Asad Hussain 508195455

MBA HRM

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ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

ASSIGNMENT NO.2
ON

PROJECT MANGEMENT (569)

Topic:The role of audit in management of a project. Select a project undertaken by a business organization and analyze the role of audit team being played in that specific project, e.g. pre audit, post audit, and its impact on the project
SUBMITTED BY_ ASAD HUSSAIN SUBMITTED TO SIR ATAULLAH SHAH SB.

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ROLL NUMBER 508195455. MOB. NUMBER 03335174447.

ACKNOWLEDGEMENT All praises to Almighty Allah, the most Gracious, the most Beneficent and the most Merciful, who enabled me to complete this assignment. There is always a sense of gratitude one expresses to others for the helpful and needy service they render during all phases of life. I have completed this assignment with the help of different personalities. I wish to express my gratitude towards all of them. It gives me immense pleasure to express my deep regards and sincere sense of gratitude to Mr. Salman Baig, Deputy Director Rural Cell, PTA H/Qs, Islamabad for his support which helped me throughout my assignment. I would also like to thank my teacher MR. ATAULLAH SHAH SB for steering my confidence and capability for giving me insight into assignment by giving me exposure to the arena of competitive and real world. Lastly I would like to thank my parents and friends for their constant support during the duration of my training. Thank You One and All ASAD HUSSAIN.
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ROLL NO. 508195455. MBA (HRM).

EXECUTIVE SUMMARY

This assignment is a research-oriented activity, which represents both the theoretical and practical implication of the topic. In the first section of this assignment, I explain the theoretical aspect of the topic and all major parts has been explained which are involved in the Audit of any project. For empirical study, I select Pakistan Telecom Authority (PTA) which is a regulatory authority for telecom sector and me the employee of countrys biggest telecom company i.e. Pakistan Telecommunication Company Limited, to analyze the audit process of a PTA project for installation of Telecentres throughout the country.

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CONTENTS:

TITLE PAGE... ACKNOWLEDGEMENT EXECUTIVE SUMMARY.. CONTENTS..... INTRODUCTION OF TOPIC. REPORTING SCHEDULE. FINAL REPORT. PHASE-I.. PHASE-II.. PHASE-III.... CONCLUSION PROJECT AUDITING PURPOSE OF EVALUATION. DEPTH OF AUDIT. MEASUREMENT PRACTICAL STUDY (PTA).. DEPARTMENTALIZATION. THE PROCESS OF AUDIT FINANCIALS.. OBSERVATIONS DATA COLLECTION METHOD SWOT ANALYSIS.. CONCLUSION. 5 5 6 7 8 9

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RECOMMENDATIONS..

Project Audit Process Introduction The process of auditing any project starts out with a formal notification being sent to the project members, informing them of the impending audit. The notification will also inform the project members of the audit team's objective and what compliance issues the team will be examining. After sending project members notification of the impending audit, the audit team will schedule and conduct a face-toface meeting with the project head and any administrators. The audit team will examine the project's records and data files ahead of the full audit. Reporting Schedule After the formality of the initial inquiry is over, the audit team begins a full-fledged inquiry into the project. The team will attempt to glean a further idea of how the project is functioning by going over the project's background documents and conducting interviews with the project head and the project's sponsor. The audit team will also conduct a series of interviews with members of the project, mapping out their individual roles in the project, to get a more detailed idea of

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the project's hierarchy and the validity of each member's role. During the inquiry and reporting phase of the audit, the audit team will periodically report its finding back to the project's sponsor. The audit team will also examine the project members' efficiency in following their set timelines and will record any inconsistencies in the project's goals and individual project member's performance. Final Report After sufficient data has been gleaned from the project's data files and group member interviews and the audit team has a firm idea of how the project is supposed to be carried out, the audit team will create a formal draft of its report. After the management team presiding over the audit team has reviewed the formal report and decided whether to recommend any amendments or further inquires into the project, the audit team will construct the final draft. The final draft of the audit report will contain a summary, list background and key issues raised, and provide an assessment of the quality of the project members' performance in carrying out its said goals. A project audit provides an opportunity to uncover the issues, concerns and challenges encountered in the execution of a project. It affords the project manager, project sponsor and project team an interim view of what has gone well and what needs to be improved with the project to successfully complete it. If done at the close of a project, a project audit can be used to develop success criteria for future projects by providing a forensic review. This review will provide an opportunity to learn what
6

elements

of

the

project

were

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successfully managed and which ones presented some challenges. This will help the organization identify what it needs to do so that mistakes are not repeated on future projects. Regardless of whether the project audit is conducted mid-term on a project or at its conclusion, the process is similar. It is generally recommended that an outside facilitator conduct the project audit. This ensures confidentiality but also provides the team members and other stakeholders with the opportunity to be candid. They know that their input will be valued and the final report will not identify individual names, rather it will only include facts. It is common that individuals interviewed during the project audit of a particularly badly managed project will find speaking with an outside facilitator provides them with the opportunity to express their emotions and feelings about their involvement in the project and/or the impact the project has had on them. This venting is an important part of the overall audit. A project audit consists of three phases:

