Summary

Project framing is an important value improving practice for a large project. This case describes how a project framing study was conducted for a resource project, and how it helped to plan and focus the pre-feasibility study.

Together with another value improving practice, risk assessment, the framing study described here allowed the project team to concentrate its efforts on those aspects of the pre-feasibility study where strategic decisions were required and where reducing uncertainty would best contribute to those decisions. Broadleaf prepared the framing study, facilitated and recorded the efforts of a substantial number of personnel and reported on the outcome of the process.

Background

This case concerns a significant mineral resource project. The resource consisted of a central ore body and a group of adjacent but smaller ore bodies. Most of the ore bodies were close to the surface and suitable for open pit mining, and there were deeper sections that could only be mined economically by underground techniques.

The company that owned the mineral development rights used a formal tollgate process for project approvals, like the one in Figure 1. The concept stage determines whether a project could ever be worthwhile; the pre-feasibility stage identifies and analyses options that might enable the value to be obtained, and then recommends a preferred option to take through to the feasibility stage for detailed analysis and implementation planning.

There are approval reviews at the end of each stage. In a review, the company’s investment committee makes the decision about whether or not to proceed to the next stage. The framing study described here took place early in the pre-feasibility stage, sometimes called the select stage or front-end loading stage 2 (FEL 2).

The framing study

Objectives

The framing study was to contribute to the project team’s objectives for the pre-feasibility study (PFS):

• Ensure the best project size, scope, technical and production solution has been selected and is a viable business concept aligned to the company’s strategy
• Demonstrate that the selected project option will add value to the company and satisfies the company’s investment criteria
• Demonstrate that all the non-preferred project options have been examined closely and are clearly inferior
• Identify targets for further value enhancement and risk optimisation Prepare a workable project execution plan (PEP) for taking the project through the feasibility development stage.

A workshop was conducted to advance the framing study and develop strategic outcomes. The specific objectives were to:

• Achieve a common understanding of the goals of the project
• Identify the key stakeholders, what they want and how stakeholder engagement might be managed
• Identify the main project options
• Identify the opportunities and threats and how they might be addressed in the PFS.

Structure

The structure of the framing study was based on the company’s requirements for tollgate approvals. In particular, it used the ‘chapters’ in the decision support package (DSP) prepared for the investment committee, summarised in Figure 2.

The scope of the study was substantial. It required a significant amount of preparation to enable the participants to engage with it productively.

Data collection

The project team collected initial background information about each element in Figure 2, and the status of work to date in the PFS, in the form shown in Table 1. The information was collected as presentation slides, to be used as an introduction for each element during the workshop, with supporting written notes and diagrams. This was a minimum information requirement, and many more than eight slides were prepared for most elements.

The data was collected, reviewed, and used to prepare a comprehensive information package for issue as a briefing note before the workshop. The intent was to provide a substantial amount of information for all participants, including information from outside individuals’ immediate areas of interest, to allow everyone to contribute meaningfully.

The workshop was planned carefully while retaining sufficient flexibility to accommodate requirements to address important matters not identified in advance.

Workshop conduct

A period of three days was allocated for the workshop, with the outline agenda in Table 2. The aim was to ensure all aspects of the project would be covered in detail, so the workshop outcomes would be comprehensive. The workshop was held off-site to reduce distractions, and there were 30 participants from the company and the project team.

The agenda was deliberately flexible, but it was crucial to ensure that all concerned understood the purpose of the three days during which they were to work together and be able to gauge progress.

Workshop outcomes

Overview

A set of 25 strategic project options was identified and discussed. They fell into several groups:

• Options that were yet to be resolved in the PFS. Trade-off studies were either in progress or planned for most of these options.
• Options for which a decision had been made already. These options were reviewed and agreed in the workshop. The options, the decisions and the reasons for the choices made would need to be documented in the PFS report.
• Policy options outside the remit of the project team. There were only two of these.

A further 25 tasks were identified. Most of these were included already in the project plan, but they were identified separately for completeness.

A high-level risk assessment was completed, with 39 threats and opportunities identified. Of these, eight were significant for the project.

Options, tasks and actions

Each element was discussed in detail in the workshop, using the initial information package as a starting point. Project options to be considered in the PFS, or options where a decision had been made that should be documented in the PFS report, were recorded in templates like Figure 3. The aim was to document the option, its objectives, and the rationale for either retaining it in the PFS or excluding it.

General tasks to be undertaken as part of the PFS, including areas where technical analyses of tactical options would be needed to develop optimal project outcomes (such as detailed equipment selection, location finalisation, and so on), and specific actions to be undertaken during the PFS, were documented in templates like Figure 4.

Option mapping and strategic themes

The 25 strategic project options were not independent. Figure 5 shows how they linked to one another and to a selection of the more important tasks. The relationships depicted with arrows represent instances where either one option or task was a prerequisite for or might have a significant influence on another.

The most important relationships in Figure 5 indicated the main strategic themes that would guide the remainder of the PFS:

1. The initial focus is on the central ore body
2. It is important to retain flexibility for future expansion if it becomes worthwhile
3. Plant capacity is yet to be determined
4. Locations and processing options are largely determined
5. Water management will be critical
6. It is likely open pit mining will be used initially
7. The contracting strategy is still to be finalised
8. Gaining a social and political licence to operate is essential.

Threats and opportunities

Threats and opportunities were addressed during the framing workshop. An initial detailed risk register had been prepared, based on existing background information, earlier assessments, and lists of threats and opportunities provided by the participants before the workshop. Risks were then combined into higher-level headline risks and grouped under the element structure for the workshop. This consolidated register formed the basis for discussion.

