Internal Audit Taskforce

"Seeing the wood for the trees"

The Audit of Construction Projects

IAT’s Managing Director, Tony Milne, spent 12 years as Head of Risk and Audit with a major construction group, where the audit of construction projects formed a major part of his responsibilities. The group took a highly effective and innovative approach to the challenge of construction audit, by adding a number of experienced quantity surveyors to the existing Internal Audit team.

IAT has emulated this model within their Construction Audit activity, by forming a team of quantity surveyors to offer support to organizations who are undertaking construction projects.

Possible pitfalls on a construction project include:
  1. Runaway project costs due to incorrect definition of requirements
  2. Delays arising from poor project planning
  3. Cash flow being compromised due to deficiencies in the monitoring of payments and valuations.
Partnership type schemes, such as NHS ProCure21 projects present their own challenges including:
  1. Verification of Guaranteed Maximum Price
  2. The maintenance of an appropriate project management structure
  3. The management of design changes.

With the resources of Estates departments being stretched to the full, there is often insufficient time spent in designing and implementing the appropriate internal control frameworks or risk analyses; our specialist Construction Audit function can play an important role in the design of such controls. Our experience in auditing, ProCure21 projects is of particular value.

Our project review programme includes:

  • Risk Assessment
  • Project and contract approval processes
  • Contractual terms
  • Competitive tendering
  • Stakeholder consultation
  • Parent company guarantees and performance bonds
  • Sub-contract award
  • Change requests and architects instructions
  • Contractor’s payment applications
  • Progress and cost reporting
  • Cash flow forecasting
  • Payment retentions
  • Contractor’s commercial control processes (‘cost to value’ etc.)
  • Progress meetings
  • Project related documentation
  • Health & Safety and security arrangements
  • Contractor’s compliance with relevant client policies (ethical, employment )
  • Practical completion
  • Post project review, sign off and ‘lessons learned’