Project Scope, Time, and Cost Management - Case Study Example

MGT8027 PROJECT SCOPE, TIME & COST MANAGEMENT Customer Inserts Name Customer Inserts Tutor’s Name 21st September, 2014 Executive Summary The Kitsault Molybdenum project is well thought investment since it assists in reviving the past mines into a top Molybdenum producer in the world. In the implementation of the project there are several factors that should be emphasized such as the involvement of stakeholders, project planning and conflict resolution. The project sponsors and the team have implemented this project based on the hindsight that it must be successful since it is a revival of an old project. Therefore, several factors should be considered in the implementation of this project and several lessons were learnt from past successful project. The success of this project will rely upon the major factors of communication, planning and problem resolution. These are important in ensuring cohesion and team spirit is maintained within the project team and in the process of undertaking their roles and responsibilities. The successful implementation of project and application of these factors will hinge upon these recommendations; a) Allow all interested stakeholders to take part in the project b) All the company’s employees from the board of directors to the lower tier should be actively involved in the project implementation c) Ensure proper planning is the backbone of the project implementation i.e. the roles and responsibilities of project team members is actively pursued d) Implement a communication plan to ensure there no communication breakdown of the project requirements and goals e) Implement a risk resolution mechanism for understanding conflicts and resolving the same. This mechanism should be relied upon in resolving future issues. Table of Contents Executive Summary 2 Table of Contents 3 List of Figures 4 Introduction 5 Project Background 5 Project Context 5 Stakeholders 6 Organizational Structure 7 Roles, Responsibilities and relationships of project team members 9 Team development and conflict 11 Conclusion 13 Recommendations 14 References 15 List of Figures Chart 1: Avanti Mining Co. Organizational Structure Table 1: Showing Avanti Mining Project’s role and responsibilities Diagram 1: Kitsault Mining Conflict resolution phases Introduction The management of projects requires the utilization of several skills to ensure successful implementation within the set goals and scope. This analysis tracks the implementation of the Kitsault Molybdenum Project which is a mining project located in North Western, British Columbia in Canada. The project got an approval from the Canadian Environmental Agency Assessment and the project construction will begin in 2015. The project is intended to produce 45,500 tonnes of Molybdenum ore per day from the year 2017 when operations will commence. The analysis will look into the construction phase of the project, the company structure, stakeholders and roles of the project team. Project Background The Kitsault Molybdenum Project was initiated by Avanti Mining Company which took over the project from Kennecott and Amax which ceased mining operations in 1982. The mine was closed due to low prices of Molybdenum at the time and now Avanti intends to operate the mine for a period of 14 years. The mine location is 140 km from Prince Rupert in British Columbia and it has proven to be among the top 5 Molybdenum assets in the World. Due to the quality and supplier agreements that Avanti has with other suppliers, the resource will fetch good prices at assumption rate of US$20.00/lb of Molybdenum. Project Context The Kitsault Molybdenum Project is expected to take 2 years of construction before commencement of mining can begin. The project’s construction cost is estimated at $ 812 million which will be wholly financed by Avanti Mining through its partners. The project is expected to employee over 700 people in the construction phase and 300 full time employees during the mining phase. The expected deliverable of the mining phase is a fully functional mining operation and the company expects to get full backing from all its stakeholders. The project major phases are; test drilling, permitting, personnel acquisition, financing and construction. Issues in the project include labour agreements and project financing. Stakeholders Stakeholders in a project are defined as people or groups upon which will be affected in the process of a project’s implementation. The stakeholders in a project are not supposed gain directly from the project although they will be affected by the project (McDowell 2001, p. 32). In the implementation of the Kitsault Molybdenum Project, there are different set of stakeholders involved in the project as outlined; a) Partners: Avanti Mining Company has agreements with different stakeholders and partners such as ThyssenKrupp Metallurgical Products which has committed for 50% take off on all Molybdenum mined from the Kitsault Mine. Other partners in the project include the Chilean-based Molibdenos y Metales (Molymet) which has agreed to establish a Molybdenum concentrate processing plan with Avanti Mining. b) Government of Canada: The Kitsault Molybdenum Project is expected to generate good revenues and thus, the project will net the Canadian government taxes and other incentives which are beneficial to the citizens of the country. The Kitsault Molybdenum mining project is a huge undertaking and therefore, it will assist in developing the Kitsault area which has been greatly affected upon the closure of the Kitsault Molybdenum mine in the year 1982 (Cleland 1998, pp. 61-62). c) Kitsault Community: The Kitsault community and region will benefit from the project since a lot of people will get employment from the company. Moreover, people living in the area will benefit from an economic boost since the project will