Project Management the Managerial Approach Ch 12 Review Questions
Project Management: A Managerial Approach Chapter 12 – Project Auditing © 2006 John Wiley and Sons, Inc.
Overview • • • Goal-based Project Outcomes Project Audit Reports Inspect Life Cycle Written report Credibility Revenue Reporting © 2006 John Wiley and Sons, Inc.
Projection Auditing • A major vehicle for evaluation is the projection audit, a more or less formal inquiry into any attribute of the project – A projection audit is highly flexible and may focus on whatever matters senior management desires – The evaluation of a project must have credibility in the eyes of the management group for whom it is performed and also in the optics of the project team on whom it is performed © 2006 John Wiley and Sons, Inc. Chapter 12 -1
Purposes of Evaluation - Goals of Projection Audit • Four contained dimensions of success: – The most straightforward dimension is the project's efficiency in meeting both the budget and schedule – Another dimension, and the virtually complex, is that of customer bear upon/satisfaction – A third dimension, once again somewhat straightforward and expected, is business/direct success – The last dimension, somewhat more than hard and nebulous to ascertain, is future potential © 2006 John Wiley and Sons, Inc. Chapter 12 -two
Purposes of Evaluation - Goals of Projection Audit • Another main purpose of evaluation is to aid translate the achievement of the project'southward goals into a contribution to the parent organization's goals • To do this, all facets of the project are studied in club to identify and sympathize the projection's strengths and weaknesses • The issue is a gear up of recommendations that tin can help both ongoing and future projects © 2006 John Wiley and Sons, Inc. Chapter 12 -3
Evaluation– Benefits of Project Inspect • A successful project evaluation via audit can help an organization: – – – Place problems earlier Analyze performance, toll, and fourth dimension relationships Ameliorate project operation Locate opportunities for time to come technological advances Evaluate the quality of projection direction Reduce costs © 2006 John Wiley and Sons, Inc. Chapter 12 -iv
Purposes of Evaluation – Need for Project Audit • Organizational Benefits – Speed the achievement of results – Place mistakes, remedy them, and avoid them in the future – Provide data to the client – Reconfirm the organisation'south involvement in, and commitment to, the project © 2006 John Wiley and Sons, Inc. Chapter 12 -5
Purposes of Evaluation – Other Project Audit Outcomes • Ancillary goals – Identify organizational strengths and weaknesses in project-related personnel, management, and decisionmaking techniques and systems – Place risk factors in the firm's use of projects – Improve the way projects contribute to the professional growth of projection team members – Identify project personnel who have high potential for managerial leadership © 2006 John Wiley and Sons, Inc. Affiliate 12 -seven
Project Audit • The project audit is a thorough examination of the management of a project, its methodology and procedures, its records, its backdrop, its budgets and expenditures and its caste of completion • The formal report may be presented in diverse formats, but should, at a minimum contain comments on some specific points © 2006 John Wiley and Sons, Inc. Chapter 12 -8
Project Audit • Six parts of a project audit: – – – 1. 2. 3. 4. 5. 6. Current status of the project Hereafter status Status of crucial tasks Risk assessment Data pertinent to other projects Limitations of the inspect • It is far broader in scope than a fiscal audit and may deal with the project equally a whole or any component or set of components of the project © 2006 John Wiley and Sons, Inc. Chapter 12 -9
Audit Depth • Fourth dimension and money are 2 of the about common limits on depth of investigation and level of particular presented in the audit report • Accumulation, storage, and maintenance of auditable data are important cost elements • 2 often overlooked costs are the self protective activity of squad members during an audit, and the potential for projection morale to suffer as a result of a negative audit © 2006 John Wiley and Sons, Inc. Chapter 12 -10
Audit Depth • At that place are three distinct and easily recognized levels of projection auditing: – General audit - normally nearly constrained by time and resources and is normally a cursory review of the project touching lightly on the half dozen parts of an audit – Detailed audit - usually conducted when a follow-upwards to the general inspect is required – Technical audit - generally carried out by a qualified technician under the straight guidance of the project auditor © 2006 John Wiley and Sons, Inc. Chapter 12 -xi
Audit Timing • The first audits are normally done early in the project's life • Early audits are often focused on the technical bug in order to make sure that key technical bug accept been solved • Audits done later in the life cycle of a project are of less immediate value to the project, only are more than valuable to the parent organization © 2006 John Wiley and Sons, Inc. Affiliate 12 -12
Audit Timing • Equally the project develops, technical risks are less probable to be matters of business organization • Conformity to the schedule and budget get the chief interests • Management issues are major matters of interest for audits made late in the projection's life • Postproject audits are often a legal necessity considering the client specified such an audit in the contract © 2006 John Wiley and Sons, Inc. Chapter 12 -xiii
Take chances Outcome Graph Adventure Cost High Toll to fix adventure event Chances of risks occurring Low Project life cycle © 2006 John Wiley and Sons, Inc.
