Banking

Validate project status with periodic audits

If you're working on a large project, it's a good idea to get an auditor involved to make sure the project is progressing as expected. Tom Mochal lists the seven steps that you can expect during the audit process.
Editor's note: This article was originally published October 16, 2006.

The project manager is responsible for establishing a viable project workplan (schedule) and making sure that the project is progressing appropriately against this schedule. However, in many cases it makes sense to have an outside party double-check to make sure the project is progressing as expected. This is especially true with large, critical projects. If you have a two-month project that takes twice as long as expected, you may be upset, but it won't materially effect your organization. On the other hand, if a two-year program budgeted at 100 million dollars takes twice as long and double the budget to complete, it could have a devastating impact on your organization.

It's not unusual for larger projects to be subject to periodic audits. The sponsor might call for a project audit if there's a concern about the state of the project. In some cases, periodic audits may be called for as a part of the overall charter. (In some organizations, these audits are referred to as Internal Verification and Validation or IV&V.)

For larger projects, the person performing the audit should be an experienced project auditor -- either internal of external to the company. A project audit focuses on quality assurance -- asking questions about the processes used to manage the project and build the deliverables. The audit can follow this process:

  1. Notify the parties. The auditor notifies the project manager of the upcoming audit and schedules a convenient time and place.
  2. Prepare for the audit. The auditor may request certain information upfront or ask the project manager to be prepared to discuss certain aspects of the project. This ensures that the actual meeting time is as productive as possible.
  3. Initial meeting. The auditor asks questions to ensure the project is on track. These questions are quality assurance related, verifying that good processes are being used, and then checking some of the outcomes of those processes. For instance, after verifying that the project manager is using good processes to update an accurate schedule, the auditor could review the actual schedule to validate the current project status against the schedule.
  4. Further analysis. On many projects, the investigative aspect of the audit might culminate after one meeting with the project manager. If the project is large or complex, the auditor might need to meet with other team members and clients and review further project documentation.
  5. Document the findings. The auditor documents the status of the project and the processes used on this project. The auditor should also make recommendations on areas that can be improved to provide more effective and proactive management of the project.
  6. Review draft audit report. The auditor and the project manager should meet again to go over the initial findings. This auditor describes any deficiencies and recommendations for changes. This review also provides an opportunity for the project manager to provide a rebuttal when necessary. In many cases, the initial findings of the auditor might be modified based on specific, targeted feedback from the project manager.
  7. Issue final report. The auditor issues a final report of findings and recommendations. The project manager may also issue a formal response to the audit. In the formal response, the project manager can accept points and discuss plans to implement them. The project manager may also voice his or her disagreement with certain audit points and explain his or her reason why.

Project audits are very helpful to get an outside opinion on the status of a larger project. In many cases, experienced auditors can point out potential problems with projects much quicker than the project manager might communicate them.

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7 comments
jeff.nuding
jeff.nuding

Project Management within my organization maintained for many years a Project Office which not only promulgated PM standards, document templates, and best practices, but also conducted routine periodic project audits. These had high visibility to executive management, as troubled projects were highlighted on a corporate watch list. The audits were highly formalized, with an audit interview, specific artifacts to review, and a roll-up of results in a standardized audit report. The focus on the interviews were to ensure reported results matched actual status on deliverable completion, schedule, scope and costs. Team and individual time keeping was spot checked and and discrepancies identified. Overall project accounting was verified. One of the more important, though more subjective functions of the audit, was to ensure that estimates to complete were reasonable based on trends to date. Too many PMs reduced ETC, explaining ealry project overages as "learning curve related," rather than a trend that would likely carry through the project. They kept building themselves a bigger and bigger wall, with less and less time left to complete remaining deliverables, but showing a forecast-at completion that was within the original estimates.

shimon.ze
shimon.ze

Introducing an audit into a project, large or small scale, has so many drawbacks built-in which makes me wonder weather it is a good idea in the first place. Let me point out some of them: 1) It inherently declares the project manager as incapable of being totally accountable for the results of the project. 2) It weakens the project manager position in terms of authority and leadership. 3) The auditor is rarely ideally balanced. He comes with his background and ideas and it is more likely that he will tend to show that the project is off-track or in some cases that the project is running ???better??? than planned. 4) The auditor is limited to finding and raising problems. He has no charter or ability to solve these problems. A large project that goes off track has objectively tough problems or is short with the right knowledge needed to solve these problems. An auditor won???t help. A better investment will be in bringing the missing knowledge into the arena.

joshnankivel
joshnankivel

Good post, it would be great to see one from Tom with some stories and examples of the auditing process on different types of projects, and in different organizational cultures. I am sure the culture has a big influence on how these work, and if they are done at all. It definitely seems like a good thing to do as a rule on most projects that are significant enough to warrant it. Josh Nankivel pmStudent.com

pwoodctfl
pwoodctfl

Auditors validate the project manager's assessment of project progress at least as often as they find problems. Their value is in their independent view of the project. They represent neither the client nor the project management and precisely because they have no stake in the outcome of the audit, they can be objective. As for participating in the resolutions....well that is not their job...the project manager needs to take action.

jeff.nuding
jeff.nuding

Mature PM organizations can avoid alot of the subjectivity implied by Shimon by using Project Audits as part of training, mentoring, and project/engagement oversight. We sold ours to clients as a value-added type of continuous improvement. The key is to first develop or adopt formal PM practices and templates, from WBS, development of project plan, a robust status reporting which includes milestone and cost reporting, preferably with earned value of deliverables as work progresses. If the audit forms and reports are standardized, and what's being audited is (in essence) adherance to standards, then alot of what you suggest here is avoided. There will always be an element of politics or competitiveness among teams of PMs, but if you involve as many of those people in the professionalization, whether as mentors, mentees, or auditors, you'd be surprised how much team spirit can offset most of those negative factors.

shimon.ze
shimon.ze

Although I devotd my comments to several drawbacks I can see in introducing an audit into a project I can appreciate a list of benefits this act has, as written here and elsewhere. I agree that they can be objective, then a new question is raised: Is there a commonly agreed objective way of doing things in this world of project management? This area of management is still under research and changes each term. What was best practice yesterday turns to be a damaging practice today, when new practices arise. I really appreciate the benefit a PM can have by adding an independent viewer of the project to his team. I can hardly see this benefit when the same person/function is appointed as an auditor.

mmoran
mmoran

In fact, the audit process described in the article closely tracks the one which forms an integral part of formal quality management systems based on the Plan-Do-Check-Act cycle, such as ISO 9001:2000. Shimon's key point regarding objectivity is well-taken, and in quality management system auditing is addressed by maintaining focus on the process, not the people. In addition, an auditor is never allowed to audit his/her own area of responsibility. These auditing practices are well-characterized and as the article demonstrates, can easily be adapted to serve project managers with or without the support of a formal, organization-wide quality management system.