The mining industry could save billions by improving capital project execution

By Mark Anderson, Business Development Manager, Coreworx

In the mining industry, owners have historically outsourced project management to EPCM contractors out of necessity. By doing so, owners sacrificed project visibility, oversight and control of their information. Risk is a reality in any large capital project, and projects are subject to both internal and external forces.

Whether the risk is political, economic, social, or technological, each can destabilise and create complications in project execution. There is no doubt that better project execution practices will lead to significant cost savings for mining projects.

A quote from a recent Accenture publication entitled “Achieving Superior Delivery of Capital Projects” sums it up nicely:

“The potential savings and returns through effective management and delivery of a capital project investment can be huge,” said Jose J. Suarez, managing director for Accenture’s North American Mining industry group and the research lead. “Keeping on budget and within planned timelines across a portfolio of multi-year projects can save millions for a company – in today’s environment strong project management can be an important competitive advantage” (Amy M. Callahan, John E. Lichtenstein, 2012).

Easier said than done.

How can companies make this happen?

Better project information management results in better project execution

One of the primary challenges faced by mining owners involved in large capital projects is a lack of transparency and information visibility. This lack of visibility is compounded by often contradictory demands of external and internal stakeholders stemming from:

-Increased public scrutiny, regulation compliance and environmental pressures

-Schedule slippage and associated opportunity costs

-Financial pressures to secure the required level of capital to take their operations into production

-Risk management and litigation issues

-Health and safety issues

Mining projects are increasing in size, complexity and cost (often in the multiple billions of dollars). As challenges grow, it is important that the mining industry adopts best practices for mega projects and selects tools to manage project information and improve project execution.

To be successful project owners must not only have the best people, but also provide them with the skills, enabling tools and best possible processes to be successful.

Achieving better capital project delivery: five key Areas for Improvement…

The Accenture report mentioned earlier identifies five key areas for improvement that will help improve project ROI. I have listed each of the five areas below, along with commentary on how implementing project information control tools built on industry best practices and processes can help companies achieve these recommendations.

1. Establish strong project governance and risk management capabilities.

Risk is a reality in any large capital project. With the increased scale and complexity of today’s projects, getting the right information, at the right time, to the right people is critical.

As with all large projects, effective project management is built around establishing processes, choosing the right people, and selecting project tools to enable the process and people. While spreadsheets and email might be suitable for smaller projects, as projects grow in scope and complexity project teams need tools that will enforce strong project governance by instituting process compliance and provide the visibility necessary to help decision makers spot and deal with  issues in a timely manner. A proper project information control system must allow project teams to:

-Build systematic, enforceable processes for design review and approval to facilitate successful front end design processes

-Automate workflows for managing change and technical queries to ensure that not only the right people are engaged but also that responses and evaluation are completed in a timely matter

-Provide look-ahead reports using real time data to identify potential bottlenecks and deal with them in a timely manner before a large issue develops

-Set up dashboard reports to provide project status/progress information at a glance to supply owners and project managers the information they need to understand where closer observation may be required and give them the ability to make decisions with the real-time information

-Provide a single auditable version of the truth

2. Proactively manage stakeholders’ increasing expectations for sustainability.

Within all major capital projects, Owners must navigate the complexities of both internal and external stakeholders.  Projects today face increasing regulatory oversight, increasing public scrutiny, and increased financial oversight; expectations for sustainability have never been greater. These demands include dealing with contractors, HSE, surface and mineral rights, Aboriginal consultation, hiring and personnel, internal and external financial data, corporate governance, increased media attention, and land owner and public rights.

Along with collaboration and communication, effective information management is key to successfully handling so many stakeholders, often with highly varied and competing needs and perspectives.  Along with providing and engaging stakeholders in a secure online work area with access to project staff,  documents, and proactive notifications, a project information system should allow project teams to capture and classify stakeholder information as it is generated during a project. This makes it easier to ensure that:

-Promises made are promises delivered

-Selected information is transferred to records management systems for long-term retention

-Discovery efforts are traceable in the event of potential litigation

-Projects are best executed when information is readily available, accurate reports are frequently distributed, and stakeholders are well informed.

