Program and project audits not only uncover problems, issues and challenges that may be preventing projects from succeeding but also contribute “Lessons Learned” that can help to improve the performance of future programs and projects. They are always highly beneficial to an organization and pay back the investment many times over.
Corporations throughout the world lose billions of dollars in wasted project spending owing to project mismanagement, poor quality processes on projects and/or lack of knowledge in how to manage projects. And they often will not include these failed projects in their normal auditing practices. Organizations can positively impact both profits and shareholder return; by ensuring that they are making well-informed decisions about their key projects. They can do this by understanding project management best practices and the process of auditing projects.
A project audit provides an opportunity to uncover the issues, concerns and challenges that a project team may encounter throughout a project’s execution. It allows those people responsible for the project with valuable insights about what is going well and what needs improvement to get the project completed successfully. Conducting an audit mid-way can help struggling projects to get back on track. At the close of a project, a project audit can also help to develop success criteria for future projects by providing a forensic review.
Phase 1 – Background Research
Background research consists of interviews with key people such as the project sponsor, executive sponsor and project manager to identify both their individual and collective needs and how they will measure success for the project audit. There are various research methodologies possible for this research depending on the type and depth of information you are seeking. This includes: one-on-one interviews, survey questionnaires, focus groups, etc.
If you conduct project audit interviews consider forwarding the questions in advance of each interview. It helps the interviewees to focus their thoughts. Arrange all of the interviews including project team members, customers, vendors, suppliers, consultants and other external resources.
The easiest way to identify who to include in the interviews is to identify whether or not they are directly impacted by the project or during the project’s execution. These are the individuals and groups of individuals you will want to include in your interviews.
Why Project Audits?
The success of programs and projects is often critical to the bottom-line of organizations. Most projects face a number of challenges in meeting their time, budget and customer requirements. A project audit; sometimes also referred to as a “program audit” or “project health check,” provides organizations an opportunity to create future program and project success and generate savings. One may conduct a project audit mid-way into a project or at the close of a project. Either way, a project audit helps to identify the root cause of problems and provides detailed guidance for how to get a program and project that’s in trouble back on track. As a forensic tool, conducting a project audit at the end of a project will provide valuable learning about how to improve project performance on future projects. Therefore, a project audit has a direct, positive bottom-line impact on the organization.
Timing of Project Audits
Sometimes organizations choose to conduct a project audit at the close of a project to conduct a forensic review. In this situation, the project audit generates valuable insights about the organization’s project management capability and helps clarify “success criteria” for future projects. In this way, organizations are able to use the project audit to learn from mistakes and make sure that they do not repeat them on future projects.
Who Should Conduct the Project Audit?
Regardless of whether the project audit or project health check is conducted mid-term on a project or at its conclusion, the process is similar. It’s generally a good idea to for organizations to hire an outside facilitator to conduct the project audit or project health check. This ensures confidentiality but also provides the team members and other stakeholders with the opportunity to be candid. They know that their input will be valued and the final report will not identify individual names, rather it will only include facts. It is common that individuals interviewed during the project audit of a particularly badly managed project will find speaking with an outside facilitator provides them with the opportunity to express their emotions and feelings about their involvement in the project and/or the impact the project has had on them.
We have audited programs from a variety of industry sectors including: Manufacturing, Information Technology, Software Development, Insurance, Banking, Mining, Government and Universities. Despite the differences in their services and products, our approach to completing a program or project audit is similar. It requires about three (3) very intensive weeks to complete an in-depth audit and deliver the final report. Often the program or project is in crisis and our client organization is eager to get the project back on track quickly. Therefore it is important for us to get the audit completed quickly.
The Goal of a Program Audit and Project Audit
The goal of Program and Project Audits is to identify the:
- Issues, concerns and challenges preventing program and project success.
- Opportunities which will ensure a successful completion of programs and projects within the constraints of time, budget and customer expectations.
Program Audit and Project Audit Process
The approach that we undertake is broken down into three phases:
Phase 1: Planning the Audit
Phase 2: Program Analysis
Phase 3: Report and Recommendations
Phase 1: Planning the Audit
During the Planning Phase the project auditor plans the audit and conducts preliminary interviews with the steering committee members and/or leadership team and/or sponsors as well as the project manager to clarify their expectations from the audit.
The objective of this phase is to:
- Understand leadership’s “success criteria” for the program audit so that we are able to meet their individual and collective needs.
- Identify the project management culture so that we can determine whether or not consistent project management practices are part of the corporate culture.
- Review any current project management processes, tools and templates that are expected to have been followed in the management of this program.
- Examine the structure of the program.
Here is an example of a real project audit that we conducted to help our client organization get a project that was in serious trouble back on track.
This organization undertook a major program to re-design one of their product development platforms. This platform accounted for about one-third of their business. It was valued at 200 million dollars and had 50 internal resources working on it.
