19th Annual Regional Audit Conference - UAE IAA...• Monte Carol Risk analysis • Primavera P6 &...

Internal Audit, Risk, Business & Technology Consulting

19th Annual Regional Audit Conference “How to be Efficient and Innovative while auditing Capital Projects”

© 2019 Protiviti Member Firm for the Middle East Region CONFIDENTIAL – This document is for your organization’s internal use only and should not be copied or distributed to any third party.

KEY OBJECTIVES

Understanding the need of capital project auditing

Glance through transformation journey of capital project audits

Exploring efficient & innovative tools & techniques to audit capital projects

Adopting comprehensive and proactive approach

How disruptive technologies will drive capital projects in future

2


WHERE DO WE STAND TODAY?

3


NEED OF CAPITAL PROJECT AUDITING


UNDERSTANDING CAPITAL PROJECTS

5

Capital project is a long-term, capital-intensive investment project with a purpose to build upon, add to, or improve a capital asset. They are defined by their large scale, large cost with extensive planning & resources.

Segmentation

Economic Infrastructure Others

Healthcare

Telecom

Transport Energy & Utilities

Social Infrastructure

Roads & Bridges

Airports

Ports

Railways

Urban mass

transit

Cargo and

Logistics centers

Oil & Gas

Power Generation,

Transmission &

Distribution

Water & Sewage

Gas storage and

distribution

Manufacturing &

processing plants

Renewable energy

Metals & Mining

Townships / Smart City

Educational Institutions

Sports stadiums & facilities

Convention centers

Public housing

Community facilities

Economic Zones

Industrial Facilities & Free Zones

Industry Segmentation

Investors - Owners – Developers – EPC’s – Contractors – Banks - Operators - Authorities

5


GLOBAL PROJECTED CAPITAL PROJECT SPEND - US$ 43 TRILLION, UPTO 2025

6

Asia/Oceania $ 13.8 T

Middle East $ 3.5 T

Africa $ 2.8 T

Europe $ 9.1 T

US/Canada $ 6.5 T

South & Latin America

$ 7.4 T


GLOBAL CAPITAL PROJECT LANDSCAPE

Brazil

Angola

USA

Russia China

Australia

Korea

Canada

Middle East

South East Asia

Japan

North Sea

India

• Globalization of EPC resources

• Increased environmental

requirements

• Increased contracting needs

• Increased regulatory requirements

• Aging workforce

• Transitional workforce

• Globalization of EPC

resources

• Limited specialty

engineering and project

management resources

• Aging workforce


resources





resources




• Increased

environmental

requirements

• Increased in country

content needs

• Limited specialty engineering and

project management resources

• Increased in country content

needs

• Political Govt. stability


resources




Nigeria

• Transitional workforce


• Limited specialty engineering and project


• Strong competition for construction resources

• Strong focus on in- country content

• Growing Mfg. / specialty



• Corruption

• Strong focus on in- country

content

• Limited specialty engineering and


• Political instability

• Globalization of EPC sector

• Fast track projects

• Growing specialty engineering

and project management

resources

• Limited EPC access

• Political stability

• Corruption

• Logistics

• Increased Arctic

exploration

• Growing specialty engineering and


• Growing construction

capabilities

• Growing mfg. & construction capabilities

• Rising labor costs

• Growing specialty engineering and project management

resources

South Africa

• Long term Government policies


• Skills development to fill specialty

engineering and project management

resources

7


GCC CAPITAL PROJECT SPEND

8

46%

25%

13%

10%

4% 2%

KSA

UAE

Kuwait

Qatar

Oman

Bahrain

61% 15%

10%

9%

4% 1%

Real Estate

Transportation

Oil and Gas

Power and Water

Manufacturing

Mining

Source: meedprojects.com.

