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Chapter 9. Technical Audit. Technical Audit. Definition A Technical audit may be defined as "A systematic, independent process for obtaining evidence and evaluating this objectively to determine the extent to which needs or expectations are fulfilled."
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Chapter 9 Technical Audit
Technical Audit Definition • A Technical audit may be defined as "A systematic, independent process for obtaining evidence and evaluating this objectively to determine the extent to which needs or expectations are fulfilled." • A technical audit is a formal assessment of the extent to which a project has followed the procedures laid down in these Public Works Directives (PWDs), other government rules and regulations, and applicable donor procedures in donor-assisted projects. • A technical audit may also assess a project against appropriate ‘best practices’ where the PWDs and other rules and regulations do not provide specific procedures to be followed. • Such audits are carried out on a ‘third party’ basis, that is audits performed objectively by independent, impartial auditors.
Technical Audit cont… Project Technical Auditing Stages and Systems • A project may be in any one of four stages of completion when it is audited: • Preparation: project identification, feasibility, environmental and social assessment, and engineering design • Procurement: of works, goods and services • Implementation: pre-construction, construction and defects liability period • Post-implementation: operations and maintenance and benefit monitoring and evaluation. • Technical audit is done to monitor the activities, which is done according to the rules and regulation of Government, Norms of development and contract document.
Technical Audit cont… • The main purpose of audits is to examine how well the planned or design criteria are met by the project within the allocated time frame and budget. • Technical Audit depends upon the nature and volume of the Public development activities. What is to be audited? • Planning and design: In this phase, Technical Audit is focused on preliminary planning and designing related with quality and adequacy. • Procurement: In this phase, Technical Audit is focused on purchase of service, equipments and raw materials mainly related with transparency as per PPA and requirements of funding agencies.
Technical Audit cont… • Implementation: In this phase, Technical Audit is focused on accomplishment or construction that is mainly related with quality schedule and budget. • Post Implementation: In this phase lie the activities after the program implementation, repair and maintenance and re construction along with assessment of principal aspect of project. Matters that requires to be kept in mind during audit • Its sustainability • It design appropriate • Its cost effectiveness • What lesson have been learned
Technical Audit cont… Activities to be performed during audit • Examine the activities which are done according to the planning or not. • Examine the activities which are done according to the program objective or not. • Preparing the program layout and examine the possibilities of service provided and optimum use of purchased raw materials, whether the works is implemented according to the law and order. • Examine the management of budget release is right or wrong. • Examine the time table and the work done accordingly or not
Technical Audit cont… Activities to be performed during audit cont… • Examine the achievements according to the planned or not. • Examine whether the activities done within the allotted budget frame. • Examine the Project design either right or wrong • Examine the transparency about the service, purchase during project planning. • Examine the quality of project and its implementation done within time frame or not. • Examine the cost effectiveness. • Examine the project's sustainability.
Technical Audit cont… Expected benefits of technical auditing • Improved infrastructure quality and value • Assured application of public work directives • Transparent, cost effective procurement of goods and services • Decreased project quantity and cost variations • Decreased annual maintenance expenditure • Increased project life with decreased life cycle costs • The objective of technical audit is improving the quality of Public development activities. • We can achieve goal only when we put our responsibility in transparent way. Technical Audit is not a means but a medium.
Technical Audit cont… Status of technical audit in Nepal • The practice of promoting quality of Public infrastructure and technical audit is new approach in Nepal but the importance of quality & technology has become the concerned subject matter since 1970 AD only. Adequate concentration is never given towards the quality of development activities and better services. • Asian Development Bank (ADB) & Administrative Improvement Commission has addressed towards the quality maintenance and optimum utilization of expenses for better Public infrastructure in 1990. As a result in 1992 A.D. establishment of the of the position of Chief Technical Examiner occurred within the Ministry of Works and Transport, now the Ministry of Physical Infrastructure and transport.
