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The audit programme which the CAT compiles as part of the NCAP consists of audits all of the major programmes and the assets over a 12 month period. These audits are mandated as part of Network Rail's Health and Safety Management System, they must be done because they are part of Network Rail's agreements with the Office of the Rail Regulator (part of the Government's Department of Transport) as outlined in the Operating License. However, this is not the only reason for conducting these audits - we need a way to ensure that we comply with legislation, industry standards and our own business standards.
Audits are also used in a proactive manner to highlight good practices. They enable us to fix any non-conformances that we may find and also highlight corporately-related issues which could be a concern across the whole of Investment Projects.
An example audit programme is attached as Appendix A. As can be seen the CAT conducts audits of 2 or 3 Major Programmes per quarter (as well as additional audits of assets and cross-functional audits (which feature an audit of a specific topic carried out by an audit team gathered from Investment Projects, Maintenance and Operations and Customer Services)).
Each Major Programme Audit consists of 7 "core" topics. These are identical for each programme and are determined by the CAT examining Network Rail's standards and processes, determining the current principal risks for the Investment Projects portfolio and evaluating them using a risk matrix technique. Additionally, each Programme is requested to select 3 specific elements which they have determined to be their 3 principal risk areas. Hence the audit consists of 10 mini-audits, some of which look at compliance with standards and others which examine the effectiveness of risk-mitigation measures.
Each Major Programme Audit is conducted by a team of around 7 or 8 people, resourced from an independent major programme as well as those from central Network Rail functions. The audit is led by an individual from the CAT. Each of the 10 sub-audits are divided up between the audit team according to their specialist knowledge.
Appendix B presents a list of core topics for the 2010-11 NCAP.
Appendix A shows that the Major Programmes of FTN and Building and Civils(1) require to be audited within quarter 1 of the NCAP for 2010-11. Representing the CAT, I have been assigned to lead the audit of the FTN Programme. This is the "project" which I will use as a basis for this assignment.
Identify a simple financial tool to check if the project is viable
For the project in question, Cost Benefit Analysis (CBA) was used to evaluate its desirability. The process involves (either explicitly or implicitly) comparing the total expected costs against the total expected benefits in order to determine if the action is profitable. The purpose of CBA is to gauge the efficiency of the action against doing nothing.
The process involves comparing the monetary value of initial and ongoing expenses vs. the expected return. During CBA, monetary values may often be assigned to intangible effects such as the various risks which could be attributable to the full or partial failure of the project (such as loss of reputation or damage to long-term business prospects). In some cases these values must be attached to the cost of a human life or serious damage to the environment and these are therefore controversial.
An audit minus 90 (A-90) days meeting is called. The purpose of this meeting is for the lead audit from the CAT to brief to the Programme Team the aims an objectives of the audit as well as how it will be structured and for the Programme team to provide him with background information on the Programme (i.e. the projects that are currently being run, their status in terms of progress against the Guide to Railway Investment Projects (GRIP), copies of Programme Management Plans, etc.). The main aim of the A-90 meeting however, is for the Programme Team and the lead auditor to agree a 10-day "window" for the audit activity, during which all 10 sub-audits must take place to minimise the disruption on the Programme (3 members of staff - 1.5 man days).
The lead auditor then has to request his audit resources. For the FTN audit, it was agreed that the independent programme which would provide resources would be the Thameslink Programme. This means that they will provide a Health and Safety Manager, an Environment Specialist, an Assurance Analysis Specialist, an Engineer and a Contracts and Procurement manager who all have auditing skills. In addition, resource is also provided by the Central Programme Controls team (for the Delivery of Work Within Possessions and the GRIP elements).
The lead auditor makes a series of calls to inform the identified audit team of the impending audit and determine their availability within the 10-day window. It is then necessary to "marry-up" the audit team's availability with those who have been selected by FTN to be the auditees. In this way, it is possible to populate an audit timetable which identifies the auditor, the auditee, where and when the audit is taking place. The time taken to make these arrangements is less easy to quantify, because it occurs over a 2-week period, but is not continuous. However, the amount of time in phone calls and documenting arrangements could be around 2.5 man-days.
Project specific execution (doing) activities
Please refer to Appendix C, which presents a chart with approximate timings on how long a Major Programme audit requires to deliver.
There is some overlap, as the "doing" section of the audit also involves an element of preparation/planning from the side of both the auditor and auditee so that they are prepared on the day for their section of the audit. Because the protocols are circulated in advance, both sides are aware of the questions which will be asked and the auditee has the opportunity to prepare his responses. Appendix C presents a figure of 54 man days in total, from the preparation to the completion of the audit activity - this includes each auditor writing up his notes. Including auditee-time, execution probably accounts for 79 days.
Cost of producing report
Usually the lead auditor will chase the audit team for their notes which he will use to produce a summary report for the Programme Team. The production and approval of the report probably takes around 3 man days.
Cost of follow-up activity
This section relates to the time spent jointly by the CAT and the Programme to resolve all of the audit findings and close them out. Obviously, this can vary depending on the number of issues found during the audit and the amount of effort to close each one. Taking an average figure of 20 findings, this could take around 10 man days of combined auditor/auditee time to resolve and close down.
