Independent Project Management Audit

(Sudhir Kumar*& Shashank Vaidya**)

Synopsis:In Railway construction and doubling projects,normally three entities are involved in
successfully completing the project. These are the Client, Client’s Engineer and Contractor(s). It
is suggested to add one moreentity/ activityby way of Independent Project Management Audit
(IPMA). This has many advantages in complex, multi-disciplinary and major projects. The paper
describes what, why andhowof IPMA to be introduced in Railway Construction Projects.
==============================================================================

1.0 Introduction – What is IPMA?

IPMA is periodic audit by a team of Competent and Independent experts to verify the
compliance of Project Plan and fulfilment of requirements related to prescribed
time/schedule, quality and cost parameters. Normally, in projects, the contractor and
client’s engineer carry out internal audits during the execution of the project. Internal audit
is an important activity in the lifecycle of the project but at times it may suffer from lack of
investment of time, competence and independence of auditors to generate free unbiased
opinion about various aspects of construction activities. Hence arranging Project audit by an
independent external auditor(IPMA)is likely to immensely benefit the projects as discussed
in following sections.
Before we get into greater details of the scheme, it’d be worth to clarify the meaning of
some of the key terms used.
 Audit refers to a systematic, independent and documented process to evaluate and
determine the extent to which a given criteria is fulfilled.
 Independence meansthe assessor should not be involved in any activity of the
project. Organizationally, he should be independent of management. Independence
means freedom form responsibility for the activity/activities being performed.
 Criteria, also referred as ‘audit criteria’, means the set of policy, processes and
requirements of the project. These could include the contract agreement, Quality
 and Safety plans, construction schedule and other project documents. Best industry
practices can also be included in the list of audit criteria.
 Competencerefers to the knowledge and ability of the auditor that enables him to
perform the audit effectively. The IPMA should be an Engineer having project
management and auditing experience. Qualification as a certified auditor for any
management system under ISO should be a preferredqualification.The auditor
should have successfully carried out similar audit works in the past.
In Railway doubling /construction projects, there are many possible causes fornot achieving
the project objectives and these include incapable contractors, delay in land acquisition,
delay in approvals,delay in payments, weak dispute resolution mechanism,paucity of skilled
manpower,ineffective procurement procedures,lack of empowerment, shortage of
competent organization, unworkable rates etc. To overcome these, it is desirable that
corrective action is taken in the early stages of project.
2.0 Howto implement IPMA?
For any project execution, first the project plan is to be prepared by experienced people.
In the concept phase, experienced persons develop the Project Assurance Plan at the pre-
construction phase. It includes Project objective,schedule, budget, procurement strategy,
policies related to Quality, safety and Environment management, organization-roles and
responsibilities, plans to achieve qualitysafety objectives, audit processes, acceptance and
approval process of the project in various phases of project’s lifecycle etc. It describes how
each phase will be properly completed, what will be inputs, requirement, processes and
output/ deliverables of each phase. It further lays down what hold /control points will be
there in between. It describes verification and validation activities in various phases. All
these would typically form the audit criteria.
IPMA involves periodic audit of various activities at different phases of the project lifecycle
such as concept, design, construction, testing and commissioning to verify the fulfilment of
project objectives and other aspects contained in the audit criteria.
IPMA by experienced,competent persons will identify the project development problems in
early stages of the project so thatimplementation of corrective actions will involve less
 resources and would deliver greater benefits. Whatever non-compliances, deficiencies, grey
areas and hinderancesexist, these identified by the IMPA and the relevant stakeholder
informed of these to take proactive action to resolve the problem and avoid any lapse.
Thus, the management can take proactive action rather than reactive action about
hinderances or problems of the project execution.

3.0 The IPMA Process

The process involves following steps as other audits of management processes. It should
follow the typical Plan-do-Check-Act (PDCA) model enshrined in all Management Systems.
3.1 Plan - preparation of Audit/assessment Plan—
Process auditing in various management auditing has fully matured now and international
standards are available. In project management audit also, a Plan will be required to be
prepared in the beginning. This will include collecting audit criteria, identifying aspects to be
covered in the audit, selection of audit team, scheduling the audit etc.

3.2 Do– Execution of the audit plan involves various tasks as follows;
The audit team should be empowered by the owner and it should be ensured that the
stakeholders provide quality time to interact with the auditors. The audit team should be
ensured that the audit team receives full and uninterrupted access to all the required people,
facilities, documents. Various steps to be followed in the conduct of the audit as given below:
 Preparation of audit assessment remit and plan.
 Collecting documentsand records such as contractor’s quality management
team, employer’s Project Management including Contract Management.
 Reading the documents to check /verify the requirements and the potential risks
to the project, the control major for the risk, duty holder prepared by the
Contractor. It’s adequacy and correctness based on experience of other projects.
 Opening meeting, kick-off meeting
 Inspection of field records, test results, construction method statements
 Interviewing various stakeholders
  Carry out site inspections, witness important tests
 Raise observations /findings
 Closing meeting of field audit
 Submitting audit reports to project team for compliance and generating
corrective and preventive action
 Final report and/or presentation to the client top management
 Follow up / Review of action items in the next audit

