HM TREASURY
Central Unit on Procurement
No. 43 Project Evaluation
This is one of a series of guidances prepared by
CUP on the management of works projects. Its use
is not mandatory but a statement of good profes-
sional practice.
1. INTRODUCTION
1.1 Major projects are often complex and risky. An
enormous number of decisions have to be made and
actions taken during a project’s life: often under tight time
and budgetary constraints. Project evaluation enables
participants to stand back from the detail of the project,
review what has occurred and to take a forward look at the
remainder of the project.
1.2 Project evaluation is a team effort. It enables indi-
vidual members to consider aspects of the project from
different points of view, identify possible conflicts or poor
communication and improve working relationships
benefiting the overall project.
1.3 Project sponsors and managers are also
responsible for feedback from lessons learned, both
good and bad, so where appropriate they can be used to
benefit future projects.
1.4 Project evaluation techniques are an essential aid to
improving project performance and achieving best value
for money (VFM). This guidance sets out the principles of
project evaluation explaining how, why and when they
should be done. In carrying out such evaluations, project
sponsors will need assistance from one or more of the
following:
- professional adviser;
- project manager; and/or
- other consultants.
The extent to which they will be involved depends on the
stage the project has reached and the scope of the evalu-
ation.
1.5 This guidance assumes knowledge of guidance no
33 “Project Sponsorship” which deals with both the
responsibilities and the activities of the sponsor and the
professional team (see Annex 3 of guidance 33). These
activities are also subject to evaluation techniques. Sec-
tion 3 of guidance No 33 describes a number of key
project tasks which form the core topics of project evalu-
ation Core topics are by definition relevant at all stages in
the project life cycle.
1.6 Many of the project controls (eg cost, time, quality
and change), which must be in place on any well man-
aged project, are subject to evaluation. These are set out
at Annex A together with notes on some of the principal
issues to be addressed.
1.7 Project evaluation is part of the total quality process.
It contributes towards a successful outcome in terms of:
- greater assurance of total performance in terms of
cost, time and quality;
- clearer definitions of responsibilities;
- reduced exposure to risk; and
- improved VFM and accountability.
2. SCOPE
2.1 Although this guidance deals with evaluation of
majorworksprojects in general terms, experience shows
that it also applies to smaller projects. However, given
the varied nature of projects, this guidance cannot be
comprehensive. The principles of project evaluation can
also be applied to projects other than works.
2.2 The guidance is in 9 sections with supporting
Annexes.
Section
1. Introduction
2. Scope
3. Definition of terms
4. General principles
5. Pre-project evaluation
6. In-project evaluation
7. Post-project evaluation
8. Occupancy review
9. Independent reviews
A full list of contents is at Annex E.
3. DEFINITION OF TERMS
3.1 Project evaluation is a technique to review the
current status of a project against plan and to provide
practical, comprehensive and forward-looking recom-
mendations for corrective action where necessary. In
general terms it should consider:
- project objectives in terms of cost, time and quality;
- management;
 - organisation;
- systems and procedures;
- suitability of contracts;
- performance of consultants and contractors; and
- work to date in terms of cost, time and quality meas-
ured against plan.
3.2 Evaluation is often carried out by project partici-
pants (project manager, design and cost consultants with
contributions from contractors and sub-contractors) and
should be a routine performed at predetermined stages
to establish that objectives are still achievable. Ad hoc
evaluations may also be used as a means of focusing on
specific problems. The starting point for ad hoc evalua-
tions often arises from specific concerns of the project
sponsor.
3.3 A difficulty with evaluation by project participants is
that they often find it difficult to be objective about their
own decisions. An evaluation or review by an independ-
ent consultant overcomes this problem and can bring in
new ideas and useful outside experience.
3.4 Project evaluationshouldnot be confusedwith ‘value
engineering’ or ‘economic appraisal’:
Value engineering is a pre-planned, formal review
of the design philosophy and development, at one or
more stages of design development, sometimes led by
an independent expert. These studies are short 4.3
exercises intended to review the delated design
solutions against the objectives and to establish whether - methods for controlling the cost, time, quality and
they can be achieved in a more cost effective manner.
Economic appraisal assesses the costs and benefits
of expenditure proposals. It is the process of defining
objectives, examining options and weighing up the
costs and benefits before a decision is made. The main
source of guidance on appraisal is the Treasury’s “Green - assets and interests are properly controlled and
Book” (Economic Appraisal in Central Government:
A Technical Guide for Government Departments
HMSO 1991). It contains a checklist to ensure good
appraisal techniques and notes some common errors.
3.5 When an investment decision is made, a project is
“born” - though it may not necessarily pass later stages of
approval and reach completion. This decision is the first
stage of the Treasury’s project approval procedure (see
guidance no 38 “Approval of Works Projects”), ie the
initial approval of the options and the assessment of
the business case. The second stage is identifying the
preferred option, establishing a preliminary budget and
obtaining approval to take forward planning and design
work on this option.
3.6 Project evaluation can be used from the second
approval stage (by evaluating the chosen option against
the objectives in the appraisal) throughout the project’s
life, ending with the post-project evaluation and occu-
pancy review. It is important to note that the term
‘evaluation” in the ‘Green Book’ is concerned with post-
project evaluation only.
3.1 Post-project evaluation is a means of recording
experience from past projects, so it can be used where
appropriate to influence future projects. The aim is to use
data which is of benefit to non-specialists so that it can be
used to influence future decision making. This will help to
ensure that past mistakes are not repeated, and that
“good practice” is properly understood.
4. GENERAL PRINCIPLES
4.1 This guidance provides a summary of activities,
procedures and controls which should be in place at each
of the following stages of a well managed project:
- pre-project stage covering appraisal and
feasibility study;
- in-project stage covering outline design to
construction completion and commissioning; and
- post-project stagecoveringrectificationofdefects,
final payments, post-project evaluation and
occupancy review.
4.2 Evaluations should:
- assess the effectiveness of the project organisation;
- review the project execution plan;
- measure progress against planned cost, time,
quality and performance objectives;
- identify causes of deviation from plan; and
- recommend remedial action.
Project evaluation is used to check that:
performance characteristics of a project, from the
initial planning to post completion assessment, are
sound and effectively applied;
- management information is prompt, adequate and
accurate;
safeguarded from all losses;
- the cost of rechargeable works is recovered;
- there are adequate safeguards against fraud, error
and impropriety;
- material losses due to waste or inefficiency are
identified and recovered where appropriate;
- information on which costs and cash flow projections
are based provide a sound basis for the funding of
the project; and
- internal guidance and other established policies and
procedures are appropriate and are followed.
4.4 Project evaluation is independent of any established
reporting requirements. It can be used to encourage the
project team to stand back and review what it is doing and
where it is going in relation to the stated project objec-
tives. It should end with a formal written report presented
to senior management by the sponsor based on data and
reports from the project manager.
4.5 A disciplined and systematic approach to evaluation
is recommended so that it becomes a routine project
activity, heading off problems before they occur.
2
The project cycle
4.6 Every project can be visualised as a series of steps
requiring a variety of technical skills to manage inherent
risks. Initially objectives must be defined and options for
achieving them generated and evaluated before decid-
ing which option should be implemented. Project evalu-
ation techniques provide the sponsor with an additional
means for controlling and monitoring the progress of a
project.
4 .7 The steps in the project cycle and the stages when a
routine project evaluation should happen are at Figure 1.
Evaluations, project stages and approvals
4.8 Although projects and their procurement strategies
vary, there is a pattern of definite stages common to most
projects. Some of these stages overlap depending on the
type of project and the method of procurement. Project
evaluation is very effective when carried out at the end of
the project stages which are immediately prior to the next
approval stage. The link between project stages and
approval stages is illustrated in the following table.

