What ‘Manage by Exception’ PRINCE2’s Principle Brings is BRILLIANT!

What ‘Manage by Exception’ PRINCE2’s Principle Brings is BRILLIANT. From all of the seven PRINCE2 principles, one of the most interesting is “Manage by Exception”. The idea behind this powerful management approach is to establish limits of delegated authority for the 3 differentiated levels of decision in the governance model of a project: directing, managing and delivering.

And now, how do we define who is responsible for making a decision? The answer is by setting tolerances against 6 objectives in each plan:

• Time Plan: setting limits (up and down) to the amount of time that deliverable completion can exceed. E.g.  the maximum deviation will be exceeding the agreed delivery date by 3 days.
• Cost Plan: setting limits (up and down) to budget deviations. E.g.: the maximum cost deviation without scaling will be 7%.
• Quality Plan: setting limits (up and down) to quality requirement deviations. E.g.: response time should not exceed 5% from what is planned.
• Scope Plan: setting limits (mandatory, desirable, and optional) to product requirements. E.g.: we can’t meet 3 desirable requirements.
• Risk Plan: setting limits to risks that each level can assume. E.g.: unplanned costs can’t be over 10% of the budget.
• Benefit Plan: setting limits to overdelivering and underdelivering. E.g.: our goal of reducing 40% customer waiting times can’t go below 35%.

With clear tolerance definitions against these 6 plans, delegation of authority will dramatically reduce follow up meetings, reporting efforts, and many hours of unnecessary controlling and monitoring. Only when there is an ‘exception’ in one of these 6 tolerances is when the Project Board needs to meet and make a critical decision. Until then, the Project Team and the Project Manager each have their own responsibilities on the success of the project.

If we really think about this approach, in fact, it is not very different from Agile methods. In both, Project Team can make decisions by themselves. And in both, Efficiency is more important than bureaucracy.

Now think about how many new productive things we can do while we avoid overmeeting:

Have you ever applied ‘management by exception’? What was your experience?