bring a lot employees and people who will need good and services sourced from the community (Gardiner 2005). d) Labour Unions: The implementation of the Kitsault Molybdenum mining project will involve approximately 700 workers in the construction phase of the project. A further 300 will be employed when the mining process will commence. Therefore, labour unions who will be involved in the labour negotiations and other staffing arrangements will meet and decide on an appropriate method of undertaking this process. As a result, these unions are stakeholders in the implementation of the project (Cleland 1998, pp. 57-63). e) Local Kitsault Government: The Kitsault local community and government will be involved attractively in the project since it will act as a liaison between the company and the residents of the region. Moreover, development in the area as a result of the Kitsault Molybdenum project will be huge and thus it will boost the economy of the region in terms of infrastructure development and other amenities. f) Business Community: The business community in the Kitsault area will greatly benefit from the project since the potential of the project will spur trade and commerce (Cleland 1998, pp. 65-67). Organizational Structure The Avanti Mining Company which was formed by sponsors and stakeholders who had the opportunity and desire to mine Molybdenum at Kitsault and therefore, we have to understand the structure of the company and how its operations/activities are implemented (Dow 2009). The company is made up of a three tier operation which is in charge of the company’s operations in the implementation of the Kitsault Mining project as outlined; a) Board of Directors: This is the top organ of the company and is responsible for making major decisions on behalf of the company shareholders. They represent the company’s shareholders and therefore, they have a very important task. Avanti Mining Company’s board of directors is made of 5 directors and the CEO who represents the company’s internal staff in the board (Dugdale 1991, pp. 47-48). b) Senior Management: this comprises of the Chief Executive Officer, the Chief Operating Officer, the Chief Finance Officer and the Human Resources Director. The senior management is responsible for defining and implementing the company’s strategy based on the vision, mission and goals of the company’s board of directors. c) Departments: Avanti Mining Company is divided into different departments such as Finance, Technical, HR & Planning and these departments are headed by departmental heads. Each department has specific functions which are interconnected to ensure the company goals and objectives are achieved (Furman 2011). The departments within Avanti Mining Company are; Senior Management – Company’s major decision making organ. Finance – Responsible for financial strategy and reporting mechanisms for the company HR & Planning- Responsible for all the human resources of the company with activities such as hiring, firing, outsourcing and labour relations. Technical – Responsible for technical advisory and technical planning for the company Construction & Mining- Company’s department that is responsible for actual mining activities and construction of the company facilities. This structure has been segregated to ensure several activities and issues are addressed adequately in the process of implementing the company’s goals (Degarmo 1993, pp. 66-69). For instance, decision making is simplified and solutions are implemented easily since all departments are responsible for carrying out the company’s decisions (Dayal 2008). Each unit is interdependent on the other and therefore task and company activities are carried out faster. The chart below represents diagrammatically the structure of Avanti Mining Company. Chart 1: Avanti Mining Co. Organizational Structure Roles, Responsibilities and relationships of project team members In the implementation of the Kitsault Molybdenum mining project, we expect the project team to come with a management of project tasks and activities (Bishop 1999, pp. 9-11). The Kitsault Mining project initial stage of mine development will see the project team divided into three sections; planning, Technical and Construction. a) Planning: this section will be comprised of a steering committee which will be responsible for planning and evaluation of all project tasks. This section will be headed by the project manager who will work with other sectional heads (Chin 2009). b) Technical: this section is in charge of all the technical works that will be undertaken in the implementation of the project. These tasks include drilling, technical design and specifications. It will be headed by a technical manager who is a mining engineer by profession (Thamhain 1998, pp. 271-275). c) Construction: this section of company will be concerned with the construction of the mine areas and it will headed by a civil engineer working with other engineers such as the structural engineer, architect and other staff (Barr 1996, pp. 36-37). d) Support staff: support staff will be deployed and work within any of these sections and this will include employees such as drivers, mechanics, filing staff, handymen or labourers (Calvert 1995, p. 215-218). The table below summarizes the sections, roles and responsibilities of some staff that will be vital in the implementation of the project. Department Head Project Role Responsibilities Planning Steering Committee Project Manager Overall in charge of managing the project to completion. Head Human Resource Officer In charge of labour issues, hiring and vetting of new employees. Reports to the HR Director. Technical Manager Briefs the steering committee on the technical aspects of the project and the progress in terms of technical Legal Adviser Gives legal advice and makes user the project meets the set laws and regulations. Give solutions to legal