Figure 1: The Project Cycle

Definition

Generation of
options

Evaluation of
short-listed options

SELECTING
CONTRACT

t
Decisions
Monitoring - Choice of options
and control -Whether to implement

Monitor
and con

- Responsiblties
Whether to implement
 Timing of evaluations
1
Project Stage Approval Stage

there is an identification stage, when the

need is apparent, the benefits are measurable,
the business case can be established, initial
studies are carried out and options are
appraised;
Business case/option appraisal.

the preferred option is taken forward and

subjected to further feasibility studies
(the preferred option may have established
a location and even a site for the building)
feasibility studies will examine the ways
the building might fit the site, the
environmental impact, planning and
statutory requirements and estimated
cost and funding;
Submission for approval to take forward planning
and design work.

planning and design work is taken forward

through outline (concept) design and into
scheme design; the project execution
plan is further developed;
Approval Estimate leading to submission for final
approval as soon as cost estimates of the
required accuracy can be prepared
(not linked to any specific design stage but
usually around final sketch plan stage).

detail design, procurement and

construction which may be sequential
or overlapping depending on the
contract strategy;
Submission for re-approval if at any time
forecast outturn cost is greater than approval
and/or conditions established at
final approval are likely to be broken.

commissioning and occupation. Occupancy review.

Timing 4.11 The ability to control the outcome of a project is

4.9 At intermediate stages, the natural points to consider
evaluation are again at the end of one stage and prior to
the commencement of the next, eg at the end of scheme
design but before detail design or prior to the submission
for final approval.
4.10 During construction, evaluations are recommended
at the mid point of the construction programme or once a
year for longer programmes. More frequent evaluations
should be considered for particularly complex projects.
Ad hoc evaluations to identify and solve specific prob-
lems may be called for at any time throughout the project.
greatest in the early stages decreasing rapidly as the
project progresses as illustrated in Figure 2 below. How-
ever, uncertainties about the outcome of the project are
also greater. Project managers should use risk analysis
techniques to help evaluations and advise the sponsor to
make plans and choose strategies which reduce risk, and
where appropriate place remaining risks where
they can be managed most effectively. Risks should be
reflected in the level of contingency allowance so that
outturn cost and time can be contained within forecasts.
See guidance no 4 1 ‘Managing Risk and Contingency for
Works Projects’.
 Figure 2: Degree of Project Control
High
Low
Topics for Evaluation
4.12 Annex A lists some of the topics to be evaluated at
various stages of the project and, for each topic, several
key issues to which the evaluation team should provide
answers. Controls and procedures often have to envolve
as the project progresses. The evaluation should check
that a control mechanisms are:
- established, appropriate and being used;
- reviewed and amended to meet changing project
needs; and
- complied with.
4.13 Where existing controls are considered unsatisfac-
tory, evaluations must provide the sponsor with recom-
mendations for improvement. An independent review
may be necessary if the evaluation either cannot establish
the problems adequately or reveals a particularly serious
problem for which the underlying cause or corrective
action cannot be identified quickly. This is particularly
applicable if poor performance, fraud or some other
impropriety is suspected.
Duration
4.14 Evaluations should be sufficiently detailed to satisfy
the sponsor that the project is on course to meet its
planned objectives or, if not, that the cause of any problem
has been identified and proposals made for its resolution.
4.15 Typically evaluations should last one to two weeks,
depending on the stage the project has reached and its
size, importance and complexity. This is particularly im-
portant when the evaluation is carried out to deal with a
perceived problem, so that corrective action can be
taken quickly and the effects of the problem mitigated.
4.16 Evaluation of a specific problem will be achieved
best by limiting its scope. For example, an evaluation to
identity and reduce the causes of a cost overrun, may be
limited to all changes made or planned. The review may
be further limited where the problem is more specific, eg
whether the cost effects of a particular design change
have been fully assessed.
Management
4.17 The project sponsor is responsible for ensuring that
evaluations take place at intervals recommended in this
guidance. The project manager, when appointed, is re-
sponsible for managing the evaluations in a disciplined
5
and systematic manner. Other participants may include
members of the sponsor’s organisation, the professional
adviser, the design team, the construction team and the
intended users of the building.
4.18 If project sponsors suspect that project managers
have not been fulfilling their responsibilities, they should
consider either an evaluation by the professional adviser
or an independent review. The professional adviser can
provide guidance on this.
Reporting
4.19 It is important that the evaluation should be docu-
mented clearly by all concerned so that if the need for a
further review is identified the team can follow the proc-
ess of planning, work, findings, conclusions and recom-
mendations.
4.20 Each participant in the evaluation team should keep
working files to support individual evaluation reports,
recording the details of each stage from evaluation plan-
ning through to reporting.
4.2 1 The project manager will provide the sponsor with a
written report, based on contributions from all the partici-
pants (but checked by the project manager as necessary)
highlighting the key areas, This report should address in
particular any aspects of control systems and procedures
which were found wanting. The implications of these
deficiencies should be explained together with recom-
mendations for improvements.
4.22 The project sponsor reports the results of the evalu-
ation to the project director on the basis of data and
reports received from the project manager. The spon-
sor’s evaluation report should comprise:
- a short (one to two page) executive summary listing
the reasons for the report, the principal conclusions
and the actions to be taken; and
- sufficient detail on the findings of the evaluation to
identify any further action required.
5. PRE-PROJECT EVALUATION
5.1 At this stage, prior to commencing design and
construction, the objectives of the project sponsor’s
department and the project itself are established. Project
objectives should be defied clearly and prioritised
in terms of time, cost, quality and performance. A pre-
project evaluation should be carried out to confirm that
this is so by investigating:
- the clarity of the project objectives;
- the viability of achieving those objectives;
- whether sufficient options for achieving the objec-
tives have been generated;
- that these options have been properly evaluated;
- the degrees of influence in the client organisation;
- that the main risks and constraints to the project have
been identified and assessed; and
- that the project has appropriate funding.
The purpose of a pre-project evaluation is to provide a
checkthat these matters are being or have been resolved
satisfactory.
5.2 If the evaluation reveals serious flaws in the project
or its proposed implementation, it may be necessary to
delay moving to the design stage until further investiga-
tion by a more detailed evaluation or independent review
is complete and the implications have been assessed.
Timing
5.3 The best time for a pre-project evaluation is shortly
after appointment of the project manager, and before
appointing the permanent design team. It may be neces-
sary to seek specialist advice, for example on risk identi-
fication and analysis, during the course of the evaluation.
In this event temporary appointments may have to be
considered.
Management
5.4 The project sponsor is responsible for ensuring that
the pre-project evaluation takes place. The project man-
ager should manage the evaluation.
Contents
5.5 Annex A indicates some of the topics to be reviewed.
The evaluation should establish that the necessary systems
and controls exist to proceed to design stage or identify
the means of achieving this. The project objectives,
preliminary contract strategy and the project organisa-
tion should be identified and procedures should exist for
the appointment of consultants, and for design and cost
control to the pre-tender stage. Many of the control docu-
ments at this stage are the initial versions for the project
and will be amended by the professional team
as the project progresses. However, they should be
appropriate for this stage.
Reporting
5.6 The project manager’s evaluation report should state
clearly whether the project should proceed as currently
proposed and if not, the actions necessary for the project
to be successfully continued. The report must also state
whether the evaluation has been adequate for its intended
purpose or whether a more detailed evaluation is
recommended for all or part of the project.
5.1 An indication of the issues to be covered in the
project sponsors’s evaluation summary is at Annex B.
However, the summary will need to be tailored to suit the
particular project.
Benefits
5.8 Evaluation plays a valuable role at this stage in
ensuring that the department has defined the project
objectives clearly and that the chosen preliminary con-
tract strategy is consistent with those objectives prior to
entering contractual relationships and commitment of
funds.
6
5.9 Most crucial decisions are taken prior to commenc-
ing design (see paragraph 4.11). The evaluation should
identify where action needs to be taken. Changes at this
stage are rarely as costly or as disruptive to the project as
those implemented later.
5.10 When the pre-project evaluation confirms that the
project objectives are achievable and that the necessary
controls are in place, the project can proceed to the
design stages.
6. IN-PROJECT EVALUATION
6.1 During the design stages of a major project, interac-
tion between the various parties is intense and complex.
Oversights and mistakes can easily occur. As the project
design progresses the opportunity for introducing
significant changes (without incurring costs for abortive
design work) reduces rapidly. A preplanned evaluation
should be carried out at the pre-tender stage to establish
that all is well with the project before entering into the
most significant financial commitment (ie construction of
the project).
6.2 Duringthe constructionphase, the project sponsor’s
department incurs the major part of the project
expenditure. Changes introduced at this stage are likely
to incur disproportionate cost increases and result in
delay to the project.
6.3 As projects can be subject to significant risks during
both the design and the construction phases, in-project
evaluations provide the project team with the opportunity
to stand back from the detail of the project and:
- evaluate how well they are working together;
- assess the status of the project against cost, time and
quality objectives;
- identify existing or potential problems;
- make forward-looking, practical recommendations
for improvements which can be implemented
immediately;
- check that the risks to the project are being man-
aged; and
- ensure a commitment of funds to the project.
6.4 It is good practice to carry out in-project evaluations
during:
- design: the project manager should advise the
sponsor on the timing, but typically this would be
prior to commencing detailed design and/or prior to
tender and construction; and
- construction: the project manager should advise
the sponsor on the frequency, which might typically
be at 6-9 month intervals.
Management
6.5 The project manager, reporting to the sponsor, is
responsible for managing the evaluation, the participants
and for providing the report.
Contents 6.13 The advantage of conducting an evaluation at the
outline and/or scheme design stages is that changes are
6.6 Annex A summarises some of the topics whichshould relatively easy and economic to introduce. This is not the
be evaluated during the design and construction stages. case once detailed design has taken place.
The evaluation process should check that:
6.14 Evaluation at mid-construction provides the final
- control procedures for the core topics are appropri-
check that the project is on course. Whilst significant
ate to meet current and future project needs and are changes to project scope at this stage will be costly to
being complied with; and implement, changes in control procedures are not and
- new controlmechanisms specific to in-project phases may be necessary if forecast time, cost or quality objec-
exist, are appropriate and are being complied with. tives are not being met.

