Presented To

:
Dr. Arshad Zaheer
Group Memberz: ‡ Ali Zain-ul-Abideen ‡ M.Israr Khan Niazi ‡ Farhat Abbas ‡ Junaid Iqbal ‡ Rizwan Mansoor

Project Evaluation and Audit

Project Evaluation
Project Evaluation is a step-by-step process of collecting, recording and organizing information about project results, including short-term outputs (immediate results of activities, or project deliverables), and immediate and longer-term project outcomes (changes in behavior, practice or policy resulting from the project).

Project Evaluation Myths
‡ Useless activity that generates lots of boring data with useless conclusions. ‡ Highly unique and complex process that occurs at a certain time in a certain way, and almost always includes the use of outside experts

Project Types
‡ Successful: The project is completed on time and on budget, with all features and functions originally specified. ‡ Challenged: The project is completed and operational, but over-budget, over the time estimate, and with fewer features and functions than initially specified. ‡ Failed: The project is cancelled before completion or never implemented."

Top 10 Reasons For Project Success
1.Executive support 2. End-user involvement 3. Experienced project manager 4. Clear business objectives 5. Minimized scope 6. Standard infrastructure 7. Firm basic requirements 8. Formal methodology 9. Reliable estimates 10. Skilled staff

Top 10 Reasons For Projects Fail
Inadequately trained and/or inexperienced project managers 2. Failure to set and manage expectations 3. Poor leadership at any and all levels 4. Failure to adequately identify, document and track requirements 5. Poor plans and planning processes 6. Poor effort estimation 7. Cultural and ethical misalignment 8. Misalignment between the project team and the business or other. 9. Inadequate or misused methods 10. Inadequate communication, including progress tracking and reporting 1.

Purposes
In short, project evaluation aims at analyzing research and development projects, or activities or ideas, for any or all of the following purposes: ‡ Getting an overall understanding of the project. ‡ Making priorities among a set of projects. ‡ Taking a decision about whether or not to proceed with a project.

Purposes
‡ Monitoring projects, e.g. by following up the parameters analyzed when the project was selected. ‡ Terminating projects and evaluating the results obtained.

Why is Project Evaluation Important
Evaluating project results is helpful in providing answers to key questions like: ‡ What progress has been made? ‡ Were the desired outcomes achieved? Why? ‡ Are there ways that project activities can be refined to achieve better outcomes? ‡ Do the project results justify the project inputs?

Types of Evaluation
‡ Based on Timing ± Ex-ante evaluation ± Ex-Post evaluation ‡ Based on position of evaluator ± External evaluation ± Internal evaluation or self-assessment ‡ Based on Purpose ± Formative ± Summative

Based on Timing
‡ Ex±ante evaluation ± A term that refers to future events, such as future returns or prospects of a company. ± Using ex-ante analysis helps to give an idea of future movements in price or the future impact of a newly implemented policy ± Conducted before the implementation of a project as part of the planning ± Also referred to as appraisal or quality at entry

Based on Timing
‡ Ex-Post evaluation ± Conducted after the project is completed. ± It is based on analysis of past performance. ± Used to assess sustainability of project effects, impacts. ± Identifies factors of success to inform other projects.

Based on Position of Evaluator
‡ External evaluation ± Initiated and controlled by the supporter as part of contractual agreement ± Conducted by independent people ± who are not involved in implementation ± Often guided by project staff

Based on Position of Evaluator
‡ Internal or self assessment ± Internally guided reflective processes ± Initiated and controlled by the group for its own learning and improvement. ± Need to clarify ownership of information before the review starts

Based on Purpose
Formative and Summative Evaluation ‡ Formative Evaluation - This evaluation takes place During the project to guide future development. ‡ Summative Evaluation ± This evaluation takes place After completion of a project to appraise its success.