issues. Technical Technical Manager Drilling Engineer Responsible for drilling exercise, drill tests, plans and drill reports to the project manager Environmental Officer In charge of ensuring environmental assessments and measures are met in the project implementation Surveyor Ensure mine area surveys are accurate. File survey reports with project manager. Construction Construction Manager Civil Engineer Ensure civil works on the site meet acceptable metrics and standards Planning and design of civil works and activities Structural Engineer Ensuring mine structures are built to last and meet structural standards Architect Drawing, evaluating and approving construction designs and maps Clerk of Works In charge of all labourers and handy men working on the construction site Table 1: Showing Avanti Mining Project’s role and responsibilities Team development and conflict In the implementation of the Kitsault Molybdenum mining project, the project will be implemented by a project team which will responsible for all the project tasks (Wysocki 2000, pp. 240-247). In the construction and implementation of the project, the Kitsault project team will comprise of 3 major sections namely; a) Planning: This section will be responsible for the selection of a steering committee to make sure that the project is completed within the scope. The planning section is ensures that the proper among the different sections of the project team (Gray 2003). b) Technical: This section comprises of engineers and experts who advise the project implementers on technical issues and how to solve these issues. c) Construction and Mining: this is the section of the project team will be responsible for the actual construction and mining activities within the implementation of the project. In the process of managing the project team, it is advisable to ensure there is proper communication and conflict mechanism is put in place to ensure proper cohesion between employees in the project team (Wall 2007, p. 531). Some of the factors that will ensure cohesion in the project team include; a) Proper communication channels b) Delimitation of roles and responsibilities among project team members c) Conflict resolution scheme that allows escalation and resolution of conflicts In the implementation of a project, there will always be conflicts which are healthy for the development of the project team (Harrison 2004). However, these conflicts need resolution based on a resolution mechanism which seeks solutions and lessons for the future (Barnett 1997, pp. 1-4). A conflict resolution mechanism should consider the need for resolving the issues and understanding the situations under which conflict occur (Wall 2007, pp. 516-522). The stages outlined would be suitable for conflict resolution in the Kitsault Molybdenum project; a) Identification: identify all conflicts or issues from within the project b) Validation & Prioritization: check whether they are real conflicts or issues which affect the project. Then prioritize validated conflicts based on impact to the project (Okmen 2008, pp. 50-56). c) Analysis: Analyze all the conflict or issues from all angles and seek views from the project team. d) Tracking & Reporting: track the development of the conflict and report progress on the conflict to the project manager (Kloppenborg 2014). e) Issue resolution: Find solutions to the conflict and in case of non-solution, the conflict or issue will be escalated to experts or outsourced by the project team. f) Resolution Closure: once the solution is implemented then the conflict is closed and the solution recorded for future conflict resolution (Heldman 2009). The diagram below summarizes the conflict resolution mechanism to be used in the Kitsault Molybdenum project. Diagram 1: Kitsault Mining Conflict resolution phases Conclusion The implementation of a project requires and encompasses several skills set which is utilized in the process of managing and implementing the project. Project managers and experts should have an understanding of project goals, scope and deliverables in the management of the project. Since this will enable them to come up with proper plans for managing the project team and solve issues that might lead to project stalls. In the management of the Kitsault Mining project, communication and problem resolution have been prioritised as important skills that the project should discover, transmit and implement among the project team members. Having a proper communication and problem resolution mechanism is important in the implementation of the project. This is because a resolution mechanism allow for rapid problem resolution, improves communication and allow the minimization of downtime or deadlocks in the process of project implementation. Recommendations The Kitsault Molybdenum mining project allows the project manager and other project stakeholders to revive a project that was successful in the past. Therefore, the project has to ensure the project is implemented in a swift manner to allow for development and investment inflows for all the stakeholders (Back 2001). As a result, these recommendations would ensure these goals are achieved; f) Allow all interested stakeholders to take part in the project g) All the company’s employees from the board of directors to the lower tier should be actively involved in the project implementation h) Ensure proper planning is the backbone of the project implementation i.e. the roles and responsibilities of project team members is actively pursued (Nagarajan 2004). i) Implement a communication plan to ensure there no communication breakdown of the project requirements and goals (Mansuy 1991, pp. 16-18). j) Implement a risk resolution mechanism for understanding conflicts and resolving the same. This mechanism should be relied upon in resolving future issues (Meredith 2011). 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