The program was comprised of both manufacturing and software development. The organization had wasted a couple of years on this program resulting in their competitiveness slipping from being the leader on this product line to number three in the marketplace. This had a serious financial impact on the organization. The leadership team determined that if they didn’t get this new product platform launched in the next 10 months, the very survival of the company was at risk.
In the previous 2 years they had assigned 3 different program managers to work on the project yet they still had no clear plan on how to launch. They delayed hiring Business Improvement Architects to do an in-depth project audit for 8 months from their initial point of contact with us. It was only when the program was in a complete crisis and it was apparent the launch date was not attainable that they finally decided to have our company come in to complete an audit.
The bia™ Audit Process and Approach
To develop our audit plan, we started by presenting a number of questions to the program manager. The answers helped us to identify who to interview, the questions to ask and the documentation to review. These questions probed for the following information:
- Had the organization identified what core competencies this program’s project team required in their roles as program manager, core program team leader, or for other program resources roles?
- How did the organization identify which resources to use for the program?
- What was the current program structure and was it appropriate for the program?
- Was there a specific project management methodology or framework in place within the organization, as well as any specific project tools, templates and/or documents for managing projects?
- Had the project plan identified specific lifecycles that this program must follow, such as software development, new product development, or other?
- What were the risks to the project? Had a risk assessment ever been done on this program?
- Were changes in project scope being managed effectively? How where project changes being managed?
Armed with answers to these questions we were then able to plan the program audit.
Phase 2: Program Analysis
The Program Analysis phase is comprehensive and involves a review of the entire program. In this phase, the project auditor gathers information from the project manager, core team members, sponsor, vendors, consultants, suppliers, or other stakeholders to assess the issues, challenges and concerns with the program and to get to the root causes of any problems.
The auditor identifies gaps in the level of detail in the program plan as well as dependencies, milestones, resources and control. They check to see:
- How well the project plan incorporates the Vendor Plan.
- How the project team is managing the project budget.
- The overall quality of the program processes.
- The extent to which external resources such as suppliers, consultants, contractors, etc. are on track in the management of their portion of the program schedule and budget.
- How well risk has been managed.
- The extent to which change has been correctly managed.
To accomplish this, the project auditor will likely sit in on selected program and project team meetings, sponsor meetings, customer meetings and other meetings. This will help them identify the process and outcomes of these meetings and get a first-hand understanding of the process that the program is following. Additionally, the project auditor will also analyse all project documentation to identify root causes of issues, challenges and concerns with the project.
In the case of the client organization we described above, during this phase we interviewed: the program manager, program sponsor, executive steering committee members, core program team members, key internal and external resources (vendors, suppliers, contractors) and other key stakeholders. We also attended program core and extended team meetings, sponsor meetings and customer review meetings. And we reviewed all of the existing project documentation including:
- Program Structure
- Scope Statement
- Business and Stakeholder Requirements
- Program and Project Schedule Plans (baseline and re-baselined)
- Budget plans (original vs. actuals)
- Vendor, Consultant and/or other external resource plans
- Milestone Reports
- Program Team Meeting Agendas and Minutes
- Issue Logs and action items
- Change Orders/Requests
- Change Logs
- Risk Logs and Assessments
- Sponsor reports
- Customer and other Stakeholder reports
- Other relevant program documentation
This intense phase of the audit is a key to identifying root causes of issues, challenges and concerns with the project.
Phase 3: Report and Recommendations
The Report and Recommendations phase results in the presentation of a detailed project audit report to management with specific recommendations for overall performance improvement of the program.
The report includes the findings from all of the information that the project auditor collected; both from interviews as well as project documentation. It identifies all the program’s issues, concerns and challenges and, most importantly, provides specific recommendations for actionable improvements for the overall performance of the project.
When conducted at the end of the project a project audit report provides valuable lessons learned for future application and validates that resources were effectively and efficiently utilized. It also identifies any competency and leadership requirements for a Program Manager.
Report and Recommendations
We delivered the final report to the senior leadership team. It included detailed recommendations and the actions required to get the program on track. The leadership team listened, asked questions and promised to report back to us within the next few days, once they had digested the findings and recommendations. The executive sponsor contacted us several days later. He told us that this was the most difficult report they had ever reviewed. Their initial reaction, after we had left their boardroom, was to discount the report as untrue, unfounded, etc. Then they thought about it and realized that we had been the first consulting firm they had ever worked with that told them what they needed to hear – not what they wanted to hear.
This organization embraced our recommendations and asked us to work closely with them to implement all of them. They also recognized that they didn’t have the internal capability to complete the project and we worked with them to provide necessary support. Although it took this organization two intensive months to implement our recommendations, with our help, they are on track to launch on their original date.