1. 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
Difficult to hold people accountable for unstated goals
Difficult to separate indirect goals from personal goals
Lack of trust
Different ideas about the indirect goals

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

10. Depth of the Audit
General Audit
Detailed Audit
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
It should facilitate the comparison of actual versus predicted results
Significant deviations should be highlighted
Reasons for significant deviations should be given
Plans for resolving negative deviations should be discussed

14. Audit Information Introduction Current status Future project status
Critical management issues
Risk analysis
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
Project audit initiation
Project baseline definition
Establishing an audit database
Preliminary analysis of the project
Audit report preparation
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