I Project management, and the design of shaft-sinking projects
by H.W. Read* and L.G.D. Napierf
Synopsis Introduction Astute corporate executives, under constant pressure of changing and challenging economic Change is endemic in our Traditionally, shaft-sinking projects have been constraints, are re-evaluating their mission society. Future change managed by conventional operational will be aa:elerated by an statements, and in many cases are becoming explosion in technology, techniques, and have often involved large cost more sharply focused in what their business communication, and and time overruns. This paper proposes that the activity should be. 'What are we actually political thought. To project-management system has a better chance required to produce?' is the question that is meet these challenges, of success. The characteristics, techniques, and being asked. Activities that are not in the main rapid structural changes application of project management are examined. stream are being pruned and, under the severe have been taking place Experience gained on numerous shaft-sinking in mining organizations strain of capital budgeting requirements, they projects has increased confidence in the efficacy both here and abroad. have started looking for better and more cost- The management qf of the project-management concept. effective ways of creating and expanding their shqft-sinking prqjects is Shaft sinking in South Africa is as old as the production facilities. . a case in point. Shqft mining industry itself!. For over one hundred In addition, organizations now operate in an sinking is a seminal years, mining houses have been involved in the environment that is even more turbulent than element in the sustained sinking of shafts. Each mining house developed before. The growing demands of international well-being qf a deep- expertise and skills of its own that were level mining venture. Its competition, increasingly sophisticated jealously guarded and protected. Shaft-sinking accomplishment is customers, unprecedented short lead times, and fraught with risk, crews were paid premium salaries and acquired a uncertainty in the environment require levels of involves a high level qf certain amount of exclusivity. They exploited the performance, adaptability, flexibility, and speed capital expenditure, and arcane nature of the profession to gain of innovation that only a few years ago would is a precursor to prqfit- somewhat of a prima donna status. Their able mining investment. not have seemed possible. management styles were dictatorial and based Executives have realized that, to meet these The purpose qf this on the command-and-control principle. paper is to present a new demands, the creation of new facilities concise and practical In boom times this was acceptable but, when cannot be treated as an adjunct to the operations picture qf the concepts, the economic pinch came, corporate management function. Operational managers are dedicated to methods, and techniques looked at alternative methods of sinking their production, and very rarely have either the qf prqfessional project shafts. A specialist contracting industry began to specialized skills required to manage projects or management as applied evolve, firstly from within the various mining to shqft-sinking prqjects. the necessary time to allocate to these projects. houses and under their financial and managerial This has induced corporate executives to search control, but later on these companies acquired for new methods to improve their organizational independence, although there are still some effectiveness. The project-management system is notable exceptions. However, in spite of the an obvious and viable alternative. Project growing competition among the contracting management is an advanced and specialized companies, cost and time overruns persisted. * Read Swatman & VOW branch of management. Virtually every organi- (Pty) Ltd Consulting Mining houses continued to develop design zation in the free world has come to recognize its Engineers and Prqject expertise, but management systems were sadly tremendous value, and is using project Managers, P.O.Box neglected. Shaft sinking was often relegated to a 62532, Marshalltown management in one form or another. minor role, being treated as an adjunct to the The Project Management Institute (PMI)2 2107. operational management function. t Johannesburg defines a project as 'any undertaking with a Consolidated Investment The increasing economic pressure in the defined starting point and defined objective by Company, Limited. industry virtually forced a new approach to the which completion is identified'. Project P.O. Box 590, management of shaft-sinking operations. management is defined as 'the art of directing Johannesburg 2000. Various forms of organizational structure were, @ and co-ordinating human and material resources The South 4frican and still are being, experimented with. The throughout the life of a project by using modern Institute Mining and if partial project-management systems implement- management techniques to achieve pre- Metallurgy, 1994. SA ed by some mining houses were less than ISSN CXJ38-223X13.CXJ determined objectives of scope, quality, time and + successful. O.CXJ.Paper received cost and participant satisfaction'. Nov. 1993; revised paper received MaT. 1994.
