How do you audit project costs and learn from your mistakes?

1 Define the scope and objectives

Before you start auditing, you need to define the scope and objectives of your audit. What are you trying to achieve? What aspects of the project costs are you focusing on? How will you measure and report the results? By clarifying these questions, you will be able to plan and execute your audit more effectively and efficiently.

2 Collect and review the data

The next step is to collect and review the data related to the project costs. This may include contracts, invoices, receipts, change orders, budgets, forecasts, schedules, progress reports, and any other relevant documents. You should also interview the project team, contractors, suppliers, and clients to get their feedback and insights. You should verify the accuracy, completeness, and consistency of the data, and identify any gaps, errors, or discrepancies.

3 Analyze and compare the data

Once you have the data, you need to analyze and compare it to find out the actual versus planned costs, the variances, and the causes. You can use various tools and techniques, such as spreadsheets, charts, graphs, ratios, benchmarks, and variance analysis. You should also consider the impact of external factors, such as market conditions, regulations, and risks. You should look for patterns, trends, and anomalies that indicate problems or opportunities.

4 Report and communicate the findings

The next step is to report and communicate the findings of your audit to the relevant stakeholders. You should prepare a clear, concise, and comprehensive report that summarizes the data, the analysis, the conclusions, and the recommendations. You should also present and discuss the report with the project team, contractors, suppliers, clients, and management, and solicit their feedback and suggestions. You should highlight the strengths and weaknesses of the project costs, and the areas for improvement.

5 Implement and monitor the actions

The final step is to implement and monitor the actions that you have recommended or agreed upon based on your audit. You should assign roles and responsibilities, set deadlines and milestones, and track the progress and results. You should also update the project costs accordingly, and adjust the budgets, forecasts, and schedules as needed. You should communicate and coordinate with the stakeholders regularly, and report any issues or changes.

6 Learn and improve

Auditing project costs is not a one-time activity. It is a continuous process that requires you to learn and improve from your mistakes. You should evaluate the effectiveness and efficiency of your audit, and identify the best practices and lessons learned. You should also document and share your findings and recommendations with other project managers, contractors, suppliers, and clients, and apply them to future projects. By doing so, you will enhance your construction cost estimation and management skills, and deliver better outcomes for your projects.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?