2%

13%

6%

4% 1%

68%

1%

5% Water

Transport

Oil

Gas

Industrial

Real Estate

Chemical

Power

Key Highlights

• Almost 80% of large projects are over budget in terms of cost and approx. 20% in term of schedule;

• $ 31 MN average value of dispute;

• 30% projects on HOLD;

Overall GCC Market - $ 2.8 T

(5300 Active Projects) GCC - Sector Split UAE - Sector Split


CAPITAL PROJECTS ARE BECOMING INCREASINGLY COMPLEX AND EXPENSIVE

9

Startup Effort 1%

Engineering Management – 3%

Project Management – 3%

Construction Management

5%

Other 6%

Engineering 11%

Bulk Materials 18%

Engineered Equipment

15%

Construction 38%

Typical Capital Project Cost Breakdown

An industry survey conducted by the Construction Management Association of America (CMAA)

indicates that 40-50% of major construction projects

run longer than planned and incur significant cost overruns. (http://www.cmaanet.org)

According to The Association of Certified Fraud Examiners (ACFE), the global cost of fraud and

corruption in the construction industry could result in

potential annual losses to owners in excess of $1.5 trillion by 2025. (http://www.aconex.com)

Major Capital Projects encounter significant planning, design, construction, commercial & closeout

challenges to meet cost, schedule, quality and safety

objectives, which may result in erosion of shareholder value and ROI before project completion;

http://www.cmaanet.org/

http://www.aconex.com/


KEY CHALLENGES ACROSS CAPITAL PROJECT VALUE CHAIN

Develop Execute Operate Decommission

Concept

approval

FID Construction

start

First

production

Value

delivery

Asset

closure

Project Phase

Assess Select Define Engineering Procurement Construction Commissioning Operations,

maintenance Decommission

C. Adequately balance EPC risks

E. Changing business and regulatory contexts

F. Managing and optimizing talent availability

B. Getting the plan right and then executing on budget and schedule

D. Integrating information from different disciplines and stakeholders involved in the project for proper decision making

A. Selecting the right projects and optimizing capital

allocation

H. Developing the right offer to the country and managing local content

Ch

alle

ng

es

G. Achieving effective handover &

ramp up

Macro Influences includes:

• Unstable global

market conditions

• Commodity Prices

• Highly competitive

landscape

• Rapid technological

advancement etc.

10


KEY STAKEHOLDER CHALLENGES

11

External Challenges Source: survey conducted by leading MNC

Internal Challenges


KEY RISKS ACROSS PROJECT PROCESS

12

Governance Risks

Cost & Schedule Risks

Commercial Risks

Financial Risks

Realistic Schedule

Estimation Errors

Drop in Productivity of Resources

Process & Regulatory Delays

Improper cost to complete assessment

Inconsistent Reporting

Misinterpretation of contract clauses

Inadequate Contract admin. process

Recording/drafting of claims

Issues in Final Account Settlement

Issues in Project Funding

Fraudulent activities


DETAILED PROJECT RISKS

13

ILLUSTRATIVE

Initiate

• Project funding not approved

• Undefined project organization

• Lack of delegation of authority

• Project Charter not documented

• Project feasibility not established

• Poor scope definition

• Unrealistic development timeframe

• Inadequate PM resources

• Environmental and regulatory

assessments not performed

Plan

• Lack of PM processes, controls,

systems and protocols

• PM plans do not address all risks

• Inadequate resource estimating

• Ineffective stakeholder input

• Lack of PM technology tools

• Lack of contingency planning

• Lack of regulatory pre-approvals

• Project program not validated

• Lack of QHSE planning

Design

• Poor design management

• Uncontrolled design changes

• Value engineering not performed

• Constructability not performed

• Design errors and omissions

• Lack of design performance

• Lack of stakeholder design input

Procure

• Lack of competitive procurement

• Lack of transparent Award process

• Project delivery, contracting and

packaging strategies not defined

• Bid collusion and fraud

• Selection of unqualified vendors

• Allocation of contractual risk

• Lack of contractor pre-qualification

• Hidden contingencies in bids

Construct

• Regulatory noncompliance

• Improper construction sequencing

• Unforeseen site conditions

• Contract noncompliance

• Poor risk management

• Inadequate QHSE monitoring

• Poor sub-contractor management

• Inaccurate progress reporting

• Inadequate cost control

• Uncontrolled changes

Commission

• Lack of commissioning plans

• Inspections and testing failures

• Integrated testing not performed

• Training not conducted

• Lack of operating approvals/NOCs

• Poor systems integration

Close

• Pending punch list work

• Lack of completion certificates

• Final project signoffs not obtained

• Noncompliance with project closeout

• Unresolved claims and disputes

• O&M manuals and warranty

Completed contracts not closed

• Lack of defect liability and warranty

Operate

• Lack of facility management plans

• Asset management plan not in-place

• Safety procedures not operational

• Documentation issues


TRANSFORMATION JOURNEY OF CAPITAL PROJECTS AUDITING


EVOLUTION JOURNEY OF CAPITAL PROJECTS

15

2010

Construction Time Period: 1631- 1648

(17 years)