Typical Inputs to Project Evaluation
Typical inputs
Technological ‡ The technical activities which will have to be undertaken, maturity of technology, company's technological position. Internal ‡ Potential technical success, familiarity with the area of the project, role of individuals and of different functions within the organization

Typical Inputs to Project Evaluation
Financial ‡ Expected benefit, likely cost, both of project and resulting actions Market ‡ Size and attractiveness of the market, competitive position Business ‡ Clarification of objectives, fit with company's strategy, level of top-management support, key success factors

Methods of Evaluations
‡ ‡ ‡ ‡ The Methods/criteria more often used for evaluating a project are:Simple Rate of return (SRR) Payback Period (PBP) Benefit Cost Ratio (BCR) Net Present Value (NPV) or Net Present Worth (NPW)

‡ Internal Rate of Return (IRR).

Simple Rate of Return
‡ The SRR is a commonly used criterion of project evaluation. It basically expresses the average net profits (Net Cash Flows) generated each year by an investment as a percentage of investment over the investment¶s expected life SRR = Y/I Where ‡ Y = the average annual net profit (after allowing depreciation) from the investment ‡ I = the initial investment

Pay Back Period (PBP)
‡ The Pay back period is the length of time required for an investment to pay itself out.

Benefit Cost Ratio (BCR)
‡ It is the ratio of present worth of benefit stream to present worth of cost stream BCR = Sum of the present worth of benefit Sum of the present worth of cost

Net Present Value (NPV)
‡ Net Present Value is computed by finding the difference between the present worth of benefit stream less the present worth of cost stream. ‡ NPV = Present Worth of Benefit Stream ± Present Worth of Cost Stream.

Internal Rate of Return (IRR)
‡ Internal Rate of Return (IRR) is that discount rate which just makes the net present value (NVP) of the cash flow equal zero. ‡ It represents the average earning power of the money used in the project over the project life. It is also sometimes called yield of the investment.

Project Audit
‡ Audit: systematic, independent and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which audit criteria are fulfilled. ‡ Audit Criteria: set of policies, procedures or requirements used as a reference. ‡ Audit Evidence: records, statements of fact or other information, relevant to the audit criteria and which are verifiable (can be quantitative or qualitative)

‡ Audit Finding: result of the evaluation of the collected audit evidence against audit criteria ‡ Audit Conclusion: outcome of an audit, reached by the audit team after consideration of the audit objectives and all audit findings. ‡ Auditee: organization being audited. ‡ Auditor: person with the competence to conduct an audit. ‡ Audit Team: one or more auditors conducting an audit (one being appointed as audit team leader).

‡ Technical Expert: person who provides specific knowledge or expertise with respect to the subject to be audited. ‡ Audit Program: set of one or more audits planned for a specific time frame and directed toward a specific purpose.

‡ Audit Plan: description of the on-site activities and arrangements for an audit. ‡ Audit Scope: extent and boundaries of an audit (typically includes a description of physical locations, organizational units, activities and processes, as well as the time period covered) ‡ Competence: demonstrated capability to apply knowledge and skills

Types of Audit
‡ Management Audit ‡ Internal Audit ‡ External Audit ‡ Financial Audit ‡ Non-financial Audit

Project Audit
‡ The project audit is a thorough examination of the management of a project, its methodology and procedures, its records, its properties, its budgets and expenditures and its degree of completion. ‡ The primary purpose of a project audit is to find the reasons for uncomfortable symptom in the project, and answer questions posed by the sponsor or senior manager

The Project Audit
‡ Six parts of a project audit: ± 1. Current status of the project ± 2. Future status ± 3. Status of crucial tasks ± 4. Risk assessment ± 5. Information pertinent to other projects ± 6. Limitations of the audit

Depth of the Audit
‡ Time and money are two of the most common limits on depth of investigation and level of detail presented in the audit report. ‡ Accumulation, storage, and maintenance of auditable data are important cost elements. ‡ Two often overlooked costs are the self protective activity of team members during an audit, and the potential for project morale to suffer as a result of a negative audit

Depth of the Audit
‡ There are three distinct and easily recognized levels of project auditing: ± General audit - normally most constrained by time and resources and is usually a brief review of the project touching lightly on the six parts of an audit ± Detailed audit - usually conducted when a follow-up to the general audit is required ± Technical audit - generally carried out by a qualified technician under the direct guidance of the project auditor