Reporting 7. POST-PROJECT EVALUATION

6.7 Evaluations should be summarised and presented
to the sponsor in a report prepared by the project man-
ager based on contributions from project participants.
The report should:
- state clearly whether the project remains on course
to meet its plan
- consider risks and how they are being managed;
- provide fully evaluated recommendations to deal
with any existing or potential problems; and
- improve the effectiveness of project execution.
6.8 Design stage evaluations should recommend
whether to proceed to detailed design and/or construc-
tion They must state whether the evaluation is sufficient or
whether a more detailed independent review is required.
Duration
6.9 Outline design stage and scheme design stage
evaluations should be completed normally within 2 weeks.
If serious problems are revealed, moving to the next
design stage should be delayed until a further detailed
evaluation has been undertaken, the implications
assessed and remedial measures taken.
6.10 Construction stage evaluations should proceed in
parallel with construction and normally be completed
within 2 weeks.
6.11 Delaying the construction process is likely to prove
very costly and should only be considered if:
- the evaluation reveals serious problems which
significantly affect the achievement of project
objectives; and
- these problems will worsen significantly if con-
struction is allowed to continue before taking
remedial action.
In these cases a more detailed evaluation or independent
review may be necessary to provide recommendations
for corrective action.
Benefits
6.12 Evaluations during in-project stages should identify
the causes of any problems and provide recommenda-
tions for remedial action. The sooner this is done, the
more likely the project will be completed successfully.
It serves to limit the risk to which the project sponsor’s
department is exposed.
7.1 This should be carried out soon after completion of
construction to:
- measure the success of the project in achieving its
planned objectives;
- identify the reasons for any problems that have
arisen:
- determine what remedial actions should be taken:
and
- record the lessons which have been learnt to
improve performance on subsequent projects.
The objective is to learn lessons for application to future
projects and to pass them onto other departmentalprojects
or departments. The post-project evaluation report for a
building project may be supplemented by an occupancy
review (see Section 8).
7.2 There is a minimum level of post-project evaluation
which should be carried out on all major projects. The aim
ofpost-project evaluationis to improve project appraisal,
design, management and implementation, Its objective is
to get maximum benefit from accrued experience, not to
apportion blame.
Timing
7.3 Time is not usually critical at this stage. However, the
earlier the post-project evaluation is done, the earlier the
lessons are available for subsequent projects. In particular,
the evaluation should be completed sufficiently early to
ensure that:
- knowledge is still live;
- those involvedwiththeproject are still available; and
- outstanding obligations are identified and steps taken
to ensure they are fulfilled.
Management
7.4 The project manager is usually responsible for di-
recting the post-project evaluation. The evaluation re-
quires the active participation of all parties to the project
as part of their final duties and this should be set out in their
terms of appointment.
Contents
7.5 The evaluation should assess whether the objectives
of the project were realised and the established controls
complied with. The effectiveness of these controls should