Phase 1: Success Criteria and Questionnaire Development Phase 2: In-depth Research

Phase 3: Report Development Phase 1 - Success Criteria and Questionnaire Development 1. Success Criteria Development
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Interview the core project sponsor and project manager to determine their success criteria for the project audit. This ensures that their individual and collective needs are met. 2. Questionnaire Development

Develop a questionnaire to be sent to each member of the core project team and selected stakeholders. We find that individuals will often complete the questionnaire in advance of an interview. It helps them to focus their thoughts. The actual interview provides the facilitator with the opportunity to gain deeper insights into the interviewees comments. The questionnaires help them to reflect on the projects successes, failures, challenges and missed opportunities.

3. Project Audit Questions

There are many questions that can be asked. It is easiest to develop open-ended questions for the interviews. These questionnaires can be used for team members and/or other stakeholders who cannot attend an interview.

Develop the questions so that they will help to identify the major project successes; the major project issues, concerns and challenges; how the team worked together; how vendors were managed; how reporting and meetings were handled; how risk and change was managed, etc. Phase 2 - In-Depth Research

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1. Conduct individual research interviews with the Project Sponsor,

Project Manager and Project Team members in order to identify the past, current and future issues, concerns, challenges and opportunities.
2. Conduct

individual

research

interviews

with

stakeholders

including vendors, suppliers, contractors, other project internal and external resources and selected customers.
3. Assess the issues, challenges and concerns in more depth to get

to the root causes of the problems. 4. Review all historical and current documentation related to this project including;

Team Structure Scope Statement Business Requirements Project Plan Milestone Report Meeting Minutes Action Items Risk Logs Issue Logs Change Logs

5. Review the Project Plan to determine how the Vendor Plan has been incorporated into the overall project plan. 6. Interview selected Stakeholders to identify and determine what their expectations of the project had been and to identify to what extent their expectations have been met.

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7. Review the Project Quality Management and the Product Quality Management to identify the issues, concerns and challenges in the overall management of the project and to identify the opportunities that can be realized through improvements to the attention of project and product quality. Identify the Lessons Learned that can improve the performance of other future projects within the organization. Phase 3 - Report Development 1. Compile the information collected from all of the interviews. 2. Compile the information collected from individuals who only completed the questionnaire. 3. Consolidate the findings from the project documentation review. 4. Identify the issues, concerns and challenges presented through the review of the Project Quality Management and Product Quality Management plans and isolate the opportunities you believe may be realized. 5. Identify all of the projects issues, concerns and challenges. 6. Identify all of the projects opportunities that can be realized through this reports recommendations. 7. Identify the Lessons Learned that can improve the performance of future projects within the organization. Finalize the creation of the report and recommendations on the basis of the findings and present this detailed report and recommendations

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including the road map to get future projects to the next level of performance. Conclusion The purpose of a project audit is to identify Lessons Learned that can help improve the performance of a project or to improve the performance of future projects by undertaking a forensic review to uncover problems to be avoided. In this way, project audits are highly beneficial to the organization and provide the following multitude of outcomes:

Development of Lessons Learned on the project that can be applied to both the organization and its vendors. Development of strategies, which if implemented within the organization, will increase the likelihood of future projects and change initiatives being managed successfully. Development of project success criteria which might include ontime, on-budget, meeting customer and other stakeholder requirements, transition to next phase successfully executed, etc. Recognition of risk management so that risk assessment and the development of associated contingency plans becomes commonplace within the organization.

Development of change management success criteria which might include how staff are involved, how customers are

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impacted, how the organization is impacted, transition to next level of change to be initiated, etc.

Development of criteria that will continue the improvement of relationships between the organization and its vendors, suppliers and contractors regarding the management of projects.

Identification of the Lessons Learned on the project that can be applied to future projects within the organization.

