When faced with various capital investment alternatives, we need to undertake some analysis to determine the best path forward. Much of this analysis is very straightforward if you can quickly review the range of NPV measurements for the various options and choose the scenario with the highest value. Some caution should be exercised to ensure that those undertaking the analysis are well trained and equipped.
For example, we may have considered a range of expansion options for the mining fleets (trucks, shovels and associated ancillary equipment). We may have also considered a range of processing capacity expansions with their associated impacts on costs, recovery and productivity. An experienced strategic planning engineer would ensure that some cases of increased mining capacity are undertaken with increased processing capacity.
One of the great advantages of the analysis stage is learning about where the significant value drivers are for a project. Often, there are very few people who have access to information on the value of an entire project so there are many new areas for improving the project value discovered during this stage. The importance of learning the value drivers can be further leveraged by ensuring that site staff undertake the analysis. Site staff that ‘live and breathe’ a project are often better placed to respond to changing conditions and possess greater knowledge of what can be changed to help improve the project value.
Analysis and feedback is best undertaken by a multidisciplinary group of people. For example, a change in the production schedule would be provided to mining operations, processing, logistics, marketing, finance and management for feedback. While all cases cannot be provided to all people, the more important cases should receive greater review to pick up mistakes, gain greater team ownership and uncover more ideas on ways to further improve project value. Some periodic independent and expert feedback into the analysis is considered best practice given the magnitude of the decisions and the prevailing levels of experience in this field in the industry..
The analysis will typically result in some additional scenarios to evaluate or the fine-tuning of decisions. This feedback should flow back into the new prioritised alternatives, better measurements and sometimes even into the objectives to make sure that it truly reflects shareholder value.