What is an Audit & Review in Project Management?

The prime objective of the audit role is to provide management with planned, systematic and independent assessments of the effectiveness of the business control framework, Reviews…..have the following objectives:
• independent, formal evaluations of whether proposals are fit for purpose and able to meet their objectives
• capture common lessons learned and assist their effective dissemination.

Audits and reviews are used as a means of management control. They form a major
element of the “monitoring” activity in the Management Control Loop (Report
Monitor Analyze Correct) They are normally carried out to a regular programme for
most operational processes, or at a manager’s request, (e.g. to investigate a suspected
fraud or analyze an under-performing process.) For projects there are additional reviews,
usually carried out at milestone events, in addition to the same business related reviews
that are carried out in operations. These milestone reviews normally occur at project
transition stages along the life cycle.
A programme for the audits and reviews that are considered necessary to ensure that the
project’s processes and procedures are being being well managed and that maximum
value is being extracted from the opportunity must be prepared as part of the Project
Quality Plan. Such a programme is often known as the Verification Plan. An Action
Register is needed to list all actions resulting from implementation of the Verification
Plan and there need to be clear procedures in place and responsibilities assigned to ensure
that actions are closed-out and documented.
Audit or review, what’s the difference?

Audits and reviews use many common tools; document reviews, interviews, spot
sampling, presentations and debriefing reports. However, they do have a different focus,
and it is important to remember that while both deal with compliance, the approach
adopted for the audit will generally focus on past procedural performance, whilst the
review will be looking at the achievement of future objectives. The review should
therefore, encourage open debate on the potential issues involved, and be less concerned
with detailed procedural compliance.

Planning and Carrying-out a Review

Reviews are vitally important to project progression, and because of their management
check point nature, they are often on the project critical path. Timely planning is
therefore the key to successful reviews. Reviews seek out the present and future risks for
the project. They are carried out for the benefit of the project and should be executed in
a spirit of cooperation. There is no room for adversarial point scoring nor for negotiations
over the diplomacy of the report. The most important issue is that findings are accepted
by the reviewee and a plan for future implementation of agreed actions initiated.
The following summaries provide a guideline that will assist the opportunity/project
manager and the review team leader to approach a review with the same common purpose:

The purpose of the review
• must be clearly stated
there should be no hidden agendas
• deliverables must be unambiguous
review team should be able to decide Yes/No on deliverables
• scope should not be too prescriptive
review is of limited value if the key issues impacting on project success are excluded for political reasons
• the dependencies on the review outcome stated
i.e. where the review fits in the overall business plan
The review sponsor
• invariably the manager responsible for the work being reviewed
• possibly initiated by director(s)
• other stakeholders/shareholder via Regional Business Directorate
Terms of Reference (TOR)
• concentrate on no more than five deliverables
• joint effort by reviewee and reviewer
• known issues and concerns must be covered in scope definition
Other information
• background
• organisation
• project approval timetable
• technology innovation
• relationship to corporate business plan
• sensitivity to partners and government
• corporate champions
• operating unit controls
Required documentation (pre-reading)
• minimum controlling documents
ideally three weeks ahead of time for all review team
• document reference list
these are essential to provide some idea of the breadth and scope of the data involved
• drill down requests to check quality of work

the review team members should be able to satisfy themselves as to the quality and
consistency of the data by selective sampling

Resourcing the review
• Team leader is responsible for ensuring adequate skills are available for the review
• adequate coverage of technical skills v minimum resourcing
i.e. some members will need to double up on skills
• strong deputy team leader (report drafter)
• knowledgeable project team member, essential for good linkage with reviewee
• partners where required must have tasks assigned – no observers
• single point responsibility assigned to each Critical Success Factor (CSF)
• project administration focal point (data, logistics and resourcing)
Review timetable (preparation)
Week 6 confirmation of review date: receipt of preliminary TOR
Week 5 check on resource availability and identify preferred team members
Week 4 confirm team members: present budget: discuss TOR and csfs against which review will be conducted
Week 3 team leader checks “other information” receives principal review documents
Week 2 travel arrangements: informal discussion with disciplines on Critical Success
Factors: confirmation of attendees and time of management presentation:
finalise TOR
Week 1 final check on latest developments with reviewee: confirmation of attendance by team members
Review timetable
Review Day 1
• general team introductions
• project presentations
• team get-together TOR/CSF check
• task allocation
• plan interviews
Review Day 2
• confirm TOR
• commence interview
• team get-togethers
• team leader’s first impressions presentation to review team
• review project’s CSFs
• check on previous audits and reviews
• plan further investigations
Review Day 3
• further interviews and documentation checking
• team leader’s status discussion with reviewee
• compilation of findings by team members at team meeting
• agreement on critical issues for report update of team leader’s first impressions
Review Day 4
• final document checking and confirmation interviews
• preparation of first draft of report sections

