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Project Audit: Improving Project Performance and Risk Identification

A comprehensive review of a project to identify strengths, weaknesses, and areas for improvement, with the goal of enhancing performance, reducing costs, and managing risks effectively.

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Project Audit: Improving Project Performance and Risk Identification

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  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 • Identify ways to improve the skills of project members

  8. Frequency of audits • How many? • Timing?

  9. 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)

  10. 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

  11. Depth of the Audit • General Audit • Detailed Audit • Technical Audit

  12. Constraints • Need • Time • Money

  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 report • Introduction • Current status • Future project status • Critical management issues • Risk analysis • 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

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