According to the Royal Spanish Academy, an audit consists of the systematic review of an activity or a situation to assess compliance with the rules or objective criteria to which they must submit.
Basically, it is a review of the accounts of a company or, in this case, the verification of the money invested by a company in a project.
From a ‘simple’ work carried out by a city council in our country, to large projects like Elon Musk’s in Berlin (The Giga Berlin-Brandenburg), audits play a fundamental role in reviewing the proper performance of these constructions.
Thus, if you wonder what a construction audit is, the auditors’ job is to ensure compliance with the contract signed by the clients and the construction companies.
Many years have passed since scams and embezzlements have touched our lives. Some have suffered this type of crime in their own flesh, while others suffer it indirectly.
Either due to the mismanagement of municipal, state or regional works; Many of us have been indirectly victims of breaches of contracts by third parties in the works of our community.
Regarding the breach of contracts, we are not referring only to the miscalculation of the term that the work would last; on the other hand, to the acquisition of unsuitable or cheaper materials, differing from what was reflected in an initial contract.
Construction audit procedures and methods
There are several processes to audit in a work; In the first instance, the auditors can verify which were the agreements raised by both parties in the contract.
Regarding the examples of the agreements are: The duration (in days, months or years), the costs, the initials paid, budgets raised.
In the same way, the calculation of the project development is very important in an audit, thus, a tentative date can be given as the project takes shape.
In some contracts, payment is established in installments depending on the development of the work, in this way, by calculating either visually or in numbers, how much the work has progressed, cash advances can be given.
One of the ways to calculate this progress is by counting the existing material in the work, as well as interviews with laborers and construction managers.
The auditors can consult the invoices for materials used in the work and review the cost raised for said materials in the contract.
Another audit can be carried out at the end of the work, verifying that the value of the asset is equal to that of the spent materials.
In this way, it can also be verified if any extra expense was necessary or if the use of any material was omitted or substituted.
Why should there be an audit?
As you could notice throughout the article, audits are extremely important throughout the development of a work.
The start of a new project either with public money or with private investment; it brings with it the following of certain guidelines for its proper development.
If at any time, there is a breach of any point of the contract; The company could face millions in fines and even the suspension of the corresponding license.
Let’s take the following example: The construction of a bridge between two cities is carried out; and the company that takes on the contract is characterized by its speed when building the work , however, what not everyone knows is the way they build.
This company can use material of less value than recommended and even acquire products that do not fulfill the required function. However, in the absence of an audit, the work takes place.
Everything was carried out ‘successfully’ and cars and people cross the bridge every day. But, the day arrives, the bridge does not hold any more and collapses, leaving multiple injuries as well as material damage.
If there has been an audit before, during and at the end of said work, this type of problem could be largely avoided .
With this example of a public works audit, and all of the above, we hope you understand the importance of audits of construction projects.
