the whole team has come down sick. The Team Manager now has an issue they must deal with. The first thing the Team Manager should do is look at the impact on the Work Package tolerances agreed with the Project Manager. If the Team Manager feels that they can finish the work within those tolerances they can decide on the course of action. However, if they feel they cannot their Work Package is now in exception. This means that the Work Package now no longer has the approval of the Project Manager. Let’s say in this situation the Team Manager is now forecasting that the Work Package will now take a week longer than planned for. They only have 2 days’ tolerance so they are in exception. This means they need to report the issue to the Project Manager.

The Project Manager and the stage exception

As the Work Package is now in exception it needs to be reported by the Team Manager to the Project Manager. So, the Team Manager raises an issue basically saying to the Project Manager here is what has happened, here is the impact on the work and what do you want me to do?  Once the Project Manager receives the issue they must look at ways to manage the situation. Also, they should look at what impact it would have on the stage tolerances they had agreed with the Project Board. So, what was agreed in the stage plan was a target timescale of 6 weeks but +/- 4 days and a target spend of $20,000 +/- $2000. Now we have seen from above that the Team Manager has forecasted the work will now take a week longer than planned so it does seem initially that the stage time tolerance is being threatened. But this is where a Project Manager earns their crust. As a Project Manager, they should look at a range of options to see if they can keep the stage on track. One option might be to use some of the cost tolerance to pay for some overtime thereby putting the stage back on track. Or they might have some scope tolerance so they could deliver less which means the job could be finished quicker. However, if the Project Manager cannot find a way to keep the stage within tolerance the stage is now in exception. This means it needs to be reported to the Project Board in the form of an Exception Report. The Exception Report is basically saying to the Project Board here is what has happened, here is the impact, here are some options and a recommendation of what the Project Manager thinks should be done but what action do you want me to take?

The Project Board

Once the Project Board receive the Exception Report they have several possible decisions they could make. They are senior people so they can commit resources so they may just give the Project Manager more tolerance. They might just say let’s monitor the situation over the next few days and see what happens. They might however ask the Project Manager to revise the current Stage Plan showing how the Project Manager would implement the chosen option of how to deal with the situation. This is the Project Board requesting an Exception Plan. All an Exception Plan is a revision of a plan that is forecasted to exceed tolerance. This would involve the Project Manager revising the current Stage Plan from the point the issue was raised to where they are now estimating the stage will end. Once the Project Manager has revised the plan they would send it back to the Project Board to review. If the Project Board are happy with the revised plan they will approve that plan and it becomes the new version of the Stage Plan.

Going all the way to Corporate or Programme

In the situation, we have described above it would probably never be serious enough to have to go any further than the Project Board. But there will be times when an issue is raised that is so serious that it could threaten the project tolerances. If you remember, the project tolerances agreed where for 9 months +/- 1 month and $100,000 +/- $10,000. Let’s say a situation arises were the whole house building team walk of site. The Project Manager looks at the impact of the issue and forecasts that it is going to now take 11 months to complete the project. This means that the Project Plan is now in exception. In this situation, the Project Manager would raise an Exception Report to the Project Board but even they would not have the authority to decide on the course of action. They would have to consult with Corporate or Programme. Once Corporate or Programme management are involved there is several decisions they could take. They could just close the project. They might feel it is now no longer viable. They could ask the Project Manager to revise the Project Plan showing how they would manage the situation. This is Corporate or Programme Management requesting an Exception Plan for the project. The Project Manager would then revise the plan, send it back to Corporate or Programme and if approved the plan would become the new revised plan for the project. So, what we have seen s that PRINCE2 gives you the tools to ensure decisions are made by the right people in the project team. By using the process above it allows for good use of management time but also allowing people to direct, manage and deliver the project. This is why one of the 7 key Principles PRINCE2 supports is Managing by Exception.