Construction Auditing: Auditing Beyond Cost and Schedule Risks Construction Auditing: Auditing Beyond

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  • Paul Pettit, Revenew International LLC

    National Association of Construction Auditors 7th Annual Conference

    South Lake Tahoe, California September 17-19, 2018

    Construction Auditing: Auditing Beyond Cost and Schedule Risks

    1

  • © 2018 Revenew International, LLC. All Rights Reserved.2

     Paul Pettit, VP Performance Improvement

     Revenew International LLC

     Over 25 years of progressive roles within industry and professional services

     Project Management Professional (PMP), Construction Controls Professional (CCP), Certified Construction Auditor (CCA), Certified Internal Auditor (CIA), Certified in Risk Management Assurance (CRMA) and Certified Professional EH&S Auditor (CPEA)

    Speaker Background

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     Cost and schedule risk can impact a construction project

     Poor definition and management of scope can also impact the project

     Quality, Environmental, Health & Safety and Security risks can have a significant impact on the project  Fines, delays and, in some cases, complete shutdown of a project

     Impacts to project cost and schedule

     May keep the project from generating revenue and management’s planned return on investment

    Presentation Overview

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     Learn what to look for during a construction project audit

     Understand why auditing more than just the cost and schedule can be beneficial

     Leverage the three lines of defense while auditing your project

     Hear about actual findings and what to look for when you’re in the field

     Develop your audit plan to cover more than just cost and schedule risks

    Learning Objectives

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     What do you audit today?  Cost

     Schedule

     Quality

     Environmental

     Health & Safety

     Security

     Other

    Construction Project Audit Scope

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    3 Lines of Defense

    IIA Position Paper: The Three Lines of Defense in Effective Risk Management and Control, 2013.

    Presenter Presentation Notes One way to think through the roles and responsibilities of the assurance, risk management and compliance departments in an organization is the Three Lines of Defense model.

    1st Line – Operational Management Own and manage risk 2nd Line – Risk Management and Compliance Functions Oversee risks Support, inform and alert management Monitor internal controls that are in place 3rd Line – Internal Audit Independent assurance Governance in accordance with recognized standards Higher reporting level within organization

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    3 Lines of Defense in Construction

    • Project Management • Project Controls • Project Risk Owners and Managers

    1st Line Contractor

    • Risk Management and Compliance • Limited Independence • Reports Primarily to Management

    2nd Line Owner

    • Project Audit • Provides an Independent Perspective and

    Challenges the Process • Objective and Offers Assurance

    3rd Line Audit

  • Quality

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    Quality

     Start with the process Who, what, when, where, why

     Identify the controls  QA/QC

     Inspection

     Factory Acceptance Testing

     Commissioning & Turnover

     Conduct a walkthrough during construction

     Document your findings  Let’s take a look

  • Environmental

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    Environmental

     Start with the process Who, what, when, where, why

     Identify the controls  Air

    Water

    Waste

     Noise

     Conduct a walkthrough during construction

     Document your findings  Let’s take a look

  • Health & Safety

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    Health & Safety

     Start with the process Who, what, when, where, why

     Identify the controls  Training

     Inspection

    Monitoring

     Auditing

     Conduct a walkthrough during construction

     Document your findings  Let’s take a look

  • Security

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    Security

     Start with the process Who, what, when, where, why

     Identify the controls  Detection

    Monitoring

     Response

     Conduct a walkthrough during construction

     Document your findings  Let’s take a look

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    Conclusion and Takeaways

     Lots of potential impacts on construction projects  Poor definition and management of scope

     Cost overruns and schedule delays

     Quality issues

     Environmental incidents

     Health & Safety incidents

     Security incidents

     Fines, delays and, in some cases, complete shutdown of a project

     Delayed revenue growth and negative return on investment

     Develop an audit plan to cover more than just cost and schedule risks

  • Thank you! – Questions

    Paul Pettit 713.302.4202 or ppettit@revenew.net

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