November 28, 2012

Mining and Metals Companies Could Save Billions on Capital Projects, Accenture Research Finds

Improved front-end project planning can mitigate risks and reduce cost of increasingly complex projects

NEW YORK; Nov. 28, 2012 – Faced with delays and budget overruns – which can add billions to total project costs – mining and metals companies could significantly reduce the cost of large capital projects by improving planning and addressing workforce shortages, according to Accenture (NYSE: ACN) research on capital projects delivery in the mining and metals industries.

The research was based on 31 interviews with mining and metals executives with responsibility for capital projects around the world. Less than a third (30 percent) of the respondents report staying within 25 percent of approved budgets for all projects, and less than a fifth (17 percent) said they completed all projects within a 10 percent budget range.

The tremendous scale and complexity of mining projects – which are often multi-billion dollar investments – mean that budget overruns and delays in completion are not unusual. Among the contributing factors are infrastructure needs such as roads, ports and electrical power in less developed regions; the lack of talent and skilled workforces; and environmental and regulatory requirements in developed regions. When asked what typically causes delays in project schedules, survey respondents cited the availability of talent (57%), new or unconsidered regulatory requirements (45%) and insufficient detail during the planning stage (42%). Metals companies tend to have fewer delays and smaller budget overruns due to the reduced size and complexity of plants as opposed to mining projects.

Accenture research estimates that metals and mining expenditures for capital projects will reach more than U.S. $140 billion in 20121, and between U.S. $1 trillion and U.S. $1.5 trillion during the period from 2011 to 20252. Even with the current downturn in commodity prices, long-term demand for minerals and metals, driven by economic growth and social development throughout the world, continues to spur investment in mining and metals. With $100 - $200 billion in annual spend, the impact of project delivery overruns on individual companies and the industry as a whole is enormous.

“The potential savings and returns through effective management and delivery of a capital project investment can be huge,” said Jose J. Suarez, managing director for Accenture’s North American Mining industry group and the research lead. “Keeping on budget and within planned timelines across a portfolio of multi-year projects can save millions for a company – in today’s environment strong project management can be an important competitive advantage.”

More than two-thirds of the survey respondents indicated that their portfolio of projects will grow larger, and 81 percent said their complexity will increase. When asked about their top priorities in optimizing capital project management in response to the expected growth in project size and complexity, the executives cited ensuring the availability of the right leaders and talent for project delivery (72 percent), improving front-end planning and scheduling (52 percent), improved readiness for start-up and a more effective transition from planning to operations (43 percent), and effective stakeholder engagement (39 percent).

Based on the research findings, analysis and Accenture’s experience working with mining and metals companies, Accenture has identified five key areas for improvement in project delivery:

“While it is difficult to anticipate all of the changes that can arise from a multi-year project, companies can improve their project management delivery, reduce risks and boost returns on investment by looking beyond aspects of engineering and procurement. To be leading performers, companies will need to increase their focus on governance, human capital strategy, and integrating information systems with business suppliers and operations,” said Suarez.

1Accenture Research, © 2012 Capital IQ.

2Accenture Research analysis, Industrial Info Resources, Oxford Economics.

About the research and research methodology

Achieving Effective Delivery of Capital Projects, Insights from the Accenture global survey of the mining and metals industries is based on primary research conducted by a third-party firm on behalf of Accenture. Thirty-one interviews were conducted with executives in the metals and mining industries between February and May 2012. All respondents were C-level executives and decision makers or influencers in the management of capital projects in their organizations. Interviewers conducted a phone survey with executives in North and South America, Europe, South Africa, India, Russia and China. Accenture defines a capital project as a long-term investment in excess of $50 million, involving either greenfield or brownfield projects. For this survey, Accenture focused on delivery of major assets costing at least $1 billion to build and taking more than a year to deliver. To gain insights on leading practices, Accenture also looked at characteristics of companies that self-reported higher scores for capital project delivery.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is

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