7
also be reviewed and recommendations should be made
for improvement of controls on future projects.
Reporting
7.6 Post-project evaluationshouldconcludewithareport
prepared by the project manager using contributions
fromtheprojectparticipants. It shouldstateclearlywhether
the project met its objectives in terms of time, cost, quality
and performance. Recommendations for reducing the
possibilityofproblemsoccurringonfutureprojectsshould
be made. It should also highlight aspects of project man-
agement which have worked particularly well or not and
state that the evaluation was sufficient for its intended
purpose or whether a more detailed evaluation is required.
7.7 The sponsor adds a report on the project manager’s
performance. The sponsor submits the final post-project
evaluation report to the project director who uses it
to check whether the department’s objectives and
requirements have been met.
7.8 Typical issues to be addressed in the report are at
Annex B but the report should be tailored to particular
projects and evaluations.
7.9 Departments who use the Contractor Management
Information System (CMIS) and the Consultants Register
(CONREG) operated by Construction Industry Sponsor-
ship (CIS), DOE, 2 Marsham Street, London SW1P 3EB,
are required to submit performance reports on contractors
and consultants as a matter of course.
Benefits
7.10 A post-project evaluation provides an opportunity to
review the project with the benefit of hindsight. It reviews
all project stages and the problems that have arisen
thereby providing lessons for the future and identifying
how problems arose. It is also valuable to conduct post-
project evaluations on major projects that have gone
particularly well, in order to identify ingredients for
success.
7.11 The evaluation can also provide the sponsor with
assurance that the works have been completed in
accordance with the contracts, that consultants and con-
tractors have discharged their responsibilities and that all
potential liabilities have been recognised and quantified.
It will expose any shortfall in these areas and enable the
sponsor to recognise where commitments still exist and/
or damages might be recoverable.
a. OCCUPANCY REVIEW
8.1 When the project relates to a building, an occupancy
review should be performed one to two years after the
building has been occupied. The result of this review is an
addendum to the post-project evaluation. It records how
successfully the completed project meets the require-
ments of the occupiers and identifies any further work
required.
8.2 An occupancy review has the following objectives to:
- consider whether the objectives of the users have
been met. If those objectives changed, or were
8
anticipated to change duringthe course oftheproject,
to assess whether those changes were accommo-
dated:
- confirm that the building functions in use as planned;
- ensure that any outstanding work, including defects,
have been remedied; and
- ensure that key lessons learnt on occupation are put
into practice without delay for the benefit of future
and continuing major projects,
Management
8.3 The occupying business manager responsible for
the property should arrange for the occupancy review to
be conducted. Assistance will be required from the senior
users and preferably also the project manager.
Contents
8.4 An occupancy review should include:
- an assessment of whether the users’ requirements
have been met. If not, consideration should be given
to the briefing process and the extent to which
users were consulted and involved as the design
developed;
- costs in use - how the planned operating cost of the
building compares with actual cost and how the
planned efficiency and effectiveness of the equip-
ment and facilities compare with actuals; and
- any further recommendations the users can make to
improve VFM performance of future projects. For
example, the users may consider that some of the
facilities provided were unnecessary.
Reporting
8.5 Typical issues to be addressed in the occupancy
review report are at Annex C. The report should be
tailored to suit the individual project.
Benefits
8.6 The occupancyreviewis the finalfeedbacklinkfrom
the users which closes the loop of the project cycle. The
review also identifies the existence of any outstanding
obligations, with which the project sponsor must deal.
9. INDEPENDENT REVIEWS
9.1 Project sponsors should commission independent
detailed reviews if they are concerned about either
the general status and progress of the project or, more
usually, about specific issues.
9.2 Its aims should not be limited to identifying the root
causes of any problem but should also make practical
recommendations for corrective action and aim to
generate direct and significant time, cost and quality
improvements.
When an independent review is necessary
9.3 The need for an independent review may arise at
any time when the project sponsor considers that certain
problems are serious enough to require separate inves-
tigation However, the project manager should also
advise the project sponsor when one is necessary. There
are a number of typical warning signs:
- cost issues:
- large increases between successive estimates;
- tenders for construction being significantly above or
below estimate;
- a significant overspend or underspend compared
with predicted cash flow;
- unpredicted changes resulting in high additional
costs;
- large contractual claims for additional payments or
extensions of time; and
- a final contract sum which is much higher than the
tender sum;
-time issues:
- progress falling significantly behind programme eg
failure to meet milestone dates;
- delays in providing the contractor with necessary
information, which results in delays and/or addi-
tional construction costs; and
- late completion;
- quality and performance issues:
- a pattern of failings in design or workmanship; and
- a finished product which fails to meet the users
requirements in certain important respects;
- management/organisation issues:
- delays, cost increases or reduced quality standards
arising from failure to provide the right people with
the necessary information to make decisions or take
actions at the right time; and
- lack of clarity of roles and responsibilities,
Procedures
9.5 Reviews will be capable of identifying problems and
providing recommendations for their resolution. The
reviewer’s approach should be objective. Subjective
judgements, for example relating to truth or fairness,
should be expressed specifically as an ‘opinion’ as distinct
from a ‘finding’.
9.6 The project sponsor should make reviewers aware
of the circumstances which make the project unique.
Although reviews may cover the same topics as evalua-
tions (see Annex A) they are often in greater depth and
therefore detailedprocedures will need to be established
