PROJECT AUDITING/TERMINATION

(WEEK 11)

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CONTACT HOURS

Total Student
Lecture Tutorial Self – Study Library Search Assignment Exam Learning Time
(hours)

2 2 4 4 2 NIL 14

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LEARNING OUTCOMES

1. Describe about the application of project audit.

2. Describe about the various project termination

and its steps.

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PROJECT AUDITING
• It is a formal inquiry into any aspects of the project.
• Can also be known as project evaluation
• Project evaluation appraises the progress and performance of a
project compared to that project’s planned progress and
performance.
• Can also be used to compare the progress and performance of
similar projects.
• Evaluation can support any management’s decisions
required for the project.
• Therefore, the evaluation must be conducted and
presented in a manner and format that assures
management that all pertinent data have been considered.
• It is carried out by an independent third party.
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PURPOSES OF EVALUATION

1. Project evaluation serves as road maps to help team

members measure their precise location.
• It serves as a checkpoints along the way to ensure the project is on
course.
• If the project deviated from the course, the review can identify the
variance and help you make the proper adjustments.
2. It also helps to motivate team members, customers and
clients.
3. It provide feedback to help everyone to stay focused on
the project objectives.

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WHEN TO PERFORM PROJECT EVALUATIONS

1. On-going reviews
• Project should be reviewed constantly as part of an on-going
quality assurance program.
• Should include the standards that are included in the project
scope statement are applied to the work.
• Standards include
• Safety regulations
• Security issues
• Licensing requirements
• Environmental considerations
• Legal requirements

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WHEN TO PERFORM PROJECT EVALUATIONS

2. Periodic inspections
• Team leaders, functional supervisors or quality inspectors should
review project work periodically to ensure that project objectives
are being met.
• These may be daily, weekly or monthly according to the needs of
the project.

3. Milestones evaluation
• Additional project evaluation should take place when milestone
events are reached (conclusion of each major phase of the
project).
• This evaluation is used to certify that all the work scheduled is
completed.

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WHEN TO PERFORM PROJECT EVALUATIONS

4. Final project audit

• Needed to verify that everything is completed as agreed by the
client, customer and project team.
• It provides information that may be used in project closure and
acceptance.
• It is also time to gather and document lesson learned during the
project.

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THE PROJECT AUDIT

• It is a thorough examination of
• The management of a project
• Methodology and procedures
• Records
• Properties
• Budgets
• Expenditure
• Degree of completion

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THE FORMAL AUDIT REPORT

1. Introduction: provides description of the project to provide

framework of understanding for the reader.
2. Current status: Status should be reported as of the time of the
audit. Should include
• Cost: compare the actual costs to budgeted costs. Report should focus
on the direct charges made to the project.
• Schedule: Performance in terms of planned events or milestones.
Completed portions of the project should be highlighted. For unfinished
tasks, percent completion should be reported.
• Progress: Compares work completed with resources expended. Earned
value charts may be used. Additional information is needed to pinpoints
problems if any.
• Quality: It is a measure of the degree to which the output of a system
conforms to pre-specified characteristics.

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THE FORMAL AUDIT REPORT

3. Future project status: Contains the auditor’s conclusion
regarding the progress with recommendations for any changes in
technical approach, schedule or budget that should be made in the
remaining tasks.
4. Critical management issues: These are issues that the auditor
feels require close monitoring by senior management. A brief
explanation of the relationships between these issues and the
objectives of the project are included.
5. Risk management: Contain a review of major risks associated
with the project and their projected impact on project
time/cost/performance. Suggestion on altering the risk can also be
included.
6. Caveats, limitation and assumptions: auditor must include a
statement covering any limitations on the accuracy or validity of the
report.

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RESPONSIBILITY OF PROJECT AUDITOR/EVALUATOR

• Auditors must approach audit in an objective and ethical manner.
• Auditors must maintain political and technical independence
during the audit and treat all materials gathered as confidential until
the audit is formally released.
• Steps in conducting audit
1. Assemble a small team of experienced experts
2. Familiarise the team with the requirements of the projects
3. Audit the project on site
4. After completion, debrief the project’s management
5. Produce a written report according to a prespecified format
6. Distribute the report to the PM and project team for their
response
7. Follow up to see if the recommendations have been implemented

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THE PROJECT AUDIT LIFE CYCLE

