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Project Management
A Managerial Approach
Chapter 12
Project Auditing
Project Auditing
A major vehicle for evaluation is the
project audit, a more or less formal inquiry
into any aspect of the project
A project audit is highly flexible and may focus
on whatever matters senior management
desires
The evaluation of a project must have
credibility in the eyes of the management
group for whom it is performed and also in the
eyes of the project team on whom it is
performed
Chapter 12-1
Chapter 12-5
Chapter 12-6
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Responsibilities of the
Project Auditor/Evaluator
First and foremost, the auditor should tell
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
Chapter 12-16
Responsibilities of the
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
After the completion, debrief the projects
management
Chapter 12-17
Responsibilities of the
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
Chapter 12-18
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
Chapter 12-20
Chapter 12-23
Access to Records
In order for the audit/evaluation team to
be effective, it must have free access to
all information relevant to the project
Most of the information needed will
come from the project teams records or
from various departments such as
accounting, personnel, and purchasing
Some of the most valuable information
comes from documents that predate the
project
Chapter 12-24
Access to Records
Examples of documents that predate the
project:
Correspondence with the customer that led to
RFP
Minutes of the project selection committee
Minutes of senior management committees that
decided to pursue a specific area of technical
interest
Access to Project
Personnel and Others
There are several rules that should be
followed when contacting project
personnel
Care must be taken to avoid
misunderstandings between the
audit/evaluation team and project team
members
Project personnel should always be made
aware of an in- progress audit
Critical comments should be avoided
Chapter 12-26
Access to Project
Personnel and Others
At times, information may be given to
audit evaluation team members in
confidence
Discreet attempts should be made to
confirm such information through nonconfidential sources
If it cannot be confirmed, it should not be
used
The auditor/evaluator must protect the
sources of confidential informationChapter 12-27
Measurement
Measurement is an integral part of the
audit/evaluation process
Performance against planned budget and
schedule usually poses no major
measurement problems
Measuring the actual expenditure against
the planned budget is harder and
depends on an in-depth understanding of
the procedures used by the accounting
department
Chapter 12-28
Measurement
It is a very difficult task to determine what
revenues should be assigned to a project
All cost/revenue allocation decisions must
be made when the various projects are
initiated
The battles are fought up front and the
equity of cost/revenue allocations ceases
to be so serious an issue
As long as allocations are made by a
formula, major conflict is avoided-or
at
Chapter 12-29
least, mitigated
The Auditor/Evaluator
Above all else, the auditor/evaluator
needs permission to enter the
system
If the auditor maintains a calm, relaxed
attitude, the project team generally
begins to extend limited trust
The first step is to allow the auditor
qualified access to information about
the project
Chapter 12-30
The Auditor/Evaluator
The auditor/evaluator should deal gently
with information gathered, neither
ignoring nor stressing the projects
shortcomings
Recognition and appreciation should be
given to the projects strengths
If this is done, trust will be extended and
permission to enter the system will be
granted
Trust-building is a slow and delicate
Chapter 12-31
process that is easily thwarted
Summary
The purposes of the evaluation are
both goal-directed and also aimed at
achieving unspecified ancillary goals
The audit report should contain at
least the current status of the project,
the expected future status, the status
of crucial tasks, a risk assessment,
information pertinent to other projects,
and any caveats and limitations
Chapter 12-32
Summary
Audit depth and timing are critical
elements of the audit
The difficult responsibility of the auditor
is to be honest in fairly presenting the
audit results
The audit life cycle includes audit
initiation, project baseline definition,
establishing a database, preliminary
project analysis, report preparation, and
termination
Chapter 12-33
Summary
Several essential conditions must
be met for a credible audit: a
credible audit/evaluation team,
sufficient access to records, and
sufficient access to personnel
Measurement, particularly of
revenues, is a special problem
Chapter 12-34
Summary
The purposes of the evaluation are
both goal-directed and also aimed at
achieving unspecified ancillary goals
The audit report should contain at
least the current status of the project,
the expected future status, the status
of crucial tasks, a risk assessment,
information pertinent to other projects,
and any caveats and limitations
Chapter 12-35
Project Auditing
Questions?
Chapter 12-36
Project Auditing
Table Files
Chapter 12-36
Project Auditing
Project Auditing
Project Auditing