The construction phase is the most exciting part of any mining project. If you have ever built a house think of how you and your wife wandered around the half built walls and dreamed of the furnishings and kids you would get to fill the voids. I guess building a mine is not quite that romantic but it is exciting.

Contractors are asked to make bids on the work to build the mine based on the engineering drawings and a lot of work and energy goes into selecting the correct company for the job. Everyone wants to develop a “team” that is well integrated and fun to work with. A little sidebar here. Most owner companies do not have the personnel on staff to manage large construction projects so this function is hired out usually to large engineering companies who will supervise the contractors. There are generally two types of these management contracts; Engineer, Procure and Construct (EPC) and Engineer, Procure and Construction Manage (EPCM). In the first case the engineering company gives the project owner a single cost to hand over a mine ready to operate (turnkey). This is risky to the engineering company but takes out lots of risk for the owner. In the second instance the engineering company supervises the work but the contracts are signed between the project owner and the individual contractors. The engineering company takes a fee for providing this service. The industry goes back and forth between these two basic types of construction contracts and it is not for me to say which is best. However, I can say that it takes a specific set of skills to manage a large mining project. Think of it, if the mine is going to cost $250 million and be built in 14 months then on average $600,000 a day will be spent. Can you spend that kind of money every day for 14 months and ensure that it has all been spent wisely? It’s a tough job.

There are two very important documents that have been generated during the engineering phase but belong to the construction process and these are the target cost estimate - basically a very complex and detailed budget which is managed by specialized accounting software - and the project schedule. As with a house there is no point in the drywallers showing up before the studs have been erected so too in a mine construction project. These contractors are very expensive and their arrival and departure must be carefully planned and coordinated so that you don’t have a crew of 50 welders suntanning on the hoods of their trucks at your expense.

So the general contractor is in place (the engineering company) and the sub-trades are raring to go. The green light is given and the bulldozers roll out. The excitement lasts for about 1 week or until the first contractor storms into the office and complains that no one told him about the quicksand. He has lost two bulldozers and his best operators and now who is going to pay? So much for things going smoothly but that is the nature of all projects. And this is why good project managers are such tough old birds. They have to be able to yell louder than the angry contractors. But that is also why projects are such fun. There are always problems to solve and seeing work implemented right away has great appeal to those of us who have short attention spans. 

The basic role of the construction management team is to ensure that the work is done according to the engineering design, in a safe manner and in a timely fashion. The project engineers often run interference for the contractors to be sure they have what they need to do their work while ensuring that the contractors don’t do a sloppy job. A well run project is almost always a safe project and will usually be finished on time and within budget. And for a project to be well run it must be based on a well thought out feasibility design otherwise there will be lots of re-work and both budget and schedule will be over run.

So what is re-work? Well let’s use the case of the quicksand pool that was not identified in the feasibility study. You now have a fleet of equipment sitting around costing in the order of $20,000 per day and you want them to get to work so there are two choices; you dig out the quicksand and try to make a good foundation or you move the plant to another site. Either way there is a delay and a bunch of “hurryitup” engineering must be done. So the three weeks it takes to get the construction crews back to work plus the extra engineering may easily cost $500,000. Or what happens if someone discovers that there are hydrocarbons in the slurry feed threatening the destruction of the rubber lined pipes? Suddenly there is a need to design a way of getting the hydrocarbons out of the feed and shoehorning this little plant into the already tight quarters. I have heard of both these problems occurring in real projects so it does happen. I am getting boring but the feasibility study is the insurance policy - get it done right.

There are lots of issues to discuss regarding the construction phase but they won’t be discussed here so let’s move onto a discussion of the project startup.