Elevating Internal Audit as a Strategic Driver of Risk Management and Operational Excellence in the Philippine Construction Industry: Insights from Contemporary Mixed-Methods Research

This paper examines the critical role of the Internal Audit Function (IAF) in reducing risk and promoting operational excellence in the Philippine construction industry. An explanatory sequential mixed methods design was used with a survey of 75 mid- to large PCAB-accredited firms and 4 in-depth case studies of representative companies. The findings are supplemented by two further studies: 'Risk Management Practices of Top Construction Firms in the Philippines' (Ballesteros & Santos, 2019) and the 'PwC Philippines Construction Industry Survey' (PwC, 2022), which provide an industry-wide context and allow for benchmarking against current practice. The findings show a very strong positive correlation (r = 0.78, p < 0.01) between the quality and independence of the IAF and the effectiveness of the risk management process. The qualitative findings show that a well-developed IAF shifts from a reactive compliance function to a proactive partner, resulting in tangible improvements in cost control, project delivery, safety, and the organization's overall culture. The study concludes by recommending that the IAF be repositioned as a strategic partner and that investment be made in capability and in early integration into the project planning process.