Preparation and Use of Inspect Report • The data should exist arranged so equally to facilitate the comparison of predicted versus bodily results • Significant deviations of actual from predicted results should be highlighted and explained in a gear up of footnotes or comments • Negative comments well-nigh individuals or groups associated with the project should be avoided © 2006 John Wiley and Sons, Inc. Affiliate 12 -14
Structure and Use of Audit Written report • Data that should be independent in the inspect study: P – 1. Introduction – ii. Electric current condition – 3. Futurity projection condition C T – 4. Critical Direction issues – 5. Take a chance Analysis – 6. Caveats, Limitations, and Assumptions © 2006 John Wiley and Sons, Inc. Chapter 12 -15
Project Auditor/Evaluator Responsibilities • First and foremost, the auditor should "tell the truth" • The accountant must approach the inspect in an objective and ethical manner • Must assume responsibility for what is included and excluded from consideration in the report • The accountant/evaluator must maintain political and technical independence during the audit and treat all materials as confidential © 2006 John Wiley and Sons, Inc. Affiliate 12 -16
Project Accountant/Evaluator Responsibilities • Steps to carry out an audit: – Assemble a small squad of experienced experts – Familiarize the team with the requirements of the project – Audit the project on site – Subsequently the completion, debrief the projection'southward direction © 2006 John Wiley and Sons, Inc. Chapter 12 -17
Project Auditor/Evaluator Responsibilities • Steps to bear out an audit (cont. ): – Produce a written report co-ordinate to a prespecified format – Distribute the written report to the project director and project team for their response – Follow up to encounter if the recommendations have been implemented © 2006 John Wiley and Sons, Inc. Chapter 12 -xviii
The Project Audit Life Cycle • Like the projection itself, the inspect has a life cycle equanimous of an orderly progression of well-defined events: – – – Project audit initiation Project baseline definition Establishing an audit database Preliminary analysis of the project Audit report preparation Project inspect termination © 2006 John Wiley and Sons, Inc. Chapter 12 -xix
Essentials of an Inspect/ Evaluation • For an audit/evaluation to be conducted with skill and precision, and to be generally accepted by senior management, the client and the projection team, several weather condition must be met: – The inspect team must exist properly selected – All records and files must be accessible – Free contact with projection members must be preserved © 2006 John Wiley and Sons, Inc. Affiliate 12 -twenty
Inspect/Evaluation Team • The choice of the audit/evaluation team is disquisitional to the success of the entire procedure • The size of the team volition by and large exist a function of the size and complexity of the project • For a small project, one person can often handle all the tasks of an audit, merely for a large project, the team may require representatives from several areas © 2006 John Wiley and Sons, Inc. Affiliate 12 -21
The Audit/Evaluation Squad • Typical areas that may furnish audit team members are: – – – – The project itself The accounting/controlling department Technical specialty areas The customer The marketing department Purchasing/asset management Human resources Legal/contract administration department © 2006 John Wiley and Sons, Inc. Affiliate 12 -22
Audit/Evaluation Team • The main role of the inspect/evaluation squad is to conduct a thorough and complete examination of the project or some prespecified aspect of the project • The team must make up one's mind which items should be brought to direction's attention • The team is responsible for constructive observations and advice based on the training and feel of its members © 2006 John Wiley and Sons, Inc. Chapter 12 -23
Access to Information • In lodge for the inspect/evaluation team to be effective, information technology must accept free access to all data relevant to the project • Nigh of the information needed will come from the project team's records or from various departments such as bookkeeping, personnel, and purchasing • Some of the most valuable information comes from documents that predate the project © 2006 John Wiley and Sons, Inc. Chapter 12 -24
Access to Information • Examples of documents that predate the project: – Client Requirements (i. east. RFP Process) – Minutes of projection selection meetings – Minutes of senior management committees that decided to pursue a specific surface area of technical interest • Priorities must be set to ensure that important analyses are undertaken before those of lesser importance © 2006 John Wiley and Sons, Inc. Affiliate 12 -25
Access to Project Team and Others • Several rules that should be followed when contacting project squad and other stakeholders – Avoid misunderstandings between the audit/evaluation squad and project squad members – Project squad always be made aware of in-progress audit – Avoid Critical Comments • Constructive suggestions where advisable © 2006 John Wiley and Sons, Inc. Chapter 12 -26
Access to Project Squad and Others • At times, information may exist given to audit evaluation team members in confidence • Discreet attempts should be made to confirm such information through non-confidential sources • If it cannot be confirmed, it should not exist used • The auditor/evaluator must protect the sources of confidential information © 2006 John Wiley and Sons, Inc. Chapter 12 -27
Measurement • Measurement is an integral part of the audit/evaluation process • Functioning against planned budget and schedule usually poses no major measurement bug • Measuring the actual expenditure confronting the planned budget is harder and depends on an indepth understanding of the procedures used by the accounting section © 2006 John Wiley and Sons, Inc. Chapter 12 -28
Measurement • Big Challenge: determine what revenues should be assigned to a project • All toll/revenue allotment decisions must be made when the diverse projects are initiated • The battles are fought "up front" and the equity of cost/acquirement allocations ceases to be so serious an event • As long as allocations are made by a formula, major conflict is avoided-or at least, mitigated © 2006 John Wiley and Sons, Inc. Affiliate 12 -29
Auditor/Evaluator • In a higher place all else, the auditor/evaluator needs "permission to enter the system" • If the auditor maintains a calm, relaxed attitude, the project squad more often than not begins to extend limited trust • The start step is to let the auditor qualified access to information near the project © 2006 John Wiley and Sons, Inc. Chapter 12 -xxx
Auditor/Evaluator • Deal professionally with information gathered, neither ignoring nor stressing the project'south shortcomings • Recognize and reinforce aspects of project'southward strengths • Trust is earned during an inspect fifty-fifty with negative findings • Trust-building is a slow and delicate process that is easily lost © 2006 John Wiley and Sons, Inc. Affiliate 12 -31
Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without limited permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The Publisher assumes no responsibility for errors, omissions, or damages caused past the use of these programs or from the use of the information herein. © 2006 John Wiley and Sons, Inc.
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