Technical Audit cont… Status of technical audit in Nepal cont… • In the process of improving the capacity and procedure of technical audits Ministry of Physical Infrastructure and Transport has given the speed but the main role and function was still passive. • In 2058 B.S., first amendment of financial administration regulation has made the provision for the establishment of technical audit division in national planning commission. • Road Maintenance development Project (RMDP) under Development of Technical Audit Capacity (DTAC) project was implemented in 31st July, 2003, working for preparation of technical audit (TA) manual for Road, Drinking water and Sanitation. It was funded by World Bank.
Technical Audit cont… Status of technical audit in Nepal cont… • Public Procurement Act 2063 has provided mandate to PPMO to conduct technical audit. • Currently National Vigilance Center (NPVC) performs technical audit in Nepal. • NPVC gives priority to perform technical audit for P1 projects (First priority projects of Nepal Government) • NPVC has developed a roster of technical auditors and performs technical audits utilizing external consultants. • Since there are huge number of projects and only NPVC conducts technical audit, currently technical audit can’t be performed to all project. • It has become a great challenge to maintain the quality of Public Infrastructure for the government of Nepal
Technical Audit cont… Technical audit in Nepal cont… • Scattered Planning and petty Civil workers is disturbing in quality maintenance of public development activities. Only government organization could not cope the challenges to maintain the quality of public infrastructures. • It has become a severe public concern to maintain the quality of public development activities for the sustainability and achievements according to the planning. • Due to lack of concentration in Technical Audit, the cost of planning is increasing and need for the variation arises resulting in an increment in cost and maintenance cost, which is reducing sustainability of the project.
Technical Audit cont… Generic Technical Audit Systems and Procedures • The technical audit process consists of the application of an appropriate generic auditing system, together with its associated generic auditing procedures, in order to formulate a specific project technical audit and conduct it at the particular development stage reached by the project to be audited. • The generic systems and procedures are computer-based and available electronically. • Eventually, after sufficient specific project technical audits have been formulated and carried out, a library of specific technical audit approaches will be available electronically, for use in future technical auditing of similar projects at similar stages of development.
Technical Audit cont… Steps in the technical audit process
Technical Audit cont… Step 1 Planning of Technical Audit • The four stages of project completion set out above will each be complemented by certain basic information about the specific project to be audited. • The logical framework for the specific project (at the moment only National Planning Commission (NPC) core projects have logical frameworks) can be obtained from the Project Manager or the NPC for NPC core projects or can be constructed, with the assistance of the Project Manager, from the project documentation. • Technical audit planning commences by ascertaining which of the foregoing stages will denote the status of the project during audit.
Technical Audit cont… Step1 Planning of Technical Audit cont… • Once this has been determined, the relevant generic auditing system and its associated cost effectiveness/efficiency guidelines should be reviewed and then edited electronically into a project-specific audit plan by eliminating those system elements which do not appear to be necessary during the planned audit. • The generic procedures for each remaining system element should then be similarly reviewed electronically, together with the logical framework for the project. • By these means the auditor will obtain, prior to planning the audit, an overview of the project to be audited and will comprehend the objectives, milestones, deliverables and performance indicators associated with the work.
Technical Audit cont… Step1 Planning of Technical Audit… • Third party technical audits, with their associated cost effectiveness and efficiency reviews, should generally be planned and conducted in accordance with the technical auditing process set out below. Step 2 Technical Audit Resources • The technical audit planning will identify the qualifications of the technical auditor, or team, needed for the audit. • In projects which are technically complex it will be necessary to obtain the services of specialists in the appropriate engineering, environmental, social, financial and other necessary disciplines. The technical auditors may be provided by:
Technical Audit cont… Step 2 Technical Audit Resources cont… • The Technical Auditing Agency • Use of individual technical specialists under personal services contracts • Use of consulting firms • Use of any of the above in combination. Step 3 Technical Audit Questionnaire • To assist the technical auditor in conducting a technical audit of a specific project, an audit questionnaire will first be prepared by the technical auditor and then used to initiate the audit process with the parties concerned. • If possible, a pre-audit questionnaire may be sent for completion to the Project Manager some weeks in advance of the technical audit.
