1. Front-end design informing scenario planning
Scenario planning can enhance the robustness of risk-based cost and schedule estimates and the performance of core project management processes across all disciplines (including project controls, risk management and quality management). Effective scenario planning also allows miners to identify and understand the impact of potential events, enabling them to respond with agility and confidence when issues arise. This ability to act quickly and decisively can make the difference between projects, programs and portfolios achieving high levels of capital productivity or stalling.
2. Adequate cost and time contingency
Appropriate levels of contingency in business cases ensure investment decisions are based on the best possible information and help miners reduce the potential for unforeseen and unmitigated cost and schedule impacts. The best contingency approaches are not “set and forget,” but revalidated at key stage-gating intervals.
Miners with the most mature risk management processes ensure that the negative impacts on cost and schedule are considered equal to the upside through cost- and time-saving initiatives. They also engage contractors within the process, transferring risk and rewards to those best placed to influence and control risks and opportunities. And the organizations with the most successful approaches encourage their teams to commit to the process by innovating around how to protect budgets and schedules, and drive true productivity across the project life cycle.
3. Resilient supply chains of materials, equipment and workforce
Miners’ supply chains can be weakened through factors such as vendor concentration , low levels of safety stock, limited flexibility, and outdated contingency plans. COVID-19 has added further disruption, and the rise of national protectionism is a growing concern for mining executives.
Ensuring business and project continuity requires a greater focus on upfront planning, including identifying critical risk scenarios and potential points of failure, then defining potential responses. Early warning systems and digital twins can help build end-to-end supply chain resilience.
4. Agile governance to enable fast, informed decision-making
It’s acknowledged that a well-structured and defined governance framework with clear roles and responsibilities can significantly enhance capital productivity but, often, a lack of relevant, usable information can hinder these informed decisions. This data deficit is particularly common around “outer-horizon” key risks — risks that aren’t in the “firefighting” stage currently but are material and require timely action. Embedding leading indicators into reporting dashboards can flag these risks as they emerge, empowering management with the insights they need to make fast, effective decisions.
5. Capital portfolio management to improve long-term business performance
Organizations need to adapt their capital portfolio management strategy so that it remains both fit for purpose now and can rapidly transform to respond to changing business needs. But many miners lack confidence in their current capital portfolio management strategies and are constrained by a shortage of capital to fund all projects. This reaffirms the need for companies to address potential long-term changes to their market, refocus their portfolios on their core business, and carefully plan and prioritize which initiatives to fund in line with defined strategic objectives and goals.
Using leading indicators to mitigate risks to capital productivity
Reporting dashboards that incorporate leading indicators to monitor delivery performance can raise early awareness of potential risks to capital productivity and enable timely intervention. For example, stakeholder management could be monitored via metrics such as the number of stakeholder queries, including complaints. Other effective lead indicators include contingency drawdown rates (i.e., contingency funding consumption over time) and orphan-risk levels (i.e., no owners or mitigations), which assess risk management and planning alignment maturity. Bespoke indicators directly relevant to a project and its success factors can add more value, giving delivery teams the tailored information they need to keep projects on track and optimize productivity.
Uncertainty creates opportunity for change
Uncertainty is likely to continue for mining and metals companies, creating challenges around capital investment decisions but also providing an opportunity for change. Companies that act now to improve capital productivity can better navigate current volatility while also building stronger foundations for enhanced project outcomes in the future.