When should your power or utility company seek construction audit services?

Construction projects are exciting opportunities for growth and prosperity, but they can also present significant challenges — particularly around managing budgets, cost compliance, schedules, quality, and key stakeholder expectations. A construction audit, which can be conducted at any stage of the capital-improvement program process, can help identify, mitigate, and resolve these challenges.

Here are some key questions and answers about which types of projects are the best fit for a construction audit.

What does a construction audit focus on?

A construction audit generally focuses on three key areas:

1. Validating contract compliance
2. Assessing performance against key performance indicators, objectives, and requirements
3. Identifying improvement opportunities to better align construction practices with industry best practices

Ultimately, construction auditors are trained to conduct project assessments and validate compliance with contract, schedule, and entity requirements as well as other terms to verify the money being spent is allowable and appropriate.

What size construction project is a good candidate for an audit?

The average power or utility company can spend anywhere from a few million dollars to billions of dollars on a single construction project. Each project may encounter significant change orders, introducing risks, such as:

• Noncompliant and duplicate charges
• Schedule delays
• Budget overruns

Change orders may also provide opportunities for fraud, waste, or abuse to be introduced into your organization. These common pitfalls could result from:

• Inadequate policies and procedures
• Poor oversight and monitoring controls
• Inexperienced personnel
• Project management control override

Due to the size, scope, cost, and complexity of construction projects, your company should perform ongoing assessments to identify, mitigate, and resolve these costly risk areas.