The Journal of The South African Institute of Mining and Metallurgy JULY 1994 147 .... Project management, and the design of shaft-sinking projects
Project managementachieves its successby The Organizational Structure creating an environment that is flexible, responsive, and goal-oriented. The work flow is The form of organizational structure selected to multidirectional, and not merely vertical as in a complete a project is the single most important functional organization. This promotes contributor to the successful outcome of the communication and co-operation between top project. There are numerous forms and combina- management, the various functional tions of structures to choose from. This can be a departments, and the project office. problem for the corporate executive who has to The question now arises as to why a group make the final choice. Many factors have to be of professionals cannot simply be assembled and considered before a final choice of structure is adapt the skills they have developed through the made. From a corporate point of view the years to accomplish a project successfully. After following factors are important: all, these professionals may have a record of ~ corporate culture exemplary performance in the operations field. ~ mission statement The answer lies in the fact that project ~ available skills, technology, and experience management is not simply an assemblage of ~ the external environment skills and techniques, sophisticated computer ~ politics programs, and technical proficiency. Project ~ size of project management is a whole new culture that is ~ time frame designed for quick response, being based on a ~ organizational effectiveness flat organizational structure and total integration ~ corporate partners. across functional disciplines. Integration is Research, technical writing, and discussion central to the discipline of project management. on the subject of organizational structure are If undertakings are to be completed successfully, prolific. Many diverse opinions have come to the the individual disciplines can no longer take a fore, but experienced practitioners all agree on parochial approach and be managed on a the fundamentals. A project organization should superior-subordinate basis. be Often, groupings of workers adopting ~ simple conventional management procedures do not ~ flat in structure cope well with project work. It is difficult to ~ unbureaucratic diffuse responsibility for cost and performance in ~ flexible a rapidly changing situation. Specialized units ~ decentralized strive to perpetuate their own interests and ~ small and mobile privileges, rather than advance the project focus. ~ clearly defined Strong interfunctional bonds do not usually exist ~ equipped with managers, right down the in conventional management structures. line, capable of delegation and personal Project management is a process rather than accountability proportional to their respon- the application of specialized techniques. sibility Technology is a necessary and essential part of ~ organic and adaptive with a high rate of project management, but without a system to tie response all the entities of the project together it will end ~ highly integrated across the functional up in a melange of confusion. boundaries. Perhaps the most compelling reason for the adoption of project management is its emphasis There are numerous alternatives across the on the human side of management. It powers the continuum of project-management organiza- way for the performance of the necessary project tional structures. Youker3 has compiled a neat tasks by creating an objective problem-solving diagram to demonstrate this relationship atmosphere. The effectiveness of the approach between the functional on the one hand, the relies on the principle that all project problems matrix in the middle, and the pure project type can be solved by people. on the other hand (Figure 1). The acid test for any management system is Characteristics of Organizational Forms4,5 the degree by which it increases the owner's wealth. Measured against this criterion, the Pure Functional organizational form of project management is This is the traditional organizational structure, superior to any of the conventional management which works well for routine tasks where the forms. The sections that follow describe charac- environment is stable and where there is a high teristics and techniques of project management level of repetition. Such a mechanistic structure as applied to shaft-sinking projects. is often necessary to achieve co-ordination in manufacturing, assembly, and production lines.
~ 148 JULY 1994 The Joumal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects
100%
STAFF IN FUNCTIONAL DEPARTMENTS
WEAK STRONG MATRIX MATRIX
0% 100% FULL- TIME NO PART-TIME PROJECT SEPARATE co ORDINATOR CO-ORDINATOR OFFICE TEAM
Figure 1-organizational continuum3
Unfortunately, the impregnable boundaries The Matrix Project Organization that often arise around the different functions In an effort to optimize the extremes of the force long lines of communication up and down continuum of organizational structures, the US the pyramid formed by the vertical chain of Defence Department conceived the concept of command. matrix management (Figure2). This format is Pure Project Organization ideally suited to project-driven companies running multiple projects. It is also used by the From a pure project point of view, this is the traditionally functional organization for ideal organizational structure. People and achieving small projects through specially resources are allocated completely to the project dedicated task forces. The matrix form has team for the duration of the project, and the tended to predominate in in-house project project manager has full line-management organizations and is almost always used in authority over them. Functional departments joint-venture types of contracts. may very well develop within this format, but The matrix organization combines the the project manager has full control. Complete vertical hierarchical structure with a integration of all departments and other stake- superimposed lateral or horizontal structure of holders is simplified by the fact that there is a project management. Implicit in this arrangement single superior in close proximity to any conflict is the dual subordination of team members centre. where the vertical functional lines meet the This type of organization is possible only in horizontal project lines. companies specializing in project management, Although it is a very flexible format, the or where the parent company runs a full-blown matrix organization can become complex, and projects division. has a high potential for conflict because of the dual subordination inherent in this arrangement. A matrix or project manager is appointed to manage and integrate work and people on a project. but the functional groups are retained intact with technical authority over the special- izations.
