Mining Project in Mongolia - Case Study Example

MONGOLIA MINING PROJECT Student’s name Code & Course Professor’s name University City Date Contents 1.0 Introduction 3 2.0 Control of project quality 3 2.1 Pre-project 4 2.2 During the Actual Mining 5 3.0 Human Resources 6 4.0 Procurement 8 4.0 Communications and Stakeholders 10 5.0 Time Reduction 12 Mining project in Mongolia 1.0 Introduction Mongolia is one of the most abundant countries in terms of mineral resources. The country registered the highest GDP growth rate in the world at 17.5 percent, but since then, the economy has slowed rapidly. With a new government in place, the country is desperate for foreign investments and a return to high levels of growth. Between 2013 and 2014, foreign investment reduced by 70 per cent. With such conditions and the stiff competition, companies might throw caution to the wind when approaching mining in Mongolia. This gold mining project, however, is committed to the highest levels of quality and management and the best outcomes for all the stakeholders involved. 2.0 Control of project quality Project quality control should happen in three stages; the pre-project duration, the duration of the project and the follow-up after the project. In the case of the Mongolian mining project, the following must be done during the pre-project stage. 2.1 Pre-project After the definition of the scope of the project, the mining company must determine how much the mining operation will affect the surrounding community. This calls for an identification of the surrounding settlements or dwellings, and the formulation of a resettlement plan for the people to be displaced or disturbed by the mining project. After determination of the physical scope of the procedure, the road access to the site must be evaluated. First, the mining operation must make sure there are no road reserves in the area to be used for the mining. Secondly, it is likely that the equipment and materials to be transported and used in the mining operation will interrupt the normal road operations. The company must determine an alternative route for the transportation of the tools to be used in the mining operation. The initial preparation of the mines before the actual extraction of the mines also requires an environmental management plan. There are two major types of management plans necessary for a good environmental analysis in a mining environment. Carbon based environmental plans incorporate management of site water, a noise monitoring program, a program to monitor the air quality and one to monitor the blasting operations. The project manager must realize that in order for the mining operation to kick off as scheduled, they have to keep as close a track of the operations as possible. Projects start or end late because of the cumulative small delays that happen daily. This calls for daily progress reports, evaluation and measurement of performance and progress. 2.2 During the Actual Mining Quality control during the mining project itself must be ongoing. The eventual quality of the result depends on how much the stakeholders in the mining process; the management and the miners, understand both the quality control measures and the mission and vision of the company, and the awareness and responsibilities at the workplace. The company has a mission of becoming the best gold mining company in the country, producing the largest output of 4 tons per year. The vision of the company is to have the mine being one of the most famous landmarks in the country. Everyone in the mining process must be clear on the mission and vision, and how they translate to their daily jobs. The company also has a set of critical success factors, like a required output without any safety accidents, zero sewage and pollution, no corruption and the gold mine to be up and running by 5th June 2016. These should be engrained into the working philosophy of the mining company. The company must build a culture that ensures they meet these targets. Safety precautions and targets must be placed in locations where everyone can see. The company must make sure to provide top of the range safety equipment to their staff. Equipment must be inspected monthly to make sure they are not defective. Employees must also understand the role they play in the goals, mission and vision of the company. Regular update meetings between the stakeholders must take place, and constant performance appraisal must be done. After any organization approves a project, the next step is often how to implement it. While there are many methods of implementation, even when different companies use the same method the specific situations are often very different. This is because the organizational culture the company builds translates into a personality for the project. The organization, therefore, has to build a culture that supports the achievement of its objectives (Larson & Gray 2011). 2.3 After the Mining A rehabilitation plan is also necessary for the mining site, or for different mines after the exhaustion of the mineral resources. Rehabilitation plans have to include all the necessary stakeholders in the project. The rehabilitation must happen in consultation with the existing or potential land owners after the mining operation, the local authorities of the areas where the mines are located, local community groups, government officials and other relevant government agencies. Typically, the aim of the rehabilitation project would be to create an acceptable compromise between restoring the area or landform after mining to its original or a better state, and creating a landform that is aesthetically pleasing. Gold mining requires land disturbance, and the resultant rehabilitation process after the mining will take place in three phases. The first phase will be the creation of the agreed landform state after the consultative meetings. The second will be the subsoil and topsoil replacement. The replacement will happen, as far as practicable, in the reverse order in which the stripping of the land happened. The third stage will be the re-establishment of the indigenous vegetation. 