The Project Backlog is the artifact used to describe the project’s major products in the form of epic user stories . Epic stories are large, high-level user stories that capture significant features or product components that may later be decomposed into smaller, more detailed user stories in the product backlog.

The Project Backlog provides a strategic view of what the project intends to deliver and supports planning at the project level, including releases and stages. It bridges the gap between business requirements and team-level delivery.

The Product Backlog (C) contains detailed user stories ready for development but is typically more granular. The Release Map (B) plans releases and iterations but does not list epic stories. The Project Dashboard (A) is a reporting tool, not a repository of requirements.

The use of epic user stories in the project backlog aligns with agile practices for managing scope and enables incremental delivery aligned with business priorities.

The principle that establishes governance by delegating responsibilities and setting tolerances is manage by exception, making option C the correct answer. Agile Foundation guidance, aligned with PRINCE2 and PRINCE2 Agile principles, explains that effective governance does not require constant oversight or micromanagement. Instead, it relies on clearly defined roles, delegated authority, and agreed tolerances within which teams are empowered to operate.

Manage by exception works by setting measurable tolerances for key aspects such as time, cost, scope, quality, risk, and benefits. As long as work remains within these agreed limits, the team or delivery level can proceed independently without escalation. This creates clarity around accountability while allowing teams the autonomy needed to work efficiently and respond to change—an essential aspect of Agile delivery. Escalation only occurs when forecasts indicate that tolerances will be exceeded, ensuring that senior management attention is focused where it adds the most value.

Option A, ensure continued business justification, focuses on confirming that the project remains viable and worthwhile, but it does not define how governance is enacted day to day. Option B, tailor to suit the project, emphasizes adapting methods and controls to the project context rather than establishing governance through delegation. Option D, focus on products, ensures clarity around outputs and acceptance criteria but does not address governance or escalation mechanisms.

Agile Foundation documents highlight that manage by exception supports agility by balancing control with empowerment. Teams gain the freedom to self-manage and deliver iteratively, while leadership retains confidence that risks are controlled and objectives are protected. This principle reduces unnecessary reporting, speeds up decision-making, and supports trust between governance levels. By clearly delegating responsibilities and defining tolerances, manage by exception provides a practical and effective governance model compatible with Agile ways of working.

One of the significant challenges when merging traditional project management approaches like PRINCE2 with agile delivery methods is the lack of guidance on doing agile . While PRINCE2 provides a structured framework focusing on governance, control, and business justification, agile introduces flexible, iterative, and people-centered approaches. The integration of these requires clear guidance on how to implement agile practices effectively within the PRINCE2 framework.

PRINCE2 Agile acknowledges that while it offers a comprehensive method to combine governance and agility, many organizations and practitioners struggle with practical implementation, especially in how to “do agile” properly. This includes understanding how to adopt agile roles, ceremonies, and artifacts without losing control, as well as aligning agile delivery with PRINCE2’s management layers.

The challenge is compounded by the fact that agile methodologies emphasize adaptive planning and team autonomy, whereas traditional project management often focuses on upfront planning and command-and-control structures. PRINCE2 Agile aims to bridge this gap by providing detailed guidance, but a lack of practical ‘how-to’ agile advice remains a common issue.

Other options like terminology differences (A), unclear processes (B), and guidance at delivery level (C) are lesser challenges because PRINCE2 Agile provides a common vocabulary and defined processes that include delivery considerations.