Time theft: Team members charging for time they didn't spend on a project or overlapping time on multiple projects
Resource theft: Loss of physical resources, such as software or hardware, or use of project resources for activities not in the project scope
Conflict of interest: Any kind of subcontracting to or employment of resources based on friendships or connections rather than skill sets required for the project
So how can project fraud be prevented?
One way is to have clear policies and procedures for resource utilization, and processes for timesheet management, recording, charging and justifying time.
Implementing internal controls for managing and reporting on project progress and utilization of resources can also help.
Many elements of fraud cease to exist when you use weekly report cards on key project reporting elements: budget, time and scope. Reporting on resource usage based on project activities can show and account for time charged quickly and with clarity as to where and how resources are used.
Keeping track of the entire project inventory with a systematic approach can reduce or eliminate resource theft. Sometimes it's a matter of implementing processes that simply do not allow for resource misappropriation. For instance, sometimes it can be easier to manage consultants than members of the permanent staff. Why? Because there's a forced process to account for time spent.
Some organizations also require permanent/full time staff to report time spent on projects. This allows for a more controlled use of time, as resources, regardless of what field they are working in, will be accountable for the time they put in.
What other types of project fraud have you seen and what are your recommendations for combating them?