lean thinking in mining

8/3/2019 Lean Thinking in Mining

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The use of Key Performance Indicators (KPIs) is far from new, but their

usefulness can vary we have seen projects where the wrong KPIs produce

information that does not help management take decisions; we also know

that having too many KPIs can shift the focus from successful delivery of a

project to the achievement of specific indicators.

This article outlines some of the most common KPIs we see, and notes some

of the factors to take into account in applying them. It is part of a much

larger piece of work compiling insights and experience from projects all over

the world if you would like more information about how KPIs can help you

get the most from a project please get in touch.

Our second article looks at the application of Lean principles in the delivery

of mining projects. Although it has its roots in car manufacturing, tracing

its heritage from Henry Ford via Toyota, there are practical similarities

between mining and manufacturing. Each can use Lean techniques to manage

extensive supply chains, focus on safety, and juggle multiple complex

processes while Leans ability to address features unique to mining has

made it an increasingly useful tool in our industry. Read on to see how we

have helped some of our clients use Lean to improve their processes.

I hope you enjoy this issue if you have any feedback or would like to know

more, please do let me know.John Gravel

Vice-President

Investment is required in research,

manufacturing and delivery of sustainable

solutions to safeguard the future of the UK.

Improving project performance

Welcome to the second issue of our quarterly update of ideas and

insights for the mining and metals sector. In this issue we look at

tools and approaches from outside our industry relevant for mining

companies and members of their supply chains.

For further information please visit

Ideas for the

mining and metals sector

Making KPIs work for you

Measuring performance to ensure

successful project delivery and

continuous improvement in the

way you manage and develop

your assets.

Lean thinking in mining

Lean thinking is not purely about

cost saving. It focuses on working

smarter to reduce or eliminate the

non-value-adding work people

do each day.

John Gravel on site in Peru

Beneath the surface

Issue 2


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Beneath the surface Issue 2

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Turner & Townsend compiles KPIs from projects around

the world to help clients ensure they are measuring

the right things, generating information they can use,

and benchmarking against international best practice.

While specific KPIs on one project may not be suitable

for another, there is a reasonably consistent set of KPIs

that organisations can use to ensure their projects are

delivering:

1. Health and safety

All the mining companies we work with are making

significant inroads into improving the health and safety

of their workforces and stakeholders now routinely

monitor performance in this area.

Performance indicators, such as accidents, are now

monitored as standard and increasingly we use indicators

such as near miss data to allow more proactivemanagement of performance.

However, the most common root cause of accidents

at work is the behaviour of people. Adding KPIs that

allow management to understand, monitor and address

project-specific human factors is key to safely delivering

a project. The implications of this should not be

underestimated: widely reported figures from the UK, US

and Australia suggest that on a US$1 billion programme

costs can typically be increased by US$60 million through

health and safety-related losses more where safety

culture is not fully advanced and working environments

are difficult.

2. Environmental

Most countries have some form of legislation to control

the environmental impacts of mining operations and

mine closures. Many systems are in place for setting

and tracking KPIs against such legislation, covering

such impacts as environmental pollution and waste

management.

However, throughout the world wider sustainability

controls are being applied to mining operations, and we

are developing project-specific KPIs to demonstrate to

stakeholders that the mining operation is complying with

these wider requirements.

For example:

Funding Institutions the worlds major banks are

increasingly applying the Equator Principles which

establish baseline sustainability criteria for majorprojects that they fund

The International Finance Corporation (IFC) uses

environmental and social screening criteria to

categorise the magnitude of social and

environmental impacts

The International Council on Mining and Metals (ICCM)

has 10 Sustainability Principles with which members

must comply the worlds largest mining companies

are members of the ICMM.

3. Performance

Performance is a core measurement requirement for all

projects, as it relates to both time and cost measurementand can be used to forecast outturn cost and project

milestone dates. Used well, these measurements can

warn the project team about issues in sufficient time to

bring the project back on track. These KPIs are usually

best read as a group at high level, with the ability to drill

down to understand specific issues.

