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| Capital optimisation for an
emerging Iron Ore producer |
Context / Scope of project
An emerging iron ore producer had almost completed project design and was about to mobilise contractors for the construction of a Greenfield Iron Ore mine. With access to capital at a premium due to recent global economic events the client asked PIP to reduce their $403M offsite infrastructure capital expenditure using PIP’s ROCX* methodology. Given the late phase in project planning PIP was asked to conduct a rapid identification and validation of Capex reduction opportunities without significantly increasing ongoing operational expenditure.
PIP and client achieved:
- Identified $202m in Capex reduction ideas through multiple idea generation sessions
- Prioritised all ideas using a value:ease matrix
- Set up documentation and tracking of all the ideas
- Assigned idea owners to all the identified ideas
- Provided coaching on ideas tracking and conducting Idea Owner Reviews.
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What we did:
- Determined what was in and out of scope for review
- Conducted one overall idea generation session as well as four ‘deep dive’ idea generation sessions with client team members within the first three days
- Prioritised all identified ideas on a value:ease matrix where all of the ideas were assigned into one of four categories. Those categories were addressed as the following:
- High value/easy ideas: were well resourced to enable immediate changes to the engineering design following Decision Group approval
- High value/hard ideas: were identified as needing further work to verify the potential saving as well as steps necessary to realise the benefit, raised with Decision Group and decisions made around which ones could proceed
- Low value/easy ideas: smaller than $5m were farmed out to idea owners and processed to completion
- Low value/hard ideas: were documented and passed on to the client and EPCM team as they might become easier as more data becomes available
- Identified and analysed effect of the ideas on out-of-scope areas of the project
- Assigned idea owners to all ideas and provided coaching on how to structure mini business cases for each idea using an ‘idea form’
- Set up idea tracking and structured Idea Owner Reviews, enabling the client to drive all ideas to benefit realisation.
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