The Project Audit

Posted on 13th August, by JimYoung in Blog. Comments Off on The Project Audit

Project auditing is a formal type of “project review”, most often designed to evaluate the extent to which project management standards are being followed – that we are doing the right things, and doing things right. Project audits are rarely welcome and often contentious, but when done correctly, they offer unparalleled opportunity to uncover the issues, concerns and challenges encountered in the execution of our project. It affords us the project manager, project sponsor and project team an interim view of what has gone well and what needs to be improved with our project to successfully complete it. Such an audit is often triggered when:

  1. Situations come do not give a clear picture of the happenings on a project.
  2. Reports give a project manager the feeling that facts are being glossed over.
  3. A doubt arises on whether the project deliverables are being achieved.
  4. The progress on the project is vastly in variance with the project plan.
  5. There are doubts about the project organisation and its ability to achieve.
  6. When there is a need to see if the project conform to best practices.

If done at the close of a project, a project audit can be used to develop success criteria for future projects by providing a forensic review. This review will provide an opportunity to learn what elements of the project were successfully managed and which ones presented some challenges. This will help the organisation identify what it needs to do so that mistakes are not repeated on future projects.

Such an audit is in our interests as project manager. Sometimes we can’t see the ‘wood for the trees’. The auditor may be a colleague whose expertise we respect, or there may be an audit team, internal or external in origin, who usually manage the audit as a project. We should welcome their expert and objective assessment.

Audit Principles

The chances of a successful audit will be enhanced if the following principles are observed:

  1. First and foremost, the philosophy must be that the project audit is not a witch-hunt. Modern auditors are not here to assign blame. The audit is not a tool to identify poor performers. We look for problems not troublemakers. Nor is the audit used to serve political objectives. The existence of problems should not be construed to indicate incompetence.
  2. Comments about individuals or groups participating in the project are no no’s. Keep to project issues, not what happened or by whom.
  3. Audit activities should be intensely sensitive to human emotions and reactions. The inherent threat to those being evaluated should be reduced as much as possible.
  4. The project manager should be notified of the impending audit. Surprise audits suggest a lack of trust.
  5. Accuracy of data should be verifiable or noted as subjective, judgemental, or hearsay, and the audit must not be conducted in an arbitrary and capricious manner.
  6. Senior management should announce support for the project audit and see that the audit group has access to all information, project participants, and (in most cases) project client.
  7. The attitude toward a project audit and its aftermath depend on the modus operandi of the audit leadership and group. The objective is not to prosecute. The objective is to learn and conserve valuable organisation resources where mistakes have been made. Friendliness, empathy, and objectivity encourage cooperation and reduce anxiety.
  8. The audit should be completed as quickly as is reasonable with minimum disruption. Yet sometimes audits do contribute to schedule and cost overruns.
  9. The audit leader should have access to senior management and the project sponsor.

Audit Purpose

The purpose of project audits is to enable the project manager to:

  1. Improve project performance and the management of the project.
  2. Ensure that quality of project work does not take a back seat to schedule and cost concerns.
  3. Identify areas where other projects, current or future, should be managed differently.
  4. Keep clients informed of project status. This can also help ensure that the completed project will meet the needs of the client.
  5. Reaffirm the organisation’s commitment to the project for the benefit of the project team members and other stakeholders.

The audit should be conducted by an independent examiner. The audit should be conducted in a spirit of learning, rather than in a climate of blame and punishment, which usually encourages people to hide problems. The essential information needed by the auditor is the project charter, project plan, recent status reports, and registers for project risks, issues, changes and lessons learned, which should be readily available for scrunity. Also arrange for the auditor to separately talk with the project sponsor, project manager, and at least three team members and three stakeholders.

In general, the simpler and more straightforward a project audit report, the better. Information should be organised so that planned and actual results can be readily compared, and significant deviations identified and evaluated. The frequency with which a project audit is conducted may be influenced by the answers to the following questions:

  1. What is the project’s expected duration?
  2. How experienced is the project manager?
  3. How certain are the project outcomes?
  4. How familiar are we with managing projects of this nature?
  5. How important are the project outcomes?
  6. What are the client’s expectations?

The collection of relevant information may be undertaken by administering questionnaires, conducting interviews, direct observation, and by review of project documentation. The information gathered must give a true representation of progress and then be compared to a model or standard of best practice. This standard may be an up-to-date procedure manual, framework, or checklist used by the organisation. From the strengths and weaknesses we can identify areas where improvements can be made. When the audit report and recommendations are released, there should also be a review of the audit process to identify improved auditing methods. And is the best practice against which the project is evaluated still best practice? It can be a transient model.

The selection of the auditor or audit team is important to the success of the process. The size of the team will generally be a function of the project’s size and complexity. The main role of the audit team is to conduct a thorough and complete examination of the project or some pre-specified aspect of the project. To be effective the audit team must have ready access to all relevant information. Most of the information will come from the project team’s records.

The Audit Process

Plan the Audit: We shouldn’t start without a plan. Let everyone involved in the audit and the project know about the audit, and stress that this is not anything scary. It’s a method to make things work better, not lay blame. Preparing for the audit includes:

  1. estimating the timeframe and cost for the audit and making provision in the project budget for this
  2. selecting the auditor
  3. establishing the auditor’s reporting level
  4. agreeing on the audit terms of reference, scope and audit report format
  5. notifying the project manager of the audit and agreeing the dates for the audit
  6. advising the project manager what information is needed in advance of the audit.

Conduct the Audit: Now we do the audit and work through a thorough process to get all the data and proof.

Summarise the Audit: At this point, we’ll have lots of data; so take these findings about improvements and faults, and put them in a summary to give a clear and broad overview. Be sure to point out and praise those who have done well.

Present the Results: Next, we want to present that summary of results to all parties that need to know about the audit, from our team to our stakeholders.

Determine the Action Plan: With all this data, we can now develop a plan of action that will help improve efficiencies. Get people involved and set that course with assignments and due dates.

Schedule Follow-Up: Don’t let this action plan go unattended. Go back to it and make sure that the plan is progressing on schedule.

The audit indicates the level of compliance with procedures and processes and identifies areas for improvement or where lessons need to be learned. But project auditing can have obstacles. The project team may be defensive and reluctant to cooperate. The auditor’s style will have a major impact on the level of cooperation. In particular, the emphasis should be on improving the project, rather than accusing or blaming project team members. 
Out of professional courtesy, the project manager is usually permitted to see the audit findings first. The project manager may identify inaccuracies in the findings or items taken out of context. Such comments from the project manager can help ensure the integrity and usefulness of the report. Sometimes the conclusion might be to terminate the project.

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