Project Auditing
A major vehicle for evaluation is the project audit, a more or less

formal inquiry into any aspect of the project o A project audit is highly flexible and may focus on whatever matters senior management desires o The evaluation of a project must have credibility in the eyes of the management group for whom it is performed and also in the eyes of the project team on whom it is performed Purposes of Evaluation - Goals of the System Four independent dimensions of success: o The most straightforward dimension is the projects efficiency in meeting both the budget and schedule o Another dimension, and the most complex, is that of customer impact/satisfaction

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o A third dimension, again somewhat straightforward and expected, is business/direct success o The last dimension, somewhat more difficult and nebulous to ascertain, is future potential A successful project evaluation can help an organization: o Identify problems earlier o Clarify performance, cost, and time relationships o Improve project performance o Locate opportunities for future technological advances o Evaluate the quality of project management o Reduce costs o Speed the achievement of results o Identify mistakes, remedy them, and avoid them in the future o Provide information to the client o Reconfirm the organizations interest in, and commitment to, the project Evaluation often makes recommendations that relate to ancillary, unplanned, but important contributions to the project and its parent: o Improve understanding of the ways in which projects may be of value to the organization o Improve processes for organizing and managing projects o Provide a congenial environment in which project team members can work creatively together

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The Project Audit Six parts of a project audit: o 1. Current status of the project o 2. Future status o 3. Status of crucial tasks o 4. Risk assessment o 5. Information pertinent to other projects o 6. Limitations of the audit It is far broader in scope than a financial audit and may deal with the project as a whole or any component or set of components of the project Depth of the Audit Time and money are two of the most common limits on depth of investigation and level of detail presented in the audit report Accumulation, storage, and maintenance of auditable data are important cost elements Two often overlooked costs are the self protective activity of team members during an audit, and the potential for project morale to suffer as a result of a negative audit There are three distinct and easily recognized levels of project auditing:
o General audit - normally most constrained by time and

resources and is usually a brief review of the project touching lightly on the six parts of an audit
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o Detailed audit - usually conducted when a follow-up to the

general audit is required

o Technical audit - generally carried out by a qualified

technician under the direct guidance of the project auditor Timing of the Audit The first audits are usually done early in the projects life Early audits are often focused on the technical issues in order to make sure that key technical problems have been solved Audits done later in the life cycle of a project are of less immediate value to the project, but are more valuable to the parent organization As the project develops, technical issues are less likely to be matters of concern Conformity to the schedule and budget become the primary interests Management issues are major matters of interest for audits made late in the projects life Postproject audits are often a legal necessity because the client specified such an audit in the contract

Construction and Use of the Audit Report The information should be arranged so as to facilitate the comparison of predicted versus actual results

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Significant deviations of actual from predicted results should be highlighted and explained in a set of footnotes or comments Negative comments about individuals or groups associated with the project should be avoided Measurement Measurement is an integral part of the audit/evaluation process Performance against planned budget and schedule usually poses no major measurement problems Measuring the actual expenditure against the planned budget is harder and depends on an in-depth understanding of the procedures used by the accounting department It is a very difficult task to determine what revenues should be assigned to a project All cost/revenue allocation decisions must be made when the various projects are initiated The battles are fought up front and the equity of cost/revenue allocations ceases to be so serious an issue As long as allocations are made by a formula, major conflict is avoided-or at least, mitigated

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Asad Hussain 508195455

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Practical Study

The chosen organization is Pakistan Telecommunication Authority (PTA) for the data collection purpose. PTA is an autonomous body established under Pakistan Telecommunication (Re-organization) Act 1996 to regulate, operate and maintain telecommunication systems and services in Pakistan. PTA has its Headquarter in Islamabad and five Zonal offices in Karachi, Lahore, Rawalpindi, Peshawar and Quetta. We shall discuss the use of visual aids by the Organization. Functions and responsibilities of Pakistan Telecom Authority are as under: Regulate the establishment, operation and maintenance of telecommunication systems Make recommendations to the Government on polices Protect the rights of licensees and interests of consumers Create fair competition in telecommunication sector Promote rapid modernization of telecommunication systems and services.

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Departmentalization

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PTA has broadly divided into two functional parts Technical and Financial headed by Members. Under each member there are different divisions headed by DGs like Coordination, Wireless, Wireline, Commercial Economic Affairs, Affairs Finance, and Enforcement, Law & The Regulations, Directors. One of the best project and program of PTA is that of Rabta Ghar or Telecenter to enhance rural telephony. The Pakistan Telecommunication Authority (PTA) launched a Industry Development.

