The irony of coal mining infrastructure projects: the more talk about cost, the more they cost

The irony of coal mining infrastructure projects: the more talk about cost, the more they cost

A substantial amount of mining infrastructure projects experience cost and schedule overruns, and this situation is largely brought about by poor requirements management. More specifically, evidence suggests that overruns are primarily due to inadequate requirements definition and scoping, as well as the poor handling of requirements information throughout the project lifecycle.

With many parallels to mining infrastructure, the construction management literature agrees that there are some common compromising conditions associated with poor requirements management: clients are not fully engaged in the requirements gathering/identifying process; client’s requirements are not properly elicited, identified and captured; decisions made about requirements specifications are solution biased by partisan factions; manual requirements documentation suffers from version control; and the end user’s identification and involvement is usually too late.

Of concern to the mining industry and their infrastructure projects, is that the implications of cost and schedule overruns is significant, to the extent that on average cost overruns can be 95% above the original estimate. This suggests that for the mining industry, overrunning the sanctioned budget and schedule commitments are a regular occurrence. Therefore, the research problem for this study is to the explore requirements management conditions and establish the subsequent contributing factors in mining infrastructure projects that persistently makes them vulnerable to costly overruns.

This research was divided into two stages, with Study 1 exploring the comprising conditions in requirements management, which subsequently informed Study 2 to establish the contributing factors. This study used semi-structured interviews and some internal documentation reviews to develop a theory to explain why the situation is not improving for mining infrastructure projects. Interview data was collected from a cross-section of professionals currently in owner teams, consulting, and delivering infrastructure projects in the Australian Coal Mining industry. The results of a thematic analysis on interview transcripts finds the claims of the previously identified compromising conditions of construction projects to also be true of mining infrastructure projects, with the additional compromising conditions of ‘late changes to projects by new stakeholders’, which may be peculiar to mining infrastructure projects.

However, more pertinently to the development of a theory to explain the situation, a second round of analysis and coding on the transcripts and documentation applied with a Husserlian lens revealed that the requirements management documentation was not fit for purpose, in terms of how it is dominated by exchange-value and fails to adequately capture the use-value and benefits of the project.

The terms exchange-value is defined as the monetary amount realized at a certain point in time, whereas use-value refers to the specific qualities of the product perceived by customers in relation to their needs, which for example could be functionality. The preferencing of exchange-values is considered a result of the influence of management discourse. This discourse is evident in the requirements documentation that management sanction. However, in the interviews, participants appeared to feel less pressured or bound to adopt the management discourse. As many of them are mining engineers or engineering/mining workers who have
moved into management roles, they tend to speak in terms of use-value (a things ability to satisfy a need) as well as exchange-value (the price or cost of production).

The findings of this study include the determination of an additional compromising condition to requirements management, which is that of late changes by new stakeholders. Another finding is that a contributing factor to cost and schedule overruns in mining infrastructure projects is the misalignment of values inculcated in requirements management documentation, which privilege the values of management (exchange-value) rather than the values of the client and end-users (use-value).

Whilst these documents and processes are intended to describe, convey, and ultimately safeguard the project’s use-value for the client through to delivery, management is largely the consumers of these documents, and they have unwittingly biased these documents to communicate exchange-value. Furthermore, the exchange-value biased requirements management documentation, influences the processes and discourse around the project, and consequentially marginalizes use-value discourse, which ironically in the long run, drastically increases the cost of the project.