The benefits of audit activity are largely intangible. It is difficult to put a cost on an improvement in the level of compliance with company standards or the degree in consequential reduction in the cost of safety-related issues. This is because it's also difficult to associate cause and effect in respect of quantifying an improvement in safety performance as being directly attributable to positive contributions from audit activity (although, there is undeniably, some definite contribution).
It could be argued from a moral standpoint however, that if a finding from an audit or inspection saves one life or a person from serious injury or prevents a serious environmental incident, then the benefits far outweigh the costs.
Multi-disciplinary audit of the FTN Programme
"Generic" planned activity (protocol development, audit templates, risk analysis) - 2.5 man days
Improved compliance with legislation/company processes - saving not quantifiable
Project specific planning- A-90 meeting - 1.5 man days
- Identify audit resources - 2.5 man days
Reduced risk of a major safety/environmental incident - financial cost of one single fatality to an organistation - £1 million
- planning, doing, writing-up (auditor and auditee time) - 79 man days
Workforce more risk aware, safer and more engaged - saving not quantifiable
Produce Report- 3 man days
Reduced risk of Office of Rail Regulator intervention and/or damage to reputation - saving not quantifiable
Follow-up activity- actioning findings, meetings to close down issues - 5 days
Reduced employer's liability insurance.
Total - 96 man days
Possible savings >£1 million per year.
Plan the Project using an appropriate Project Planning technique
The multi-disciplinary audit of FTN has been planning using a Gantt chart. This is preferable to a project flow-plan because it is important that the project is delivered within Quarter 1 of the financial year. Any slippages against schedule need to be monitored and necessary adjustments made to the plan to ensure delivery on time.
The Gantt chart also enables an easy assessment of which tasks can be run at the same time as others and which are interdependent and must follow on after the previous one - i.e. the "critical path" of the process. Thus it can be determined that if a task is delayed, whether it will affect the critical path and thus delay the whole project.
The Gantt chart for the FTN audit is shown as Appendix D.
The chart shows that most of the activities must all follow within a strict sequence (with the exception of the distribution of the audit protocols, which are presently awaiting approval and will require distribution within, say, 2 weeks of the audit for auditors/auditees to prepare for the audit). Thus it is possible to see the critical path and how much "float" a task can have before it impacts on the start date of the next task and possibly on the proposed completion date of the project.
Set objectives/milestones to monitor performance and review plans
Milestones for the project have been added to the Gantt chart at the following points (see also Appendix D).
Milestone 1 - Hold A-90 Meeting with Programme
Milestone 2 - Hold audit Opening Meeting with Programme team
Milestone 3 - Complete audit activity
Milestone 4 - Hold Consolidation Meeting between auditors and Programme Head of Health, Safety, Environment and Assurance (HSEA)
Milestone 5 - Hold Closing Meeting with Programme team
Milestone 6 - Produce Audit Summary Report
Milestone 7 - Complete the close out of all audit findings.
Note that for the FTN audit, the A-90 meeting has not strictly been held 90 days prior to audit activity. This is often the case for Quarter 1 audits, where the CAT has to prepare the new NCAP and new protocols before the new Programme can start.
These milestones have been set as they all hold particular significance to the delivery of the project and any slippage may have an impact on whether the audit can be completed in accordance with the schedule. In the short term, completion of Milestone 6 on time, is more significant than Milestone 7, this is because a complete close out cannot be realistically predicted until Milestone 5 (when all of the findings are known and the actions and timescales are agreed).
All other milestones have been planned and agreed with the Programme around Milestone 3. The dates for the audit activity are really the first ones to be agreed, and then all others fall-in around them. It should be noted, that it is not always relevant to hold a consolidation meeting, this is dependent upon whether there is some disagreement relating to a finding, or its significance. In this case it is important to have this discussion so that all of the findings are agreed prior to the closing meeting.
The milestones are reviewed during weekly teleconferences between the CAT members. If there are problems/difficulties, the team escalate then to the Principal Assurance Specialist for assistance in resolution.
One Project Evaluation technique
The most significant Project Evaluation tool that the CAT uses is a "Lessons Learnt Workshop". This is a formal, quantitative evaluation technique used every quarter, to look at how the audit projects which took place in that quarter progressed and what improvements could be made for the following quarter.
The workshop consists of a meeting between all 5 CAT members; it also invites a number of auditors from the Programmes who took part in audits to add their contributions.
The agenda looks at the following points:
Review of previous actions;
Audit Planning process;
Scope and scale;
Audit Activity (execution) process;
Feedback (to Principal Assurance Specialist);
Consolidation and closing meetings.
National Integrated Audit Database;
Progression of Non-Conformance reports.
The CAT captures any required actions resulting from the workshop either as specific actions or as part of ongoing team initiatives (for example process changes).
Some examples of the issues discussed and findings captured are:
pre-meeting held with all new specialist auditors to brief them on the accepted process;
cross-fertilisation of ideas and experiences during the audit activity;
auditor resource review conducted by CAT to produce a list for all to use;
Positive findings are reinforcements of areas where the Programme team performs well; this increases the team's confidence.
selection of incorrect auditees and lack of specialist support;
observations from audits need consistent method of management;
Planning phase needs to be robust to avoid individual auditees being overloaded during the audit activity phase.