Programme/time most organisations require

a project programme so they can impose specific

milestones and stage constraints. If there are significant

changes to the project then the programme can be

modified and updated as the project progresses.

Cost/budget all projects have a budgeted cost, whichis distributed throughout the project life cycle, enabling

the client to arrange finance. Bringing the programme

and cost forecast together gives the ability to monitor

productivity.

Performance KPIs most commonly Schedule

Performance Index (SPI) and Cost Performance Index

(CPI), which generally rely on the project having a viable

cost-loaded programme at the start of the project that is

monitored and maintained.

Key Performance Indicators

Using performance data to improve your project

No project meets its objectives by chance, and careful performance management is crucial throughout.

We rarely come up against projects where no KPIs are in place, but sophisticated organisations are

now looking more carefully at how they measure performance to ensure both the successful delivery

of individual projects and continuous improvement in the way they manage and develop their assets.


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making the difference3

Quantity/man-hours this focuses on design approval,

turnaround times and production achievement. Suggested

KPIs include:

average time taken to respond to and close out

requests for information average drawing turnaround time from formal

submission of a drawing until its approval

drawing approval rating the number of drawings at

various levels of approval

design management a comparison of the number of

hours worked against the number of drawings issued

for approval

production targets these have been successfully used

to measure completion of a specific work stream such

as a port facility or process plant expansion. Over

a large project or programme these KPIs will facilitate

control and measurement of progress and when viewed

with the CPI and SPI provide a more balanced view of

the project status than just viewing the KPI in isolation.

4. Change

All well managed projects employ a change control process

to track changes to the design, cost, schedule, quality

or variation from the specification. While there is no

industry benchmark for this KPI, our experience suggests

a five percent increase on the contract sum would be an

aggressive but achievable and desirable target.

5. Risk and issues

Most projects use a risk register, usually dictated by the

client organisation. The risks on a risk register are generally

scored and given a simple colour rating. Some projects

produce probability impact grids alone these are of limited

use but over the course of a project they can demonstrate

that risks are being effectively mitigated. Simulations

generate useful KPIs from the risk register, demonstrating

the likely impact of changes and/or spend.

6. Quality

This is often measured qualitatively by looking at the

output of the project without much regard to the quality of

inputs. The measurement of quality for a project usually

relates back to the project objectives and the expectations

of the level of quality. Measuring quality is a challenge due

to the subjective nature of the topic, however by thinking

about the question from the outset, businesses with multi-

site operations can generate significant insight from theirstakeholders about the success of a project.

7. Team performance

This category includes measures of behaviour and other

people issues. Such qualitative measures can be hard to put

in place, however they can yield important results that make

a tremendous difference to the working environment and

outturn of a project by giving insights into contractor and

subcontractor performance, morale, teamwork and individual

behaviour. Large data samples are important to identify

trends and demonstrate the impartiality of the base data.

Lean thinking in mining

Lean thinking may have its roots in manufacturing, but the principles have been significantly

improving projects for mining organisations over the past decade. It focuses on implementing

processes that ensure the right things get to the right place at the right time while

minimising waste and retaining the flexibility to adapt to new circumstances.

Lean interventions take into account features unique

to mining such as inherent production push due to the

continuous operation of a smelter/refinery, variability of rawmaterials as well as common manufacturing/mining features

such as the demand for standard work practices, the reliance

on extensive supply chains and the focus on safety.

Lean is not purely about cost saving; instead, it focuses

on working smarter to reduce or eliminate the non-

value-adding work people do each day. Here we outline

some recent projects where our consultants have

helped clients use Lean thinking to save time, money

and effort and empower their workforce to increase

productivity, efficiency and morale. As these examples

show, Lean thinking is not complex but requires detailed

understanding of the process.

