Risk Based Auditing Of Projects and Contracts

Introduction

How many projects do you know which have been delivered on time, to budget, and fully met the needs of all the parties involved? Not very many I am sure will be your answer. Research indicates that in many projects, risks are identified and analyzed in a random, uncoordinated manner. Not only does this result in unexpected risks arising, but the true impact of the risks actually identified are not fully appreciated or the combined effect of the risks is misunderstood. 
It has been estimated that a strong risk management process can decrease problems on a project by as much as 80 or 90 percent. In combination with solid project management practices, a good risk management process is critical in cutting down on surprises, or unexpected project risks. Such a process can also help with problem resolution when requirements change, because now those changes are anticipated and actions have already been reviewed and approved, avoiding the need for panic and emergency treatment. Auditing the project throughout its life, from the project development stage to the post-implementation review and adopting a risk-based approach, is a proven way to maximize the opportunity to deliver the project on time, to budget, and to fully meet the needs of all interested parties

Objectives

This course is designed for those who have an interest in auditing projects and contracts. Although the course is focused at the intermediate level, all delegates will gain maximum benefit from the course if they have a reasonable understanding of or experience in projects either from an audit involvement or project involvement.

By attending this course you will be able to:

• Learn the concepts and practical application of a risk-based approach to project review
• Understand how to identify, mitigate and control project risks effectively
• Appreciate how to separate the key risks from the lesser threats
• Challenge management and sell the benefits of a proactive risk-based audit of key projects
• Audit major projects including joint ventures with confidence
• Apply techniques to ensure that more projects meet their agreed objectives

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

• Heads of audit, audit managers, and senior auditors
• Project managers and project programme managers
• Auditors responsible for undertaking project audit assignments
• Other professionals who need to understand the risks of impacting complex projects
• Managers and directors of business functions – to aid their knowledge of a risk-based audit approach to projects

Course Outline

Day 1: Understanding Risk and Project Risk: Risk Fundamentals

• Common definitions of Risk
• Gross risk/Net risk
• Upside/Downside of risk
• Risk Profile development
• The organization's risk culture
• How risk culture impacts the delivery of project
• Organizational risk appetite and the effect on project delivery
• The risk management process
• Enterprise-wide risk management
• Models of Enterprise Risk Management (ERM) - how they can contribute to effective project delivery Key roles and responsibilities in ERM
• How can an effective risk management system enable successful project delivery?

Day 2: The Challenge of Successful Project Delivery

• High profile project failures
• Why do projects keep failing?
• Eight reasons why projects (continue to) fail
• How to avoid failure – Understanding the challenge
• How to avoid failure – Learning from past mistakes
• Getting it right at the start – Five key elements for initiating successful projects

10 Common Mistakes in Project Management

• Not following an accepted methodology
• The scope is too large
• The scope keeps changing
• The timescales are unrealistic
• Absence of the appropriate skills
• Too much to do, too little time
• Making key decisions with poor information
• Spending too long on "quick wins"
• Wrong/missing roles
• Lack of project team structure and accountability

Day 3: The 10 Golden Rules of Project Risk Management

• Make risk management an integral part of the project
• Identify risks early in the project
• Communicate about risks
• Consider both threats and opportunities
• Clarify who owns each risk
• Prioritize risks
• Analyze risks
• Plan and implement risk responses- BP case study
• Use a risk register to record project risks
• Track the risks and mitigation actions

Day 4: The Risk-Based Approach: Risk Identification and Evaluation

• Effective risk identification techniques
• Risk questionnaires
• Risk and control workshops
• Scenario planning
• Bayesian networks
• Probability and impact of risk
• Effective risk measurement - Qualitative and quantitative methods
• Choosing an appropriate risk measurement methodology
• Using Monte Carlo simulations
• Risk appetite and project risk decision-making
• Evaluation and reporting of actual versus perceived controls

Key Risks to Successful Project Delivery

• Leadership and Ownership risks
• Stakeholder risks
• Project team risks
• Approach risks
• Delivery risks

Day 5: Audit of Major Projects: The Business Perspective

• Assessing the project life cycle
• Different types of construction project and their implications
• Selection of professional services providers
• Turnkey approaches
• Choice of contractor
• Principal contract terms
• Legal and regulatory requirements
• Financing the project
• Choice of methodology
• Selecting the project manager
• Selecting a contractor
• Competency and viability

Auditing Joint Ventures (JV) and Partnership Contracts

• What is the difference?
• Has each partnership/JV been risk reviewed?
• The need to identify and schedule key partnerships
• What protocol is in place?
• The effectiveness of the review mechanism
• Frequency of review by management
• Principles of managers attending partnership meetings
• Key steps in a Partnership audit

• Key steps in a JV audit

Auditing IT Projects

• Why to audit IT projects?
• Ensuring alignment between business needs and IT developments
• Types of project audit
• Use of the CoblT Framework to control the IT project
• Key risks in IT projects
• Auditing IT projects: the audit checklist