The Joumal of The South African Institute of Mining and Metallurgy JULY 1994 149 TECHNICAL DIRECTOR f'ROJECT MANAGER 1 MANAGER2 MANAGER :3 DESIGN ENGINEERING CONSTRUCTION- - f'URCHASING - - - ADMINISTRATION SERVICES FINANCE ---- DPERATIDNS ------ Figure 2- The project-related matrix Organizational Structure for a Shaft-sinking A typicalorganizationalstructure for a Project particularshaft-sinking project is shown in Figure 3. The flexibility of the structure allows Shaft-sinkingprojects, dependingon the scope, resourcingstrictlyin accordance with the often qualifyfor mega-project status. The scope requirements of the different lifecyclesof the might include the shaft, shaft steel, rock passes, project.This ensures optimaluse of manpower tips, station development, station steel, and throughout the life of the project. loading stations, with the concomitant infra- structure, pump stations, refrigeration, and ventilation. The surface infrastructure comprises Functions of the Shaft-sinking Project winders, headgears, electrical distribution, Team transport of ore, waste dumps, disposal of mine A description of the organizational structure in a water, rail-sidings stores, workshops, offices, shaft-sinking project team would not be complete change houses, personnel control facilities, etc. without a brief description of the responsibilities The preferred project structure will therefore of the main members of the team. tend strongly towards the pure project organi- zation or, at the very least, to the strong matrix Project Office Personnel type of structure. The Project Manager A manifestation of the project world is the large number of project specialists who act as ~ The first and most importantfunction of independents and go from one project to the project manager is overall responsi- another. Very often they follow a particular bility and accountability for the outcome of project manager from project to project. This may the project. be the result of the strong emphasis on team ~ As projectsare of relatively short duration, building; the high level of adrenalin generated the project manager must, in a minimum on projects; or interest, excitement, or personal period, build a strong and integratedteam gain. The spin-off is that experienced project from members with diverse backgrounds. personnel are more readily available (depending Integration must take place across the total on market conditions), and the deployment of spectrum of stakeholders, including client, personnel is relatively easy. project sponsor, parent company, functional heads, contractors, and other involved parties. ~ 150 JULY 1994 The Joumal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects PROJECT MANAGER PROJECT SECRETARY MECHANICAL SECTION DRAUGHTSMEN ENGINEER LEADER CIVIL/5TRUCT SECT1ON DRAUGHTSMEN ENGINEER LEADER DESIGNERS ELECTRICAL SECTION DRAUGHTSMEN f:NGINEER LEADER PROJECT PLANNER CAPEX CONTROLLER PROCUREMENT ENGI ERING SITE I.:> CONSTRUCTION CONTRACT OffICER MANAGER SECRETARY MANAGER QUANTITY SITE SURVEYOR SURVEYOR MECHANICAL SINKING SUPERVISOR CONTRACTOR ELECTRICAL SUPERVISOR STRUCTURAL MECHANICAL SUPERVISOR CONTRACTOR SITE CIVIL MATERIALS ELECTRICt,L ENGINEER CONTROLLER CONTRACWR CLERK OF SITE DRAWING CIVIL/5TRUC~ WORKS CONTROLLER CONTRACTOR Figure 3-A typical project structure for a particular shaft project The Joumal of The South African Institute of Mining and Metallurgy JULY 1994 151 ... Project management, and the design of shaft-sinking projects ~ Planning is a continuous function of the It is essential that control analysis is not project manager. In the volatile project limited to the recording of historical events. The environment, the scene is constantly trend today is to use future-directed, earned- changing, and programmes must be value performance analysis. This requires the continuously adjusted in order to maintain adoption of sophisticated software packages that the end date. can be linked into an integrated project-manage- ~ The project manager must co-ordinate the ment information system (IPMIS). efforts of all the team members and ensure The project planner thus has a role that that the project focus is maintained. pervades the total project from budget prepara- ~ Project management has a high potential tion, through design, contract placement, pro- for conflict. The management of this con- curement, field execution, and commissioning. flict is a high priority in the duties of a The Design-office Manager project manager. ~ Comprehensivereportshave to be produced The engineering activity is clearly a vital part of periodically by the project manager to keep the project-management effort. All inputs and the client informed of progress and cost, as ideas from stakeholders find expression in the well as of variances in schedules and design, which is the core of the engineering performance. process. If the design fulfils the requirements of ~ The project manager is the focal communi- the client (market) and makes a profit for the cation point with both the internal and the parent company (project office), then the whole external environments. system is sustainable and may even grow. The Project Engineers ~ The design-office manager is responsible for systematically producing a workable Project engineers in the disciplines of mechanical, design from the input of the project civil/structural, electrical/instrumentation, and engineers. Such a design must be control engineering are assigned to the project to produced within the budgeted hours, and ~ head the design teams must be constructable and functional. ~ write specifications ~ The general discipline, allocation of work, ~ set standards of quality and control those organization, and control of the design standards office are the responsibilities of the ~ oversee the procurement activities design-office manager. ~ administer the contracts from inception to ~ The design-office manager maintains completion discipline over the total design function. ~ ensure that the schedule, cost, and perfor- The engineer must produce a formal mance criteria are met design specification complete with ~ commission and hand over equipment and calculations to support his proposal. The plant to the client designer/draughtsman must turn it into a ~ monitor budgets applicable to discipline workable piece of equipment, and the and responsibility constructor must be able to build it using ~ liaise in the construction his normal resources. ~ controlchanges. ~ Design review meetings must be called at regular intervals so that all interested The Project Planner parties have the opportunity of voicing Project planning is one of the key elementsin the their opinions timeously. control function of a project. A projectis a large, ~ The design-office manager must adhere complex entity that is dynamic. The control of strictly to time schedules. even a moderately sized project of 500 000 man- Field Personnel hours is a mammoth task. It is, however, critical to the success of a project that the project The Construction