During the workshop new risks were added to the register, some risks were deleted, and the descriptions in the remaining risks were adjusted. Additional controls were noted where appropriate, and the risks were assessed.

This process was not intended to generate a comprehensive project risk register. The aim was to support the strategic decision making process so there was a focus on the more important risks and those that might affect strategic project options.

Figure 6 shows the risks and their consequences and likelihoods. There were four extreme risks with negative consequences (labelled T, threat) and four extreme opportunities (labelled O).

Figure 7 shows the risks grouped by control effectiveness and level of risk. Risks in the lower right cells should be the focus for control improvement activities, because they are significant and there is scope for the project team to do better.

Figure 8 shows the risks grouped by their levels of risk and their potential maximum consequences. Risks in the upper left cells should be the focus for monitoring and control assurance activities, because the impacts may be very high if the controls do not continue to work effectively.

These summaries were a starting point for deciding where to focus PFS effort to reduce the uncertainty surrounding the selection of a preferred way forward.

Lessons

Preparation and planning

This framing study required a very high level of detail. It concerned a large, complex project, and there were 21 major topics that had to be considered in the DSP and presented to the investment committee.

Three days were allocated for the workshop with 30 personnel taking part. Although this may seem a long time, it required a great deal of dedication and focus by the participants to achieve the desired outcomes. It would not have been possible to achieve such a useful result in the time allowed without detailed preparation and planning:

• A large amount of information was compiled before the workshop; participants were engaged actively in this, so they developed a strong sense of ownership at an early stage
• An extensive and detailed briefing package was distributed, to ensure all participants had sufficient background and knowledge to engage in useful discussion and make informed decisions
• The workshop logistics were arranged well in advance and implemented smoothly
• An off-site location was chosen, away from distractions, and with all participants staying at the venue
• The structure and agenda for the workshop were developed carefully, so there was a clear process and a clear timetable.

There was strong support for the framing study from senior company and project managers. This reinforced the importance of the activity, and the need for focus and discipline in the workshop.

In our experience, strong corporate leadership and support, dedicated and focussed people, detailed preparation and planning, and skilled facilitation and recording are all essential if a wide-ranging study like the one described here is to be successful.

Dedicated workshop recorder

With 30 people exploring and discussing a wide range of topics over three days, a great deal of knowledge was created and shared, and it was important that the key points of the discussion during the workshop were captured adequately. We used a dedicated recorder with an understanding of large resource projects for this.

A recorder must be reliable and able to listen, interpret and record the discussion and conclusions as the workshop progresses. In our experience the recording task must also be planned carefully if it is to be effective. In this case, the templates in Figure 3 and Figure 4 were a valuable aid to systematic recording, with the ‘assumptions and objectives’ cells providing locations for additional non-specific matters that did not fit easily into the main analysis cells in the lower part of the templates. Templates also focus the attention of participants on the key information items required.

Reporting and escalating risks

The reporting and escalation criteria associated with different levels of risk that are often contained in corporate enterprise risk management frameworks may not be appropriate for projects in the pre-feasibility stage, when there is always a great deal of uncertainty and the risks are relatively fluid as a study progresses. In most circumstances in pre-feasibility, extreme and high risks should be treated by the project team and monitored by the project steering committee, and higher-level reporting is rarely necessary.

One of aims of the PFS is to identify and reduce uncertainty in the project, and most activities through the stage are directed to this. The levels of risk provide guidance to the project team about the most significant sources of uncertainty, and so they form an important input to project planning for the remainder of the stage, targeting effort at the areas where there is the most remaining uncertainty.

Similar considerations apply throughout the project life cycle, which is why risk assessment is usually a core component of the DSP for each of the tollgate approvals in Figure 1.

In addition to recording risks in a formal risk register, risks should be taken into account when analysing project options and drawing conclusions about whether they are worthwhile. For example, relevant risks should be noted in the ‘benefits and opportunities’ and ‘costs and threats’ cells in Figure 3, and they should form part of the analysis underlying the outcomes in the ‘conclusions and actions’ cell.

Option and task mapping

Identifying and analysing options for each element and assessing the associated risks was central to the project framing. However, drawing out the relationships between them, in a form like Figure 5, improved understanding and allowed new insights to be generated.

Figure 5 presented a holistic view of the options and the main tasks, from which the main strategic themes – as noted above, following Figure 5 – could be extracted easily. (For confidentiality reasons the items in Figure 5 show only option and task numbers, whereas the project’s version of the diagram contained sufficient descriptive material to allow grouping into themes and supported discussion about their influence on the remainder of the PFS.)

Project framing as a value improving practice

Project framing is often cited as a core value improving practice (VIP), one of a group of processes that that have been shown to improve the chances of achieving successful project outcomes. It was a structured team review focused on validating project objectives, identifying, defining and assessing strategic options, and establishing the design approach for the PFS that aligned best with business needs. Like many VIPs, project framing adds most value in the early stages of a project, as part of front-end loading.

A large part of the value of project framing comes from its contribution to planning and focussing the PFS both on paper and in the minds of the participants. Together with risk assessment, another value improving practice, the framing study described here allowed the project team to concentrate its efforts on those aspects of the pre-feasibility study where strategic decisions were required and where reducing uncertainty would best contribute to those decisions.

This project framing study was viewed as a highly successful and highly valuable activity, and one that would repay the considerable investment in time and resources many times over.