Traditionally, project development includes five elements: control systems and four stages.
Project control systems
Project control is that element of a project that keeps it on-track, on-time, and within budget. Project control begins early in the project with planning and ends late in the project with post-implementation review, having a thorough involvement of each step in the process. Each project should be assessed for the appropriate level of control needed: too much control is too time consuming, too little control is too costly. If control is not implemented correctly, the cost to the business should be clarified in terms of errors, fixes, and additional audit fees.
Control systems are needed for cost, risk, quality, communication, time, change, procurement, and human resources. In addition, auditors should consider how important the projects are to the financial statements, how reliant the stakeholders are on controls, and how many controls exist. Auditors should review the development process and procedures for how they are implemented. The process of development and the quality of the final product may also be assessed if needed or requested.
Businesses sometimes use formal systems development processes. These help assure that systems are developed successfully. A formal process is more effective in creating strong controls, and auditors should review this process to confirm that it is well designed and is followed in practice. A good formal systems development plan outlines:
* A strategy to align development with the organization’s broader objectives
* Standards for new systems
* Project management policies for timing and budgeting
* Procedures describing the process
Project development stages
Regardless of the methodology used, the project development process will have the same major stages: initiation, development, production or execution, and closing/maintenance.
The initiation stage determines the nature and scope of the development. If this stage is not performed well, it is unlikely that the project will be successful in meeting the business’s needs. The key project controls needed here is an understanding of the business environment and making sure that all necessary controls are incorporated into the project. Any deficiencies should be reported and a recommendation should be made to fix them.
The initiation stage should include a cohesive plan that encompasses the following areas:
* Study analyzing the business needs in measurable goals.
* Review of the current operations.
* Conceptual design of the operation of the final product.
* Equipment requirement.
* Financial analysis of the costs and benefits including a budget.
* Select stake holders, including users, and support personnel for the project.
* Project charter including costs, tasks, deliverables, and schedule.
Planning and design
After the initiation stage, the system is designed. Occasionally, a small prototype of the final product is built and tested. Testing is generally performed by a combination of testers and end users, and can occur after the prototype is built or concurrently. Controls should be in place that ensure that the final product will meet the specifications of the project charter. The results of the design stage should include a product design that:
* Satisfies the project sponsor, end user, and business requirements.
* Functions as it was intended.
* Can be produced within quality standards.
* Can be produced within time and budget constraints.
Closing and Maintenance
Closing includes the formal acceptance of the project and the ending thereof. Administrative activities include the archiving of the files and documenting lessons learned.
Maintenance is an ongoing process, and it includes:
* Continuing support of end users
* Correction of errors
* Updates of the software over time
In this stage, auditors should pay attention to how effectively and quickly user problems are resolved.
Over the course of any construction project, the work scope changes. Change is a normal and expected part of the construction process. Changes can be the result of necessary design modifications, differing site conditions, material availability, contractor-requested changes, value engineering and impacts from third parties, to name a few. Beyond executing the change in the field, the change normally needs to be documented to show what was actually constructed. Hence, the owner usually requires a final record to show all changes or, more specifically, any change that modifies the tangible portions of the finished work. The record is made on the contract documents – usually, but not necessarily limited to, the design drawings. The end product of this effort is what the industry terms as-built drawings, or more simply, “asbuilts.” The requirement for providing them is a norm in construction contracts.
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