COST ASSURANCE AND AUDITS ON INFRASTRUCTURE PROJECTS AND CONTRACTS
Part 16: Data standards and contract requirements
In this output, the group explores how data standards are set, their impact on contract requirements and the value of audit and assurance in verifying compliance. It examines the challenges faced by different stakeholders, including clients, contractors, and suppliers and highlights the benefits of integrating audit and assurance into the data governance framework to drive efficiency, reduce risks and improve overall project outcomes.
Data standards are structured frameworks designed to safeguard compliance, quality and interoperability of data across systems, organisations, industries and professions. They define how data should be safely collected, protected, processed and exchanged and are responsible for enabling the ethical, safe, collaborative sharing and use of data among stakeholders. Generally, there are several drivers in setting data standards dependent on the industry, sector, profession, organisation and form of contract. From experience on construction and infrastructure projects, audit and assurance engagements follow strict principles and provide independent assurance of compliance with GDPR, contract data standards, accounts and record requirements. On construction and infrastructure projects, adherence to these principles is essential for maintaining ethical use of data, data integrity, regulatory compliance and to ensure that data and audit clauses are not used for the wrong commercial reasons. Audit plays a pivotal role in establishing adherence to these data requirements and standards via:
- Data integrity and quality: Audits uncover inconsistencies, redundancies and errors in datasets, allowing risk identification, effective operations and strategic decisions.
- Legal and contractual compliance: Audits help organisations avoid legal penalties and contractual breaches.
- Risk management: Audits help identify potential vulnerabilities in data security or integrity, ensuring risks are addressed before they escalate.
- Stakeholder confidence: Regular audits increase transparency, fostering trust, accountability and enhancing the credibility of data for improved decision making.
- Operational efficiency: Audits provide real-time data for recommendations to optimise processes, costs, and reduce inefficiencies, contributing to savings and improved operations.
Cecelia Fadipe, CFBL Consulting
Data standards and requirements are set by the client based on specific organisation and sector requirements. From personal experience, this has often been quite inconsistently implemented with some contracts setting very specific data standards (with appendices to explicitly show the data structure and activity level) to agreements with no clear requirement or structure. Ultimately, an audit is critical as a proactive activity to review the supply chain’s systems and data collection processes to assess whether these requirements will be met. The use of audit/assurance of this data alignment could also take place in a pre-contract environment to more broadly assess the supplier’s capability and suitability to meet contract requirements. An effectively conducted audit should also provide a gap analysis to identify where a conversion or mapping may be required from the supplier’s source data to the client’s requirements and any associated risks with this.
Imran Akhtar, Turner & Townsend
In my experience the data standards are, quite loosely, set out in the contract. NEC contracts use the schedule of cost components to state what is defined cost and therefore it might be implied that costs should be captured in this form to allow for simplified auditing. However, it does not state in very exact terms how data should be managed or what records are required to be kept. This is probably deliberate to allow some flexibility.
Other common standard forms are less precise. I have seen cost reimbursable contracts that have schedules/appendices etc. that are written by the employer/client which states exactly what records are required and in what format the data is to be kept. This indicates a mature and experienced client who is attempting to standardise data and record keeping across the board in multiple contracts/projects.
The negative point though is a contractor may have accounting processes in place that do not conform and may present a barrier to entering into contract. Whilst a contractor who relies on a particular client may change its business to suit, a one-off contractor may not want to and the cost (and risk) of compliance will ultimately be included in its price, which could make it uncompetitive or over-budget.
Gary Bone, Blake Newport
In construction contracts, standards are set by the client often this will be in consideration of its overall business and the requirements of stakeholder departments such as engineering. A typical contract will include data standards within expressed optional clauses. The NEC suit of contracts creates obligations associated with BIM via optional clause X10. The scope document would typically then include wider information on how this obligation is to be managed through the lifecycle of the works contract and beyond. Early and up front process and controls audits could mitigate any risk of non-compliance with these obligations.
Tom Leach, Southern Water
Ideally, data standards are set out in the contract in line with the specific contract requirements and within the capabilities of all parties. Data sets should be standardised to allow efficient analysis and ensure consistent categorisation and unambiguous communication.
They should benefit all parties in assisting in improvement, collaboration, providing baseline evidence ensuring all parties are on the same page and reducing the risk of miscommunication/misunderstandings.
Data standards should allow a clear audit trail of the progress on a project/programme of works and will cover a variety of areas including health and safety, quality and costs. They should benefit all parties in assisting in improvement, collaboration, providing baseline evidence ensuring all parties are on the same page and reducing the risk of miscommunication/ misunderstandings.
Audit provides assurance that these data sets are being implemented and utilised as expected which improves the decision making, communication, identification of risk areas and, where data standards are not being met, the reasons for this and how they can be addressed to improve the data collection.
Kathleen Hannon, Scottish Water
In recent reviews of the commercial performance of six major projects within National Highways portfolio of major capital projects, one stark finding was the inconsistency of data standards. Within the fragmented levels of supply across a single project data formats and coding vary alarmingly.
Despite the client and its contract documentation setting clear standards for cost and time data discipline across functions and sub-layers of supply lead to muddled and frustratingly high levels of data manipulation. With this comes inevitable error. Having progressed an advanced data analysis tool for cost data handling, it became evident that data coding against the client standards has been at the root cause of inconsistent and inaccurate data with which to make project decisions. National Highways has recently, as a consequence, started to gauge compliance with cost and time data standards to reduce variance and improve decision making.
Martin Perks, National Highways
Data standards should be set in accordance with a consistent measurement set out by the customer and included in the contract as an obligation by the contractor, e.g. how the Data Standards Authority works to improve how public sector manages data.
Data standards should be set in accordance with a consistent measurement set out by the customer and included in the contract as an obligation by the contractor, e.g. how the Data Standards Authority works to improve how public sector manages data.
This allows a uniform approach on how data is captured, recorded and analysed making it easy for cost assurance and cost auditing. The main benefit of audit in gauging compliance with such data standards is risk mitigation. Any non-conformities will provide pointers on what needs changing to avoid negative consequences by avoiding weaknesses in compliance practices and processes in meeting the data standards.
Dr Anywhere Muriro, BAM Nuttall
Multidisciplinary Steering Group for cost assurance and audits on infrastructure projects and contracts cfbusinesslinks.com/multi-disciplinary-steering-group
The Steering Group on Cost Assurance and Audits on Infrastructure Projects and Contracts:
Cecelia Fadipe (chair), CFBL Consulting; Imran Akhtar, Turner & Townsend; Claire Randall-Smith, Eversheds Sutherland; Ian Heaphy, INCC, NEC Board; Gary Bone, Blake Newport; Darren Ward, The Orange Partnership; Tom Leach, Southern Water; Kathleen Hannon, Scottish Water; Shy Jackson, Bryan Cave Leighton Paisner; Jennifer Varley, Bryan Cave Leighton Paisner; Charlotte Edwards, AtkinsRealis; Jim McCluskey (CICES representative), Kier Group; David Worsley, Transport for the North; Elliot Patsanza, Ridge & Partners; David Sharp, Mott Macdonald; Michael Bamber, WSP; Justice Sechele, Currie & Brown; Chris Leach, Balfour Beatty; Victoria Hill-Stanford, Network Rail; Lisa O’Toole, Network Rail; Martin Perks, National Highways; Chris Richardson, Colas; Charlotte Hughes, DLA Piper; Tony Cave, Croftstone Management; Dr Anywhere Muriro, BAM Nuttall.