Project Cost- 485 MN USD

Construction Time Period: 2004 – 2010

(6 years)

Project Cost- 1.5 BN USD

TAJ MAHAL, INDIA BURJ KHALIFA, UAE

Traditional Modern

↑ Time ↑Cost ↓Time ↓Cost

Improved efficiency

Mitigated Risk

Better controls

Innovative systems

Hand Drawing 3D BIM Model

Evolution


COMMON CHALLENGES FACED IN AUDITING OF CAPITAL PROJECTS

16

Sample & documents extensive

Unique Project risks

Lack of in-house technical skills

Multiple stakeholders

Lack of standard project documentation/ data

Complex nature of contracts


TRANSFORMATION JOURNEY (EFFICIENT & INNOVATIVE WAY OF PERFORMING CAPITAL PROJECTS AUDIT)

17

Generalists

• Finance & Accounting

• Chartered Accountants

• Engineers

Strong Specialization

• Contracts & Claims

• Quantity Surveying

• Planner / Architects

• Cost & Commercial

• Quality & Safety

Compliance Focused

• Milestone based reviews

• Internal controls evaluation

• Governance based

Customized Solutions

• Mix of Process & Project based approach

• Focus on core areas like Schedule Quality

Reviews, Cost Recovery, Contract

Performance , Operational Readiness etc.

• Involvement from beginning / key stages

Data Driven & Tool based

• Monte Carol Risk analysis

• Primavera P6 & Deltek Acumen

• Drone based reporting

• Process Mining, Data Analytics, RPA

• Project Database & Best Practices

People Process Technology

Standard Tools

• ERP systems – SAP, Oracle

• Accounting Software – Tally

• MS Office – Excel & MS Project

Tra

dit

ion

al

Ap

pro

ach

C

urr

en

t S

cen

ari

o


SCHEDULE MANAGEMENT REVIEWS

18

General Auditors

Review limited to compliance, project

milestones, etc.

No tools used

• Difficult to give realistic assurance on project

timeline completion;

• Schedule quality issues

such as activities with missing logic, hard

constraints, negative logic

were not identified;

• Inadequate risk factoring;

Industry & Functional Expert with Primavera skills

Comprehensive schedule review – Work Front loading, productivity

analysis, resource loading, etc.

Primavera P6, Deltek Acumen Fuse & Monte Carlo Simulation to

assure on project completion

• Schedule quality improvisation

• Rigorous schedule tracking and monitoring

• Realistic project timelines using risk based approach

• Confidence in timely project completion

Provide independent assurance on quality of project schedule including success rate of project completion using various schedule analysis tool and benchmarking techniques.

Conventional Challenges Efficient Way

PE

OP

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NE

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OB

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19

Init

iate

Strategic Operational

Des

ign

&

Pla

n

Pro

cu

re

Deli

ve

r H

an

do

ve

r

Compliance Financial

• No Alignment of master

schedule with Management

objective.

• Absence of In-build buffer in

project schedule

• Inadequate assumptions

supporting schedule

• Inadequate scope coverage in

master schedule

• Absence of schedule

management procedure

• No Master schedule prepared in

line with schedule management

procedure.

• Absence of progress update on

master schedule periodically till

baseline schedule preparation.

• Schedule not prepared as per

procurement and execution

strategy.

• Unrealistic development time

frame.

• Inadequate key design activities

• Improper sequencing of activities

• No detailed schedule with

resource deployment plan

• Absence of Consultant review of

baseline project schedule

• Absence of Client approval of

baseline schedule

• Absence of agreed progress

measurement methodology

• Project schedule not reported as

per approved baseline schedule.

• Absence of project critical path

reporting

• Poor procurement planning

• Absence of procurement

schedules update and forecast

impact on construction

• Non-alignment with strategic

procurement planning

• Absence of procurement status

report.

• Non-alignment of project

schedule with strategic vision

• Absence of detailed schedules

updates and forecast impact on

completion

• Inadequate Delay Assessment &

Recovery Plan

• Non compliance to schedule

update and review mentioned in

contractor and consultant

contract respectively.

• Non- Compliance to schedule

update process

• Reporting unrealistic project

completion date to Management.

