The adoption of innovative construction techniques for new mining developments calls for mining companies to foster a risk-awareness culture in their operations to ensure complete success of mining projects, says global advisory firm KPMG major projects advisory partner Travis McAuliffe.

“In a lot of mining projects, there are a number of causes of project failure, including poor or incomplete estimating, inadequate scope, lack of alignment between budgeting and planning, and design errors and omissions. “Adding to these are the issues of subcontractor underperformance, resource shortages, unfavourable contracts and an overly aggressive schedule,” he points out.

Owing to this, McAuliffe notes that weak project management and risk management – where the main project risks are not fully understood and problems are not picked up at an early stage as a result of a lack of monitoring and reporting – may exacerbate these factors.

He warns that, with projects based in remote regions such as West Africa and Mongolia, mining projects are becoming more complex and therefore require new techniques.

“Deploying an effective project management controls framework enables frequent monitoring of the main risk indicators – in particular, delays, cost overruns and spotting any unfavourable trends early enough to respond. Also, periodic project reviews can assess whether staff are complying with policies and procedures and ensure that suppliers are adhering to the contract terms,” says McAuliffe.

He states that, to create a flow of reliable information to the individuals and committees that oversee the projects, mining companies can focus on five key areas.

The first is the focus on strategy, organisation and administration. Projects should have clear strategies, which encompass a formal approval process prior to entering into contracts and committing company funds. Policies and procedures for all associated processes need to be regularly reviewed and updated, with the right people put in place, with defined roles and responsibilities.

Secondly, McAuliffe notes that companies should look into cost management where a standard budgeting process that includes all expenditure is subject to a consistent level of scrutiny. Also, formalised reviews of payments and approvals have to be recorded, which will assist in controlling costs throughout a project.

“Thirdly, concerning procurement, companies should consider fostering a single organisation-wide sourcing process in all its dealings as this has the ability to enhance reputation and build strong business relationships. By so doing, ambiguity is avoided,” he highlights.

Also, with mining projects constantly changing, project controls and risk management becomes key, McAuliffe adds, noting that a robust risk management framework used by the company must not only consider immediate project risks, but also encompass wider business regulatory and political risks such as resource nationalism or social and environmental opposition.

Lastly, McAuliffe mentions that schedule management is important because, by agreeing on schedule development standards, project managers can take a broad view of every major activity that takes place within the project. Based on this, managers can make informed decisions on schedule changes caused by factors such as weather, materials delivery, staff availability and budget limitations.

“By focusing on such elements, companies will ensure that mining projects reach completion within a set timeframe. Creating such a culture within the project . . . prompts appropriate decision-making,” he concludes.