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Control over key performance criteria can reduce project costs

13th February 2015

By: Bruce Montiea

Creamer Media Reporter

  

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Mining companies can reduce a project’s final installed cost by 5% to 10% by effectively tracking key performance criteria, says consulting services company SNC-Lavalin project manager John Dixon.

He explains that this can be done using a smart and accurate work-breakdown structure, budget and schedule, noting that SNC-Lavalin has the relevant experience in carrying out studies and executing projects in the iron-ore, copper, gold and rare earths sectors.

It is important to properly understand and consider the specifics of each project when establishing project schedules and budgets to facilitate effective monitoring and control throughout the project life cycle, Dixon adds.

He says some companies are not yet convinced of the advantages of the project management discipline and its importance in effectively managing inherent risks and opportunities.

Dixon states that a major challenge is educating operational management in the mining industry about the benefits of project management and controls.

“It is a misconception that too much money is being spent on project management and controls, and even though many companies are moving towards running ‘leaner and meaner’ operations, what can actually be saved by cutting back on project management and controls is minuscule in the context of the entire project.”

He points out that compromising on project management can, and often does, materially increase the project’s initial capital expenditure through, for example, lengthy delays in finalising aspects of the project and failing to deal with spiralling contractor claims.

“There is a great deal of work to be done in upfront planning and in structuring a project to render it controllable. Operational focus is often more immediate and situation driven, whereas project focus tends towards the consideration of a wider set of success criteria through a somewhat more measured and structured approach,” says Dixon.

He maintains that leveraging low-cost procurement and high-value engineering aspects to support optimal and cost-effective delivery of projects are two of SNC-Lavalin’s strengths, stating that the company’s global experience and expertise can help mining companies to remain competitive by implementing the latest project management and control methods and software.

This enables the company to excel in fulfil- ling its duties, as “more is being expected a lot faster by clients, and engineering project houses have to continually streamline their approach to executing projects within the constraints of established workflow processes and discipline”.

Dixon says the mining industry in Africa continues to offer opportunities and, although the industry, particularly in South Africa, might continue to encounter difficulties this year, the fundamentals of mining projects on the continent generally remain lucrative.

“As a company, we have graduated from the school of managing the risks in the challenging environments in which they are developing. We have a high degree of flexibility, creativity and tenacity that we can bring to bear in the delivery of effective project management solutions in Africa,” he concludes.

Edited by Leandi Kolver
Creamer Media Deputy Editor

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