1. Project audit initiation:
• Starting the audit process
• Defining the purpose and scope of the audit.
• Gathering of information to determine the right audit
methodology.
2. Project baseline definition:
• Identifying the performance areas to be evaluated
• Determining standards for each area through benchmarking
• Ascertaining management performance expectations for each
area
• Developing program to measure and assemble the requisite
information

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THE PROJECT AUDIT LIFE CYCLE

3. Establishing on audit database:

• Execution of audit
• Creation of database which might include information needed
for assessment of project organization, management and control,
past and current project status, schedule performance, cost
performance, output quality as well as plans for the future.
4. Preliminary analysis of the project:
• Judgment are made.
• It is auditors duty to brief PM on all findings and judgments
before releasing the audit report.
• Remember, the purpose of the audit is not to embarrass the PM
but it is a method to improve the entire process of managing
project.

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THE PROJECT AUDIT LIFE CYCLE

5. Audit report preparation:

• Should be organised in any format agreed before.
• Recommendations and implementation plans is also a part of the
report.

6. Project audit termination:

• Done after the project audit accomplished its designated task.
• A review on the audit process is conducted to improve the
methods for conducting audit.
• Audit is complete after review.

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PROJECT TERMINATION
• The purpose of project closure is to verify that all work has been
accomplished as agreed and that the client or customer accepts the
final product.
• This is called the scope verification.
• Steps involved are
• All payments are made
• Finances reconciled
• Project documentation and final reports are completed
• Any remaining budget, materials or other resources are properly
dispersed.
• It is also the time to recognize individual efforts and celebrate
project success.
• Typically employee evaluations, vendor evaluations and customer
satisfaction reviews are completed at this time as well.
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THE VARIETIES OF PROJECT TERMINATION

1. Termination by extinction
• Project stopped
• It may end because it has been successful and achieved its
goals.
• It may be unsuccessful.
• Even though all activity related to the project stopped,
organisation work must be done such as orderly
release of project team members and their
reassignment etc.
2. Termination by addition
• Transformation of ‘in house’ project team to be a part
of a formal part of the parent organization.

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THE VARIETIES OF PROJECT TERMINATION

3. Termination by integration
• The property, equipment material, personnel and functions of
the project are distributed among the existing elements of the
parent organization.
• The output of the project becomes a standard part of the
operating systems of the parent or the client.

4. Termination by starvation
• ‘slow starvation by budget decrement’
• Especially during business recession where budget cuts take
place.

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CAUSE OF PROJECT FAILURE

1. Insufficient support from senior management.

2. Naming the wrong person as project manager
3. Poor planning
4. Time/cost estimates were not prepared by those who
had responsibility for doing the work
5. The project was allowed to continue in existence long
after it had ceased to make cost-effective progress.
6. Unresolved technical problems
7. Delay in schedule
8. Lack of profits

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THE TERMINATION PROCESS

1. The decision process

• Decision-aiding models
1. Decision based on the degree to which the project qualifies
against a set factors generally held to be associated with
successful or failed projects.
2. Decision based on the degree to which the project meets the
goals and objectives set for it.

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THE TERMINATION PROCESS

2. Once a decision is made to terminate a project, the
termination process begins.
• It is best to plan, budget and schedule termination process

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THE TERMINATION PROCESS

• Primary duties of the termination manager
1. Ensure completion of work including task performed by sub-contractors
2. Notify client of project completion and ensure that delivery (and
installation) is accomplished. Acceptance of the project must be
acknowledged by the client.
3. Ensure that documentation is complete, including a terminal evaluation
of project deliverables and preparation of Final Report.
4. Clear for final billings and oversee preparation of final invoices sent to
client.
5. Redistribute personnel, material, equipment and any other resources to
the appropriate places.
6. Clear project with legal counsel or consultant. File patent. Record and
archive all “nondisclosure” documents.

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THE TERMINATION PROCESS

7. Determine what records (manuals, reports etc.) to keep.

8. Ascertain any product support requirements, decide how
such support will be delivered and assign responsibility.
9. Oversee the closing of the project’s books.

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THE FINAL REPORT – A PROJECT HISTORY

• It is the chronicle of life and times of the

project.
• It is a compendium of what went right
and what when wrong.
• It is a record of who served the project in
what capacity
• It details out what was done to create
substance of the project
• And how it is managed.

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THE FINAL REPORT – A PROJECT HISTORY

• Elements to be included in the FINAL REPORT

A. Project performance
B. Administrative performance
C. Organizational structure
D. Project and administrative teams
E. Techniques of project management
F. Recommendations

• The fundamental purpose for final report is to

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