Technical Audit cont… Step 3 Technical Audit Questionnaire cont… • In practice, completion of the questionnaire on a face -to-face basis is an acceptable method and can remove much of the apprehension which may exist regarding the technical audit process. • This project-specific questionnaire will be generated electronically from the generic listings of information and queries which form part of the generic auditing approach for the relevant project stage. Step 4 Technical Audit Operations and Determination of Conformance • The prime purpose of any technical audit is to compare and contrast the conditions found during technical audit with those expected to be found prior to carrying out the technical audit.
Technical Audit cont… Step 4 Technical Audit Operations and Determination of Conformance cont… • During actual auditing this purpose must be borne consistently in mind by the technical auditor. • Technical auditing may in general be carried out at the location most convenient to the technical auditor and also to the representatives of the project being audited. • For projects at the planning or design stage auditing can occur at the project office or design office if these locations are different. • Procurement technical audits will generally take place at the project office and implementation technical audits will be best accomplished either exclusively at the site of the work or between there and the design office. During technical audit of implementation site visits are mandatory.
Technical Audit cont… Step 4 Technical Audit Operations and Determination of Conformance cont… • For post-implementation technical auditing the preferred location will depend on a number of factors and the choice of location should generally be governed by where the preponderance of relevant information can be found. • Technical audit operations should be guided by the auditing questionnaire and aide memoire but the technical auditor must also be consistently alert to any findings or circumstances which indicate that more intensive querying than is contained on the list may be appropriate. • Technical auditing is far from being an exact science and generally requires the technical auditor to probe the topic under investigation until reasonable certainty regarding the conditions encountered is achieved.
Technical Audit cont… Non-Conformance Report • Where the conditions found during audit do not correspond to those anticipated, preparation of a non-conformance report should be considered by the technical auditor. • A degree of judgment on the technical auditor’s part is required as to whether any apparent nonconformance encountered warrants preparation of such a report, because the formal procedures thus triggered will involve the time and efforts of a number of other persons. • It will sometimes sufficient to record minor non-conformances and any actions to be taken regarding them in a memo or letter (to, for example, the designer or the construction supervisor) depending on the circumstances, or in the technical audit report. Step 5 Assessment The assessment will include the following activities:
Technical Audit cont… Step 5 Assessment cont… • Review of project information, reports and data to establish the expected and achieved objectives in terms of estimated costs, technical objectives, environmental objectives, social objectives. • Review Final Report, Final Certificate, as-built drawings, economic data, post-project demand and usage, etc. to assess which objectives were achieved. • Update economic and financial internal rates of return based on actual capital costs. • Update estimated annual maintenance costs using present day labor and equipment costs. • Visit the project site to gain an appreciation of the environmental and social impacts and to assess the realization of the anticipated technical objectives.
Technical Audit cont… Step 5 Assessment cont… • Prepare a table to undertake this comparison and to facilitate an assessment of the degree to which the objectives were achieved. • Make an overall assessment of how well the project has achieved its objectives. Step 6 Technical Audit Re port • A lengthy report is neither necessary nor desirable –the technical audit report should summarize the state of the project audited as briefly and effectively as possible. • Technical audit report can be restricted to such items as: • Earned value computation and graphic derived from the technical audit, if any; • Non-conformance reports, if any; • Assessments of cost-effectiveness or efficiency; and • Some summary conclusions.
Technical Audit cont… Technical audit report • The report should record the findings of the audit and recommend actions to improve accessibility. • The report should not be any longer than it has to be to accommodate the key information: • Summary; • Background and methodology; • Findings; • Prioritized action list, with suggested fixes and timeline; • Appendix of audit detail; • Any report longer than 15 pages should contain a table of contents. The report should be produced to be as accessible as possible.
Technical Audit cont… Technical audit report cont… Summary • The report summary (sometimes called an executive summary) should contain the key points of the report in very condensed form. It should contain about 400 words, summarizing all sections of the report, but with most emphasis on the report's findings and what should happen in response. • The summary should be written in plain, non-technical language, as far as possible. Its intended audience is anyone involved in or interested in the website. Background and methodology • The background and methodology section should contain the what, where, who detail of the audit, including:
Technical Audit cont… Technical audit report cont… Background and methodology cont… • The goals of the site; • The reason for the audit; • A summary of the audit requirements; • Who carried out the audit and when; • What methodology the audit used; • What the page sample was; Findings • This section of the report should give an overview of the audit findings. This can be many times longer than the summary, but not a page-by-page description of every accessibility check.
