technical audit

8/11/2019 Technical Audit

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Agenda

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1. Ground Rules

2. Construction Project Stakeholders

3. Technical v/s Operational Audit of Construction projects

4. Reasons for auditing construction projects

5. Type & Scope of Construction Project Audit

6. Case studies

7. Surprise Quality and Safety Inspections

8. Value addition by Innovation

9. Questions

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Ground Rules

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The real life case studies presented are based

on actual events but modified forconfidentiality purposes

Case studies are selected from presenters 29

years of work experience Mobiles on silent mode please

Questions at the end of presentation orthrough email

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Construction Project Stakeholders

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I smellmoney

The Contractor

I amalways

right

Third Parties

What isyour

scope?

Auditor

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Technical v/s Operational Audit of

Construction projects

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Normal audit teams generally consist of internal auditors with afinancial background

Technical audit teams consist of Engineers, Quantity Surveyors,Planning Engineers, Contract Specialists, QA - QC Experts andalso include internal auditors with financial background

Normal audit teams verify general compliance to the policies and

procedures Technical teams verify compliance to the contractual requirement

- contracts, specifications, codes and standards

Quality and EHS site visits can be conducted by technical auditors

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Reasons for auditing

construction projects

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Type & Scope of Construction

Project Audit

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Project Development/Feasibility Master Plan & Design Brief

Compliance to regulatory authority

Type & conditions of contract

Tender & Contract

Value Engineering, Project Planning & Scheduling

Contract Administration, Claim Management, Progress Payment

Construction & Safety Method Statements

Variation, Claims & Extension of Time

Contracts Close out, Defect liability & maintenance

Scope of Technical Audit Slide 1/2

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Project QA/QC manual

Project Quality Control Plan / Quality manual

Project Quality Procedures

Site inspection reports

Inspection and test plan

Test reports

Non conformance report

Material delivered/used and compliance to specification

Safety Risk assessments and compliance to EHS

Scope of Technical Audit Slide 2/2

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Case study

IIA UAE Regional Conference, March 2014

Tender

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Scope added to attract more contractors andachieve competitive rates

Deleted after a month

Instruction issued after a month

Work deleted preliminaries not recovered

Awarded to single source based on per unit area 9 different types of buildings

Contract drawings were available for 8 types

Awarded single source, lump sum, per square meter basis

Constructed area was less then calculated area

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Case study

Value Engineering

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Alternate material approved for cost savings

Bituminous membrane with protection board

Replaced with cementatious water proofing material

No test for Chloride and Sulphide resistance

Method of construction and project cost

Bridge redesign due to change in pier spacing Changed from Cast in situ to post tension

Contractor offered 20 million savings

Post tender value engineering, scope deleted, cost not

adjusted 10 items deleted from scope

Cost and quantity adjusted for 6 items

4 items no change, Project was lump sum

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Case study

Project Schedule

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Acceleration not achieved but cost paid

Project completion was moved forward for 3 months

Works completed 2 months from the original completion date

Acceleration cost paid in terms of full over time, cost of material,full equipment rent, additional material etc

Extension of time approved, penalties not

applied Contract was delayed , Scope reduced

Contractors delays not considered

Final result 5% penalty applied

Method of construction changed for time saving

Cast in situ to pre cast, no cast saving, only time saving

Not considered in EOT assessment

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Case study

Scope Changes

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Variation with additional preliminaries issued in

re measurable contract Developer added parallel parking

Works were within 20% (variation limit)

Variation issued with prelims for road diversions, additionallighting etc.

Variation issued for original work

Contractor to select the method of reclamation to negateadditional compaction

Results were not satisfactory Contractor applied for variation for ground improvement works

Ground improvement is not compaction, method use is Vibrocompaction

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Case study

Final settlement

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Loss of profit paid violating the contract clause

20% work deleted 17% new work added,

No change in project time line

Preambles No loss of profit will be payable on deleted works

As built quantities not measured and reconciled

Re measured contract, same buildings, different contractors

Final as built quantities were different for both

Client supplied material was more then installed

Project completed with savings

Item deleted cost paid,

No negative variations issued

Fire fighting system additional cost

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Case study

Quality

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Non conformance issued and closed withoutaction

Panel design is not aesthetically matching with adjacent panels

It is as per approved drawing

Hence closed with out action

NCR Corrective actions not agreed withConsultant

Design and build project

After repair consultant rejected

No agreed time line for corrective action

Material used was manufactured in Chinaspecified was from France

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Surprise Quality and Safety Inspections

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Honey comb

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Asphalt without prime coat

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Inspection at source

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Value addition by Innovation

Control self assessments Formalization ofcommon contract conditions

Bridging the gap

Facilitate the lessons learned session

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[email protected]

052 918 1299, 02 694 6800Senior Manager, Commercial Assurance,

PwC, UAE

Chairman, Construction Audit Subgroup,

IIA, UAE


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Experts are at telephone length..

Thank You

This publication has been prepared for general guidance on matters of interest only, and does not constituteprofessional advice. You should not act upon the information contained in this publication without obtaining specificprofessional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness ofthe information contained in this publication, and, to the extent permitted by law, PwC, UAE, its members, employeesand agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyoneelse acting, or refraining to act, in reliance on the information contained in this publication or for any decision basedon it. 2014 PwC, UAE. All rights reserved. In this document, PwC refers to PwC, UAE which is a member firm ofPricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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