Manager manager is made aware of changes in their inter- The construction manager has overall responsi- relationships with other activities. This process is bility for constructing the required facilities and continuous throughout the life of a project. for the safety of all the personnel on the site. He The project planner must monitor the is responsible for managing and integrating schedules from the contractors who are active on contractors and sub-contractors, and for handing the project on a weekly basis. He must keep the over all the installed equipment and related project manager informed of the present and documentation to the client as specified by the future implications of deviations. He and the contract. He represents the projectmanager on team are responsible for replanning in order to the construction site. maintain the end date of the project. ~ 152 JULY 1994 The Joumal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects The special duties of the construction This system must be linked to the IPMIS manager are as follows: so that the early-warning and tracking ~ assist mine management as a subordinate systems are totally compatible. engineer in terms of regulation 2.13.3.1 ~ He must have close-co-operation with the (Minerals Act no 50:1991) project engineers, purchasing officers, and ~ maintain project procedures in accordance accounts department. with the laid-down standards ~ Engineers will certify invoices only against ~ report on site progress and other activities waybills or delivery notes signed by the at the weekly progress meetings materials controller. ~ take corrective action to maintain safety, ~ A requirement of the IPMIS is that all the schedule, and performance within the receipt and issue details are altered with- limits of the laid-down project procedures out delay. This will ensure that inventory ~ maintain regular contact with the project levels remain up to date, and that material engineers in respect of contractor items can be retrieved with the minimum performance of effort. ~ ensure that all the contractors are working ~ A special system must be developed for to the latest drawings, and inform the pro- the disposal of scrap and, for best results, ject engineers of all change proposals in should be integrated with the established the field operations. mine system. ~ The total materials-control system should The Contracts/Mining Engineer be audited by an independent auditor at The special duties of the contracts/mining intervals not exceeding six months. engineer are as follows: Supportive Roles ~ assist mine management as a subordinate In addition to these core members of the project manager in respect of regulation 2.6.1 team, there are a number of functions that (Minerals Act no. 50:1991) support the team on a part-time or a full-time ~ control the shaft-sinking contractor in basis for a specific part of the project lifecycle. accordance with the contract-prime These resources can be obtained either through function the functional departments within the parent ~ provide liaison between the project company or from specialist consultants outside manager, the sinking contractor, and the the firm. mine management in respect of safety, These functions include but are not limited to performance, and the requirements of the Minerals Act ~ soil-survey consultants ~ arbitrate with the contractor on contract ~ geotechnical engineers variations in respect of standing time, ~ project accountants extension of time, additional support, ~ quantity surveyors overbreak, etc., and report these to the ~ land surveyors civil/structural project engineer ~ winder consultants ~ assist the quantity surveyor and the civil/ ~ procurement officers structural engineer in the preparation of ~ quality-assurance officers. the monthly certificate It is vital that the support groups should be ~ ensure that the sinking contractor works involved in the project work as early as possible. to authorized methodologies The motivationof these groups is particularly ~ authorize the contractual resources difficult because they can easily become required by the sinking contractor alienated, if not adversarial. ~ keep a daily log of all events, including the The support groups should make time and sinking schedule, occurring on the shaft cost estimates of their tasks for approval by the ~ ensure that the sinking contractor works project team. These estimates may differ from to the agreed quality levels. the initial estimates made by the project team and, in that case, adjustments should be made The Materials Controller until mutual agreement is reached. Meaningful The function of the materials controller embraces commitments should be obtained in writing from the receipt, classification, storage, retrieval, and the support groups. The support teams must be issue of materials to the contractors in the right integrated into the main project team at every quantities at the right time for the right work possible opportunity. They should attend all package. meetings where their input may be necessary, or ~ He is responsible for the implementation of where the information disseminated is useful to a well-planned comprehensive materials- them. They should also be listed on the inter- management system early in the project. office memo-circulation list. The JoumaJ of The South African Institute of Mining and Metallurgy JULY 1994 153 ... Project management, and the design of shaft-sinking projects Changing to a Project-management Formal Relationship between Employer Structure and Project Team In the change from a classical structure to a The project manager represents the employer in project-management organizational format, the any dealings with the contractor. He is therefore transition must be carefully managed in order to a party to any contract existing between the con- secure its success. tractor and the employer. A formal agreement Dr 1.}. Smalleyb has identified five phases in should therefore also exist between the employer the lifecycle of the transition process. and the project manager. In some cases, their ~ phase1: Conception andplanning agreement is actual, in others apparent, and in (measured in months). Outside consultants yet others partly actual and partly apparent. The are used to train the executives, who are agreement may be structured formally on the usually not familiar with the total implica- basis of a managing contractor, or to provide tions of converting to a matrix or any other professional services as an engineer, an type of structure. The line managers should 'engineer' being defined in the General be involved right at the outset. Conditions of Contract of the Institute of Civil ~ Phase2: Line management involvement Engineers. Nonetheless, the project manager has (measured in weeks). Line-management a professional, ethical, and legal obligation to support is indispensable to the entire conduct the contract in terms of the law and in operation. The danger of organizational the best interests