Global

Details

  • Industry: Energy & Natural Resources
  • Type: Business and industry issue, Publication series, White paper
  • Date: 2/7/2014

Quality growth through major projects: laying a smooth path to success 

Quality growth through major projects
Through careful planning and tight monitoring, mining companies have a far better chance of avoiding excessive risks and failed projects. Processes and controls alone are not sufficient, and leaders should also foster a risk-aware culture.

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:

  1. Strategy, organization and administration
  2. Cost management
  3. Procurement management
  4. Project controls and risk management
  5. 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.

 

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Travis McAuliffe

Travis McAuliffe

Partner, Major Projects Advisory, KPMG in Australia

+61 89 263 7271