Project Auditing

A key assessment tool is the project audit, a more or less systematic review into any part
of the project. A project audit is versatile and can focus on whatever senior management
needs. In the view of the manager group for whom it is carried out and the group to
whom it is carried out, the assessment of a project must be reliable.

1. Purposes of Evaluation - Goals of the System

Four independent dimensions of success

The most straightforward dimension is the efficiency of the project in meeting both the
spending plan and the timeline. Another, and most complex, dimension is the influence /
satisfaction of the client. The third dimension, once again somewhat straightforward and
expected, is business / direct success. The last dimension, somewhat more difficult and
nebulous to ascertain, is the potential of the future.

Another primary objective

Another primary objective of the evaluation is to help translate the achievement of the
objectives of the project into a contribution to the objectives of the parent organisation.
To do this, all aspects of the project are studied in order to identify and understand the
strengths and weaknesses of the project. The result is a set of recommendations that can
help both on-going and future projects.

Benefits of evaluation

Successful evaluation of the project can help the organization:

- Improve the performance of the project.

- Find out opportunities for future technological advances.

- Assess the quality of project management.

- Reduce costs.

- Identify issues earlier.

 - Clarify the relationship between performance, cost and time.

- Speed to achieve results.

- Reconfirm the interest and commitment of the organization in the project.

- Provide the client with information.

- Identify the mistakes, correct them, and avoid them in the future.

Contributions of evaluation

Evaluation also makes feedback relating to ancillary, unplanned yet important

contributions to the project and its parent:

- Improve awareness of how initiatives can be valuable to the company.

- Strengthen systems for project management and organization.

- Provide an congenial environment where project team leaders can work together
creatively.

There are also some ancillary goals:

- Identify organizational strengths and weaknesses in project-related personnel,

management, and decision-making techniques and systems.

- Identify project staff with strong Management Leadership ability.

- Identify risk factors in the firm’s use of projects.

- Improve the way in which projects contribute to the professional growth of project
team members.

2. The project audit

The project audit is a comprehensive review of a project's management, its methods and
processes, its documents, its assets, its budgets and expenses and its degree of
completion. The formal report can be provided in different formats but should include, at
a minimum, comments on some basic points.

Six parts of a project audit:

 - Present project status.
- Future status.
- State of major tasks.
- Audit limits.
- Relevant data for other programs.
- Risk assessment.
It is much broader in scope than a financial audit and may deal with the project as a
whole or with any component or set of components of the project.

Depth of the Audit

Time and money are two of the most important weaknesses in the audit report on the
depth of investigation and the level of detail. Significant cost elements are the collection,
storage and management of auditable data. The self-protective behavior of team members
during an audit and the potential for project integrity to suffer as a result of a negative
audit are two frequently underestimated costs.

There are three distinct and easily recognized levels of project auditing:

- General audit-typically most time - and resources - constrained and is generally a

quick analysis of the project that touches gently on the six components of the audit.

- Detailed audit-normally performed when a general audit follow-up is needed.

- Technical audit-usually carried out under the direct supervision of the project
auditor by a trained technician.

Timing of the Audit

Technical concerns are less likely to be areas of interest as the project progresses.
Scheduling and budget enforcement are the key interests. Management issues are
important things of concern to audits that are conducted late in the life of the project.
Postproject audits are also a legal requirement, because such an audit was stated in the
contract by the company.

Construction and Use of the Audit Report

Data should be structured to encourage the comparison of expected results with actual
results. Significant variations from projected results should be noted and clarified in a
collection of footnotes or comments. Negative remarks on individuals or groups relevant
to the project should be avoided

Information which is to be included in the audit report:

- Introducing.
- Today's status.
- Future status of the project.
- Sensitive problems of management.
- Analysis of threats.
- Caveats, constraints, and assumptions.
Responsibilities of the Project Auditor/Evaluator.

The auditor should first and foremost 'say the facts' . The auditor must conduct the audit
in an impartial and ethical way. Also should take responsibility for what is included and
excluded from consideration in the report. The auditor / evaluator should preserve
political and professional independence during the audit and treat all materials as
confidential.

Steps to carry out an audit:

- Putting together a small team of veteran experts.

- Inform the team regarding the project's specifications.
- Audit the project on site.
- Upon completion debrief the management of the project.
- Produce a written report in a preset format.
- Send the report for feedback to the project manager and project team to see if the
suggestions have been implemented.

3. The Project Audit Life Cycle

Like the project itself, the audit has a life-cycle consisting of the orderly progress of well-
defined events:

- Initiation of the project audit.

 - Defining the project baseline.

- Establishment of an audit database.

- Preliminary project analysis.

- Preparation of the audit report.

- Completion of the project audit.

4. Essentials of an Audit/ Evaluation

In order for the audit / evaluation to be carried out with skill and precision and to be
generally accepted by senior management, the client and the project team, several
conditions must be met:

- The audit team must be selected carefully.

- All records and files must be made available.
- Free contact with members of the project must be maintained.
5. Measurement

Measuring is a crucial part of the audit / evaluation process. Output against the projected
budget and schedule does not normally pose any major measurement problems.
Measuring real spending against the expected budget is more complicated and relies on a
detailed understanding of the accounts department's procedures

Determining which revenues to assign to a project is a very difficult task. All distribution
of costs / revenue decisions must be taken upon implementation of the different projects.
The conflicts are being waged "up front," and the cost / revenue allocation equity ceases
to be so big a problem. As long as allocations are rendered by a formula, major disputes
are prevented or mitigated at least