Build Magazine August 2015

Build Magazine 15 time and effort spent focusing on this area by internal audit functions remains dispropor- tionately low. The role of internal audit within the construction sector continues to be heavi- ly concentrated on reviewing ‘live’ projects at various stages throughout their lifecycle, and resistance is often encountered to internal audit’s involvement at the very beginning, during the bid management stage. The question often asked is whether the internal audit function has the right skills and experience to sufficiently challenge the busi- ness and provide the necessary assurances over the bid management process. This is a valid question that must be considered if it is to be seen as a value adding function. High performing internal audit functions regu- larly use internal or external subject matter experts to support them in reviewing this area such as commercial specialists, quantity surveyors, project managers and specialist bid management experts from professional services or boutique consulting firms. There remains a huge opportunity for Boards, executive management and, where applicable, internal audit functions to challenge themselves as to how they can play a more proactive role in helping to establish robust controls within the bid management process, from the outset, to enable more effective risk based decision making and evaluation of bid assumptions and costing, rather than once a project has com- menced and/or after things start to go wrong. What should be considered when reviewing this area? • Is there a process for capturing and evaluating risks when evaluating new projects and contracts, ensuring they are within the organisation’s risk appetite? • Are the costs associated with the development of bids understood and can this process be made more efficient whilst maintaining sufficiently robust controls? • Is the quality of data that under- pins pricing and cost assumptions complete, accurate and reliable? • Is the process for developing bids collaborative? Does it involve and engage all key staff and expertise in a timely manner? • Is there sufficient contingency allocated within the bid model for pro- visional sums and other ‘unknowns,’ and has this been profiled across the project lifecycle to allow effective monitoring? • Are there delegations of authority, based on clearly defined criteria, for both bid qualification and submitting bids? • Do individual personalities dispro- portionately influence bid decisions and circumvent the process? If so, how is this risk managed? • How are deviations from standard contractual terms identified and what processes exist to ensure these are subject to appropriate review and approval? • Are movements in contract value and anticipated margin tracked through- out the bid management and subse- quent negotiation process and, where necessary, submitted for reappproval? • Is feedback obtained from both successful and unsuccessful bids and are these lessons used to continuous- ly improve the bid process? • Where a dedicated bid management function exists, is the role and objectives of this function clearly defined and are there appropriate performance measures in place to measure their effectiveness? Seeking advice to help you identify weaknesses within your bid management and estimating and tendering processes could well pay dividends. Inside the Industry