In the mining industry, coping with uncertainty is part of the business. Whether extracting metals or industrial minerals, it is typical for mining operations to encounter obstacles or conditions that may not have been fully anticipated, even in the most detailed plans.
That’s why project delivery for design and construction of critical mining infrastructure must be flexible and adaptable. Whether it involves electrical distribution systems, water and wastewater treatment, on-site power generation, material handling, maintenance and administrative facilities, or other systems needed for mining operations, the project delivery model must account for the uncertainties of schedule, budget and unknown obstacles.
Consider EPC Delivery
There may be some misconceptions about whether an engineer-procure-construct (EPC) project delivery framework allows the necessary flexibility to adjust to unexpected mining project demands while meeting aggressive schedules for completion.
The overall flexibility afforded by an EPC process — even after construction is underway — can be the solution owners need. Also called progressive EPC or integrated EPC, these contract frameworks have something in common: integrating all stakeholders from owners and regulators to permitting, procurement, engineering and construction teams in upfront, open-book reviews that can facilitate critical communication needed for adjustments.
Procurement Made Easier
Under this EPC model, specifications for items with long lead times — everything from high-dollar electrical transformers, breakers and switches to conveyors, pumps, motors and pipe — can be developed while engineering design is in a relatively early stage. With procurement on the owner’s paper, needed flexibility can be achieved, even if project scope evolves beyond original plans.
Whether the equipment and materials are needed for specific operations or for more general balance-of-plant applications, the open-book process can optimize the planning and design because it gives owners insight and direct input on decisions that are critical to setting the overall direction of the project. Periodic reviews enable all stakeholders to track the cost impacts of all scope modifications. Those insights lead to more informed cost-benefit decisions, such as whether adding specific elements to the project really is necessary.
An additional benefit of this integrated EPC approach is the identification of equipment or materials that can be fabricated in controlled off-site shop environments and then delivered just in time for field installation. This accelerated engineering design reduces overall project costs but requires the owner, engineer and construction team to work together early in the project to meet schedule demands.
Transferring Risk
Under a conventional design-bid-build contract, the engineer is typically responsible for developing project cost estimates based on scopes of the various phases. However, the engineer may not be able to anticipate many of the risks that regularly come with the territory once construction begins. Without an accurate project scope, estimates are likely to be inaccurate, leaving the burden on the backs of the owner and construction team to resolve any discrepancies.
The partnership approach fostered under EPC project delivery can help an owner understand that spending a little more on engineering design can result in big savings during procurement and construction, where 90% — or more — of costs are typically incurred. This partnership approach can also allow the project team to be nimbler when changes to the project scope are required, resulting in a better experience for all stakeholders.
Success hinges on getting more construction input at earlier stages of design and project development. This can only happen with close collaboration that emphasizes transparent and open communication. Only fully integrated EPC firms can execute in this manner.
Brownfield and Greenfield
It is common to assume that an EPC framework is best suited for a greenfield project built from the ground up; however, the EPC model works equally well for both new construction on greenfield sites and for brownfield retrofits on existing facilities. In fact, advanced technologies like laser scanning can be a big boost in developing 3D models for brownfield retrofits within existing facilities. With upfront collaboration and open-book transparency, the process efficiencies apply for either type of project. Burns & McDonnell has a long history of executing retrofit projects with this approach.
Are There Other Risks With EPC?
No project ever proceeds exactly as planned, whether in mining or any other industry, and there is no one-size-fits-all contract framework that works equally well for every project. But no matter the flavor of the contract, any method that promotes an atmosphere of partnership and trust will be key to creating the flexibility needed to pivot and adjust.
Intense collaboration does take more effort. But defining scope with all the details subject to discussion can lead to understanding and then agreement on fair compensation reflecting the risk the owner and contractor are sharing.
A partnership approach typically results in a project with deliverables that all are happy with, and this can be the foundation for a win-win relationship.
Large and complex mining projects require robust planning and risk management. Experienced fully integrated EPC contractors can bring tools and methods that help avoid past mistakes.