• Absence of critical path of the

project in periodic reports.

• Absence of Project close-out

documents

• Absence of As-Build schedule

• Absence of Handover schedule

and punch points

• Non adherence to Schedule

completion checklist as per

contract conditions

• Absence of lessons learnt

document in schedule

management.



20

KEY OUTPUTS

Forecasted Projection Fuse Schedule Index

Work package Phase 2&3 Construction

Completion date 1 July 2019 Program name as

received P_1081-u (25.09.18)R

Summary

schedule

analysis Poor schedule quality mainly due to the average number of logic links per activity is high which causes

complex logic.

Schedule quality overall

Schedule quality metrics

Score results Interpretation

Overall

Missing Logic

2 <1% Good score, as activities with missing logic (successors and predecessors) should not exceed 5%

Logic Density

9.22 This indicates complex logic within the schedule, as the average links per activity is close to 4

Critical 0 0% 0% of the activities are on the critical path, which prevents the contractor to track the works to be targeted. Also this approach will have a negative impact in the Extension of Time claims.

Hard Constraints

0 0% A good schedule should have no hard constraints

Negative Float

0 0% Good score, ideally there should not be any negative float in the schedule

Insufficient Detail

13 0% Average score as there are 13 activities with no enough breakdown

Number of Lags

1544 8% Average metric performance, as lags tend to hide detail in schedules and should typically be replaced with activities

Number of Leads

0 0% Good score as this indicates that less than 5% of activities are carrying negative lag.

Merge Hotspot

12952 70% Average metric performance as 70% of the activities might face delay in their start due to a high number of predecessors

Score 26 / 100 The schedule quality is average and there is moderate likelihood of not achieving project completion on time

Schedule Quality

Schedule Risk Drivers Critical Path Analysis Schedule with Risk events


COST MANAGEMENT REVIEWS

21

General Auditors

Review limited to compliance and

budget adequacy

No tools used

Industry & Functional Expert with Project Controls &

Quantity Surveying skills

Analyzing project budget, actual spent, identifying areas

of major cost overruns and

balance cost to go.

Data Analytics Tools taking input from ERPs like SAP,

Oracle

• Assurance to Management on the Project cost to complete and ensuring profitability.

• Assurance to any external institutions and share holders interested with the project

• Provide better control over various project cost heads

• Provide independent assurance on project cost to complete by analyzing project budget, actual spent, identifying areas of major cost overruns and balance cost to go.

• Assist Management for effective decision making and visibility on project profitability at all stages.


PE

OP

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P

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CE

SS

T

EC

H

BE

NE

FIT

S

• Difficult to give realistic assurance on project Cost

Overrun & Variations, cost

to complete;

• Inaccurate cash flow forecasts and factoring of

risks in CTC calculations;

• Unstructured Data, Multiple

file records;

OB

JE

CT

IVE



22

Init

iate

Strategic Operational

Des

ign

&

Pla

n

Pro

cu

re

Deli

ve

r H

an

do

ve

r

Compliance Financial

• Lack of Capital Management

Plan

• Lack of financial stability

assessment.

• Lack of commercial feasibility

• No cost estimate at concept

stage

• Non compliance to budgeting

procedure.

• Feasibility cost and budget are

inconsistent.

• Non adherence to standard

estimation criteria

• Absence of budget and high

level cost estimate reporting to

management

• Lack of detailed design brief

• Risk of cost overrun due to

frequent changes

• No Contingency as per

quantitative risk assessment

• Incomplete design cost estimate

• Non comprehensive cost Heads

• Cost estimate not as per

schedule and resource

deployment.

• Stage gate approvals without

cost plan.

• Improper estimation review by

cost consultant.

• Absence of cost plan reporting to

management during design.

• Absence of cash flow report.

• Ineffective contracting strategy.

• Absence of pre tender estimate

• Absence of value engineering

• Non adherence to packaging

strategy and estimate.

• Non Compliance to regulations

such as anti-bribery and anti-

corruption laws.

• No report highlighting cost as

per budget vs commitment.

• Risk of project cost escalation

and losses

• Inadequate monitoring lead to

depletion of contingency

• Improper cost to complete

estimate.

• No proper budget monitoring

and transfer process

• Absence of corrective action

plan.

• Non compliance to budget

transfer policy.

•

• Delusion of cost at completion.

