16.

Technical Audit
16.1 Introduction
A technical audit is a formal assessment of the extent to which a project has followed the
procedures laid down in these Public Works Directives (PWDs), other HMG/N rules and
regulations, and applicable donor procedures in donor-assisted projects. A technical audit may
also assess a project against appropriate best practices where the PWDs and other rules and
regulations do not provide specific procedures to be followed. Such audits are carried out on a
third party basis, that is audits performed objectively by independent, impartial auditors.
The first recorded suggestion that quality and value audits should be undertaken regularly on
HMG/N public works projects dates from the 1970s. Reports from that time indicate that there
was concern about the overall quality of construction work being produced on road projects and
also that appropriate value was not always received for the monies spent. During the early
1990s the Administrative Reform Commission and a Technical Assistance funded by the Asian
Development Bank addressed this matter which led to the establishment of the of the position of
Chief Technical Examiner within the then Ministry of Works and Transport, now the Ministry of
Physical Planning and Works (MPPW).
In 2000, the MPPW initiated a project entitled Development of Technical Audit Capacity at the
Ministry of Physical Planning and Works (DTAC) under the World Bank-funded Road
Maintenance and Development Project to establish a technical audit capacity and procedures in
the MPPW.
The Financial Administration Regulation (First Amendment) 2058 B.S. has made provision for
the establishment of a "Technical Audit Division" in the National Planning Commission and
development of a "Technical Audit Manual" by the Ministry of Physical Planning and Works to
be applied by the Technical Audit Division while carrying out third party technical audits of
HMG/N infrastructure projects in all sectors.
This Chapter provides a summary of the technical audit process so that implementing agencies
and Project Managers are informed of the procedures being developed, and their involvement
and responsibilities.

16.2 The Technical Audit Process

The technical audit process is summarised in Figure 16.1.
Project Technical Auditing Stages and Systems
A project may be in any one of four stages of completion when it is audited:

Preparation: project identification, feasibility, environmental and social assessment, and

engineering design

Procurement: of works, goods and services

Implementation: pre-construction, construction and defects liability period

Post-implementation: operations and maintenance and benefit monitoring and evaluation.

Generic Technical Audit Systems and Procedures

The technical audit process consists of the application of an appropriate generic auditing
system, together with its associated generic auditing procedures, in order to formulate a specific
project technical audit and conduct it at the particular development stage reached by the project
to be audited.
The generic systems and procedures are computer-based and available
electronically. Eventually, after sufficient specific project technical audits have been formulated
and carried out, a library of specific technical audit approaches will be available electronically,
for use in future technical auditing of similar projects at similar stages of development.

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Figure 16.1 The Technical Audit Process

Generic Auditing System

General elements

Technical elements

Cost effectiveness/efficiency elements

Generic Auditing Approach

Generic Portion of Project

HMGN/Ministry Technical Auditing Policy

Generic auditing procedures

Audit Design - Criteria, Questionnaire and Checklists

to establish conditions expected

Audit to Verify Actual Conditions

Determine Conformance
Compare conditions found with conditions expected

Assessments

Non-conformance Report(s)

Project-specific portion of process

Resource list: PWDs, contract documents, FAR, agency requirements, regulations,

permits, EIA/IEE, etc.

Cost effectiveness/efficiency
Design appropriateness
Others

Technical Audit Report

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Example of Generic Technical Audit Systems for the Planning or Design Stage of a
Project
Table 16.1 sets out the principal elements of the technical and cost effectiveness and efficiency
of generic technical audit systems for projects at the planning or design stage.
Table 16.1 Planning and Design Stage Technical Audit System Elements
General

Technical

Cost Effectiveness and Efficiency

Identify the project

completely (name, sponsor,
location, funding and similar
data)

Determine the project schedule

Determine the project budget

Determine the principal

objectives of the project

Determine the key technical

features of the project

Examine the credit agreement or

similar funding document

Determine which technical PWDs

apply to the project

Determine which cost

effectiveness and efficiency
PWDs apply

Identify principal risks, if any, and

risk areas associated with project

Determine what cost

effectiveness and efficiency
features are to be audited

Verify property acquisition status

Determine the effectiveness and

efficiency audit approach to be
used

Identify any social or gender

issues associated with project
Determine EIA or IEE project
requirements and status

Review forward linkage1

requirements
Determine what technical
project features are to be
audited
Determine the technical audit
approach to be used

Linkage means the transfer of technical information, together with planning and other requirements, between project
stages.

