Your Least Favorite, Most Important Word: Audits

The word “audit” may be the most universally hated word in the English language, narrowly edging out other top contenders like “clogged” or “mandatory.” In the 2023 Oscar race, the Best Picture category featured stories of world wars, Irish blood feuds, rock n’ roll superstars, and Tom Cruise. The movie that resonated most with the Academy and beat out all the rest for the top prize was Everything Everywhere All At Once, which tells, albeit vibrantly, the story of a woman and her family overcoming an audit. It was the most awarded Best Picture winner in 15 years.

In the construction industry, the word may carry even more weight. The first time I spoke to an engineering consultant about an audit, it reminded me of a conversation I had with a friend who volunteered with the Peace Corps. He got through it. He was proud he got through it. He doesn’t want to go back. The fact that a cramped hut in a village with limited clean water resources can conjure similar feelings of stress as a crowded conference room table piled high with receipts is saying something, though I’m not exactly sure what.

We asked our audience to share what they word “audit” means to them, and the results were unsurprisingly similar:

“Not good.”

“Painful.”

“Why are you bringing up bad memories?”

When I chatted with David Elliott, the Construction Services Discipline Lead for RS&H, the strain was present in his voice as he recalled his most recent audit experience. Even though RS&H is well-equipped to handle mediation and resolution, no one likes reopening the wound on a completed project. Elliott had a runway project in Tallahassee where a subcontractor filed a claim on a quantity dispute over a year after construction was complete. For some readers, this story is already conjuring unpleasant associations and painful memories. Fortunately, Elliott had a secret weapon at his disposal: technology.

Because Elliott and his team meticulously record everything in a searchable, digital database, the audit process just isn’t what it used to be - in a good way, not in a “man, I sure miss getting paper cuts flipping through filing cabinets” way. Elliott was able to generate query reports for the exact items in dispute in a matter of minutes and put together a report that would’ve normally taken days in one evening.

“8-10 hours of researching files the old way, I did in about 5 minutes. It happened to come in late on a Friday and we needed to get something to the owner by Monday. To be able to stay from 5-8 and complete the report on a Friday evening for what the old way would have taken the whole weekend, that was tremendous,” said Elliott.

Stories like Elliott’s come up with some frequency when I conduct case study interviews with Infotech’s user community. “We had a project go to claim on a time issue,” said one project manager at a Texas AEC firm. “We had to see how much time impacted the contractor due to weather. With the search function in our project management system, I can go in and say ‘weather days’ and quickly pull it up. That helped with the claim process.”

These incidents follow a similar pattern: an audit comes up and the firm in question uses technology to resolve the issue. Really, that’s the crux of this article; that because we have construction technology at our disposal to greatly reduce the stress and timeline of audits, we should no longer fear them. We should even celebrate them for their true purpose: supporting transparency and accountability.

Okay, maybe I go too far. Maybe we’re never going to get to a place where project managers and owners are saying “oh boy, an audit! What fun!” But maybe we can at least agree that the audit plays a crucial role in supporting consistent contract execution and creating fair, equitable, and competitive markets.

Take, for example, the historic investment brought on by the Infrastructure Investment & Jobs Act. Hundreds of billions of dollars in funding, earmarked for investment into everything from road and bridge repair to broadband infrastructure. When the federal government gives out that kind of money, it typically comes with strings, and those strings are attached to comprehensive tracking and reporting requirements.

Let’s take a brief look at those requirements. FHWA lists three primary risks in project administration for federally funded projects:

To combat these risks, the Federal Highway Administration (FHWA) has outlined project supervision requirements that organizations must follow to receive federal aid. One such requirement: LPAs are required to maintain accurate and complete records throughout the life of the project and for a minimum of three years after the project is complete. Three years is a longer time than it sounds like; can you remember the details of a project from three years ago, or even where to look? Additionally, the funding threshold for an annual audit is a (relatively) mere $750,000.

The reasoning behind these stringent requirements is simple. Money doesn’t come from trees. It comes from taxpayers. As stewards of taxpayer dollars, it’s on the shoulders of the infrastructure industry to maximize funds efficiently to deliver the most value. Those with sophisticated methods for tracking and reporting on federal fund usage should almost look forward to an audit, as it is a way to prove your organization worthy of more federally-funded work. Those with records spread out across flash drives and filing cabinets will find it increasingly difficult to withstand audits and live up to federal standards.

At an executive level, leaders need to ask the following questions about their process to ensure their teams are set up for success throughout a project’s lifecycle:

• Are we capturing data in a digital format at the jobsite?

• Do we have a way to easily search this data by keyword, date, or other parameters?

• Do we have an organized system for storing this data for 3+ years after project completion?

Putting these practices and systems into place is like a panacea for the majority of issues that ail a typical construction project. Data becomes more accessible, trackable, and searchable, so stakeholders aren’t waiting on pertinent information. With tools for digital record-keeping, the burden and anticipation of an audit is no longer at the forefront of your team’s mind. It becomes the framework for your process, an infrastructure for success that eschews carrots and sticks in favor of a collaborative mindset.

In Everything Everywhere All At Once, one of the ways our hero triumphs is by befriending her auditor and working closely with her to dig through the muck of the audit process. By working with federal auditors and technology providers, engineering firms and LPAs can get to a place where the audit doesn’t evoke painful associations. Instead, the audit can start to feel like the final necessary step to any project, where parties work together to check the required boxes and ensure they are delivering taxpayer value. While the Oscars aren’t a likely outcome of this process, grant awards certainly are.

If you’re interested in exploring the technology solutions that help engineering firms and LPAs withstand the strictest of audits, we can help. Our platform is designed for owner-centric construction administration, providing project managers and their teams with the tools to capture data at the source, track pay items, and institute a cloud-based record-keeping system. Learn more at https://www.infotechinc.com/appia/.