Inspections and Audits

Procurement technique · See it on the map

Guide only — Inspecting a seller's work is a judgment call.

Checking a vendor's finished work and its working process against what the contract requires.

When to use it

On any active agreement where the buyer needs assurance beyond the vendor's own word before payment or acceptance — physical deliverables that can be inspected, or compliance obligations (safety, security, regulatory) that need periodic auditing. Scale the frequency and formality to the contract's value and risk.

When to avoid it

For a low-value, low-risk agreement — a short engagement with an established, trusted vendor — formal scheduled inspections and audits cost more in vendor relationship friction and admin time than the risk they're guarding against justifies. A simple deliverable review at completion is enough.

Steps

1. Decide, at the time the agreement is signed, what will be inspected or audited and on what schedule — deciding this after the fact invites disputes about fairness.
2. Inspect deliverables against the contract's stated requirements, not against an informal expectation that was never written down.
3. Audit process or compliance items separately from deliverable inspection — a deliverable can pass inspection while the process that produced it violates the contract.
4. Record findings against the agreement and follow up on anything that fails, through the agreement's own remedy or dispute process rather than an ad hoc one.

What it produces

• A record of inspection or audit findings tied to the agreement, including any failures and how they were followed up

Common pitfalls

• Only ever inspecting the final deliverable, missing a process failure early enough to have been correctable — an audit is what catches that, not another inspection.
• Treating a passed inspection as proof the whole engagement is healthy, when the underlying process an audit would have caught is quietly non-compliant.
• Scheduling inspections so infrequently, relative to the contract's risk, that problems are only found once they're expensive to fix.

Worked example

A hospital contracts a vendor to sterilise and deliver surgical instrument trays weekly. Inspecting each delivered tray confirms the instruments themselves are clean and complete, but a quarterly process audit of the vendor's sterilisation log is what catches that one autoclave has been running below the required temperature for two weeks — a defect no visual inspection of the finished trays would have revealed.

Source

• PMBOK-6 §12.3.2

Where it comes from: this technique is named by the PMBOK Guide, 6th edition.