Your Comprehensive Guide To Project Management Audits

Your Comprehensive Guide To Project Management Audits

Project management audits are a way for companies to better themselves and create stronger procedures for future projects. Not only does this benefit the company, but often the employees as well by creating more efficient systems.

There are few unavoidable aspects of running a business, and a project management audit is one of them. While the notion of an audit can cause anxiety when unprepared, the reality is that a well-planned audit leaves little to worry about. Being organized and proactive helps lower stress and create higher chances for positive outcomes.

What Is A Project Management Audit?

The role of an audit in project management is to ensure that company policies and procedures are being upheld. It also serves as a way to enhance those procedures by evaluating the assigned project being formally reviewed. Audits are usually performed by an external audit provider to avoid preferential treatment and to have the most effective and objective audit outcomes.

Audits are commonly used to provide valuable insight into the effectiveness of a company’s project management. They can be used in two ways. First, it can serve as a way to encourage growth in a company through gaining individually curated recommendations from an external source. Secondly, it can be used to help a company make the switch from one project management style to another, by highlighting the current barriers their projects are facing.

The Role of An Audit in Project Management

Project management audits can determine common struggles your project may be facing, and help prompt solutions to those struggles. If your company is experiencing recurring problems in your projects, an audit may be helpful in discovering and mitigating those problem areas so that you can optimize for the future.

Audits can provide important growth opportunities for a company. It can determine future procedures and processes to define company expectations, often with a goal to reduce costs, minimize project risks, and ensure high standards are met.

What Are The Main Goals Of A Project Management Audit?

The main goals of a project management audit can vary depending on the agreed-upon parameters. However, when determining the effectiveness of current project management procedures, there are five main objectives that are often included. Consider these:

1. Identify Risks
   An auditor will look for aspects that are negatively affecting the project. This may include anything that impacts the project timeline, budget, or quality. The auditor will measure the potential costs and time of the project as well as the resources necessary to ensure it has a high likelihood of success. This will determine if it’s possible for the company to achieve the project goals and find success based on the current strategies in place. Identifying these risks helps the project manager take steps to mitigate these concerns and achieve a more positive outcome.
2. Assess The Quality Of Services And/Or Products
   The auditor will take into consideration the different stages of the project. This includes reviewing the design concepts and the depth they go, considering alternative designs, and the current proposed implementation processes. By including these steps in an audit, it helps highlight any errors that the project may face and proposes solutions for them. This will provide a way to ensure that quality expectations are being met.
3. Improve Project Performance
   Audits identify the priorities of the project and determine if they are being supported. Project performance is improved through the attention spent on discovering and managing errors before they arise mid-project. This provides two main benefits: improving the proposed budget for the project and developing plans to avoid potential areas of struggle noted in the audit report.
4. Gauge The Quality Of The Project’s Management
   An audit will help ensure the project is complying with the company’s procedures and policies. This can provide additional protection to the project teams by providing clear outlines for management expectations. This can also provide suggestions for improvement for management staff to better support their teams and the projects they complete.
5. Learn For Future Project Management
   Audits serve as a learning opportunity for the project manager, allowing them to assess their current project and learn from their past performances. This helps shape and update a company’s policies and procedures to reflect their individual needs and goals. The learning opportunities project management audits provide are essential in the growth of a company.

Six Benefits Of Project Management Audits

When you complete a project management audit, you’re going through the process of discovering what you’re doing well, and what you may need to improve. By finding this information, your project can inherit a range of benefits beyond the project finding success. These benefits include:

1. Improved Project Performance
   When you are reviewing the project and breaking it down into each component, you can effectively see where some problems may exist. Once you have taken inventory of these problems, you’re much better suited to manage them.
2. Cost Awareness
   A project audit takes a deep look into the cost expectations of a project and is able to determine if there’s a possibility of that cost exceeding the budget. This reflects any problem areas, resource necessities, staffing needs, etc. When the project is broken down, these estimated costs can be more effectively assigned, allowing a more accurate estimate to be determined.
3. Reduced Cost
   The process of determining your cost estimate naturally provides a secondary benefit of reducing project cost all around. Once the project has been broken down into its essential elements, problem areas are discovered and can be mitigated. Managing these can reduce the cost of completing the project by eliminating redundancies or unnecessary inclusions.
4. Increased Clarity For Project Team Members
   A project audit helps team members become more aware of each aspect of the project. They will be better able to understand the complexities of the project and understand their role within it more clearly. As an added benefit, this can help develop a stronger responsibility to the project in each team member as they can visualize the importance of their role.
5. Better Relationship With Clients
   Clients will be pleased to know their project will be completed to the highest caliber, without money being wasted on avoidable pitfalls. An audit can give them peace of mind and allow them to feel more confident about their project.
6. Positive Effects On Future Projects
   Each time you perform a project audit, it will help the effectiveness of any future projects. Audits reveal aspects of change that can be carried forward into each project that follows. This helps all future projects to be completed with the same, updated standards in place without having to undergo an audit themselves.

How To Set Up A Project Audit Successfully

Successfully setting up a project audit requires five steps to be taken prior to the audit beginning. These steps will help ensure your company is ready to engage in the audit process in the most efficient and effective way.

