Article 597 Can Individuals be Accused of Fraud for Deceitful and/or Unauthorized Review and Approval Actions on Capital Construction Projects?

By definition, fraud is the crime of deceiving someone in order to secure unfair or unlawful gain or something else of value.

On capital construction projects, there are many actions to be taken and decisions to be made that could be considered as fraudulent if they were intended to deceive the project owner. Approvals of wrong estimates, selection of contractors and subcontractors, specifying unsuitable material and equipment, replacing approved material, improper approvals of change orders, improper approvals of interim progress invoices, improper acceptance of work in place and improper acceptance of material deliveries are examples of some of the many decisions that might be subject to fraud actions. A project team member can end up involving in deceitful activities when his/her review or approval actions are intended for the purpose of obtaining unlawful gains. Further, those individuals can also end up involving in deceitful activities when they take actions or make decisions that they were not authorized to do.

To reduce the risk of fraudulent and/or unauthorized review and approval tasks on capital construction projects, the project management plan must first detail the forms for all business processes that need to be performed during the project life cycle stages. This will be followed by assigning a well-defined workflow for each business process detailing the individuals who should be involved in the review and approval tasks. In addition, the project management plan should include a detailed delegation of authority (DoA) matrix that sets the approval authority levels associated with the review and approval tasks of those business processes. Further, there should be a formal process for documenting the delegation of authority to the review and approval tasks when the individuals originally assigned to perform those tasks are not available. Finally, the planned and actual details of the review and approval tasks should be automatically captured on each business process transaction and be available to be reported on.

Implementing those requirements requires digitalizing the hundred plus business processes needed to manage the delivery of a capital construction project. The digitalization will fulfill the first requirement of having predefined forms or templates to capture the need information for each business process by those who will be authorized to do so. In addition, digitalization will address the requirement for assigning pre-defined workflow for the review and approval tasks for each defined business process form. This workflow will embed the authority approval levels as defined in the delegation of authority (DoA) matrix. Further, digitalization will enforce a formal delegation of the review and approval tasks during the non-availability periods of individuals who were assigned those tasks. Finally, digitalization will enable capturing and reporting the history of all review and approval tasks associated with each transaction of each business process.

Using a Project Management Information System (PMIS) solution like PMWeb, the digitalization of project management business processes can be easily achieved. To start with, PMWeb comes ready with most of the templates required to manage capital construction projects. Most of those ready to use templates are the ones associated with the business processes that has the highest risk of fraudulent and/or unauthorized review and approval tasks. For example, those include the business processes for Request for Information (RFI), Site Inspections, Technical and Material Submittals, Contractor Prequalification, Bid Comparison, Contract Awards, Claim Notices, Change Orders, Interim Payment Certificates, Miscellaneous Invoices, Budget, Budget Adjustments, etc.

In addition, PMWeb custom form builder allows creating the templates for all business processes that either are not readily available in PMWeb or need to be customized for each project specific needs including the language of the template. For example, those could include the business processes for Material Substitution, Value Engineering Proposal, Work Inspection Requests (WIR), Material Inspection Review (MIR) among many others.

For all those templates, PMWeb allows setting the permission rights to restrict access to the individuals who can use the business process templates. Those permission rights are not limited to the template as an overall but also to data fields included in each template. This will ensure that each project’s individual is providing the information that he/she are authorized to provide as per the project management plan.

For each business processes managed in PMWeb, the project team will attach all supportive documents. It is highly recommended to add details to each attached document to better explain to the reader what is being attached and viewed. In addition, links to other relevant transactions or records of other business processes managed in PMWeb as well as emails imported to PMWeb can be also added.

To fulfill the second requirement, a workflow will be assigned to each business process template to enforce transparency and accountability in managing the business. The workflow will map the submit, review and approve tasks, role or roles assigned to each task, task duration, task type and actions available for task. The workflow will be also configured to include the approval authority levels as set in the Delegation of Authority (DoA) document.

PMWeb workflow delegation module will be used to address the requirement to formally delegate the review and approval tasks from the individuals who were initially assigned to perform those tasks to other individuals. For each delegation action, PMWeb allows selecting the individual whose review and approval tasks need to be delegated. Then, select if this will be applicable for all projects or selected projects as well as it applies to all roles played by the individual or specific roles.

This will be followed by selecting whether this will be temporary delegation or permanent replacement and who will be the individual that the review and approval tasks will be assigned to. A decision also needs to be made if this delegation or replacement will be limited to only future review and approval tasks, past tasks or both. If the delegation was temporary for a specific period, then the end date of this delegation needs to be provided. A note needs to be added to explain the reason for this delegation or replacement with the option to activate or deactivate this delegation or replacement decision.

To fulfil the last requirement, when a transaction for any of the business processes managed in the project is submitted for review and approval, the workflow tab available on the relevant template will capture the planned review and approve workflow tasks for each transaction as well as the actual history of those review and approval tasks. The captured workflow data will include the actual action data and time, done by who, action taken, comments made and whether team input was requested.

For business processes that need to be formally communicated by either printing the predefined output template so it can be wet-signed and stamped or saved in a PDF file format so it can be digitally signed, PMWeb allows including the planned and actual workflow tasks in the output form. This will provide the recipient of the communication with the details of all those individuals who were supposed to perform the review and approve tasks as well as the details of all those individuals who have actually reviewed and approved the business process transaction.

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About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 200 projects with a total value in excess of US $100 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and shopping malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 years he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 500 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the Association for the Advancement of Cost Engineering (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.


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