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16.3 Steps in the Technical Audit Process

Table 16.2 Steps in the Technical Audit Process
Step

Activity

Responsibility

Planning of Technical Audit

Technical Auditing Agency

Technical Audit Resources

Technical Auditing Agency

Technical Audit Questionnaire

Technical Auditor(s)

Technical Audit Operations and

Determination of Conformance

Technical Auditor(s)

Assessment

Technical Auditor(s)

Technical Audit Report

Technical Auditing Agency

Procedures to Facilitate Technical Audit

Project Manager
Consultants for Planning, Design and
Supervision
Contractors and Suppliers

Step 1

Planning of Technical Audit

The four stages of project completion set out in 16.2 above will each be complemented by
certain basic information about the specific project to be audited. The logical framework for the
specific project (at the moment only NPC core projects have logical frameworks) can be
obtained from the Project Manager or the NPC for NPC core projects or can be constructed,
with the assistance of the Project Manager, from the project documentation.
Technical audit planning commences by ascertaining which of the foregoing stages will denote
the status of the project during audit. Once this has been determined, the relevant generic
auditing system and its associated cost effectiveness/efficiency guidelines should be reviewed
and then edited electronically into a project-specific audit plan by eliminating those system
elements which do not appear to be necessary during the planned audit.
The generic procedures for each remaining system element should then be similarly reviewed
electronically, together with the logical framework for the project. By these means the auditor
will obtain, prior to planning the audit, an overview of the project to be audited and will
comprehend the objectives, milestones, deliverables and performance indicators associated
with the work.
Third party technical audits, with their associated cost effectiveness and efficiency reviews,
should generally be planned and conducted in accordance with the technical auditing process
set out below.
Step 2

Technical Audit Resources

The technical audit planning will identify the qualifications of the technical auditor, or team,
needed for the audit. In projects which are technically complex it will be necessary to obtain the
services of specialists in the appropriate engineering, environmental, social, financial and other
necessary disciplines. The technical auditors may be provided by:

The Technical Auditing Agency

Use of individual technical specialists under personal services contracts

Use of consulting firms

Use of any of the above in combination.

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Step 3

Technical Audit Questionnaire

To assist the technical auditor in conducting a technical audit of a specific project, an audit
questionnaire will first be prepared by the technical auditor and then used to initiate the audit
process with the parties concerned. If possible, a pre-audit questionnaire may be sent for
completion to the Project Manager or other government officer responsible for overall conduct of
the project some weeks in advance of the technical audit. In practice, completion of the
questionnaire on a face-to-face basis is an acceptable method of commencing the auditing
operation and can remove much of the apprehension which may exist regarding the technical
audit process.
This project-specific questionnaire will be generated electronically from the generic listings of
information and queries which form part of the generic auditing approach for the relevant project
stage.
Step 4

Technical Audit Operations and Determination of Conformance

The prime purpose of any technical audit is to compare and contrast the conditions found during
technical audit with those expected to be found prior to carrying out the technical audit. During
actual auditing this purpose must be borne consistently in mind by the technical auditor.
Technical auditing may in general be carried out at the location most convenient to the technical
auditor and also to the representatives of the project being audited. For projects at the planning
or design stage auditing can occur at the project office or design office if these locations are
different. Procurement technical audits will generally take place at the project office and
implementation technical audits will be best accomplished either exclusively at the site of the
work or between there and the design office. Site visits are mandatory for all implementation
technical auditing. For post-implementation technical auditing the preferred location will depend
on a number of factors and the choice of location should generally be governed by where the
preponderance of relevant information can be found.
Technical audit operations should be guided by the auditing questionnaire and aide memoire
but the technical auditor must also be consistently alert to any findings or circumstances which
indicate that more intensive querying than is contained on the list may be appropriate. Technical
auditing is far from being an exact science and generally requires the technical auditor to probe
the topic under investigation until reasonable certainty regarding the conditions encountered is
achieved. Good inter-personal skills can enhance success in this area.
Non-Conformance Report
Where the conditions found during audit do not correspond to those anticipated, preparation of
a non-conformance report should be considered by the technical auditor. A degree of
judgement on the technical auditors part is required as to whether any apparent nonconformance encountered warrants preparation of such a report, because the formal
procedures thus triggered will involve the time and efforts of a number of other persons. It will
sometimes sufficient to record minor non-conformances and any actions to be taken regarding
them in a memo or letter (to, for example, the designer or the construction supervisor)
depending on the circumstances, or in the technical audit report.
Step 5