• No periodic reporting of cost

performance

• No cash flow updates.

• Absence of Project cost

reconciliation.

• Absence of commercial audit

• Non settlement of all invoices.

• Non settlement of Warranties

and guarantees.

• Non settlement of contracts as

per contract • Absence of Lesson learnt.



23

KEY OUTPUTS

CTC Analysis

Divis ion Accepted

Contract Value

Revised Contract

Incl . Appr'd VOs ,

EOTs & ESCs

Forecasted

Contract Incl .

Appl ied VOs ,

EOTs & ESCs

Budget at

Completion

Cumulative

Actual Cost

Incurred

Remaining

Cost to

Complete

Total Cost at

Completion

Forecasted

OH & Profi t

(1) (2) (3) (4) (5) (6) (7) (8)=(3)-(7)

TOTAL 2,825,000,000 2,709,781,348 2,917,157,526 2,837,486,111 1,274,535,749 1,603,039,515 2,877,575,264 39,582,262

Prelims 256,028,525 280,089,323 361,050,231 410,055,515 322,652,821 133,135,913 455,788,734 (94,738,504)

Site Construction 48,904,248 47,395,605 48,111,094 45,585,024 6,432,652 42,539,409 48,972,061 (860,967)

Concrete 437,598,605 538,217,811 540,674,136 479,118,937 486,625,057 25,455,680 512,080,737 28,593,399

Masonry 5,718,210 24,515,110 24,987,978 22,013,918 14,244,205 9,530,544 23,774,748 1,213,229

Metals 24,575,636 21,493,982 24,602,518 22,748,484 11,225,199 12,216,894 23,442,092 1,160,426

Wood and Plastics 4,708,721 5,063,949 5,063,949 4,464,854 - 4,627,170 4,627,170 436,778

Thermal and Moisture Protection 18,353,105 38,163,247 38,163,247 34,703,615 3,441,848 32,670,909 36,112,757 2,050,490

Doors and Windows 277,297,704 275,449,014 282,728,823 262,422,865 76,287,244 183,662,952 259,950,196 22,778,626

Project CTC Summary

Cash Flow Analysis

Cash Flow Analysis


CONTRACT AND CLAIMS MANAGEMENT REVIEWS

General Auditors

Review limited to compliance and

No tools used

Industry & Functional Expert with Contract Management &

Commercial skills

Analyzing contracts, payments & commercial areas

Optical Character Recognition Tool

• Assurance on the adequacy of controls over the contract performance & compliance during execution

• Independent review to attain savings in areas of variations, payment certification, final account settlement etc.


• Identify potential cost recovery or cost optimization opportunities & Identify risk areas within the contract before leading to claims, variations, dispute / arbitration.

• Enable organizations to quickly identify greater value from their contractual arrangements (performance & compliance) and to sustain value across the contract lifecycle.

24

• Difficult to ascertain confidence on to-be Claim

& Variations;

• Non identification of

contract lapses;

• Not able to surface upon Contract performance

issues;

• No focus on cost recovery;

PE

OP

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CONTRACT AND CLAIMS MANAGEMENT REVIEWS

Financial Leakage

Material Reconciliati

on

Claims & Variations

Duplicate Payments

Contract Over

Payments

• Mismatch in Bill of Quantities claimed vs. agreed within Baseline

• Consistency with BOQ Rates

• Advance Payments, Retention, Deductions (NCR’s / Non-

Performance)

• Interim Payments, Material On-Site Payments

• Provisional Sum Items

• Free Issue Materials

• Performance Bank Guarantees

• Claim / Variations

• Liability

Typical Areas of Contractual Overpayments

25

KEY OUTPUTS


OPERATIONAL READINESS, ASSET & FACILITY MANAGEMENT REVIEWS

26

General Auditors

Review limited to FM contracts compliance

No tools used

Industry & Functional Expert with operation and maintenance skills

Performance driven approach for analyzing the FM, AM, PPM,

Hanover, Close-out areas

Drones, BMS, DA Applications and IOT devices

• Efficient Energy Cost Monitoring & Reduction

• Reduction in the maintenance expenses

• Timely Start-up

• Efficient Spare Management

• Identification of hotspots which might lead to accident.