of all the parties concerned. instability is greatest in this phase. The management system should therefore be ~ phase 3: Conversion(measuredin weeks). formally structured and committed to writing In this phase, the final design of the new wherever possible. In consequence, the parol organizational form has to be completed. evidence rule is of particular relevance in this Employees have to be introduced to the respect. This is a rule evolved by the courts, new structure. Leaders and followers are which holds that, where there is a clear and identified in this phase, and all the partici- unambiguous written agreement between the pants' roles are clarified. parties, this will be deemed to be the only and ~ Phase 4: Employee involvement. exclusive record of their agreement. Neither Management must convince employees party will be permitted to allege that the terms of that the restructuring is in their best the written agreement bearing his signature are interest. An effective way to do this is by not the true terms, or that he signed the means of training. It is emphasized that document believing it to contain other terms or the brute force approach will not work. to mean something else (Du Plessis & Nel, 1952, ~ Phase 5: Maturity (measured inyears). (1) SA 515 (A)). This phase consists in the development The project manager must work to establish and refinement of a cost-control system. In a special relationship with the client. After all, a project structure, costs are controlled the client is the supreme authority (he is the horizontally as opposed to the vertical employer). In the final analysis, it is the client mode of the classical structure. The search who pays the bills and must therefore be satis- for supporting software and the develop- fied. It would be short-sighted in the extreme for ment of sophisticated tools and techniques the project manager to seek shelter under the normally start during this phase. A follow- law when a conflict arises between the project up of the employee training is also team and the client's representatives. The project required. manager must adjust his management style to complement that of the client. An apathetic client may expect the project manager to take the initiative, and to act with bold and rapid strokes. On the other hand, an aggressive client who takes a hands-on approach may cause the project manager to shift towards a more partici- pative stance, requiring extensive prior discuss- ion of proposed decisions with interested client personnel. The project's success is strongly dependent on the project manager's ability to conciliate project-management philosophies with the client. ~ 154 JULY 1994 The Joumal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects The client's ability to oversee a project, to Statement of Work (SOW) establish policies, to indicate controls, to provide The SOW is the most important document in the specifications, and to participate in major project hierarchy of work. It is that portion of the con- decisions is a fundamental factor in a project's tract that explicitly enumerates what the success. This is of particular importance early in contracting organization will deliver to the client. the lifecycle of the project, and preferably during The SOWcontains the client's requirementsand the conceptual design phase. Belated changes in obligations, a specific work authorization, philosophy at the development and execution specific measurable and attainable goals, a list of phase could be disastrous. all deliverables, and a project schedule and bud- When the client is perceived as a group of get. Thus, the SOW includes a plan for perfor- individuals each with distinct personal. profes- mance in terms of cost, time, and quality, as well sional, and project objectives, then client as listing every activity that must be performed relations tend to be harmonious and productive. and everyresult that must be obtained.The SOW If the relations are open, easy, and straight- includes a comprehensive linear responsibility forward, positive results will be forthcoming. If matrix, which must be drawn up at this stage. the relations are strained, extended client This linear responsibility chart must identify the involvement will create obstacles to the progress participants and the degree to which an activity of the project. will be performed or a decision made. The func- tion of the linear responsibility chart" is to define, Formal Project Documents and Activities in unambiguous terms, the responsibilities of the client and of the project team. Work is initiated on a formal and structured This chart will obviously be further developed basis. It is essential that the project team under- during the project lifecycle but it must be in place To stand clearlywhat the clienthas in mind. from the outset at the conceptual phase. An avoid any confusion and conflict, the use of the example is shown in Figure 4. following documents promotes clarity and control. .. ca.. .. os ! ... c: Organisation .. .. os ...... =- ... W'orl: .. .. I " I .. .. 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".. ~.. .. ~;I cod. ... :. c:; 0;" .." :. .,.. ... a: ... c:=o ... .., u .,.. :301 Cross section F 5 5 5 301 Longltudin..) section F 5 5 5 :300 Rope l;,youts F 5 p 11'11'1 Surf..ce layouts 5 ::J 5 31'11 Station layouts I P 5 5 5 j 31'10 He..dge"r BA 5 P 5 I 31'10 T~png ..rr..ng..ment P i 5 5 I p 300 Arresting devices i 5 5 I 300 EI..nk doors F 5 5 I1 p 160 5lgn..lllng 5 11'11'1 Grid Co ordln"tes 5 P 31'11 ~Piping services F 5 5 J 11'10 EI..tch pl"nt P 5 ( Emergency procedure P 5 1(' 11'11'1 Security "rr"ngements P structural p 301'1 ~:~r".r 5 Headgear contract P 5 5 5 ~300 He..dge..r civile F 5 5 I...,...,"" p Project repor1:s I - Figure 4-Linear responsibility chart The Journal of The South African Institute of Mining and Metallurgy JULY 1994 155 --- Project management, and the design of shaft-sinking projects Work Breakdown Structure (WBS) The WBS is intended to ensure that all the required engineering activities are logically The WBS is a convenient method for the division identified, coded, and related. The methodology of the engineering project into tractable, small of the WBS approach is the most effective way of work packages, tasks, or activities (Figure 5). structuring and integrating a project, its organi- Essentially, it is a methodology of project organi- zation, and its systems. It provides a basis for zation, planning, and control based on deliver- the modern and advanced approach to structured abIes, rather than simply on tasks or activities of project management. proper organization. The more work packages in a project, the The WBS is critical to the whole planning smaller and cheaper each work package becomes. process because it provides the framework from However, the more work packages, the more which money and time are spent in arranging for these ~ the total programme can be described as a to be properly interfaced with one another and summation of