What Is A Project Audit & How To Do One Successfully
Audits Defined: Project audits are independent reviews that assess project performance, completion, and outcomes. They help make sure deliverables are aligned with initial plans or contracts.
Being Audited? Stay Calm: Audits spotlight organizational effectiveness, reveal compliance strengths and weaknesses, and improve accountability. They are invaluable for identifying gaps and risks.
Anatomy of an Audit: Project audits look at project scope, plans, and deliverables to stakeholders. Different audit types might involve looking at other specific processes and components.
Getting hit with a project audit doesn’t have to be as painful as a tax audit, but in order to sail through smoothly, you need to prepare. If your project is getting audited (or you’re conducting one yourself to make sure your project is in good shape).
I’ll walk you through everything you need to know about project audits and how to do one successfully and mostly painlessly.
What Is a Project Audit?
A project audit is an independent review of the performance of a project, how the work was completed, and its outcomes. It may also include a thorough review of all deliverables provided and a comparison to the statement of work or project charter.
A project audit might be part of a business’s process (e.g. auditing some or all of the projects) or it may be completed at the request of a client to make sure they’ve received all of the deliverables they paid for as part of their contract.
Why Are Project Audits Important?
Project audits are important because they can show how well your organization is completing project work. They may also be a factor in compliance in some regulated industries.
Even if you are not required to complete or participate in project audits, they can be a worthwhile exercise to expose areas of weakness or gaps in deliverables. They’re also a good risk management practice, and a way to hold the project team accountable for the work they are supposed to be delivering.
Key Project Audit Components
Here are the key components that are part of a project audit.
Audit Process
The audit process may vary based on the type of audit that is being conducted (more on this below). It might involve looking at the project scope or statement of work, the project plan, and all deliverables that were sent to the client or other key stakeholders.
If the audit is focused on the project process, the auditors may be more interested in seeing the project plan and workflows. Some audits follow a very detailed methodology, whereas others are less formal.
If there were issues with the project or a client is dissatisfied with the deliverables or work provided, all communication (emails, call recordings, Slack messages) may be reviewed as part of the audit. In this case, the agency or project team may need to prove that the client or other stakeholder did not provide any feedback or blatantly state they were dissatisfied.
Documents & Data
Documents and data are a huge part of a project audit. The type of project documents and data the audit team will want to review include, but is not limited to:
- Statements of work or project charters
- Contracts (between the company and a client and between the company and any vendors or contractors)
- Project plans and timelines
- Software licenses or user agreements
- Time tracking sheets from project team members
- Project communications (emails, Slack messages, call recordings, etc.)
- Project status updates (client-facing or internal)
- Client feedback or approvals
- Invoices and payment receipts
- Project risk register or risk management plans
- Dashboards or other measurements of project data
- KPIs or OKRs
Types of Project Audits
Here are the main types of project audits:
- Process audit: Process audits look at how project work was completed. The goal is to understand the decision-making process, and the audit team will look at project progress and how the work gets done and by whom. The audit report can be used to make process improvements or highlight where a team needs training or support.
- Performance audit: Performance audits are used to understand how a project performed. Look at the project’s goals and objectives and measure how closely the output or deliverables achieve those goals. Let’s say your team predicts a 20% increase in organic traffic within 6 months for a website project, but the audit reveals that it increased by 30% (which means your team needs a big pat on the back).
- Compliance audit: In a regulated industry, a compliance audit is used to make sure project teams are complying with the law. For example, if you are building a website that collects data that is protected under HIPAA, an audit may look at what data is collected, how it’s collected, and how it’s used and stored. This type of audit can also be used to check for compliance with privacy laws or other regulatory compliance.
- Financial audit: A financial audit is exactly what it sounds like. It can be used to confirm how a project budget was spent and uncover any waste (or financial fraud, but let’s hope that isn’t the case).
Who’s Involved?
Here are some of the people who will typically be involved in the project audit and their roles.
Project Manager
As the project manager, you can expect to be the audit quarterback. You know who did what, you know where the files are, and you probably have the most context as to why things were done or how decisions were made.
You might encounter a stream of questions or urgent requests faster than you can answer them, but keep your cool, ask everyone to take a beat, and come up with a plan to get everyone what they need. Try to think of the audit as a project to be managed, because it is.
Audit Team
The audit team may be composed of people who are outside the project and can look at it objectively with fresh eyes. They may be internal to the organization or external, from a third party, or even from a government agency.
Make sure you know who your auditors are and what they will be looking for. This will help you provide the most relevant information to the right people.
Stakeholders
Project stakeholders, including the project sponsor, clients, project team, and organizational leadership, may be involved in the audit. They may need to produce project artifacts like the charter, budget, risk register, project plan, or other project deliverables.
Subject Matter Experts
Subject matter experts may be called in to review different deliverables or approaches to the work in order to advise on compliance or best practices, or to give feedback on the approach. This could look like an external developer reviewing code, or an accountant or procurement specialist reviewing the budget or vendor contracts.
How to Conduct a Project Audit
Here are the steps for conducting a project audit.
1. Plan
The first step in the audit is to plan it. What is being audited, when will the audit take place, and who will be doing what? This might feel similar to creating a project plan or following the project management process you generally undertake for other project work.