• Identify and manage project handover issues and mitigating risks to ensure safe & timely start-up for revenue generation including effective Operational Readiness monitoring & tracking;

• Identify potential reduction in asset maintenance costs;

PE

OP

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SS

T

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H

BE

NE

FIT

S

• Inability to determine core operational issues;

• Review not focused on

contract performance & FM

cost reduction;

• Not able to surface upon Contract performance

issues;

OB

JE

CT

IVE


OPERATIONAL READINESS, ASSET & FACILITY MANAGEMENT REVIEWS

27

KEY OUTPUTS

Drone Captures Defects in Assets and Poor workmanship

IOT based Building Facility Management


ADOPTING COMPREHENSIVE AND PROACTIVE APPROACH


IDENTIFYING AUDIT AREAS ACROSS PROJECT VALUE CHAIN TO GAIN SYNERGIES

Initiate Plan Build Operate

Project

Conceptualizati

on & Initiation

Planning Procurement Engineering Operation and

Maintenance Construction

• Market Study

• Design brief

• Financial Feasibility

• Technical Feasibility

• Procurement Strategy

• Project Baseline Plan

• Procurement Plan

• Resource Deployment

• Procurement plan

• Design finalization

• Scheme design

• Detailed engineering

• Tender documentation

• Estimation &

Tendering

• Advanced works

procurement

• General works

procurement

• Construction

• Materials

• QHSE

• Finishing works

• Assembly and

commissioning

• Start up

• Operations

• Maintenance

• Documentation Act

ivit

ies

Audit Areas

• Feasibility Audit • Estimation Audit

• Governance,

Design, Schedule &

Cost Audits

• Procurement &

tendering Audit

Project Mgmt., QHSE,

Constr., Contract &

Payment Audit

• Handover, Close-

out, FM Audits

29


ADOPTING HORIZONTAL & VERTICAL APPROACH ALIGNED TO AUDIT OBJECTIVES

Tendering &

Estim

ation

Pro

ject

Manag

em

en

t

Schedule

Managem

ent

Cost

Manag

em

en

t

Project-1

Horizontal Approach Vertical Approach

Project-2

Pro

ject

Revi

ew

- 1

Pro

ject

Revi

ew

- 1

Pro

ject

Revi

ew

- 1

Pro

ject

Revi

ew

- 1

• Focus is on process and coverage

• Focus is on project objectives such

as timely completion of project &

within cost including any cost

recovery opportunity

30


ADOPTING HORIZONTAL & VERTICAL APPROACH ALIGNED TO AUDIT OBJECTIVES

Cost and Financial

Management Procurement

Management Project Controls, Quality and

Risk Management

Project strategy,

Organization and Administration

Schedule

Management Project

Schedule Management

Project

Integration Management

Reporting &

Stakeholder Management

Human

Resources &

Labor Relations

Project

Estimating

& Cost Management

Financial

Management

Asset

Management

Procurement

Management

Project Scope

Management

Risk

Management

Regulatory and

Environmental

Health & Safety

Quality

Management

Information

Management

Project

Charter

Roles &

Responsibilities

Lessons

Learned

Project

Breakdown

Structure

Document

Management

Code of

Conduct

& Ethics

Recruiting,

Hiring &

Retention Labour

Relations &

Industrial

Action

Management Training &

Development

of Resources

Performance

Management

Taxation &

Duties

Financial

Management

&

Accounting Progress &

Other

Payments

Cash Flow

Management

Prime

Contracting

Contracting &

Purchasing

Contracting

Administratio

n

Materials

Management

Claims

Management

Scope

Management

Change

Control

Management

Design

Standards &

Specifications

Risk

Identification

Qualitative

Risk Analysis

Risk

Response

Planning

Risk

Monitoring

& Control

Quantitative

Risk Analysis

EH&S

Training Environmenta

l

Management

&

Compliance Occupational

Health &

Safety

Management

& Compliance EH&S

Reporting

Site

Security

Quality

Assurance

Quality

Control

Info.

Management

System

Information

Security

Progress

Management

Schedule

Change

Management

Schedule

Integration

Asset

Categorizatio

n

Asset

Register

Asset

Transfer

Budget

Revisions

Contingency

Management

Funding

Revision

Cost

Management

Trend

Management

Implementati

on

Management

Reporting

Governance

Protocols

Stakeholder

Identification

&

Communicati

on

Planning

Resource

Planning &

Management

Baseline

Estimate &

Budget

Corporate

Treasury

Management

Asset

Management

Strategy &

Planning

Procurement

Planning

Baseline

Scope

Development

Risk

Management

Strategy &

Planning

Policies,

Procedures &

Standards

Quality

Planning

Info.