individually for each review.
Review of project management controls
9.1 Project management controls can be audited as
follows:
9
- systems evaluation;
- compliance testing; and
- tests of detail.
The flowchart at Figure 3 (page 10) indicates this process.
Systems evaluation
9.8 This comments on the adequacy of control system
and offers recommendations for improvement. Th
approach is broadly based rather than detailed and i
conducted in two stages. First, the system is recorded
in terms of its operation, preferably in flowchart forn
Second, the system is evaluated by defining its control
objectives and assessing the strengths and weaknesses
of the system in meeting those objectives.
9.9 A typical evaluation might cover the following:
- is the procedure clearly defined?
- is someone nominated to carry out the procedure
- is this person fully aware of the responsibility fc
carrying out the procedure?
- is the person required to demonstrate that th
procedure has been followed?
- are there any further procedures providing for a
independent witness or check that the procedure
has been carried out? and
- does the procedure provide the intended control
Compliance testing
9.10 This is used to check that the system is operating a
intended. It focuses on the key controls of the system an
the principal management actions which must be carried
out if the system is to operate as intended. The tests are i
whatever form is appropriate to determine whether the
key controls are operating in practice. Examples of these
tests include:
- observation of the procedure in operation;
- examination of working papers and formal docu-
mentation; and
- interviews with project participants to determine th
actual procedures in use.
9.11 If systems evaluation has proved that the system is
itself inherently weak, compliance testing is usually
inappropriate.
Tests of detail
9.12 These may be necessary when systems evaluatio
and/or compliance testing have revealed weaknesse
and deficiencies. There are two types of tests of detail:
- those concerned with financial values; and
- those concerned with the quality of managemer
decisions.
9.13 Financial tests of detail either start at:
 Figure 3: Audit Flowchart

Select system to be audited

I

Does system exist? ) No

7 I

I Gather data on how I

1 system operates
I

I
Systems
evaluation I Flowchart the system
I

I Define what the system is

intended to achieve I

t
Evaluate strengths and
weakmesses of system

I Report to management
I
- - - - - - - - - - - - -_-----
I
I
I
I
1 1 Debekey contr;kthesystem I

I
Devise sampling procedures
and compliance tests I ~~
Compliance
testing I I
I I
I I
I I
I I
I
/ Reporttort I + - - - - - - - - - - - - - - - - I I
I
I
I
I
I
I
I
I
Tests of detail I
I
I
I
Report to management +--_---_____---------- -I

10
 - a figure in an account - then trace the data or facts during their investigation, They should have rel-
evidence validating that figure (eg expenses or evant experience and a successful record of conducting
costs); or construction project reviews. Suitable candidates can be
- found in construction and property management consult-
the data or evidence - then check that the correct
ants, project and cost management consultants and
figure arising from that information is included in the
consulting engineers. The professional adviser and/or
account (eg income or deductions from expenses).
project manager can advise the project sponsor on
9.14 During the course of a project, some management selection.
decisions fall outside the scope of systems and control.
9.20 Details of the form of the review, the scope of the
These decisions may have to deal with unforeseen
work and the final report should be agreed between the
circumstances eg poor ground conditions, bad weather
project sponsor and the review team before work starts.
or poor interaction between the parties to the project.
Objective tests of detail consider the quality of these 9.21 The reviewers will need the co-operation of the
decisions by: project participants in gathering information. However,
- setting down clearly the relevant history and facts when the project sponsor has commissioned a review
rather than an evaluation of the project, participants may
relating to the decision;
feel threatened and may be reluctant or unwilling to co-
- considering all options available to management; operate. This may reduce the effectiveness of the review.
- analysing how well each option relates to the The obligation to co-operate must therefore be included
in the terms and conditions of engagement of the
achievement of the project objectives; and
project participants. When fraud or negligence are being
- recording the reasons for selecting a particular investigated, it may be necessary for the sponsor to
option. remind participants of their contractual obligations on
co-operation.
9.15 Good decision makers should have followed the
process described above. However, it is stillnecessary to Contents
check that the process has been completed correctly and
9.22 Annex A summarises some of the topics which may
that the associated working papers are on file.
be included at different stages of the project. The project
sponsor should define the scope of the review and
Scope of review
prepare a brief for the review team.
9.16 The scope of an independent review will depend on - -
9.23 The level of detail of the review depends on:
the nature of the problem under consideration, its associ-
ated risk and why it is being carried out. If the objective is - the project sponsor’s brief to the review team;
simply to assess the effectiveness of systems and controls
- the project stage;
and to provide recommendations for improvement,
the review may be limited to systems evaluation and - the matter under investigation: and
compliance testing. If a judgement on a specific issue is
- discoveries made during the review process.
required, compliance and detailed testing will be neces-
sary. If fraud is suspected, all three levels of review are The reviewers should investigate whether the controls
likely to be necessary to reveal the full extent of the are clearly defined and are being satisfied.
problem.
November 1993
9.17 However, the review’s size may be limited by
sampling techniques. Judgmental sampling relies on the
reviewer’s judgement to pick out the major or most
contentious items for investigation. Whilst this method is
quick and cost-effective, the project sponsor should
recognise that oversights may occur.
9.18 Statistical sampling is likely to be more accurate but
more time-consuming. The reviewer selects the size and
type of sample based on an assessment of risk and
importance. The reviewer will advise the sponsor on how
and why the sample was chosen and the confidence that
can be placed in the results.

