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Projects are approved on the basis of (1) Their anticipated benefits, and (2) Expectations regarding costs and 'time to payoff'
required to obtain these benefits. These benefits might be a faster time to market, a more efficient and less costly process,
a better product, or an increase of market base.
There is a difference between a successful project and a successfully executed project. A project may be performing well - even
'ahead of schedule' and 'under budget' - but in a fast changing financial or technological world there remains a need to validate
the underlying purpose of the project and to confirm that it will meet its purpose and deliver upon its promises. A project may
also be not performing as planned and not being reported as such to a higher level of management. The right time to know of real
or potential cost or time overruns is always sooner - never later!
The Project Auditing process strives to provide corporate management and project executive sponsorship with an unbiased review,
assessment, and revalidation of (1) The Project is in compliance with its business purpose, and (2) The Project's performance
is consistent with its defined success metrics. Saybrook Associates provides impartial review and assessment of (1) the Project's
purpose, and (2) of the project's success in execution - independent from the Project's management or management team.
Re-validate the Project's purpose
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Validate ROI and compliance with Business Benefits Model. |
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Ensure that decisions and strategies made to accommodate project success are not in conflict with Program or Corporate goals. |
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Comparison of current market, technological, or economic conditions with those used in modeling the business need and as the basis of calculating project value. |
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Affirm that the Project Value Tree is consistent with the Corporate Value Tree. |
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Assure that Product = Promise, that ongoing effort is or will lead to desired results. |
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Assess the Project's Performance
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Affirm that Project decisions and prioritizations are in compliance with Project Value Tree. |
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Validate the basic assumptions used to develop the estimate and schedule. |
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Perform comparative reviews of estimates and execution plans to industry standards and to similar projects. |
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Validate that Project performance information provided to management is accurate and ensure that reporting is timely and targeted. |
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Confirm that the Cost to or at Completion is accurately forecast. |
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Confirm that the Time to or upon Completion is accurately forecast. |
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Identify 'root causes' for performance failures. |
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Identify Risks to success that have not been identified and for which no Risk Management Strategy exists. |
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Review bid documents to detect ambiguities and incomplete or missing information. Can reduce the potential for future claims. |
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Evaluate the sequencing and durations of tasks for the work is reasonable and investigate opportunities for work operations to be performed more quickly or concurrently. |
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An owner of a fast-track project could not procure construction services under a guaranteed lump sum contract, and because the
design process would be concurrent with construction, a detailed estimate was impossible at the outset. This meant that the
construction manager could only consider a cost-plus contract with a target price, with both parties sharing in the risk.
We were asked to validate and ensure the equity of the target price and help the project manager perform due diligence in reviewing
and approving that price. So we analyzed the proposed target estimate, considering industry standards and benchmarks, as well as
assumptions, quantity projections, and pricing for commodities and services. Using a proprietary database with costing factors
for similar facilities in other global locations, we modeled site-specific productivity and cost adjustment factors.
The result? Our review and validation process established that the estimate was reasonable.
However, we did identify significant amounts included for yet-to-be realized or, in some cases, yet-to-be identified events,
actions, or risks. We recommended that these costs be managed separately as contingencies. Had they been included in the target
price, the construction manager would have been unjustly rewarded with a percentage of the amount not expended. In fact,
the owner's savings exceeded our fees by a factor of 12.
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