Improved order delivery times from stores

The issue: The lead time for a department from placinga requisition to stores to receiving the parts was up to five

days longer than the planned maximum two days. Reasons

included 22 percent of the items being out of stock,

multiple sorting and triple counting of stock, batching

of reservations and a single issue report each day.

As part of the countermeasures, the project team

introduced labelled containers and pallets per destination

to avoid re-sorting on delivery as well as delivery to the

wrong drop points. This reduced average dispatch and

delivery times from 2.9 days to 1 day. Minimum and

maximum threshold stock levels were defined to facilitate

optimum reordering.

continued over...


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Beneath the surface Issue 2

For more information about the issues discussed in this newsletter please contactJohn Gravel on: [email protected] or call: +1 415 489 1509

or visit our website: www.turnerandtownsend.com

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Optimised planned maintenance at the workshop

The issue: Only 80 percent of the scheduled tasks were

being completed daily, resulting in a perpetual backlog.

Analysis showed that there was inconsistent work allocation

between the maintenance staff with some completing

ten times more than others in the same time. Plan to

completion reports were only available two weeks after

the event which made tracking difficult.

A new planning process was proposed including features

such as:

daily Job Card issue and return to monitor work statusand completion of scheduled tasks

bi-weekly maintenance plan reviews

a workload board whereby every maintenance worker

was preloaded according to jobs and not sections

to address the workload imbalance

a schedule board with priorities.

The countermeasures ensured 60 percent time allocation to

planned maintenance and 40 percent to reactive maintenance.

Improved shift change

The issue: Production was scheduled to commence

at 07h45 but the actual start-up time averaged 08h07.

These 22 minutes resulted in a loss of 264 tons per day.

Analysis established that blasting preparation was the major

cause of all the delays; 67 percent of all late start-ups were

a direct result of late blasting. The blasting delay reasons

included damage to wiring by loaders, incorrect wiring

connections due to human error, inadequate system checks

and insufficient preventative maintenance of blasting fans.

We also found complex and unclear procedures that were

not easy to follow, while not all critical data was captured

and analysed.

Countermeasures developed by the team included:

clear operating procedures for all activities during the shift

changeover period as well as ensuring ready access to all

users of visual control standards, control charts etc.

Included in the Standard Operating Procedures (SOPs)

was that wiring was to be routed at a height clearing the

travel path of the loader.

Countermeasures for the immediate future included:

installing an electronic closed circuit tester to be

monitored by the control room

a scheduled maintenance programme for blasting fanswould be implemented.

Annual health assessments

The issue: All people working at the mine are required

to undergo an annual medical examination. They were

spending as much as five hours in the clinic, most of which

was spent waiting for the next process.

Some of the problems identified were that all patients

arrived at the clinic at 05h00. The radiographer and the

doctor only arrived at 07h00 and 08h00 respectively.

Completion of the form at reception took over 25 minutes

and there was no defined sequence followed by patients

for the various procedures.

The project team focused on the activities occurring from

the time the patient entered the clinic until they were issued

with a health certificate, for which they designed a process

flow and conducted a flow simulation. It was established

that it was possible for patients to leave the clinic within

69 minutes of entering a target which was then achieved

by moves including reorganisation of seating to facilitate

flow, redesign of the form at reception and introducing

standardised procedures.

HR recruitment process

The issue: Recruitment of C-band and higher staff

averaged 83 days, with a maximum of 446 days, with

significant cost and time implications to production.

Analysis showed that documentation pertaining to specific

positions spent considerable time waiting for approval at

various stages in the process. The approval process was

revised to reduce the queuing time and to have some

activities happening concurrently rather than sequentially.

Countermeasures included:

making resignation approval the trigger for commencingthe recruitment process

scheduling candidate review and shortlisting meeting

prior to application closing date

a telephonic interview questionnaire drafted before

closing date of advert

the candidates personal information to be sent to HR

during their notice period to avoid delays in signing on

and induction.

These measures reduced the average recruitment period

by 12 days.

Lean thinking in mining continued...

Turner & Townsend plc March 2011

lean thinking in mining

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