Following the most recent mining boom in Western Australia, the industry is experiencing a shift in market conditions and is facing volatile commodity prices and increasing costs. During these times, it is increasingly important for the mining industry to optimise its capital productivity. This article will delve into the concept of Capital productivity and how an investment in project management capabilities and toolsets can boost performance within the mining industry.
Capital productivity is defined by the Australian Bureau of Statistics as “a ratio of output to capital input”. Given the nature of the ratio, Capital productivity can be improved by:
- Increasing the output
- Reducing the capital input
“Currently, an estimate of 64% of global mining and metal megaprojects ran over budget or schedule – or both – with the average cost overrun sitting at 39%.”
To minimise such overruns and improve their mining capital productivity, mining firms should focus on doing two things, namely:
- Increase their output by optimising their production.
- Reduce capital input by prioritising their investment in project management capabilities and toolsets.
To address the above criteria, we advise mining firms utilise a robust Operations Readiness Plan (ORP) to assist their project managers with understanding the various components of Operational Readiness so that they can allocate an accurate budget and resources to each task and avoid cost overruns.
Our recommended approach to achieving Operational Readiness is to view the business and operation from a value chain perspective and develop a framework that identifies all core and supporting functional areas (multiple workstreams) as well as foundational building blocks. This will then determine the process, technology and people that need to be deployed to attain operational readiness.
Cubility’s Operations Readiness Framework
Mining capital projects that develop and incorporate Operations Readiness Plans into a project will benefit from optimising production and control operating costs resulting in boosted capital productivity.
At Cubility we assist clients developing and incorporating Operations Readiness Plans into their mining capital projects by utilising our in-house developed “Mine-in-a-box” solution incorporating a framework, best-practice models and roadmap to deliver an ORP that is aligned to their business objectives. To speak to one of our consultants about Mining Capital Project Support please get in touch with us, we would love to hear from you.
