1. Copyright 2009 John Wiley & Sons, Inc. Chapter 12 Project Auditing

2. Project Audit A formal review of any aspect of a project. Project “audits” are not limited to financial matters Project audits may not be performed by accountants

3. Purpose of Evaluation—Goals of the System The main purpose of an audit is to help achieve the goals of the project A project audit is equivalent to the application of TQM to project management

4. Approach to Project Audit All facets of the project are studied The strengths and weaknesses are identified Recommendations are prepared to help this, and future, projects

5. Project Audit Recommendations Identify problems earlier Clarify performance Improve performance Locate technological advances Evaluate quality Reduce costs Improve risk identification Many more…

6. Direct Versus Indirect Direct goals Indirect goals

7. Indirect Goals Improve understanding by parent organization Improve management by parent organization Improve team effort on the project Identify strengths and weaknesses Better identify project risks All access by external stakeholders Identify ways to improve the skills of project members Identify potential project managers

8. Problems With Indirect Goals 1. Difficult to hold people accountable for unstated goals 2. Difficult to separate indirect goals from personal goals 3. Lack of trust 4. Different ideas about the indirect goals

9. The Project Audit 1. Current status of the project 2. Expected status of the project 3. Status of critical tasks 4. An assessment of potential risks 5. What lessons can be applied to other projects 6. What are the limitations of the audit

10. Depth of the Audit 1. General Audit 2. Detailed Audit 3. Technical Audit

11. Constraints Need Time Money Distracting

12. Audit Timing All significant projects should be audited Larger projects may be audited several times An audit may also be conducted after the project is over (post-project audits)

13. Construction and Use of the Audit Report 1. It should facilitate the comparison of actual versus predicted results 2. Significant deviations should be highlighted 3. Reasons for significant deviations should be given 4. Plans for resolving negative deviations should be discussed

14. Audit Information 1. Introduction 2. Current status 3. Future project status 4. Critical management issues 5. Risk analysis 6. Caveats, limitations, and assumptions

15. Responsibilities of the Project Auditor Be honest and ethical Be independent Tell the whole truth Seek help for technical issues

16. The Project Audit Life Cycle 1. Project audit initiation 2. Project baseline definition 3. Establishing an audit database 4. Preliminary analysis of the project 5. Audit report preparation 6. Project audit termination

17. Some Essentials of a Project Audit Need to select an audit team with experience and expertise Auditors need access to top management Auditors need access to project personnel and others Auditors need access to all records

18. Measurement Many aspects are easy to measure Performance against budget and schedule are usually straightforward Measurement on projects that include a profit component is more difficult