With projects and programs becoming increasingly complex, it is a challenge to safeguard and protect corporate decision making when relying heavily, or even solely, on third-party reported information. How do executives and boards of directors effectively validate, cleanse, and prioritize data provided by the delivery teams to make informed and timely decisions? How do executives and boards of directors ensure that the information they receive is objective, free from bias, and reliable?
It is essential that the leadership in an organization address these strategic challenges. It becomes especially complex and challenging when development and construction is not a core competency. Too often organizations make critical decisions based on poor information. This doesn’t need to be the case.
The first challenge is to ensure that reported information is correct, reliable, and robust. With high degrees of complexity involved in projects and programs, the first step is to acknowledge that independent and objective advice is a worthy investment. Retaining an independent third party can be an effective, expedient, and invaluable way to ensure the validation and review of reported project information. It also provides a level of confidence that the information reported by the project team is properly reviewed and considered.
As an external third-party provider, the project assurance reviewer can objectively and independently comment on the accuracy of the information and highlight any areas of divergence, risk, and opportunity. This provides a much more informed picture to help leadership make decisions.
Assurance reviews can be conducted at any time during a project, and typically occur when a sudden divergence between planned vs actual progress highlights potential distress and challenges. In this scenario, a reactive intervention can be an informative and powerful approach to highlight the symptoms of distress. Once highlighted, corrective actions can be made.
A more proactive project assurance approach, using information to exploit opportunities, rather than react to risks, is a set of planned reviews at critical project milestones: (1) inception, (2) procurement, (3) delivery, and (4) close. Using this approach enables organizations to build on each subsequent review, maximize information, and optimize decision making in advance of key construction pinch-points such as exploiting and implementing value engineering options. The real benefit is that proactivity can significantly reduce risks by highlighting early warnings identified and supported by independent and unbiased information.
Whether reactive or proactive, a structured project assurance approach is essential to be effective and address matters in a consistent and comprehensive manner. Following is a seven-step approach to consider when working to protect the board’s business outcomes on a specific project:
- Contract data review
Review the signed contract documentation to understand the scope, complexity, risk, and context of the project. This includes drawings, specifications, program, and any working restrictions.
- Client review
Take time with the board to understand the context and restrictions of the work being undertaken, such as permitting, planning, environmental, and other similar stakeholder influences, like archaeological studies and preservation requirements.
- Data review
Review the current project documentation including cost reports (cost incurred, changes logs, and forecast to completion), payments (performance against cashflow), project meeting minutes, programming (Primavera P6 or similar contract program, critical path, and float reviews), variations, contract administration, and other current information. Where applicable, review subcontractors and suppliers’ procurement performance and commercial matters.
- Site review
Meet and interview the key project personnel to gather project issues and feedback, followed by a site visit to independently observe progress.
- Project reconciliation
Using the steps above, seasoned construction experts can review the reported position for spot errors, anomalies, and gaps. Risks that remain unresolved threaten time and cost impacts.
- Summary action report
Leverage steps above to summarize the key issues and risks facing the board, coupled with an assessment of time and cost impact. This can make the final step toward mitigate and resolution clear.
- Summary action follow up
When multiple reviews are required during the lifespan of a project, a review and comment about the status and completion of each previous report helps to update clients on the status and resolution of previous issues.
In summary, effective project assurance needs to be at the heart of every major project program delivery. This service best protects interests by providing objective, independent, and free-from-bias commentary on current reporting, risks, and opportunities. It helps to set the focus on addressing the right issues, at the right time, to achieve the optimum outcome.
Regular project assurance support can provide early warnings of key risks or divergences from what is reported vs achieved and help address challenges before they become detrimental to the project. With better information executives and boards of directors can make informed decisions, rather than relying on out of date or inaccurate information.
© Copyright 2019. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals.
Ankura is not a law firm and cannot provide legal advice.