Fluor, together with our clients, has yielded significant reductions in the total cost of mining projects by employing a systematic and methodical process of cost reduction. This paper outlines this structured approach to reducing the total cost of projects through the gathering of information, the evaluation of the zero base design, and the development of the execution strategy for the project in the study phase.
Over the recent iron ore boom the cost of growth projects escalated rapidly due to a variety of factors including the engineering cost of re-designing facilities, construction in remote areas and an increase in the ‘perceived’ capital requirements for maintainable and operable facilities.
Fluor has made strategic steps towards safely reducing the capital intensity of projects, by working with clients to develop zero base designs which utilise the minimum technical requirements in order to meet the function of the plant and then add cost for safety, maintenance and operability only where clearly justified.
This paper has set forth a structured three phased approach to focus the team on reducing capital cost while maintaining a low increase in engineering effort.
The initial ‘gather’ phase focuses the team on acquiring information and identifying decisions that will need to be made so that the team can prioritise and focus the attention on areas that will provide the greatest benefit. Within this phase the identification of zero base design requirements, review of lessons learnt and analysis of capital cost levers, allows the team to identify the key decisions on the project that will affect the capital cost.
In the subsequent ‘evaluation’ phase the team established the zero base design, using the hierarchy of cost reduction as a guide to focusing the team’s attention on high yielding cost saving opportunities.
In the final phase the team develops the execution strategy which will yield the least cost using strategies and tools such as modularisation, standardisation, replication, strategic sourcing and 3D design.
Merrells, J, 2017. Reducing total project cost in the study phase using zero base design, in Proceedings Iron Ore 2017, pp 621–626 (The Australasian Institute of Mining and Metallurgy: Melbourne).