EBUS614: Project and Portfolio Management: Auditing and Closure

This report analyzes project auditing and closure, covering essential aspects of project management within organizations. It examines project auditing's role in evaluating progress, performance, and identifying areas for improvement throughout the project lifecycle. The report details different levels of audits, timing, and the auditor's responsibilities. It also explores project closure methods, including extinction, addition, integration, and starvation, along with the reasons for closure and the decision-making process. Furthermore, the report discusses the implementation of closure, including tasks conducted by closure managers, and the importance of final reports and capturing lessons learned. Finally, it considers how to address the needs of the project team during the closure phase, emphasizing the significance of recognition and celebration of success. The report provides a comprehensive understanding of project auditing and closure, essential for effective project management and organizational success.

EBUS614: Project and Portfolio Management
in Organisations
Lecture 9 – Project Closure
Dr Fotios Misopoulos and Dr Matthew Tickle

What we will discuss today
1. Project Auditing
2. Project Closure
2

Project Auditing
• An audit is a formal review (or evaluation) of any aspect of the projec
• They are conducted throughout the project’s lifecycle and are used t
compare progress and performance of the project against a set standa
• This can be either:
– Progress and performance against plan, or
– Progress and performance against other similar projects
• All aspects of the project are evaluated
• The strengths and weaknesses are identified, and recommendations fo
current and future projects are made
3

How do we Evaluate a project?
• We can evaluate how “successful” a project is based on:
1. It’s efficiency at meeting the budget and schedule
2. It’s impact on customer satisfaction
3. It’s impact on business success
4. It’s future potential
5. It’s impact on organisational goals and strategy
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Direct Benefits of Audits
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Identify problems
earlier
Improve project
performance
Provide more accurate
information on project
progress to customer
Identify opportunities
for future innovations
Increase
organisation’s
commitment to
project
Improve risk
management
processes
Identify mistakes –
eliminate them in
future
Evaluate
organisation’s project
management maturity
Reduce costs of
running projects

Indirect Benefits of Audits
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Increased
understanding of how
project adds value to
organisation
Increased project
management maturity
Create a collegial
environment
Identify potential
future senior
managers
Identify organisation’s
strengths and
weaknesses
Improve the impact
projects have on team
members’ careers

The Audit Report
• The audit can focus on the project as a
whole, or a specific aspect of the project
• There is no standard format, so organisation
usually create their own template which is
used for all projects
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The Format of a typical Audit Report
1. Introduction
2. Current Project Status
– Cost, Schedule, Scope, and Quality
3. Future Project Status
4. Critical Management Issues
5. Risk Assessment
6. Limitations and Assumptions
8

Example Audit Reports
9

Depth of the Audit
• Audits should be as detailed as possible, however time and mo
often constrain the level of depth presented in the report
• Costs of auditing include:
1. Team members’ time
2. Management of audit documentation
3. “Distraction” effect
4. Poor results lead to low morale
• There are 4 main levels of audit – the General Audit, the Detail
Audit, the Technical Audit, and the Risk Audit
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Timing of the Audit
• All important projects must be audited
• Larger projects should be audited multiple times
• First audit is usually conducted early in the project lifecycle
(normally during the Initiation stage)
• Audits are then conducted during:
– Feasibility Study
– Preliminary Plan / Schedule / Budget
– Implementation
– Post Project
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The Project Auditors
• All Auditors must:
– Be honest and ethical
– Identify and avoid biases
– Be independent
– Ask for further clarification if required
– Keep information confidential
– Evaluate the effectiveness of the auditing process
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The Project Auditor’s Responsibilities
13
Assemble a small
team of experts
Ensure team
understand project
objectives
Audit the project Debrief PM and
project team
Write Audit Report
Send report to PM
and project team
Check that
recommendations
have been
implemented

The Project Audit Life-Cycle
Initiation Baseline
Definition
Create Audit
Database
Preliminary
Analysis
Preparing
Report Closure
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• Purpose and
scope
• Audit
methodology
• Identify areas to
be assessed
• Determine
standards
• Begin collecting
data
• Store in database
• Analyse collected
data • Write up findings
• Include
recommendations
• “Lessons
Learned” for
audit

