The cost for large capital projects keeps increasing, and it’s becoming more important than ever to make sure every dollar is used wisely. But when the money starts flowing, it’s not always easy to maintain discipline.
The mining industry undertakes some of the world’s most challenging construction projects. It’s never been cheap, and it’s getting more expensive all the time. Controlling large capital expenditures requires a structured approach that’s applied at each level of project organization.
The average investment in mining projects worldwide more than tripled during a five-year period in the 2000s. The number of expansions may be smaller now and the cost increases have slowed, but most mining companies have to fight the familiar challenges of budget and time overruns.
Some companies wait until rising costs can’t be ignored any longer and pay the price for the delay. Others respond with new quality control programs, more frequent status reports, increased pressure on suppliers, and more detailed project-deviation assessments. But they’re often disappointed by the results.
Effective large-capex project management is critical in today’s environment. Improved capital allocation, stronger links to business objectives, leaner designs, improved productivity, and more strategic sourcing can help companies reduce capital intensity 20-35%, with improvements seen across the full spectrum of project activities.