• preparation of presentation viewgraphs
• reviewee update and comment
Review Day 5
• draft report discussed and factually verified
• presentation to management
• handover of draft report for responses

Report contents
• brief, concise, balanced and complete
note the achievements as well as the issues
• follow the management presentation
presentation material forms report structure
• executive summary
key issues only with emphasis on what management must do to rectify the concerns
• background
cut and paste from project data: minimum for context
• findings standardised approach
finding, implication, consequence, recommendation, acceptance and action
• appendices

• illustrations for context
• list of recommendations
• list of documents reviewed
• list of interviewees
• viewgraphs

Critical Success Factors

The essence of effective added value reviews is their ability to establish the Critical Success
Factors (CSFs) of the planned activities; to identify the risks that might impact on them,
and to make experienced judgement on the measures in place to minimise the probability
of the risks occurring. Typical CSFs are summarised below for various stages of the project
and referred to the relevant Value Assurance Reviews (VAR).
Concept selection (VAR 3)
• have alternative scenarios been formally investigated?
• are the reasons for the rejection supported by management?
• is the proposed concept fully aligned with the business plan?
• are the development design assumptions documented?
• are fluid properties and compositions confirmed?
• are well flowing rates confirmed by test?
• is the range of production profiles realistic?
• can upside potential be accommodated in surface facilities?
• does the facilities downturn range handle low case prediction?
• does the concept provide the optimum business case or the optimum technical design?
• is the appraisal strategy based on Value of Information (VOI)?
Field Development Plan (VAR 3)
Successful Field Development Plans should have the following in place if they are to proceed to prime scope approval and project execution:
• completed staff work?
• alternative sub-surface models investigated?
• uncertainties identified and risks established?
• risk linked to project economics?
• risk management plan in place?
• clearly identified contingencies – risk related?
• robust life cycle cost estimate (Capex and ORP)?
• economic scenarios against combined spider diagram factors?
• realistic schedule to first oil?
Project Execution Plan (VAR 3, VAR 4)
Prime scope approval requires that the project in addition to being technically sound also
demonstrates a robust achievable project execution plan. A successful PEP will havsatisfactorily addressed at least the following:
• clearly defined work scope?
• effective organization design linked to WBS?
• effective delegation and interface?
• clearly defined execution resources?
• both for in-house and contracted?
• cost effective?
• cost effect contracting and procurement?
• building on OU/Group’s purchasing?
• realistic planning?
• robust CTR durations within?
• robust critical path linked to project control?
• project quality management?
• project safety management?
• project data management?

Audits

Many of the precepts that govern review preparation apply to audit preparation:
• Purpose of the audit
• Audit sponsor
• Terms of Reference
• Pre-reading
• Resourcing the audit
• Timetable
• Team introduction
• Audit report preparation
• Debriefing the auditees

Reference documents

The relevant guidelines on reviews are:
• EP93-1600

• EP Policy and Guideline on Audits and Reviews
• • EP59.0001
• Operations Review and Appraisal Guideline
  • EP59.0002
• Review and Appraisal of EP Economics, Planning and Portfolio Analysis Guideline
  • EP59.0003
• Field Development Review Guideline
  • EP95.7000
• EP Business Model Version 3
  • EP95.2093
• Upstream opportunities evaluation
  • SIPC – FNCA
• Internal Audit – A Management Guide (9/1990)
• Business Control Guidelines – A Summary for Managers (1/1991)