3.0 Human Resources Human resources are an integral part of the mining operation. The choice and treatment of the employees determines how successful the project will be within the chosen parameters of the company. Traditionally, the project leaders will work for the company, but the miners themselves will likely be from local areas. There is always the threat of the allure of riches for the miners, and by extension, the company, being more than the concern for their wellbeing. Every miner must be made to feel included in the benefits of the mining operation. For the long-term benefit of the company and mining operations in the country, the company will outsource the hiring of the local miners. Outsourcing offers several strategic advantages like the reduction of costs, faster project finishing times, high expertise levels and flexibility. The company will look at outsourcing with the view of building a long term relationship. Long-term outsourcing offers the company reduced administrative cost, efficient utilization of resources, improved levels of communication, innovation and performance as the partners become more acquainted with the procedures and standards of the company (Larson & Gray 2011). The company will perform enough due diligence to make sure the company it hires for mining operations is above board. However, it will still actively participate in the daily activities of the miners to make sure everything is above board. The mining company will every week conduct surveys of the working conditions to enforce the required national, international and company standards. Important standards that the company must uphold are the UN Global Compact standards, the UN Universal human rights declaration and standards set by the international labor organization. Further, the company will make sure to provide their employees with the right equipment for their jobs.Poor choice of equipment impacts both the final output of the mining operation and the health of the miners. The company will make sure all the employee training on the use of equipment and safety standards is as current as possible. It will conduct regular audits together with partners, local and government authorities and union officials to keep track of the state of the working environment. A code of conduct can help guide both the company in its choice of mining company and the procurement partners in the conduct. The company will use the following criteria to develop a code of conduct for the course of the project. First, it will perform a thorough assessment of the risks involved in its operations. Possible risks include the reputations of the country or region in terms of ethics, environmental and human rights enforcement and the level of risk of bodily harm involved in the mining activities. The company will then consult with other companies in the industry about the codes of conduct to establish the industry standards. Based on the results of the risk analysis, industry standards and the established national and international standards, the company will then develop a code of conduct (GIIRS, 2015). 4.0 Procurement Few projects are veer completed using internal resources. In the course of a project, companies will likely require external resources to complete their work (Nokes & Kelly 2007). The need for external resources depends on the complexity of the task to be performed. Outsourcing is slowly growing to be one of the preferred methods of obtaining external resources, in situations where the traditional procurement procedures are not appropriate as the project increases in scope (FME, 2014). The project will use the PMBOK guide in the procurement processes in its mining operations in Mongolia (Project Management Institute 2013). The first step in the PMBOK process is the planning. This is when the company, through the project manager and the stakeholders involved, including the procurement department, will decide what secondary resources the project requires. The primary questions that these process answers are as follows; what are the best or appropriate resources to acquire? How best can this acquisition be done? When must it be done and how much will the company require? At this stage, there is a considerable amount of risk evaluation involved with every decision to either buy or make, including evaluation of the required documentation and the available legal contract options, including those that transfer the risk to the supplier. The second stage in the PMBOK process is the conducting of procurements. This happens much like an open tender process, where the suppliers bid, and after the company receives the responses from the sellers, shortlists suppliers, chooses the appropriate one and awards the contract. The company will produce a procurement management plan from the results of the first stage, then produce procurement documents from previous processes which give guidelines on aspects like requests for information, proposals and quotations, tender notices and invitations to negotiations (FME, 2014). The analysis tools for this process must be public for the sake of objectivity and lack of bias. The company will then use a bidder conference to select and award the contract. Bidder conferences go by many names but are normally held by the buyer for all the companies that have received the request for a bid or request for a proposal. These meetings can either be mandatory or optional. Either way, they are a chance for the bidding team to meet the project managers, receive more detailed information about the bid and inquire on the proposal. It is important that o bidder receives preferential treatment. Bidding conferences are the ideal location for all the bidders to receive equal information. The third step is to control the procurement. This involves management of the relationship with the companies to whom the contract is awarded, to monitor the execution of the contract, take corrective steps if necessary and manage any changes to the scope of the exercise grows. The company will monitor the contract’s process with the aim of making sure that goods and service delivery is timely and of the right quality and that the relationship is managed properly. The final stage of all procurement processes will be the closure of procurements. At this stage, the company will verify the procurements to make sure that the work is acceptable and that all the administrative steps have been taken. Administrative activities include the archiving of information, finalizing any open claims and the proper archiving of the information for use in the future. Any outstanding disputes between the company and procurement partners are solved at this point. When negotiating, the company will concentrate on the problems rather than on the positions (Fisher & Ury 1991). The company will then conduct an audit of the process with the aim of learning as much as possible. 