Management
9.19 The project sponsor is responsible for commission-
ing independent reviews and appointing the review team
to undertake the investigation. The team should be inde-
pendent, without any conflict of interest, unbiased and
have no reason to protect any individual or conceal any

11
ANNEX A

OUTLINE CHECK LIST OF TOPICS FOR EVALUATION

This Annex lists some of the topics (with their key issues Force Majeure
and problem areas) which may be reviewed during catastrophic events
project evaluation. Where appropriate, evaluation teams
should both examine and provide answers to each. Design development
However, the list is not exhaustive and will need to be designers
reviewed depending on the project’s stage and its design team responsibilities
contract strategy. In addition, the list may also need design brief
amendment to reflect the scope and requirements of the design process
particular project. The project sponsor, on the advice of design programme
the project manager and/or professional adviser, should design elements
define the scope of partial or specific evaluations. the design
Controls andprocedures evolve as theprojectprogresses Estimating Data
and evaluations should establish that they are:
cost estimate for professional services (resources)
- established and appropriate to the stage of the
works cost estimate
project; other cost estimate
- being reviewed and amended to suit the changing project programme
needs of the project; and Site Conditions
- complied with.
the site
Where procedures and controls are considered unsatis- conditions above and below ground
factory evaluations must provide recommendations for susceptibilities - flooding, bad weather
improvement. labour availability
existing services
The suggested topics for evaluation are as follows: existing buildings
Project Definition environmental impact assessment
user requirements Construction and Commissioning
project objectives contractors
project brief site management responsibilities
planning, social and environmental impact assessments health and safety measures
Project organisation and management emergency procedures
permits to work
department’s client organisation construction methods
project management team long delivery, short supply items
project organisation structure commissioning methods
risk assessment handover procedures
approved budget operating manuals
cost, time, quality and change control procedures as built drawings
contract strategy
project execution plan
procurement procedures
detail design
reporting systems
contractual claims
Availability of funds
Statutory and other External Factors
planning approval
building regulation approval
health and safety regulations
site access
inflation
interest rates
currency exchange rates
VAT

12
 ANNEX A - continued

PROJECT DEFINITION Project Organisation and Management -continued

User Adequately defined? Project Project manager pro-active?

requirements Incomplete or unclear? management Continuity in project management’
Conflicts between different user team Project manager’s links with
requirements? continued participants effective?
Likely to change? Project manager administers
contracts efficiently?
Project Properly defied? Queries dealt with promptly?
objectives Incomplete or unclear?
Conflicts between primary/ Project Clearly defined?
secondary objectives? organisation Clear direction and
Possibility of change? structure communication?
Project team responsibilities clear?
Project brief Complete? Gaps or overlaps?
Inadequate or unclear? Arbitrary external interference
Conflicts between different in project team?
requirements? Clear communication and
Possibility of change? identified responsibility with
Are the following unclear, in interested organisations not
conflict or likely to change: directly involved?
- site;
- scope: Risk Carried out at important stages?
- extent; assessment Used to determine contingency,
- quality and performance: tolerance and approved budget?
- design concept; Control budget within approved
- cost and time; or budget?
- completion date? Conditions attached to
Sufficiently output orientated to authorisation to proceed?
provide design flexibility?
Cost Effective and working?
Planning, Carried out? control Control budget regularly
social and Issues of concern identified? procedures reviewed?
environmental External authorities consulted? Costs monitored and exceptions
impact Their requirements met? acted upon?
assessments Outstanding matters? Time control effective and
working?
Project programme regularly
PROJECT ORGANISATION AND MANAGEMENT reviewed?
Progress monitored and
Department’s Clearly defined? exceptions acted upon?
client Clear direction and Quality control effective and
organisation communication? working, exceptions acted upon?
Sponsor and client team Change control effective and
responsibilities clearly defined? working?
Appropriate? Sponsor’s approval to changes?
Gaps or overlaps?
Arbitrary external interference Contract Takes account of project
in client team? strategy objectives?
Sponsor administers contract Project execution plan current?
efficiently? Defines the work packaging of
Notes and decisions issued design, procurement,
promptly? construction and commissioning?
Defines how activities are
Project Correct balance of resources coordinated and managed?
management and expertise?
team Effective? Procedures for Effective and working?
Responsibilities clear? procurement Comply with EC/GATT rules?
Appropriate? Tender documents adequate?
Project manager exercises Tender periods adequate?
adequate authority? Information reliable?