Technical Audit cont… Technical audit report cont… Prioritized action list • To help you to remedy accessibility problems uncovered in the audit, a key component of the report is an action list. This should contain enough detail to rectify the problems identified. • The action should be clear and unambiguous. Carrying out the action should be enough to deal with the accessibility problem identified. Audit detail - appendix • The organization of detailed appendices may vary. The essential requirement is a full listing of: • Audit checkpoints; • Pages checked; • Conformance of the pages checked with checkpoints.
Technical Audit cont… Step 7 Procedures to Facilitate Technical Audit • Every project must be prepared for a technical audit, and to provide all necessary assistance to the technical auditor. • The technical audit will also examine the activities of the consultants, contractors and suppliers who are employed by the project. Therefore, the technical auditor will require access to the consultants’, contractors’ and suppliers’ reports, drawings, calculations and records as well as access to work sites, sources of materials and fabrication facilities. • The Project Manager shall ensure that such access is forthcoming by incorporating the requirement to provide such access into the contract documents. This is best done by adding a clause in the particular conditions of contract to this effect, such that consultants, contractors and suppliers are made aware of this obligation during the bidding process.
Technical Audit cont… Performance Evaluation • “Performance evaluations focus on descriptive and normative questions, such as: what a particular project or program has achieved (either at an intermediate point in execution or at the conclusion of an implementation period); how it is being implemented; how it is perceived and valued; whether expected results are occurring; and other questions that are pertinent to program design, management and operational decision making. • Performance evaluations often incorporate before-after comparisons, but generally lack a rigorously defined counterfactual.” • Performance evaluations generally focus on the programmatic, technical, managerial, and organizational elements of a project.
Technical Audit cont… Purpose of Performance Evaluation • Performance evaluations are designed to identify accomplishments, performance issues, and constraints in the implementation of the project. • They identify results and lessons learned in project implementation. As a result of performance evaluation programming, decisions are made on what activities to continue, modify, or enhance. • Examples of performance evaluation questions may include the following: • What has the project or program achieved? • How is the project or program being implemented? • How is the project or program perceived and valued? • Are expected results of the program or project occurring? • To what extent is the project progressing towards the achievements of its objectives and goals?
Technical Audit cont… The Role of Performance Evaluation in Monitoring and Evaluation • Performance evaluation is not the same as Performance monitoring. Performance monitoring tracks changes in performance indicators, and reveals whether desired results are occurring and whether implementation is on track and performance monitoring tracks progress towards planned results through project inputs and outputs. Performance evaluation focuses on measuring the progress and process of achievement of project results and whether and how inputs and outputs are producing outcomes and impacts. • Good performance monitoring is essential for enabling good performance evaluation. • To what extent has the project capacity building efforts been successful in improving the management skills, and efficiency of the local partner implementing project activities?
Technical Audit cont… Performance Evaluation Design • Performance evaluations are designed to identify accomplishments, performance issues, constraints in the implementation of the project, as well as results and lessons learned in project implementation. • Usually as a result of the performance evaluations, decisions are made on what program or project activities to continue, modify, or enhance. Performance Evaluation Methods a) Data collection b) Analysis • Performance evaluations should combine qualitative and quantitative methods, • Data collection methods should be selected to provide the highest quality and rigor in answering the performance evaluation questions. The choice of method is determined by the information that is needed and by the cost of collecting the data.
Technical Audit cont… Performance Evaluation Methods cont… Data collection methods : • Performance monitoring data • Structured surveys • In-Depth Key Informant Interviews • Self-Administered Questionnaires • Focus Group Discussions • Participant Observation • Review of Literature and Project Documents When to Conduct a Performance Evaluation • The performance evaluation must be timed so that the findings will be available as decisions are made about new strategies, project designs and procurements.