You (or the person in charge of the audit) should have an audit checklist that includes all the items the audit team wants to gather and review.
2. Execute
Next, you will move through the audit process that was planned. This can involve gathering deliverables, interviewing project team members, and aligning benchmarks to actual project metrics. You may not be doing the audit yourself, but you’ll need to help the audit team with the artifacts and scheduling, and provide any other support needed as they conduct the audit.
3. Summarize & Report
Once the audit is completed, the audit team will analyze the learning, and create and distribute an audit report. The report will contain information about the audit objectives, learnings, recommended corrective actions, and an action plan for implementing findings in future projects.
The audit report may also contain a copy of the audit checklist so everyone is on the same page about what was reviewed and how it was reviewed. This will help make sure nothing has been missed.
4. Implementation
As the project manager, you will work with your team to make sure that any audit findings or recommendations are implemented either as a corrective action for the project being audited or on future projects.
There are a number of ways you can do this, depending on the audit results and where you are in the project life cycle. If it is too late to put a recommendation into practice on the current project, start a notes document for the next project before you kick it off.
5. Follow-Up
Depending on the results of the audit, you may be required to follow up with the audit team or other leaders in your organization. This might include sending a missed deliverable, correcting an inefficient process, or even demonstrating how you have made improvements in future projects.
Project Audit Example
Let’s look at an example of an audit from a digital agency. A project team was responsible for delivering a refreshed brand, a digital strategy, a content strategy, and a new website to support the strategy.
The client called the CEO of the agency about three-quarters of the way through the project to say he was not happy with how things were going. He felt like the strategy documents were too generic and didn’t understand what his team should be doing.
And he felt like he wasn’t given clear directions on deliverable reviews, and his feedback wasn’t being implemented. He also mentioned that the documents were full of errors, and edits weren’t being pulled through directly.
The CEO asked her creative director and lead copywriter to conduct an audit. The project manager and account manager pulled the SOW and the project plan, strategy recommendations, branding presentations, website wireframes, designs, and copy documents.
They also asked for all of the emails with the client’s feedback and call recordings that contained a presentation or walkthrough of the deliverables. The audit team concluded that the team was stacked with more junior team members and needed some additional creative oversight, more than the project manager alone could provide.
The CEO let the client know that the creative director would be overseeing the remainder of the project and that some of the deliverables would be revised based on the feedback, at no additional charge. The client was much happier and stayed on working with the agency for many years after the initial audit was completed.
Benefits of Conducting a Project Audit
Here are some of the benefits of conducting regular project audits:
- Increase or maintain project quality: While quality assurance should be part of every project, having fresh eyes or even an objective third party review a project can help ensure project quality or provide additional ideas for improvement.
- Find opportunities for efficiency: Unbiased observers can also be an easy way to find opportunities for efficiency. Having someone ask why things are done a certain way is never a bad thing!
- Ensure legal compliance: Audits can help ensure legal compliance, which can protect the company or the team from potential litigation.
Tools for Project Audits
An audit plan won’t produce itself, but there are plenty of project management software choices that can be really helpful when it comes to planning and conducting project audits. They can help you track down documents, conversations, and deliverables so they get to the audit team quicker.
Whether your PMO has a formal process, or audits are more ad-hoc and spun up in real time, this type of tool can help drive efficiency and keep things organized.
Project Audit Reporting Best Practices
Like running a project, you want to also keep project audits running smoothly so they don’t become overwhelming or distracting to your team. Here are some best practices to help you keep audits from becoming a distraction:
- Communicate proactively: Nothing breeds anxiety on a team faster than uncertainty. If your team is being audited, you or another leader in the organization should explain everything they need to know about the audit. What is being looked at? Why is this happening? What will the outcome be?
- Ask questions from a place of curiosity: Auditors should try to ask questions or make requests from a genuine place of curiosity. Most people want to do a good job at work, and having an auditor take an accusatory tone can put team members on the defensive. Even if someone did make a mistake, there are many reasons it could have happened, and some mistakes are outside the team’s control—like not having the right information in the first place or not enough time to proofread deliverables.
- Share the audit results: Even when it isn’t the best news, share the audit results with your team. If someone is being removed from the team or the organization, or if a client has decided to terminate the relationship, tell the team. But don’t just leave it at that—talk about how you will prevent the issue in the future or what the next step will be.
Mistakes to Avoid
Here are some mistakes to avoid as part of the project audit process.
1. Trying to Shield Your Team From a Project Audit
While you don’t want to freak your team out with an audit, keeping them in the dark is also not a good strategy. Tell your team enough to give them some peace of mind and assure them that you have things under control. If you don’t, they might make up their own stories about what is going on, which can have a negative impact on team engagement.
2. Choosing an Audit Team That Isn’t (or Can’t Be) Objective
When conducting an audit, if people can’t be truly objective, they may introduce bias into the process. Enlist neutral team members who can rely on data to make sure the audit is conducted fairly and provides real insights.
3. Not Taking Action Based on the Results of the Audit
Project audits are fairly big undertakings and require a significant investment of time and resources. It would be a big mistake not to learn from the results and keep improving processes or compliance.
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