sub-divided elements managed. Conversely, if there is only one large ~ planning can be performed work package, there is no interfacing cost, but ~ costs and budgets can be established the task itself is large and expensive. This is ~ time, cost, and performance can be tracked where the astute and experienced engineer can ~ objectives can be linked to company demonstrate his prowess. The larger the pack- resources in an objective manner ages, the fewer the interfaces, the fewer the ~ schedules and status-reporting procedures schedule activities, and the less intensive the site can be established control. One large work package also deflects ~ network construction and control planning more of the risk onto the contractor. The can be initiated engineer must always be sensitive to the market ~ responsibility assignments for each situation and size his packages accordingly. element can be established. There is an inverse exponential relationship between the WBS levels and the activities to be scheduled, and therefore also between the cost and the control of scheduling. PROJECT LEVEL 1 ------ HEADGEAR LEVEL 2 ------ LEVEL 3 ------ LEVEL 4 ------ -~~~-~------ Figure 5-Work-breakdown structure for a typical shaft-task element ~ 156 JULY 1994 The Journal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects Data Sheets The practice of funding from undeclared surpluses and savings should not be tolerated Work packages form the input to the drawing since this can result in major unexplained office by way of a data sheet. The data sheet variances. Each and every deviation from the provides the design-office manager with WBSmust becarefully recorded and processed, ~ all the technical input for the accomplish- and all undeclared surpluses and savings should ment of the task be under the sole control of the project manager. ~ all reference drawings Design changes can emanate from many ~ all manufacturer's drawings and data, areas: flawed designs, changes in client require- including dimensions ments, updated information from external ~ scheduling information sources, new legislation, new safety ~ preliminary sketches. requirements, and internal instructions from The data sheet is initiated by the engineer senior management. All must be documented, for the discipline concerned, initialled by the and must be subjected to consideration and planner, and authorized by the project manager. review in the same systematic manner as the The addressee is the design-office manager, who original documentation. In addition to the aspect will check the data sheet for completeness and of quality, these reviews have to take into then allocate it to the relevant draughtsmen. account the likely effect of each proposed change Copies are sent to the engineer for each on the cost and progress of the project. Formal discipline, and the original is filed by the design- procedures for controlling the engineering office manager. changes will ensure that the client is consulted where it is relevant. Project Specification Project definition is the process that defines the Distribution of the Documentation three project objectives of time, cost, and perfor- mance before any work starts. The project speci- Procedures must be established for the fication7 is the document that contains the tech- distribution of the documentation so that the nical and commercial elements of the project recipients are accurately identified. More definition. Starting from the first client enquiry importantly, the procedures used must be based to the contractor, and following through the upon the principle of needs. Involvement by various technical and commercial discussions those have have no need to be involved not only between the parties involved in the establish- creates confusion, but also adds considerably to ment of a contract, a large volume of data is the circulation time and, consequently, to the amassed for any project of significant size. This project schedule. Inevitably, such an overloaded information must be recorded faithfully. Its list becomes inoperable and obsolete. The project interpretation has to be clear and uniformly manager must select the recipients, and only appreciated by both the client and the contractor. those who are essential for inclusion on the list Most importantly, this information has to be must be considered. An example of such a distri- communicated through the project manager to all bution list is shown in Figure 6. participants to ensure that the project is carried out in the manner intended by the client. Design A full and comprehensive list of specifica- tions must be identified by the engineer at the The process of design is at the core of any initiation of a contact. Each specification must be engineering practice. Design is the function of relevant to the work as anticipated, and each creating a technical plan to solve a problem. It change must be formally approved by all the involves much more than calculations on a com- project stakeholders. puter and lines on a drawing. It also involves careful planning for safety, technical feasibility, Change-of-scope Documents economic viability, constructability, and ease of Change control is a vital aspect of the overall maintenance. The design problem-solving pro- cost-control system of a project. The engineer for cess requires inventiveness, analysis, and that particular discipline must ensure that his decision-making. current design is congruent with the WBS. Any changes must be recorded through variation or change-of-scope documents. This must also be done for concept changes, even when no actual cost variances have been generated. In this context, the project-management and design- cost components are often overlooked. The Journal of The South African Institute of Mining and Metallurgy JULY 1994 157 .... Project management, and the design of shaft-sinking projects ... .. co>-- ...I! '"t\ tII ...... : I! ...... P ROJ ECT 1i4 ~I! " ...... " ", .5" I!" .. .. " co """'§ -; tII tn .", ., tII ... s: I! tII .... cs "I! Ii4 s: ...... DRAWING COMMENT .. ;s Ii4 .", "'...... I! ... tII 1i4 ...... I! cs .. c .. ... ;S s: ;: ... :at d IQ '" 1::I :at ... .. tI d tII Co-ORDI N AT ION ...... b ;: ... '" tII E ...... cs~s: ;: ;! ...... ss "' ... .c I! MATRIX ...5 ...5 ""0 .$ -; .. Q,... " " ~... t; t; "'u" :at" :!ll .s c:a Process .. flolN diagl'"C~ms X X X X X X X X X .. ~------.. Design 0 cl'"lterla X X X X X X X X ___m-X Q,... ------P & 10'5 X X X X X X X X X f---- 1------Mechanical equipment list 0 X X X X X x: 1------r------Instrumentatlon equipment list N X X X X _u < 1------t------Elee trical equipment list X X X X x: 1------t------+ -- enquiry Gene ral spec X X X X X X _____n- ;:11> ------... -- ... Civil spec enquiry R X X .. .. -- -H ------.