13
Project Organisation and Management -continued STATUTORY AND OTHER EXTERNAL FACTORS

Procedures for Tender documents protect Planning Possibility of delay in obtaining?

procurement department from low tenders approval, Project compliant with building
continued with potential for claims? building and health and safety
Tender evaluation appropriate? approval, regulations?
Approval and award of contracts licences and Necessary statutory approvals
effective and working? permits obtained?
Contracts clearly define scope Access to site subject to approval
of work and responsibility of of external organisations or
contracting party? authorities?
Any nominated sub-contractors? Bureaucratic procedures likely to
Department’s responsibilities cause delay?
recognised and taken into account? Anticipated changes in
regulations or legislation affect
Detailed Complete before construction project?
design starts?
Design requirements properly Inflation, Inflation taken into account?
coordinated? interest rates, Affected by interest rates?
Level of design detail appropriate rates of - taken into account?
and adequate? exchange Affected by rates of exchange?
Likely to change after start of and VAT - taken into account?
construction? VAT taken into account?
Design information complete and
timely?
Queries and conflicts resolved FORCE MAJEURE
quickly?
Catastrophic Department’s investment
Reporting Effective and working? events protected from extreme
systems Include narratives on current status weather, flood, landslips, earth
of cost, time, change and quality? quakes, fire, crashing aircraft or
Shortfalls in meeting objectives other catastrophic events?
highlighted? Adequate plans for dealing with
Corrective action identified and them?
initiated? Adequate precautions against
Identify actual and anticipated war, revolution, riot, insurrection,
critical areas? hijack, piracy, pestilence,
Essential information provided in disease, etc?
a coherent format? Protected from claims by
Information used to prompt action consultants and contractors
and take decisions? under terms of force majeure
clauses?
Contractual Likely to arise?
claims Performance likely to prompt
claims? DESIGN DEVELOPMENT
Adequate records maintained to
counter claims? Design team Adequate vetting before short
Validity and potential exposure to listing?
actual claims independently Selected using weighted quality
audited? and performance criteria for bid
evaluation?
Properly experienced and
AVAILABILITY OF FUNDS competent?
Financially secure?
Availability Subject to approval or annuality?
of funds Dependent on other departments Design team Adequately defined?
or agencies? responsibilities Clear?
Allocation adequate? Clear organisation structure?
Funding policy (or funding policy Effective?
of other departments or Match technical requirements?
agencies) likely to change? Correct balance of resources and
Timing of funds match cashflow expertise?
forecasts? Gaps or overlaps?
Timing or scale of funds likely to
change?

14
Design Development -continued
Design briefs Complete?
Issued early enough to design
team members?
Adequate and clear?
Conflicts between different
requirements?
Any omissions?
Approved by sponsor?
Design process Managed and coordinated
effectively?
Exchange of technical and design
information effective?
Design optimisation accounts for
relevant objectives?
Design Delivery of information ahead of
programme construction?
Design resources deployed
adequate?
Meets all requirements?
Design Selected to meet requirements of
elements contract strategy and execution
plan?
Costed as developed?
Design within constraints of
control budget and design
prog-ramme?
The design Appropriate?
In accordance with design
brief?
Design data appropriate?
Makes use of new or untried
technology?
Procedures for designs to be
reviewed by sponsor?
ESTIMATING DATA
Cost estimate Reliable for resources?
for professional Based on ad valorem approach?
services How applied percentages
determined?
Reflects current market forces?
Realistic and reliable?
Resources cost estimate based
on consultants’ costed
proposals?
Includes allowances for costs
arising from terms and
conditions of consultants’
contracts?
Allowances realistic?
All foreseeable work of external
advisers, project managers,
architects, design and specialist
consultants, quantity surveyors
(and in-house staff) included?
I.5
Estimating Data -continued
Works cost Reliable?
estimate Based on quantity surveyors’
approach?
How accurate are quantities?
Historical all-in data reliable?
Provisional lump sum items
reliable?
Proportion of work costed using
lump sum guestimates?
Reliable percentage applied to
cover contractors’ preliminaries,
staff, plant, accommodation,
overheads and profit?
Figures reflect current market
forces?
Realistic and reliable?
Based on contractors’ tenders?
Includes allowances for costs
arising from terms and
conditions of contractors’
contracts?
Allowances realistic?
Work for health and safety,
security, site preparation,
temporary works and facilities,
permanent materials, plant and
equipment, construction and
installation, connection to
services, commissioning and
handover included?
Other costs Reliable?
estimates Provide adequately for land
purchase?
Handover and occupancy costs
included and reliable?
Department supplied furniture
fittings and equipment
reliably identified and costed?
Works of art included?
Project Reliable?
programme Level of development?
Produced using CPM or PERT
methodology?
Properly reflect objectives of
contract strategy and execution
plan?
Regularly updated?
SITE CONDITIONS
The site Greenfield or brownfield?
Data adequate on archeological
remains, underground
obstructions, contamination and
ground conditions?
Adjacent structures or works
likely to be affected?
Special precautions necessary?
Department’s interest protected?
Site Conditions -continued
The site Liable to flooding?
continued Access adequate?
Any additional infrastructure?
Liable to unusual weather
conditions?
Seasonal weather pattern affect
programme?
Remote?
Adequate local labour and
accommodation?
Will local customs, holidays or
religious restrictions affect
programme?
Existing All identified locations known
services accurately?
Present a hazard?
Require future maintenance?
Available for use during
construction and installation?
Existing
installations Any locations currently
inaccessible?
Locations of asbestos and
hazardous material identified?
Environmental impact
assessment carried out?
Any matters arising?
CONSTRUCTION AND COMMISSIONING
Contractors Adequately vetted before short
listing?
Experienced and competent to
undertake contracted works?
Quality of management and
coordination adequate?
Contractors, sub-contractors or
specialist suppliers to provide
design services?
Sub-contractors and specialist
suppliers experienced and
competent to undertake works?
Quality of coordination and
supervision works adequate?
Financially secure?
Management Responsibilities clear?
Representation on site of the
various functions?
On site organisations have
correct balance of resources
and expertise?
Clear individual management
responsibilities?
Interfaces between organisations
clearly defined and understood?
1
Construction and Commissioning -continued
Health and Adequate?
safety Individual and company
measures responsibilities clear?
Client’s responsibilities
recognised?
Emergency procedures
established?
Updated regularly?
Permits to work?
Effective and working?
The Methods defined and agreed?
construction Realistic programme drawn and
agreed?
New, unusual or untried
construction processes?
Special skills required?
Special plant or equipment
required?
Permanent materials, fixed plant
or equipment in short supply?
Approval subject to special
testing, design or storage?
Points when management passes
from construction to
commissioning defined?
Commissioning Methods defined and agreed?
Scope of work defined?
Individual items of equipment, the
systems and the whole system
identified?
Adequate performance
specifications?
Realistic programme drawn and
agreed?
Coordinated with achievable
dates for construction/
completion?
Ongoing construction and partial
operation?
Points when management
responsibility passes from
construction to project handover
defined?
Handover Effective and working?
procedures Completion of contractual
obligations ensured?
Operating manuals and as-built
drawings complete and of
required quality?
Scope of required documentation
adequately defined?
Includes scope of supplier’s
documentation?
 PROJECT EVALUATION SUMMARY