Timing of the Audit
‡ The first audits are usually done early in the project¶s life. ‡ Early audits are often focused on the technical issues in order to make sure that key technical problems have been solved. ‡ Audits done later in the life cycle of a project are of less immediate value to the project, but are more valuable to the parent organization

Timing of the Audit
‡ As the project develops, technical issues are less likely to be matters of concern. ‡ Conformity to the schedule and budget become the primary interests. ‡ Management issues are major matters of interest for audits made late in the project¶s life ‡ Post-project audits are often a legal necessity because the client specified such an audit in the contract

Benefits of a Well-Done Project Audit
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Identify problems earlier Clarify performance/cost/schedule relationships Improve project performance Identify future opportunities Evaluate performance of project team Reduce costs Inform client of project status/prospects Reconfirm feasibility of/commitment to project

Major Tasks of a Project Audit
1. Evaluate if the project delivered the expected benefits to all stakeholders. Was the project managed well? Was the customer satisfied? 2. Assess what was done wrong and what contributed to successes. 3. Identify changes to improve the delivery of future projects.

Project Audit Components
‡ Review of why the project was selected. ‡ Reassessment of the project¶s role in the organization¶s priorities. ‡ Check on the organizational culture to ensure it facilitates the type of project being implemented. ‡ Assessment of how well the project team is functioning well and if its is appropriately staffed. ‡ Check on external factors that might change where the project is heading or its importance. ‡ Review of all factors relevant to the project and to managing future projects.

Types of Project Audits
‡ In-Process Project Audits ± Allow for corrective changes if conditions have changed and for concentration on project progress and performance. ‡ Post-Project Audits ± Take a broader and longer-term view of the project¶s role in the organization and emphasize improving the management

The Audit Process
‡ Initiation ‡ Enquiry and reporting ‡ Final audit report contents

The Project Audit Life-Cycle
Like the project itself, the audit has a life cycle ‡ Six basic phases: ± 1. Project audit initiation ‡ Focus and scope of audit; assess methodologies, team members required ± 2. Baseline Definition ‡ Determine the standards against which performance will be measured

The Project Audit Life-Cycle
± 3. Establishment of Audit Database ‡ Gathering/organizing pertinent data ‡ Focus on what¶s necessary ± 4. Data Analysis ‡ The judgment phase ‡ Comparison of actual to standard

The Project Audit Life-Cycle
± 5. Audit Report Preparation ‡ Present findings to PM first ‡ Then, prepare final report ± 6. Audit Termination ‡ Review of audit process ‡ Disbanding of team

Responsibilities of Project Auditor/Evaluator
‡ First and foremost the auditor should ³tell the truth´ ‡ The auditor must approach the audit in an objective and ethical manner ‡ Must assume responsibility for what is included and excluded from consideration in the report ‡ The auditor/evaluator must maintain political and technical independence during the audit and treat all materials as confidential

Responsibilities of Project Auditor/Evaluator
‡ Steps to carry out an audit: ± Assemble a small team of experienced experts ± Familiarize the team with the requirements of the project ± Audit the project on site

Responsibilities of Project Auditor/Evaluator
‡ Steps to carry out an audit (cont.): ± Produce a written report according to a prespecified format ± Distribute the report to the project manager and project team for their response ± Follow up to see if the recommendations have been implemented

Essentials of an Audit/Evaluation
For an audit/evaluation to be conducted 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 properly selected ± All records and files must be accessible ± Free contact with project members must be preserved

References
‡ http://www.bia.ca/systems-audit.htm ‡ http://wiki.answers.com/Q/What_do_you_ mean_by_project_audit ‡ http://www.ateec.org/services/evaluation/in dex.htm ‡ https://www.nsf-proj-evalguide.org/html/home.htm ‡ http://www.projectsmart.co.uk ‡ http://www.syntropy.co.uk

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