1. Determine The Range Of The Audit
   Before you can begin the audit process, it is essential that the executive team determines if the audit is for one particular project, or for a range of projects across the company. This will depend on the outcomes you are hoping to achieve, and the reason why an audit is being performed.
2. Bring In An External Auditor
   Hiring an expert auditor that is not part of your company helps ensure the quality of your audit. Because these auditors are not associated with your company, their findings and recommendations are not influenced by their involvement with the company. This also provides your employees with a more open environment during their interview process, as they are protected by the audit being done outside the company itself. This allows for more honest feedback and maintains the integrity of the audit.
3. Identify The Challenges
   Before you begin the audit, identify the challenges you’re experiencing with the project(s) or the processes involved. Use this opportunity to reflect on what may not be working and how you’ve witnessed that through project performance in the past. This will help set the main goal for the project and provide a starting point for the audit.
4. Determine The Scope And Parameters For The Audit
   Think of this as a roadmap. This will help direct the range the auditor can engage in, and determine the areas that are most important. This will also help ensure that the auditor is investigating the required aspects of a project, and not moving into secondary projects or areas of the company that are not included in the audit.
5. Notify Your Project Team
   Let your team know about the upcoming audit. Many auditors will speak directly to members of the project team. Your team being prepared is an important aspect of the audit process. This will help the audit go smoothly and allow them to get the best information in an organized way.

An Internal Audit Checklist For Project Management

A project manager who has a well-planned audit can create a better learning opportunity for the team as a whole, and often performs better than those that are less organized. While there are many individual steps involved in an audit checklist, there are five main categories they fall under. By completing an internal audit checklist, you’ll be better able to support your team during the audit process. This will also provide you with a streamlined process for the auditor upon their arrival to make the process go quickly and smoothly.

The five areas that make up your audit checklist include:

1. Your Main Audit Goals
   Defining the main goals you have for your audit will help facilitate the initial planning for the audit. Your goals should reflect both your project and the company’s values. Goals could include reducing project costs, more efficient processes, or resource management improvements. Take some time with your team to discuss and clearly define the goals for this audit.
2. Well-Defined Parameters Of The Audit
   This includes the expectations you have for the audit process. It should include things like how the project will be measured and why it’s being audited. This will also include the areas that the auditor will focus on, such as team performance, resource allocation, or management involvement.
3. Members To Be Involved
   It is important to have a comprehensive list of the members that will be taking part in this audit. This will give you an opportunity to consider all those that play a vital role in the project, and notify those individuals of the audit. This list could include project managers, team members, sponsors and stakeholders, and even clients. Those on this list could be included for individual interviews throughout the time of the audit.
4. Audit Process And Expectations
   This portion of the checklist can be extensive based on the project itself and the audit goals. It is a list of the methods to be used during the audit. One essential and easily forgotten aspect to include is the environment and atmosphere of the project audit. When you include this in your checklist, you are ensuring your employees are protected throughout the entire audit process. This would extend to the communication expectations as well. Outline how the auditor is to communicate with the members from the previous section, such as individual interviews.Also include the expectation to prioritize problems based on their severity so that the report is organized in a way that makes implementing recommendations easier to navigate.In this section, it is essential to state that strengths be included in the reports as well as areas of improvement. Knowing what’s currently working and what isn’t is an important aspect of any good audit.
5. Audit Reporting Expectations
   Decide how the findings of the audit are to be reported and communicated and include details regarding the audit process. This section of the checklist could include:
   • Who will be included in the findings
   • Problems discovered during the audit
   • Solution recommendations
   • Performance evaluations
   • Project performance rates

These are all aspects that you should be including in your audit reporting expectations. This will help ensure you and your auditor have the same understanding of the audit process.

What Is The Audit Process?

The audit process consists of five main portions. What is included in each will vary based on the project, but the outline of the process typically remains the same. Audits can take up to a few weeks to complete, with the bulk of the time being spent gathering information. There are, however, some valuable aspects that must come first in this process.

The Audit Notification

This is a letter that is provided to the project manager to notify them of the audit. Within this letter are the audit highlights. It includes an introduction to the auditor(s) and lists the main objectives and scope.

Requisition Of Documents

After the project manager has received the audit notification, they will be provided with a list of documents the audit team is requesting. The documents that are requested will vary depending on the nature of the audit. For instance, this could include:

• Past project performance, both from the team as a whole, or the manager individually
• Average project costs
• Project breakdown and estimated cost
• A copy of the company policies and procedures
• Quality reports
• Project plans
• The companies project management framework

Kick-off Meeting

This meeting serves as the beginning of the audit process. It will provide time for the project team to meet with the auditor, and give managers an opportunity to ask questions to become more clear on audit parameters.

The Audit Process

This is the stage where the auditor begins gathering information through a variety of means, such as:

• Individual interviews and assessments
• Employee questionnaires
• Observations
• Evaluating provided documents
• Collecting evidence to support claims and recommendations
• Creating the final report

While the details of this list can vary, this portion of the process makes up most of the audit timeline.

Closing Meeting

The closing meeting is the time when all final information has been gathered by the auditor and recommendations are ready to be made. These recommendations would then be used to create an action plan to implement them.

Four Different Types Of Audits In Project Management

There are four main categories audits in project management fall into. Which one you encounter will vary depending on the company’s goal, and the reason an audit was prompted. The types of audits include:

1. Inspection Audit
   Inspection audits are performed after a product is built. It involves monitoring the creation process and inspecting it after it’s completed.
2. Quality Audit
   These audits aim to determine how well a project manager is following the company’s outlined processes. It deals primarily with the execution of a project and the implementation of company protocols.
3. Procurement Audit
   This audit directly relates to the use of resources throughout the lifetime of a project. It reviews the different contracts and contracting processes used to determine how efficiently resources are being managed.
4. Risk Audit
   The main goal of a risk audit is to increase the effectiveness of a company’s processes. It helps determine how well a company’s risk management processes function and helps measure the success of risk responses in place.