While the mining industry has invested heavily in improving its risk management over the past decade, it continues to experience large-scale project failures.
“Across all sectors, 77 percent of the engineering and construction executives responding to KPMG’s 2013 Global Construction Survey1, report underperforming projects.”
Anticipating and dealing with risks
The consequences of a major budget or schedule overrun can be severe, and in the worst case, could even threaten the future of the business. To avoid such events in the future, they need to be confident that they have a reliable way of anticipating and dealing with risks.
Causes of project failure
- Poor or incomplete estimating
- Inadequate scope
- Lack of alignment between budgeting and planning
- Design errors and omissions
- Weak project and risk management
- Subcontractor underperformance: over-optimistic bidding, resource shortages, unfavorable contracts and an overly aggressive schedule
Creating a more reliable approach to projects
An effective project management controls framework enables frequent monitoring of the main risk indicators, in particular, delays and cost overruns and spots any unfavorable trends early enough to respond. Periodic project reviews can assess that staff are complying with policies and procedures and ensure that suppliers are adhering to the contract terms. This should create a flow of reliable information to the individuals and committees that oversee the project.
Five main areas of focus:
- Strategy, organization and administration
- Cost management
- Procurement management
- Project controls and risk management
- Schedule management
To learn more about quality growth through major projects, please click here to view the full report
1Ready for the next big wave? KPMG Global Construction Survey, 2013.