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A post-completion audit is, in essence, a review of the way in which the investment process was carried out. It involves a comparison of the actual outcomes with those estimated when the investment project was first approved. It also involves an assessment of the way in which the investment project was managed and controlled. This type of audit forms an essential element of the monitoring and feedback processes within a well-run business. When properly carried out, it can help the business in its drive for continuous improvement.
Post-completion audits are the final stage in the investment process and are carried out at some point after the project has been commissioned. This may be during the outcome period or soon after the outcome period has ended. In practice, it seems that they are often carried out six to 12 months after the project has been commissioned. However, where project outcomes extend over several years, the full story cannot be told at this point, and so further follow-up audits should be carried out to assess longer term results.
There are three main benefits in carrying out a post-completion audit:
Identifying lessons to be learned for the future
These lessons may not only help to improve the planning and execution of future investment projects, but may also feed into the strategic planning process. If, for example, it is found that an investment project did not prove to be as profitable as imagined, it may prompt a re-assessment of the strategic plan.
Identifying problems and appropriate solutions so that corrective action may be taken
If the audit is carried out during the outcome period, it may be possible to make changes to the ongoing investment project, and to similar ongoing projects, to improve matters. Where things have gone seriously awry, it may also be possible to abandon an investment project in order to cut future losses.
Exerting discipline in the investment planning and control process
If managers are aware that post-completion audits are to be undertaken, they may take more care when developing initial assumptions and estimates and when making investment decisions. They may also take more care when managing an investment project through to completion.