Divisions are further categorized

into Directorates headed by

telecentre project called Rabta Ghar in rural areas across Pakistan in January 2008. Under the first phase of the scheme, PTA along with other telecom operators established 400 telecentres for which equipment worth PKR 50,000 each was provided free of cost. The telecom operators sponsoring Rabta Ghar include PTCL (100), Mobilink (100), Ufone (50), Instaphone (15), Intel (10), Worldcall (payphones in all Rabta Markaz) and PTA (125) bringing the total to 400. A Rabta Ghar (telecentre) is a small business set-up that provides PCO, internet, fax, printing and scanning services to small communities. These telecentres were provided to those individuals who are unemployed with at least intermediate qualification and have a shop or room of minimum 1012 ft. Individuals from villages/union councils were considered for Rabta Ghar where the population is 4,000 to 10,000 and no public telephone or net cafe facility in the radius of 5 km is available. PTA has also arranged free delivery,
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installation and training of the Rabta Ghar equipment on the premises of the selected individuals by Intel through its genuine Intel dealers (GIDs). The development of rural communication is a multi faceted issue and PTA realizing its importance is mobilizing all the relevant resources for increasing access of telecom services in rural areas. Rabta Ghar (Telecentres) are the most suitable strategy for bridging the digital divide; therefore PTA has taken the initiative of promoting awareness and also facilitating the establishment of Telecentres and PCOs. Telecentre is a small establishment providing telephone, fax and Internet services to a community. This will not only provide basic Telecom services in rural areas but will also create employment opportunities. PTA launched the Rural Telephony Project across Pakistan. The main objective of the project is the establishment of Telecentres across Pakistan. The project comprises of the following two main components: Rabta Ghar through PTA & Telecom Companies Funds Rabta Ghar through Micro Credit Loans The Process of Audit: The project of Rabta Ghar was audited by audit team of the following members:-

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1. 2. 3.

Mr.Shahid Javaid, Assistant Director Mr.Gul Hassan, Assistant Director Mr.Umar Farooq, Assistant

Financials Rabta Ghar was a project of Rs. 30,00,000 under which a total of 400 Telecenter were installed. Process Following process of audit. 1. 2. 3. 4. 5. Committee formulated of the above mentioned offices. Files of all the telecentres have been scrutinized according to the prescribed rules. The administration and management of the revolvers has also been analyzed. Committee prepared its initial report and sent it to finance and enforcement divisions of PTA for analysis and vetting. After vetting the audit report has been prepared and submitted to Chairman PTA. Observations: Following were the observations of the team.

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1. 2. 3. 4.

14 telecentres are either not installed or made dead after installation. An amount of RS. 400,000 can not reconciliated Amount allocated for checking and survey of the telecentres has no valid records. Some machines are left, after the completion, whose cost can not be recon ciliated. Data collection methods

I personally visited the office of PTA HQ, Islamabad, and met Mr. Salman Baig, Deputy Director Rural Cell who gave me all the details.

SWOT analysis Strengths Efficient Employees looking into the Audit Process. All facilities provided for Audit. High funds allocated for Audit. Weaknesses Vague records. No cooperation from the owners of telecenters. Data was computerized which could not be validated by old system.

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Opportunities Facilitation for future Audit. Helped recover the wasted money. Helped in quality management of new such projects. Threats Telecenter owners not well educated who hindered the Audit process. Low interest of few stakeholders in Audit process. Some corrupt contractors made problems for audit.

Conclusions The strategy being used in audit of this project was extremely suitable to its objectives. Each Rabta Ghar is being equipped with a PC, one Wireless PCO, One Internet enabled Wireless set, Printer, scanner, copier and fax (4 in 1 machine) was checked as per audit rules. In addition to that each Rabta Ghar owner is being provided with a comprehensive training from the GID and the owner is also being provided a training manual and selflearning CD for future reference. Apart from above, A Universal Service Fund (USF) has also been created to bring the focus of telecom operators towards rural population, which remained unnerved. Up till now, USF has awarded contracts to provide services
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in Malakand, Sukkur, DG Khan, Pishin, Mansehra and Dadu while several projects are in pipeline It is expected that over 5 million population of these remote areas will get benefit out of these projects. USF signed Contract of Pilot project on October 04, 2007 with Telenor that aims to provide telecom related services in Malakand Division. A subsidy of Rs. 310 Million is being provided to Telenor for this project. Telenor will install a total of 175 cell sites in Malakand. A subsidy of Rs.112 Million is being provided to Mobilink for the provision of telecom services in Sukhar which covers 25% od the province of Sind. Warid Telecom under USF will get a subsidy of Rs. 91 Million to provide services to the mass population in un-served areas of Dera Ghazi Khan division. PTCL will provide basic telephony and data services to the population in the yet un-served areas of Baluchistan districts of Pishin, Killa Abdullah and Quetta and a subsidy of Rs. 175 Million is being provided to PTCL for this project. PTCL will get another subsidy of Rs. 300 million to provide basic telecom services in Mansehra and a subsidy of Rs. 250 million for provision of telecom services in Dadu under USF facility. USF has planned to extend the Fibre Optic connectivity to the un-served TEHSIL HQs in Pakistan for meeting the growing requirements of Voice, Data and Video in these areas. Recommendations I shall submit the following recommendation for this project:

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Introduction of Private Auditors to the Project. Media campaigns to enhance awareness among people should be launched. Number of auditors may be allocated to each area according to its rural population and the work done there.

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