3. Optimise scarce talent through management, organisational flexibility, selective outsourcing and training.

In Canada, the mining industry is anticipating a shortage of 60,000 skilled workers between now and 2020 in disciplines such as geology engineering and management. There are a number of issues that factor into the shortfall, including a lack of young professionals entering the field and an estimated 40% of mining employees retiring in the next eight years.

While a project information control system can’t fix the inherent problems of an aging workforce and subsequent shortage of skilled workers, it can help to mitigate the problems associated with workforce attrition. As key employees leave, knowledge management is essential. Effective information management allows organisations to capture best practices and lessons learned, and apply this information to staff training and continuous improvement of practices. Not only does this ensure that the know-how of your experienced workforce stays in place, but it also makes processes easier to adapt for new and upcoming employees.

4. Integrate information systems among capital project players.

Having a mechanism to exchange project information and manage uncontrolled sources of information is crucial to providing a collaborative single, auditable version of the truth for all parties.

As a basic example, the use of “Transmittals” and the use of “Workflows” controls the exchange of information and transforms uncontrolled data into a central repository of project truth. With workflows regulating information between parties, tracked markup and review, and the ability to cross reference mul¬tiple document numbers from multiple sources (EPCs, vendors, internal, clients, etc.), project teams can ensure the right people get the right documents at the right time without confusion.

An automated project information control system can further refine the information into user-specific, decision-ready knowledge in the form of intelligent dashboards.  This helps project teams ensure process compliance, mitigate risk, and meet project timelines.   

5. Accelerate operational readiness.

A well-planned and managed handover process, from a completed project to operational readiness, can help companies avoid rework and delays and support high production levels from the initial operation of the mine or plant.

Starting with the end in mind is easier said than done. Working with contractors to set up and institute best practices and determine how vendor data is to be collected and managed can have a serious impact on operational readiness at handover. A versatile information management system that can flexibly accommodate and enforce your operation team’s data requirements, and allow engineering and design documents to be easily searched, accessed and packaged for handover to operations is a great start. A system that provides workflows based around the desired outcome is even better, and will result in reduced risk, reduced cost and on time and easy handover to operations.

Bringing it all together…

The increased scale and complexity of mining projects leads to the question: How can capital projects execution be improved?

Instituting consistent transparency of information ownership and flow is essential to supporting project execution improvements. The most effective approach is to adopt a robust commercial project information control solution. Organisations looking to implement a project technology should expect a solution that provides:

-Ability to monitor and control the quality and progress of all information during project execution

-Ability to manage complex document transactions

-Workflows to automate large volumes of document transactions

-Efficient transmittal process for submitting and receiving information

-Management of multiple projects on a common infrastructure to reduce cost

-Automated information control to ensure compliance with contractual obligations

-Detailed audit trails to alleviate risk

-Dashboard reports to provide up to date project status at a glance

With the maturity in commercial project information controls solutions built for industrial projects this is now possible.  

By Mark Anderson, Business Development Manager, Coreworx

About the Author

Mark Anderson is responsible for Business Development at Coreworx. Being involved with project stakeholders around the world, Mark has a keen awareness of the trials and opportunities, as well as the economic and social impact of capital projects. His experience includes running several companies in the Oil and Gas industry, as well as more than 10 years’ sales experience in Software and the Oil and Gas industries. He is always interested in listening to and learning from project experts and passing his learned observations and experience on to help others.

About Coreworx

Coreworx provides integrated project information and cost control software solutions for projects in the Oil & Gas, Power, Mining and Infrastructure sectors. The Coreworx solution is a proven enterprise application suite that enables EPCs and Owner/Operators to automate best practices, mitigate business risks and improve performance to budget throughout the entire project lifecycle.

Founded in 1997, Coreworx Inc. services a portfolio of projects valued at over $500 billion across more than 50 countries, on more than 600 capital projects with nearly 70,000 users and offices in Kitchener, Calgary, Halifax, Houston (USA), and Perth (Australia).

www.coreworx.com

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