What types of contracts should be audited? For example is there a need to audit lump sum or fixed price contracts?
Actually all types of contracts can and should be audited. The various contract types: cost plus with or without a GMAX, lump sum or fixed price, unit price or time & materials, each have associated risks. In fact nearly all large projects are actually a combination of contract types. For example, the prime contract could be cost plus but the subcontracts can be primarily lump sum with a few being unit price – the excavator for example, or time & materials for a few others. The exact contracting structure forms a risk profile and the audit approach used takes that combination into account when determining the Work Plan. Also, the Owner controls are included in the audit planning so the audit effort is designed to address the major risks. Since change orders are a fact of life and will occur in lump sum contracts as well as the other types, there is always a need for reviewing these items. Another risk in lump sum is making sure the Owner gets what is specified in the contract documents
