Generally, the mining industry has not kept projects in line with feasibility study forecasts. A series of studies that analyzed approximately 100 different mining projects from 1965 through 2001 revealed that the average project had a cost overrun of 25% against forecast. This overrun directly impacts the profit expected from each project which in turn undermines the use of feasibility studies as a basis sfor management green lights.
Mining corporations and operating units are under constant pressure to improve financial performance. Operational costs have steadily increased over time. Subject matter experts are stretched thin because of multiple demands for their input. Key stakeholders and decision makers are spread out over long distances and multiple time zones. Given the need to rapidly align all stakeholders on huge volumes of data within the same context, making timely and informed management decisions in this environment is challenging.
Efforts to improve financial performance are eroded by a range of operational profitability killers that are embedded in traditional processes and procedures and that inhibit effective decision making.
Technology supported collaborative decision making has emerged as a key efficiency driver at all stages of the asset lifecycle, from planning and construction through production and into decommissioning. This paper will focus primarily on the characteristics of successful collaborative environments as established and operated in the production phase due to the fact that the lifecycle of this stage is the longest of the four with the most complex combination of technology, applications, processes and behavioral change.
Project Profitebility Killers
Project profitability killers that impede timely and effective decision making are centered on several key obstacles:
Functional Silos. In an effort to be most efficient, many operators break their projects into function-based teams so that groups of specialists can focus on various problem sets. While this approach is efficient in one way, these teams are often so focused on their particular issues and responsibilities that they do not have insight into, or appreciation for, the impacts of their decisions on other functional teams. This commonly leads to problems with opportunity realization, deferment, planning, and cost management. Another by-product of functional silos is the insulation of subject matter experts and other resources, which end up being hard for other elements of the project to access. A key success factor in streamlining and optimizing projects is employing processes, technologies, and physical infrastructure that facilitate transparency and integration across functional silos.
- Geographic Separation. Mining is one of the most global industries. As operations expand across the globe in search of new finds, decision makers and key subject matter experts are increasingly dispersed across a wide geographic area, sometimes several continents. Movement through the decision making process, therefore, can be very slow and costly as key decisions often involve staff travel for in-person meetings.
- High Demand/Low Supply. Availability of experts with specialized knowledge and field experience can become a critical path item for a project. It is not unusual for an organization to have multiple projects underway around the globe that must all tap into the expertise of one specific person (or handful of persons) in order to move forward. High demand for a small number of individuals can be a logistical and financial challenge, and can create a “bottleneck” that can lead to expensive project delays.
- Reinventing the Wheel. As projects move through the production phase, many operating units create their own approach to roles, systems, and processes that are common across the organization. These redundant, non aligned processes prevent the spread of best practices and lessons learned across the organization and create “nontransferable” methodologies and practices which erode efficiency and profits.
- Data Access. Obtaining and managing reliable data in the right format, and presenting it at the relevant time to decision makers is a challenge for many mining enterprises. Thousands of staff hours are wasted annually verifying, transforming, visualizing and presenting data needed to make informed decisions, and most organizations still feel they are making key decisions without access to the right data.
Economic pressures and labor shortages have driven remote, automated technologies to the forefront of major mining eneterprises. With the potential to lower costs at mine sites and reposition people in ways that bring costs down further, these technologies are fostering new approaches to process, workflows, and capital investment. However, despite efforts to integrate technology into and across projects, profitability killers remain deeply embedded in traditional processes and procedures, as well as in staff mindset. Eliminating them means finding new ways to leverage assets and establish connections across land masses and between functional silos.