Richard Bullock from Missouri U is doing what looks like a great presentation in a PDAC technical session on Monday. I'd almost pay $800 just to see him.
Here's the entirety of his abstract:
Mine feasibility studies still need correction
Richard Bullock, Missouri University of Science and Technology, Longview, USA
The original paper, (Bullock, 2011)* on the need to improve the accuracy of the mining industries feasibility studies reported on 261 projects which had an average overrun of 26 per cent and outlined twenty reasons for the causes of the problems. It documented various examples of how bad the overruns have been in the past. It then gave a classic example which the author had firsthand knowledge of a large project documenting why the overruns occurred. The paper then described what the author believes is the root cause of these problems; that there is insufficient good engineering hours applied to each level of feasibility study. That paper made a plea to the United States mining industry to set some feasibility study standards which in two years have been totally ignored.
This current presentation is an update on the same subject, reiterating the problems and what this author feels is the solution. The situation of the accuracy of feasibility studies, particularly of very large projects seem to have gotten much worse. Four examples are sited using information from the public literature to illustrate the problems (average of 332 per cent overrun). Based on these, the author will express his perception of some problems normally not discussed such as: that mining companies have become much more reliant on individuals rather than reliable systems of feasibility studies and cost estimating; that they accept a reworked feasibility study because it now meets a hurdle rate, even though it is wrong; they can always blame construction inflation for the blowout overrun. And to get one of the “reputable” EPCM contractors, they must accept cost reimbursable contracts, whose billing probably goes far beyond those who are actually on the project and who also probably have subsidiary companies from which they can buy supplies and rent construction equipment. Companies are encouraged to consider using Reference Based Forecasting, while it will not necessarily reduce cost, will lead to more accurate cost estimates.
Again the paper tries to show that for mining companies to improve the accuracy of each level of feasibility studies leading to developing an operation which will generate the return on the investment projected by the feasibility evaluation and improve our image to the investment community.
*Accuracy of Feasibility Study Evaluation Would Improve Accountability, April, 2011, Mining Engineering, SME, pp 78-85.