This chapter refers to the use of independent auditors that were external to the project. What are the advantages of independent audits? Describe what you believe should be the role of an independent auditor.

Independent Audits

A global accounting and consulting firm was placed on contract to validate project developed cost and schedule assessments. These periodic reports contained numerous recommendations for cost and schedule control and cost containment. In addition, audit reports were issued by independent agencies including the National Academy of Engineering, independent auditors, and state and federal audit agencies.

For instance, as claims increased dramatically during the peak years of the project from 1999 to 2003, a new protocol was established to handle these claims and changes based on the recommendations of an outside audit. An important feature of the claims and changes program was the requirement of independent audits of claims that had been conducted during the claim resolution process rather than after that process had been completed. Some examples of the findings of these reports are highlighted in Table 8.7.

Best Practices Few would dispute that independent outside audits are a necessary control mechanism for megaprojects; however, compliance with these reports is not always certain. Projects must be held accountable and demonstrate where audit recommendations are adopted, as well as where they are rejected and the reasons why the recommendations will not be implemented.

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Table 8.7 Central Artery Tunnel/Project Audit Recommendations and Compliance Audit Recommendation Deloitte Project Assessment Office of the Inspector General Recommended increase in CSU 7 budget of $2.214 billion to complete the project and $280 million for contingency reserves. Recommended corrective actions to increase cost recovery efforts against both designers and contractors. Implemented Project revenues were increased to meet the additional increase in the project budget, and contingency reserves were increased (Deloitte 2003 Project Assessment). Based on OIG recommendations, corrective actions were implemented, resulting in recovery of millions of dollars for defective design and workmanship (OIG 2000).