Project name: Evaluation date:

Project sponsor: Department:

Project stage: Pre-Project/In-Project/Post-Project *

* delete as applicable

Project status Conclusions

Theprojectsponsor’sreportmustbe basedontheproject The project sponsor should provide information on les-

manager’s evaluation report and record:
- whether the objectives of the evaluation were met;
- whether the systems, procedures and controls for
the areas under evaluation:
- have been established;
sons learned during the course of the evaluation so that
future projects may benefit from:
- what went particularly well and why; and
- where problems were experienced, the reasons for
these and recommendations on how they could be
avoided.

- are or were appropriate; and Attachment

- are or were being used; The project sponsor should also attach the brief issued to
the project manager for the evaluation.
- whether the project objectives in terms of time, cost
and performance have been defined and are being
met at the time of the evaluation; and
- an explanation of deviations from those objectives,

Recommendations

The project sponsor should provide the following recom-

mendations, based on the project manager’s report:
- whether the evaluation was sufficient and, if not:

- what particular aspects should be subject to

further evaluation or independent review;

- whether the project should ‘proceed as currently

proposed and, if not:
- an explanation of the reasons;

- proposed actions to allow the project to

proceed; and

- implications, timescales and responsibilities of

these actions.

17
 OCCUPANCY REVIEW SUMMARY

Project name: Review date:

Project sponsor: Department:

Occupying manager: Department:

Date of occupation:

Project status Recommendations

The report must address: The report should consider from the point of view of the
user’s requirements those aspects of the completed
building that are particularly:
- whether the user’s original requirements have been
met. If not: - useful;

- what were the shortfalls; - efficient;

- explanations of these; - surplus to needs;

- if the user’s requirements changed significantly - uneconomic to operate;

during the course of the project:
- and under performing.
- what these changes were;
Recommendations and what should be included and
- whether they were accommodated and, if not: avoided on future projects should be provided in the light
of this assessment.
- are they still required;

- whether the facilities provided are adequate, fall

short of or exceed requirements, appropriate
supporting evidence should be provided;

- identification of outstanding defects and remedial

works; and

- an assessment of whether the building is economic

to maintain and operate, with details of any unsatis-
factory aspects,

18
 OTHER GUIDANCES

Applicable CUP Guidances Produced by Property and Buildings Directorate,

Department of the Environment, St Christopher
No 1 Post Tender Negotiation House, Southwark Street, London SE1 OTE

No7 Project Sponsorship: Planning and Progress Contracting for Works Services
Monitoring
Contractor Management
No 11 Debriefing Information System Handbook

No 12 Contracts and Contract Management for Consultants Register Guide

Construction Works
Guidelines for the Design of Government Buildings
No 13 The Selection and Appointment of Works
Consultants Environmental Action Guide
(including series of six notes)
No 15 Estimating for Works Projects
Historic Buildings Conservation Guide
No 17 Quality Assurance in Building and
Construction Fire Precautions Guide

No 19 PTN Update The Government Property and MOD Fire Standards

No 20 The P&S Function and Works Projects Standard Fire Precautions for Contractors

No 25 Cost Management for Works Projects Better Briefing means Better Buildings by J J W O’ReilIy
published by the Building Research Establishment of the
No 26a Selection of Works Contractors: Department of the Environment.
Prequalification and Tendering Procedures

No 26b Selection of Works Contractors:

Bid Evaluation and Award

No 33. Project Sponsorship

No 36 Contract Strategy selection for Major Projects

No 38 Approval of Works Projects

No41 Managing Risk and Contingency for Works

Projects.

To be published

Procurement of Project Management and other consul-

tancy services (excluding design) including model form
of contact.

19
CONTENTS Commencing 8. OCCUPANCY REVIEW 8.1
paragraph
Management 8.3
1. INTRODUCTION 1.1 Contents 8.4
Reporting 8.5
2. SCOPE 2.2 Benefits 8.6

3. DEFINITION OF TERMS 3.1 9. INDEPENDENT REVIEWS 9.1

4. GENERAL PRINCIPLES 4.1 When an independent review is necessary 9.3

Procedures 9.5
The project cycle 4.6 Review of project management controls 9.7
Evaluations, project Systems evaluation 9.8
stages and approvals 4.8 Compliance testing 9.10
Timing 4.9 Tests of detail 9.12
Topics for evaluation 4.12 Scope of review 9.16
Duration 4.14 Management 9.19
Management 4.17 Contents 9.22
Reporting 4.19

5. PRE-PRO JECT EVALUATION 5.1 ANNEX Page

Timing 5.3 A Topics for evaluation 12

Management 5.4
Contents 5.5 B Project evaluation summary 17
Reporting 5.6
Benefits 5.8 C Occupancy review summary 18

6. IN-PROJECT EVALUATION 6.1 D Other guidances 19

Management 6.6 E Contents 20

Contents 6.7
Reporting 6.8
Duration 6.10
Benefits 6.13

7. POST-PROJECT EVALUATION 7.1

Timing 7.3
Management 7.4
Contents 7.5
Reporting 7.6
Benefits 7.10

20