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Project Audit

The document discusses project auditing and evaluation. It defines project auditing as thoroughly examining a project's management, methodology, records, budgets, and degree of completion. The objectives of auditing are to assess project quality, correspondence to plans, documentation, and efficiency of tools used. An audit team typically includes a project sponsor, project team, and auditor. The auditor leads the audit process and life cycle, which includes initiation, baseline definition, data collection, analysis, reporting, and termination. The report contains the project status, future outlook, critical issues, risks, and limitations.

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418 views10 pages

Project Audit

The document discusses project auditing and evaluation. It defines project auditing as thoroughly examining a project's management, methodology, records, budgets, and degree of completion. The objectives of auditing are to assess project quality, correspondence to plans, documentation, and efficiency of tools used. An audit team typically includes a project sponsor, project team, and auditor. The auditor leads the audit process and life cycle, which includes initiation, baseline definition, data collection, analysis, reporting, and termination. The report contains the project status, future outlook, critical issues, risks, and limitations.

Uploaded by

Fatema Tuj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Project Auditing

Course Title: Project Management


Course Code: IPE- 4201

Nurul Ahad Choudhury


Lecturer, IPE
NITER
Project Evaluation
The term evaluate means to set the value of or
appraise. Project evaluation appraises the
progress and performance of a project
compared to that project’s planned progress
and performance, or compared to the
progress and performance of other, similar
projects. The comparison is made by
measuring the project against several different
types of standards.
Purpose of Evaluation:
• Identify problems earlier
• Clarify scope, cost, and time relationships
• Improve project performance
• Locate opportunities for future technological advances
• Evaluate the quality of project management
• Reduce costs
• Improve the process of risk identification and management
• Speed up the achievement of results
• Identify mistakes, remedy them, and avoid them in the future
• Provide information to the client
• Reconfirm the organization’s interest in and commitment to the
project
Project Audit:
The project audit is the process of verification of the extent to which the project
realization complied with the rules and principles of project management for the
concrete project.
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. It may deal with the project as a whole or only with a part
of the project.
The formal report may be presented in various formats but should, at a minimum,
contain comments on the following points:

1. Current status of the project: Does the work actually completed match the planned
level of completion?
2. Future status: Are significant schedule/cost/scope changes likely? If so, indicate the
nature of the changes.
3. Status of crucial tasks: What progress has been made on tasks that could decide the
success or failure of the project?
4. Risk assessment: What is the potential for project failure or monetary loss?
5. Information pertinent to other projects: What lessons learned from the project
being audited can be applied to other projects being undertaken by the organization?
6. Limitations of the audit: What assumptions or limitations affect the data in the
audit?
Objectives of Project Auditing:
The main goal of an audit is to inspect and evaluate the
current state of project realization, find out to what extent
it complied with defined criteria for project success and
identify opportunities for improving the project realisation
and management. This inspection can be performed after
the project completion or after the end of one project
realization stage, or it can be performed during the project
realization.
Specific audit goals:
• Assess the quality of project management
• Assess the correspondence of reached project outputs with
planned outputs and project goals
• Assess the purposefulness and quality of project
documentation
• Assess the efficiency of used project management tools
The Audit Team:
1. The project Sponsor: The sponsor must ensure that their projects or
programs meet the organizational requirements. In relation to audits
they are responsible for liaising with the audit team in planning a
program of project audits, providing support for the audit team and
ensuring that the remedial actions are implemented.
2. The Project Team: Delivery of the project and of its ability to achieve the
expected outputs and outcomes is the responsibility of the project team.
The project team also participate in the auditing process trough their
individual respective duties that they perform for the project. Thus,
Project audits are a principle way for organizations to review and assess
that their project activities will deliver the expected outcomes and
benefits. In relation to that, then project team is responsible for ensuring
data, information and staff are available to participate in the audit.
3. The Project Auditor: The main responsibility of the project auditor is to
undertake and supervise the auditing process and reporting the findings.
The auditor also play a key role in working with the sponsor, project team
and management while maintaining a smooth communication and
scheduling the audit across the organization
Project Auditing Process/The Project Audit Life Cycle
As the project itself, the audit has a life cycle composed of an orderly
progression of well-defined events. There are six of these events:
1. Project Audit Initiation: This step involves starting the audit process,
defining the purpose and scope of the audit, and gathering sufficient
information to determine the proper audit methodology.
2. Project Baseline Definition: This phase of the cycle normally consists of
identifying the performance areas to be evaluated, determining standards
for each area through benchmarking or some other process, ascertaining
management performance expectations for each area, and developing a
program to measure and assemble the requisite information.
3. Establishing an Audit Database: Once the baseline standards are
established, execution of the audit begins. The next step is to create a
database for use by the audit team. Depending on the purpose and scope of
the audit, the database might include information needed for assessment of
project organization, management and control, past and current project
status, schedule performance, cost performance, and output quality, as well
as plans for the future of the project. The information may vary from a highly
technical description of performance to a behaviorally based description of
the interaction of project team members.
4. Preliminary Analysis of the Project: After standards are set and
data collected, judgments are made. Some auditors eschew
judgment on the grounds that such a delicate but weighty
responsibility must be reserved to senior management. It is the
auditor’s duty to brief the PM on all findings and judgments before
releasing the audit report. The purpose of the audit is to improve the
project being audited as well as to improve the entire process of
managing projects. It is not intended as a device to embarrass the
PM.
5. Audit Report Preparation: This part of the audit life cycle includes
the preparation of the audit report, organized by whatever format
has been selected for use. A set of recommendations, together with
a plan for implementing them, is also a part of the audit report.
6. Project Audit Termination: As with the project itself, after the
audit has accomplished its designated task, the audit process should
be terminated. When the final report and recommendations are
released, there will be a review of the audit process. This is done in
order to improve the methods for conducting the audit. When the
review is finished, the audit is truly complete and the audit team
should be formally disbanded.
Responsibilities of the Project Auditor/ Evaluator:

• Assemble a small team of experienced experts


• Familiarize the team with the requirements of the
project
• Audit the project on site
• After completion, debrief the project’s management
• Produce a written report according to a prespecified
format
• Distribute the report to the PM and project team for
their response
• Follow up to see if the recommendations have been
implemented
Project Report Contents:
The following items cover the minimum information that should be contained in the audit report.
• 1. Introduction: This section contains a description of the project to provide a framework of
understanding for the reader. Project objectives (direct goals) must be clearly delineated.
• 2. Current Status: Status should be reported as of the time of the audit and, among other things, should
include the following measures of performance:
• Cost
• Schedule
• Scope
• Quality
• Future Project Status: This section contains the auditor’s conclusions regarding progress together with
recommendations for any changes in technical approach, schedule, or budget that should be made in
the remaining tasks.
• Critical Management Issues: All issues that the auditor feels require close monitoring by senior
management should be included in this section, along with a brief explanation of the relationships
between these issues and the objectives of the project. A brief discussion of time/cost/scope trade-offs
will give senior management useful input information for decisions about the future of the project.
• 5. Risk Management: This section should contain a review of major risks associated with the project and
their projected impact on project time/cost/scope. If alternative decisions exist that may significantly
alter future risks, they can be noted at this point in the report.
• 6. Caveats, Limitations, and Assumptions: This section of the report may be placed at the end or may be
included as a part of the introduction. The auditor is responsible for the accuracy and timeliness of the
report, but senior management still retains full responsibility for the interpretation of the report and for
any action(s) based on the findings. For that reason, the auditor should specifically include a statement
covering any limitations on the accuracy or validity of the report.

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