When Martin Health System began a project last year to expand Tradition Medical Center from 90 to 180 beds, it began using an “integrated approach to auditing.” The plan embeds our construction auditors in the project delivery team, which includes the owner, program managers, architects, engineers, equipment planners and major subs. 

 

To ensure project alignment, we have invited our auditors to attend project meetings and have full audit access to the 

project website which houses financial and non-financial reports. They are also included in the distribution list for the monthly status reports which contain project control reports and logs. Full transparency is achieved during project meetings because we openly discuss all findings related to project controls, which enhances collaboration with all parties.

 

As a result of these relationships, the Tradition project is integrated across the entire team. With this approach, our auditors are able to review the project in real time and the integrated team gains new insights into how auditors look at project controls.

 

The audit assignment started with evaluating risks and establishing “project controls” well before construction began. This included reviewing and improving financial and non-financial controls which set the compass course early for a successful project that is transparent on all levels. This has established project guard rails and set safety nets to ensure risks are mitigated and any negative trends are understood and addressed without delay.

 

Financial controls include reports and logs for budgets, allowances, alternates, change orders, back charges and contingency. Budget/financial reports are very detailed and accompanied by an executive level dashboard.

 

Non-financial controls include field reports and logs that are used to control the project and communicate with the integrated team. These include project schedule, change order log, RFI log, submittal log, long lead time item log, safety occurrence log, meeting minutes, equipment usage log, quality assurance reports, quality control reports, permit log as well as other reports and logs.

 

The construction audit process closely reviewed “eleven areas of risk” along with related logs and reports.  The areas of risk and their related reports are listed as follows:

 

1. Design Risk: RFI tracker, submittal log, add service log

 

2. Safety Risk: Safety manual, safety compliance meetings, safety/incident log, ICRA

 

3. Cost Control Risk: Project cost matrix including general conditions and general requirements, back-charge log, schedule of values log, permit log, owner purchase order report, asset & equipment logs

 

4. Change Order Risk: Change order log

 

5. Schedule Risk: scheduling software reporting

 

6. Budget/Financial/Accounting Risk: Contractor contingency log, project contingency log, buyout savings log, escalation log, allowance log, alternate log, budget change process and log, reconciliations on the project including CIP and change orders

 

7. Quality Management/Assurance/Control Risk: Field reports, lab tests, threshold inspections, quality control reports and logs, materials received on site log and quality standards, non-conforming tracker 

 

8. Insurance and Perils Risk: Subcontractor insurance enrollment and tracking log

 

9. Surety Risk: Subguard and subcontractor enrollment log

 

10. Claim Mitigation/Lien Control Risk: Notice to Owner log

 

11. Legal/Contract Risk 

 

Project controls and mitigating risks are important in managing and controlling large capital projects. Martin Health System is discovering the benefits of fostering an integrated audit approach as a new way to involve construction auditors in development of project controls at the onset of a project.