~ Structul'"i:J1 spec enquiry E X X tII ____n- -_u_--- s: - ---- Ii4 Mechanical spec enquiry a X X - r------Piping spec enquiry U X X 1------~------Mining spec enquiry E X X X ------Inst rumentatlon spec enquiry S X X ------~--- Electrical spec T X X C!rrC!ngements :;: Concrete X X X X X X X X X ..... --~- u Reinforcing detClils --- 1:: Steelwork arrangements ;S X X X X X X X X X ...... !I) Shop details ------GenerC!1 arrangements X X X X X X X X >< .c ------".. Details X X x: ~------Data sheets ------Piping arrangements tII X X X X X X X X < ------...s: -- .... Pipe supports and deteils X X X < Q,... ------Isometrics. MTO lists and deta sheets tII ------. ...s: Mining C!rrC!ngements X X X X X X X X ;: _. < ... ------Details X X >( ~------GenerC!1 arrangements X X X X X X X ..... ------., Loop diagrams. schedules and diC!grC!ms I! 0..; ------Data sheets ------... u General ar rengements X X X X X X X ... -- -- i;; LJable schedules. routing and schedules Figure 6-Distribution of documentation ~ 158 JULY 1994 The Journal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects Changes in Design Design Reviews Design and change control is managed in accord- A fundamental part of design management is the ance with the ISO 9000 series of standards. The design review. The project manager must call for main objective is to ensure that the design of the design audits on all the major plant items that product results in its specified requirements can have a material effect on the outcome of the being met. The design inputs and outputs must project. The engineer selected to do the audit be agreed on between the main parties. The out- should have a status at least equal to that of the puts should include criteria of conformance, and engineer responsible for the original design. It is must be demonstrated in the verification process. preferable for an external design review to be Design also requires the creation of an organi- carried out by a party not connected with the zation with appropriate technical interfaces and a project. documentation and control system. Reviews amount to a detailed design audit, A design change affects the total execution adherence to the contract, and an account of pre- process of a project. All the stakeholders are vious studies. Both the timing and the cost of involved. Documents have to be updated, affect- the reviews should be built into the project ing the cost schedules, planning schedules, schedule and budget. procedural schedules, manpower schedules, Internal design reviews are called at weekly quality plans, and project specifications. A struc- intervals by the design-office manager. The main tured control and document-revision system purpose of these reviews is to involve all the dis- must therefore be maintained. ciplines at an early stage of the design process. At this early phase of the design process, the Design Phases cost of a design change is minimal compared In accordance with Asimon'sB morphology of with a change made later on. The final quality of design, the following phases of a design project a product is determined to a large extent by the can be considered. effort that goes into the design. It is therefore of Phase I:Jeasibility stuqy. The aim of this the utmost importance that the design team phase is to validate the need for the project, should be totally committed towards quality from establish the line of thinking, produce a the start. This motivation should be reinforced at number of possible solutions, and validate every design-review meeting. the solutions on the basis of physical realizability and financial feasibility. This The Shaft-sinking Contract stage is also called the conceptual stage. Phase 11:preliminary design. From the Background useful solution developed in Phase I, the The contractual arrangements between the part- parameters are quantified so as to establish ies involved, Le. between employer, engineer, an optimal solution. Onlyorder-of-magni- and contractor, will have a significant influence tude estimates of design performance and on the success of a project. Prime objectives must costs are established. be to prepare the contract documentation, and to Phase Ill: detailed design. The purpose of administer the contract so as to minimize the risk this phase is to develop a complete engin- of litigation arising from ill-considered and im- eering description of a tested and produ- precise allocation of risk and consequent uncer- cible design. A detailed design includes tainty. manufacturing drawings with all parts As Max W. Abrahamson9 says, 'The dimensioned, toleranced, and specified. Engineer is under a duty to have a reasonable These drawings are often produced by working knowledge of the law relating to his job project-design offices, but this practice is - e.g. to comply with statutes and by-laws; to not recommended since it can be counter- advise on the causes which should be in the productive in respect of both cost and time. construction contract, but not on the details of Manufacturers and fabricators have their draughting; to look for and make reasonable own methods and procedures that are enquiries from his client as to private and public congruent with their fabricating facilities, rights which may affect the works; to acquaint and they must be allowed to produce these himself within a reasonable time of major final designs. The project team must changes in the law, by legislation or decisions of review these detailed drawings carefully the court'. against the specifications and preliminary designs. The Joumal of The South African Institute of Mining and Metallurgy JULY 1994 159 ... Project management, and the design of shaft-sinking projects An excellent, comprehensive, and penetrative The ICEConditions are supported by a large work on construction law is that by P.C. 100ts1°. body of law emanating from the law of prece- which is practical, easy to understand, and dent. With the growth of the construction intended for the professional engaged in con- industry in South Africa, it became necessary to tracts. Nonetheless, an engineer can never adapt the ICEConditions to South African assume the role of a legal practitioner, and the conditions, particularly in relation to final draft would always be prepared by a lawyer Roman-Dutch 1aw as it is applied in the with experience and training in engineering Republic of South Africa. The rules known as the contract law. General Conditions of Contract were prepared under the auspices of, and recommended by, the Basis of the Engineering Contract South African Institution of CivilEngineers, the Under common law, a contract can be described South African Association of Consulting in simplistic terms as an obligation to keep a Engineers, and the South African Federation of promise. Both the law of obligation and the law CivilEngineering Contractors. Certain mining of contracts enjoy prominence in legal and com- houses have further developed these conditions mercial affairs. specifically for use in shaft sinking, raiseboring, The simple obligation involves a legal rela- . and development works. tionship between two persons: one is bound to The Association of Mining Contractors' perform and is called the debtor; the other is Standard Conditions of Tender have not