The projected increase in client capacity over ten years was 100%.
MiningInc, a rapidly growing global mining operation that had doubled its capacity over the past ten years and aimed to double it again in the next decade, called on BCG experts to help the firm optimize capital spending and ensure that the major expenses involved in building the assets for growth would return the projected revenue.
BCG applied its proprietary LESS capital expense framework—lean design, effective project management, standardized processes, and structured decision-making. BCG used a three-phase approach that diagnosed existing shortcomings, ranked fixes, and applied new processes that integrated the knowledge of employees, contractors, and suppliers.
BCG’s work focused on several major components of MiningInc’s organization. One part of the work plan involved one of the largest single components of the client’s planned capital spending: an integrated port, stockyards, and rail megaproject that would represent about 35% of the total capex portfolio.
BCG worked with a small team of senior MiningInc executives to design a full suite of LESS initiatives and conduct more than 100 cross-functional workshops to identify and address capital inefficiencies. The team enabled the broader group of engineering, procurement, and construction managers to adopt LESS principles throughout their operations.
The result was a reduction in capital intensity of 35%, representing a significant increase in revenues compared to the amount of capital spending involved. The groundwork was laid for continued improvements with established new procedures and strategies that were thoroughly documented for future reference.
BCG also helped MiningInc’s team integrate the useful knowledge that existed throughout the organization into the LESS process. Mining executives know how to run mines, but when it comes to capital spending, it takes a particular set of skills to be able to draw widely dispersed players together in a way that effectively transforms the process.
As MiningInc’s head of Development put it, “Lean was such a success because we gave the engineers a voice, we got the right people in the room, and we cleaned up who got to make decisions and made them.”
That’s the essence of the LESS approach.
I’d choose an integrated team time and time again. There was just the right tension between working through challenges together and making the tough calls. —VP of Projects
Lean was such a success because we gave the engineers a voice and got the right people in the room. —Head of Department
We learned quickly how important driving absolute accountability for capital efficiency was to LESS’s success. —VP of Projects