Assessment

The assessment will include the following activities:

Review of project information, reports and data to establish the expected and achieved
objectives in terms of estimated costs, technical objectives, environmental objectives, social
objectives.

Review Final Report, Final Certificate, as-built drawings, economic data, post-project
demand and usage, etc. to assess which objectives were achieved.

Update economic and financial internal rates of return based on actual capital costs.

Update estimated annual maintenance costs using present day labour and equipment
costs.

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Visit the project site to gain an appreciation of the environmental and social impacts and to
assess the realization of the anticipated technical objectives.

Prepare a table to undertake this comparison and to facilitate an assessment of the degree
to which the objectives were achieved.

Make an overall assessment of how well the project has achieved its objectives.

Step 6

Technical Audit Report

A succinct report should be prepared following each technical audit or group of technical audits.
A lengthy report is neither necessary nor desirable the technical audit report should
summarise the state of the project audited as briefly and effectively as possible. After a project
identification section the technical audit report can be restricted to such items as:

Earned value computation and graphic derived from the technical audit, if any;

Non-conformance reports, if any;

Assessments of cost-effectiveness or efficiency; and

Some summary conclusions, with or without recommendations.

Table 16.3 is an example of a summary non-conformance report.

Step 7

Procedures to Facilitate Technical Audit

Every project must be prepared for a technical audit, and to provide all necessary assistance to
the technical auditor. For the Project Manager and other project staff this means following all
the procedures contained in the PWDs, other HMG/N regulations and donor loan/credit/grant
requirements which are relevant to the project, and maintaining adequate records of all project
activities.
The technical audit will also examine the activities of the consultants, contractors and suppliers
who are employed by the project. Therefore, the technical auditor will require access to the
consultants, contractors and suppliers reports, drawings, calculations and records as well as
access to work sites, sources of materials and fabrication facilities. The Project Manager shall
ensure that such access is forthcoming by incorporating the requirement to provide such access
into the contract documents. This is best done by adding a clause in the particular conditions of
contract to this effect, such that consultants, contractors and suppliers are made aware of this
obligation during the bidding process.

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Table 16.3 Example of a Non-Conformance Report

Report No.

Date

Branch

Supplier

Item Identification

Routine and periodic maintenance

Item Location
Details of Non-conformance (continue on separate sheet if necessary)
Condition expected: routine and periodic maintenance being carried out acceptably and
evidence of this displayed by condition of wearing surface, drainage
works, retaining structures and other maintainable infrastructure
features
Condition found:
little routine maintenance completed or under way no periodic
maintenance undertaken at all
___________________
Original (Print Name)

____________________
Signature

________________
Date

Root Cause - Why did this non-conformance occur?

insufficient resources
inadequate funding
inappropriate maintenance planning and management
general inaction of maintenance personnel

Proposed Disposition - Actions below to be taken by parties named

development of link-specific maintenance plan by Division

DoR to allocate additional funding and equipment
Division to address maintenance backlog, possibly using unemployment relief
measures
___________________
Supplier (Print Name)

____________________
Signature

________________
Date

Recurrence Prevention Measures - What must be done to ensure non-conformance is not

repeated
No action beyond disposition recommended
Action to be
Action as follows to reduce risk of recurrence:
taken by (date) ____________________

continued involvement of SMD

pre-monsoon drainage maintenance and repair
annual post-monsoon inspection and remedial measures as necessary
___________________
Supplier (Print Name)

____________________
Signature

________________
Date

____________________
Signature

________________
Date

Ministry Acceptance
Remarks:

______________________
Ministry Representative (Print)

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