The need for infrastructure improvements in the energy industry continues to be a challenge for energy providers. Whether or not a utility has an internal audit group, the use of construction audit and review techniques is critical in mitigating enterprise risk for large construction projects. Efforts in assembling a construction compliance review team, no matter its size, may yield some project cost savings. When a utility undertakes a construction project for power supply, buildings, or large transmission or distribution projects, they should consider review techniques to ensure effective spend and allocation of resources has been made. Establishing a robust internal control process over the construction segment can yield risk mitigation and positive results no matter the size or spend of construction activities.
In order to create a collaborative environment between the internal audit or compliance professionals for a review of construction activities, it is necessary to build construction chops, i.e. to demonstrate a working knowledge of the construction process. It is imperative that internal teams are able to speak the language of contractors. Without this knowledge, the team will be unable to ask probing questions of senior leaders, construction project managers and personnel to determine proper application of controls or areas for further review.
The following information provides details around the approach and steps taken to proactively use construction audit reviews to evaluate and mitigate risks with projects. This process allows not only for mitigated risks, it provides a high level of value along each step. These value added insights allow for direct savings that can more than cover the cost of the audit.
- Determining an effective approach
- Risk assessment and creating a collaborative approach
- Auditing the first pay application
- Key internal controls in the process
- Providing value at each step of the project
- Expected savings
Download this whitepaper: The importance of internal controls during a construction project >