3.3 Check: The project team reviews the audit findings and develops action to correct
the non-conformities (repair)and further action plan to prevent recurrence of the
non-conformities. Even in the absence of any specific defect or non-conformity,
actions to improve various aspects of project performance are identified and
implemented.
3.4 Act: (Repeat) Inresponse to the IPMA and as corrective action,the Project owners
modify the rules, manuals, processes,specification, skillset etc. The implementation
and effectiveness of these improvements can be assessed in thenext IPMA.Thiswill
result in Continual improvement on the project.
3.5 Reporting: After auditing, a summary report may be submitted, and a presentation
made to the top management of the owner organization. This should cover the
executive summary of the detailed audit report, comments on the corrective and
preventive action envisaged by the auditee, lessons learnt etc. The report may be
prepared in a prescribed format.

4.0 Aspects of IPMA:Annexure 1 provide a short list of various aspects to be covered by the
IPMA. Important aspects of IPMA cover the following:
 Overall project requirements and objective
 Preliminary hazard and risk analysis and their management
 Overall performance targets and acceptance criteria
  Assessment of the contractor’s quality management in execution,
compliance to ISO 9000 series.
 Quality plan, quality policy, procedures, organization.
 Interface Management Control.
 Project communication protocol
 Construction technology and methodology
 Code and Standards to be applied.
 Availability of measuring,monitoring and testing devices.
 Control of non-conformance in the processes
 Competence and training of Employer’s and Contractor’s Team
 Establishing internal and external quality control measures.
 Establishing test plans, verification and validation tasks

5.0 Advantages/Merits of IPMA

IPMA is proposed because the Independence of the auditors ensures opinions being
free from project constraints. In addition, identification of deficiencies, shortcomings at
early stage of life cycle is done. At this stage corrective action is easier. TheIPMA
hasmany advantages, some of which are given below:
1. An independent and competent auditor brings insight based on his vast experience
and foresight, thereby helping identify problems at an early stage.
2. The deficiencies are identified early in the life cycle so corrective action is easier and
less expensive.
3. There is a reduction in risk to the project due to timely identification of critical issues
and bringing these to the attention of the project team and top management.
4. The stakeholders involved in day-to-day operations/ execution are often blinded by
their perspective of the situation. A third party is not constrained by this and has
greater chance of analyzing the situation objectively.
5. Independent auditors may contribute from the lessons learnt from other projects
 6. Involvement of different members of audit team provides a diversity of views.
7. Positive intermediate audit reports boost the morale of employees. Certifying
agencies andclient will get additional comfort with positive audit reports.
8. Independent external auditors will comment on the performance of all the agencies
involved in the project such as General Consultant, Independent Engineer, Quality
assurance team and help to eliminate any deficiency related to skill or competency.
9. Impact of third-party opinion will be better on the contractors, consultants.
10. Regular audit reports of third-party will result in collection of facts which may be
useful for more effective dispute resolution (if required) at a later date.
11. It is a proactive action (as opposed to reactive action) by management to assess the
deficiencies in advance and take corrective action.

6.0 How to Introduce IMPA in Railway Projects

All Management Systems developed by the ISO are based on the framework of PDCA. The
same framework can be applied to the IPMA also.
In Railway projects, during planning stage the requirement of arranging these external
audits should be decided and incorporated in the contract conditions or technical
specifications of bid documents.Criteria for qualification of the auditor may also be
developed and laid down. The auditor(s) fulfilling the qualification criteria may be proposed
by the contractors and approved by client judging the competency, independency, quality,
past experience etc.The fees of the auditors shouldbe borne by the client and reimbursed to
the contractor so that the auditors are not influenced by the contractors.
Suitable mechanism may be built in the contract to ensure that the IPMA is not ignored or
delayed by the contractor. The top management should use the report of the auditors in
finetuning the project execution strategy and taking timely corrective actions at the
leadership level.
The final A ‘lessons learnt’ report at the conclusion of the project should be drawn and
effect of carrying out IPMA should be a mandatory part of this report.
7.0 Conclusion

Due to increasing complexity and size of the projects, traditional methods of monitoring by
senior management are not adequate. Presently there are three stakeholders in project
execution, whose priorities are project execution (time and cost) and notanalyzing the
situation and identifying gaps in achievement of ALL project objectives.Introduction of
Independent Project Management Audit as the fourthentity through independent external
audit will prove to be immensely beneficial for the project management as explained in this
article.

*Sudhir Kumar Chief Commissioner of Railway safety (Retd.)

** Shashank Vaidya Director, Gem Engineering Mumbai
 Annexure-1

Project Audit criteria / Checklist

SN Discipline Recommended
Action
1 Scope of work as per requirements
2 Cost estimate
3 Quality Management in various phases of lifecycle
4 Human Resources management
5 Project schedule and control
6 Contract management and dispute resolution
7 Communication /consultation
8 Risk Management
9 Procurement process
10 Occupational health &Safety Management
11 Sub-contractor selection and management
12 Document and drawing control