Knowledge Bank ~ Case Study – Multi-disciplinary Gold Mining Facilities

Managing the construction of multi-disciplinary processing facilities at a remote West African mine was always going to be a challenge. Add to the mix a constant flow of project changes, construction expertise without scheduling expertise and the inevitable result was delays and spiralling costs. This case study examines the construction project, and steps taken to turn the project around.

Construction included the provision of:

Milling Plant
Roads
Tailings Dam
Transformers and Power Systems
Vibrating Grizzle, Shakers etc.

The construction of the gold processing facility was initiated by an investment consortium who had an interest in a nearby goldmine and needed processing facilities too. They needed external expertise to deliver this and therefore hired an EPCM consultant to carry out the engineering and subsequent management. The multi-disciplinary aspects of the project, and their interdependency on the construction programme where challenging in themselves. However these were amplified by the logistical issues of managing a project in West Africa. The original high level project plan was reasonable and agreed by both parties, with an experienced construction manager overseeing the project

The Challenge

As with many construction projects, unforeseen events arose during the course of the project. However a lack of detail in the project planning and reporting processes meant that the impact of changes and delays to the project were not initially quantified. This meant decision-making was not on a fully informed basis. For example, the immediate impact of a change was self evident over the next month, however the repercussions over the next 12 months were far from clear. Ultimately this meant that the client did not have a clear idea of the project’s status.

This general lack of clarity over the project status was overlaid with numerous requests for changes to the project scope by the client – the cumulative impact began to have a detrimental impact on the success of the overall project. Inevitably delays increased, costs spiralled and the relationship between the underlying client and the EPCM consultant started to break down.

It was at this point the contractor’s legal counsel realised they needed additional technical project management expertise covering project scheduling and forensic delay analysis. They needed to establish their position; calculate an accurate completion date for the project as well as identify which party was liable for the costs of the numerous delays.

THE SOLUTION

Combining technical analysis with practical experience

Asgard supplied a Chartered Engineer, who was a delay analysis expert, proficient in the use of critical path techniques. Importantly, the engineer also had extensive hands-on experience of construction projects involving major earthworks, structural steel design, fabrication and assembly. Hands-on experience was essential to understand the complete picture of the project – combining technical analysis with an understanding of how real on-site pressures affect decision-making.

Develop realistic construction schedules

A thorough review of the construction drawings helped establish the scope of the project. This review also made it apparent that the construction planning had been either inadequate, or in places, wholly absent. This was especially true with regards to procurement and logistics – critical elements given the project location – and therefore a big influence on timing and costs.

Asgard developed a realistic, resourced construction schedule that could be used to manage the completion of the remaining works, adding a level of certainty that had previously been absent. It also meant that the potential impact of any future changes requested by the end client could be readily established and priced. Giving the client a clearer idea of the impact of their changes also helped improve the relationship between both parties.

Use Forensic Delay Analysis to justify additional payments

Asgard investigated the variations to the project that the client had requested, and carried out a Forensic Delay Analysis. This helped establish the impact these changes had had on the project, and were also continuing to have. The EPCM consultant was then able to justify additional payments that it was entitled to under the contract, as a consequence of being able to attribute direct costs to each variation. They were also able to recover the additional costs related to prolongation that had arisen from the growth in the project scope.

It is worth noting that the Forensic Delay Analysis also helped the contractor identify those delays for which it was culpable; providing the consultant’s legal counsel with clarity on which costs to pursue and which to settle. This enabled both parties to reach a swift and amicable settlement through mediation rather than through protracted litigation or arbitration.

Positive Conclusion – Project on track & costs recovered

Asgard was positioned as an expert resource and not a threat to the existing team. By integrating with and supporting the contractor’s onsite team, Asgard ensured that there was buy-in from everyone needed to execute the revised plan going forwards.

In addition to getting the project schedule back on track, Asgard was able to improve the commercial decision-making of the contractor’s executive and legal teams. Reporting measures were put in place to ensure the satisfactory completion of the work, plus the necessary supporting evidence provided to recover additional expenditure that had been incurred.

The Lessons Learnt