Another Perspective on Auditing
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Project Closure
• Project Closure is the formal process of closing down a proje
and reporting on its relative success
• This process is inevitable, but it is also a highly complicated
process and therefore never easy
• Closure activities:
– Have limited impact on success or failure of project
– But have a large impact on quality of life after the project
ends
– Are different depending on the type of project
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5 Reasons for Closing Projects
• Project Closure occurs when:
1. Project objectives have been met
2. Work on project has stopped / slowed so much that further
progress is not possible
3. Project has been delayed for a long period of time
4. Project’s resources must be used by other projects
5. Project team members (including Project Manager) are
removed from the organisation
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4 Main Methods of Project Closure
1. Closure by Extinction
2. Closure by Addition
3. Closure by Integration
4. Closure by Starvation
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1. Closure by Extinction
• All work on the project simply stops
• Project work may stop because of:
1. Project has achieved its goals
2. Project has not achieved its goals
3. Changes in external environment
4. Politics
• Although project work stops, a large amount of
administrative work must still be completed
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2. Closure by Addition
• Used on ‘in-house’ projects that are successful
• Closure takes the form of “institutionalisation”
– E.g. a new department is created
– If successful, this new department can become a new busine
• Very different to Closure by Extinction
– Some staff moved to new department
– Others request to move to new projects
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3. Closure by Integration
• Most common method of closing a successful project
• All assets owned by project are “absorbed” into the
organisation
– Organisational practices are changed to mimic those of proje
– Project team moved into established departments
• Can be incredibly complicated
– Must consider staff, organisational policies, risks, capacity,
internal politics…
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4. Closure by Starvation
• Involves starving a project of the resources it requires
be successful
• This method is used to “manage out” a project without
actually having to officially close it
• Very useful method of closing a potentially “sensitive”
project
• Recession / austerity is often used as a “mask”
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When Should We Close a Project?
• It is relatively easy to close a project that is complete,
it’s very difficult to close a project early
• There are no standard guidelines exist for the decision
close a project
• Very little research has been published on how to mak
the closing decision
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Questions to Ask:
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Does project still align
with organisational
goals?
Is project output
useful?
Are senior
management
committed to project?
Can the organisation
afford this project?
Does the project have
the support of all
required departments?
Is the project
sufficiently different to
other projects?
Is the project team
still enthusiastic?
Could the project be
outsourced with no
impact on output?
Is the project team
sufficiently skilled to
complete the project?
Has the project lost its
key personnel?
Is the project still
profitable / on time?
Is it time to integrate /
add the project into
the organisation?

When Should We Close a Project?
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Reason for Closing a Project % of Companies
stating factor as
important
Low probability of achieving objectives 94%
Low probability of Return On Investment (ROI) 64%
Project output is too expensive 50%
Insufficient market need for project output 44%
Technical problems cannot be solved with available resources 31%
Other projects are more important 28%
Change in external environment 28%
Output will take too long to achieve 17%
Project has a negative impact on other projects 8%

5 Signs a Project is in Trouble
1. Vague or incomplete project requirements
2. Incomplete documentation on all stakeholders
3. Vague or incomplete project schedule and / or budget
4. Suspicious Status Reports
5. Poor team morale
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Source: Alderton, M., (2013), “The Case of the Troubled Project”,
PM Network

Main Reasons why Projects Fail
1. Lack of top management support
2. Wrong choice of Project Manager
3. Poor planning
4. Refusing to learn from previous projects
5. Project managers of successful projects “won’t let go”
6. Lost interest in the project
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Project failures are not a new phenomenon
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Process of Closing a Project
• First, a decision needs to be made as to whether or not
the project should be closed
• If we decide to close the project, there is an
implementation process we need to follow
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Continue running the
project
Close the project down
(Implementation)
Is project
progressing
as planned?
(Decision)
Yes
No

Process of Closing a Project –
Part 1: The Decision
• There are 3 main ways of deciding if a project needs to
be closured down:
1. Assess project against standardised Success Factors
2. Assess project on its Goals and Objectives
3. Assess projects against planned Schedule
• Overall, the decision is made based on whether or not
the organisation is willing to continue investing in the
project
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Process of Closing a Project –
Part 2: Implementation
• Closure should be planned, budgeted, and scheduled
– This ensures better results
• Difficult process to manage, particularly for the project
manager
1. Loss of power
2. Loose ends to tie up
• For this reason, Closure Managers are sometimes us
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Process of Closing a Project –
Part 2: Implementation
• Tasks conducted by Closure Manager include:
1. Ensure project work is completed
2. Notifying the customer of project completion
3. Ensure all paperwork is completed
4. Send out final invoices to the customer
5. Reassign all resources to other suitable projects /
departments
6. Ensure all legal requirements are met
7. Decide on which paperwork to keep
8. Close the project’s accounts
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The Final Report
• This is not simply another evaluation, it is the history of the projec
• There is no standard format or style, but each Final Report should
contain information on:
1. Project Performance
2. Administrative Performance
3. Organisational Structure
4. Project and Administrative Teams
5. Project Management Techniques
• Each section of the Final Report should include recommendations
improving future projects
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How to capture Lessons Learned at the end of a Projec
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Celebrating Success
• There must be some form of recognition at the end of t
project
– Thank you notes
– Commemorative mug
– T-Shirt
– Pizza party
– Bonuses / Promotions
– Bus Tour through the city?
35

Videos
• Lynda.com
• Course: Project Management Foundations
• Videos:
– How to close a project
– How to gain customer acceptance
– Document Lessons Learned
– How to prepare a closeout report
– Learn how to close and transition projects
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Exercise
• Project closing can have a significant impact on the
members of the project team.
• Imagine you are a project manager and your current
project is about to enter the Closure phase.
• Describe the techniques you would use to address the
needs of your team members during this difficult perio
in the life of the project.
37

Recap – What we have discussed today
1. Project Auditing
2. Project Closure
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Next Time…
• Case Studies
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