Management

Process

Design

Baseline

Schedule

Development

Schedule

Reporting

Environmental, Health,

Safety & Security Reporting

Quality

Reporting

Risk

Reporting Cost

Reporting

Project-1 (Residential Tower)

Project-2 (Power Sub Station)

31


IDENTIFYING KEY SKILLSETS REQUIRED AS PER EACH SPECIALIZED AUDIT AREA FOR GAINING EFFICIENCY

32

Key Skills Review Areas

1 Project Management / Project Controls

Project Reviews, Schedule Delay & Forensics Analysis, Cost To Complete Reviews, PMO,

Enterprise & Project Risk Management, Profitability & Cash Flow Analysis,, QHSE & EHS

reviews, Material Balancing, Productivity Analysis

2 Contracts & Commercial Estimation & Commercial Viability Review, Contract Performance & Compliance Reviews,

Claims & Variations Assessment, Investigation

3 Operations Operations & maintenance (O&M), Asset & Facility Management , Energy Management

4 Supply Chain Procurement Review , Logistics Review

5 Finance & Accounting Cost Accounting, Capital expenditure reviews , Revenue Assurance


USE OF STANDARD FRAMEWORK, METHODOLOGIES & TEMPLATES TO OPTIMIZE AUDIT TIMELINE

Schedule Review Project Review Framework Risk Management

Cost Review Feasibility Review Commercial & Contracts

Review

33


ADOPTING AN OUTCOME DRIVEN APPROACH

34


USE OF TOOLS TO COVER WIDER SAMPLES & GAIN EFFICIENCY

35

Project Due Diligence Process Mining Drone Visualization

Primavera Tool Deltek Schedule Analyzer Monte Carlo Risk Analysis Tool

35


USE OF TECHNIQUES FOR PERFORMANCE ANALYSIS

Duration Sensitivity Analysis Budget analysis & forecast cost at completion

Project different delay analysis techniques Cash flow historical performance and forecast

Critical Path and Delay Analysis

36


LEVERAGING PROJECT DATABASE, BENCHMARKS & INDUSTRY BEST PRACTICES TO INNOVATE & ADD VALUE

37

Project Lifecycle Risk Library PMP Best Practices PMP Risk Model

Industry Leading Practice &

Benchmarks Project Controls Library


DISRUPTION IN FUTURE CAPITAL PROJECTS


EMERGING TECHNOLOGIES IN CAPITAL PROJECTS

39

Risks

• Inability to source the right data

• Lack of assurance mechanisms

• Exposure to cyber risks

• Difficulty in filtering relevant information

from vast amount of data generated

• Lack of regulations


EMERGING TECHNOLOGIES IN CAPITAL PROJECTS

40

40

Artificial Intelligence

reads BIM Model

3D Printing in

Construction Robotics in

Construction

Allocates works

to 3D Printing &

Robots

Instruction to Rovers &

Drones to monitor Quality,

Progress and Safety

Violation

Monitoring Quality Monitoring Progress Monitoring Safety

BIM Model

Updates Project Management Information

systems (PMIS)

Information stored

in Cloud


FUTURE OF CAPITAL PROJECTS AUDITING?

41

Virtual

Auditor?

Data driven

Decision Making?

Continuous Risk

Assessment?

Auditing

Disruptive

Technologies?

Say good-bye to

rotational audit

plans!

BUSINESS

INTELLIGENCE?

DATA, CAN YOU

HELP ME?


THANK YOU


Q&A

© 2019 Protiviti Member Firm for the Middle East Region

This proposal contains confidential and proprietary information relating to Protiviti Member Firm for the Middle East Region and Protiviti Inc. The contents of this proposal including the information, methodologies, approach and concepts contained herein are confidential and are intended solely for the use by persons within the addressee’s organization who are designated to evaluate or implement the proposal. The proposal should not be shared with any third party or used for any

other purpose or in any inappropriate manner.

Contact Us;

Varun Kharbanda, Director – Real Estate, infrastructure & Capital Projects

Email - [email protected]

Mobile - +971-565099207

19th Annual Regional Audit Conference - UAE IAA...• Monte Carol Risk analysis • Primavera P6 &...

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