4.0 Communications and Stakeholders The major stakeholders in the mining project are the project manager, the company directors, the subcontractors, miners, local and government authorities and the local community. Every stakeholder has concerns, and communication is important for the various players in the project, both to ensure that their concerns are met and to report on the progress. Two aspects of communication are important in the course of a project between various stakeholders. Workforce awareness and responsibility is crucial for the efficiency of the project. The company will make sure all the members of the mining operation on the ground are aware of all the mining methods and the relevant procedures, as well as the standards required by the company. Before every operation, there must be an induction exercise and frequent toolbox meeting. Communication is important for accountability. When everyone is on the same page in terms of responsibility and tasks. It is especially important for the miners in terms of environmental accountability for the company, and the upholding of safety standards. Communication is also important for the management of the progress of the project. Without the frequent tracking of the progress of a project, it is likely that the project will fall into a cycle of delays and derailment. Another important communication process between stakeholders in this project will be weekly progress reports. After the setting of the scope, duration, vision and mission of the project, the project manager will set an operations plan for the project. This plan will then be broken down into short goals tailored to collectively meet the demands of various stakeholders and the overall mission and vision of the project. Communication for the sake of tracking the progress of the project involves the collection of data on the arranged schedules and costs of the project, as well as time parameters. The mining project will design weekly reports which will include the progress since the previous report, the current state of the project in terms of scheduling, the costs and scope, trends in execution of the project and the problems arising from the previous report. This will help the project manager to come up with corrective actions and keep the project on its original plan. Every project requires control, but for large projects, a formal control method is required, that is consistent and effective. The basis of formal control is that after the original setting of the baseline plan, the manager measures the progress and performance of the project and compares it to the original plan. If any issue arise, as they are bound to, then the manager takes corrective measures. The frequency of these progress meetings determines how effectively the project runs with respect to the baseline plan. 5.0 Time Reduction The project already has a baseline schedule, plan for execution and a control plan. However, the situation in Mongolia is such that there are very attractive natural resource prospects. This means that companies are always constantly on the prowl for mining opportunities. Apart from the stiff competition, there is also the issue of the dependence of the country on mineral resources (Langfitt 2012). This means when the world prices go down; then the attractive market conditions go down with it. The combination of these conditions only means that the company that has its product to the market faster has the advantage. The mining company will employ a project time reduction plan in Mongolia in an effort to establish a competitive advantage (Ibbs, et al., 1998). The company will do this by outsourcing the work. The company will outsource its mining equipment and human resource operations in an effort to make the process faster and easier. By using the critical path method, the company will determine which tasks they can improve in order to reduce the duration of the project (Baker 1997). The most critical process in the mining project is the actual extraction of the gold. The company will schedule periodic overtime during the project, reducing the duration of the project without necessarily increasing the labor costs of the project by increasing the number of workers. Overtime also reduces the additional hassle of induction and communication to new members of the workforce. However, the company will use over time sparingly, noting that the mining procedure is a long one. Reference list Baker, B. M., 1997. Cost/Time Trade-off Analysis for the Critical Path Method. Journal of the Operational Research Society, 48(12), p. 1241–44. Fisher, R. & Ury, W., 1991. Getting to Yes: Negotiating Agreement without Giving In. 2 Ed. New York: Penguin Books. FME, 2014. Project procurement Management:Free Management e-Books. GIIRS, 2015. Global Impact Investing Rating System. [Online] Available at: . [Accessed 26 May` 2015]. Ibbs, C. W., Lee, S. A. & Li, M. I., 1998. Fast-Tracking’s Impact on Project Change. Project Management Journal, 29(4), pp. 35- 42. Langfitt, F., 2012. Mineral-Rich Mongolia Rapidly Becoming 'Mine-golia'. [Online] Available at: . [Accessed 26 may 2015]. Larson, E. W. & Gray, C. F., 2011. Project Management: the Managerial Process. 5 Ed. New York: McGraw-Hill. Nokes, S. & Kelly, S., 2007. The Definitive Guide to Project management. 2 Ed:Prentice Hill, Financial Times. Project Management Institute, 2013. A Guide to Project Management Body of Knowledge (PMBOK Guide). Newton Square: Project Management Institute. Read More