found entitled to performance and is called the creditor. general favour among the mining houses. Dif- The basic characteristic of the obligation is that ferent forms of contract are available, and the the debtor can be forced directly or indirectly to selection of a particular type of contract is of vital comply. The debt cannot be reclaimed if per- importance to the employer and the contractor. formed in accordance with the law. From the The employer, by appointing a contractor, creditor's point of view, the obligation involves transfers some of the risk of the successful the idea of a right that is sometimes obscured by outcome of a project to the contractor. At the the dominant concept of a duty. same time, the employer loses some of his con- Often, common law will not be satisfactory to trol over the project to the contractor. Together the parties for the performance of their particular with the transference of risk goes the flexibility obligations, and they will make their own partic- that the employer has in the execution of the ular rules that will expand the rules of common project. It is therefore obvious that the employer law. A case in point is the engineering and con- must devote sufficient time and resources to the struction law from which the different conditions determination of a contract strategy that satisfies of contract arose. The most prominent of these his objectives. Peter Thompson11 illustrates this are the Conditions of the British Institution of graphically, as shown in Figure 7. CivilEngineers (ICE). These conditions have The employer's risk and flexibility are stood the test of time, and are the foundations minimalunder a lump-sum contract. This type of on which most engineering contracts in the free contract presupposes that the design is complete, world are based. Many variations of these condi- all the specifications and drawings have been tions have been attempted, but any change must completed, and the total works have been be made with the greatest circumspection since accurately defined. No variations are anticipated the court's interpretation is not always exactly throughout the construction period. determinable. Only the doctrine of precedent can At the other extreme is the cost plus make the law certain and, when a clause has not percentage fee. This type of contract is used been tested in the courts and a decision reached, when the requirements of the employer are such a clause remains uncertain. vague, or when it is desirable for the design to proceed concurrently with construction. In other words, when the contract is executed on a fast- track basis, the employer is directly involved in the management of the contract and the financial risk to the contractor is reduced. ~ 160 JULY 1994 The Joumal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects LUMP SUM (MIN) LUMP SUM + VARIATIONS '1<) BILLS OF QUANTITIES ~~ m '-<{ ~ ~~ LJ f- r ~~ SCHEDULE OF RATES (f1 0 Q -< u m JJ f- tJ) 00 l!J 0')'- (!) 11 IT: r ~ « m ~<'; f- x "7~ H COST + FIXED FEE ill v~ rH 0'- COST + PERCENTAGE FEE (MAX) CMIN) EMPLOYERS RISK CMAX) CONTRACTORS INCENTIVE CHIN) Figure 7-Contract formats" Between these two extremes, in ascending History has proved that unquantifiable risk order of risk to the employer, are contracts can be transferred only at a premium. The involving hills qf quantities and schedules qf employer is in a better position to carry and rates. Both forms are based on re-measurement underwrite this type of risk. On the other hand, of the contract works. The difference is that, every effort must be made to transfer the quanti- under the bills of quantities form, each com- fiable risk to the contractor, and there is no better posite item of work is supplied at the rate quoted way of doing this than by full disclosure of all the provided that a re-measurement of the quantities project variables and an open, competitive tender. does not vary by more than an agreed percent- Experience has shown that at least 40 to 50 per age from the bills of quantities; under the cent of the engineering must be done if a schedule-of-rates form, the rates apply and the confidence level approaching 90 per cent is to be full extent of the work remains unquantified. attached to a variation of approximately 10 per The nature of shaft sinking is such that cent of the tender value and schedule. change is inevitable during the contract because The final document is the base line in the of ground conditions, water inflow, or change of consideration of variations. The more managerial employer requirement. It is therefore prudent to input into the document, the lower the conflict select a form of contract based on the re- level between the contractor and the engineer. measurement of the contract works and risk- Also, administration of the contract will flow sharing in the most equitable manner. more easily, resulting in greater potential for the final success of the project. Terms of the Contract The contract document should have the follow- ing sections. ~ General conditions of contract ~ Special conditions of contract The Joumal of The South African Institute of Mining and Metallurgy JULY 1994 161 ~ Technical information containing the ~ Geotechnical information is provided in the project specification, schedule of responsi- form of borehole logs. The contractor is bilities, schedule of drawings, and geo- entitled to payment for incompetent technical information ground only if the actual ground condi- ~ Schedule of quantities tions differ from those indicated by the ~ Form of tender, with annexure and pro borehole logs. forma forms ~ The permanent headgear, winder house, ~ Applicable standard specifications. and winders must be available for the The following principal points should be con- main sink. Water and power are provided tained within the conditions of contract. free of charge to the contractor. ~ The insurance of the contract works, The contractor is also required to submit the SASRIA, public-liability insurance, and following information: removal of lateral or other support should ~ a detailed programme for the proposed be covered by the mine company's prin- work cipal-controlled insurance policy. However, ~ a comprehensive method statement the first amounts payable or deductibles ~ histograms showing plant utilization and are to be paid by the contractor in respect labour of each and every claim. The contractor ~ proposal for the contract-management should be responsible for arranging insur- structure. ance for workmen's compensation, The contractor may also submit alternative common-law employer's liability, contrac- proposals that he considers to be technically or tor's plant and equipment, off-site manu- financially superior to the proposal asked for in facturing, MVA, and balance of third party. the enquiry. ~ The contractor must provide a surety bond to the value of 10 per cent of the contract Administration of the Contract12 sum. This bond is released upon fulfIlment The following reports and procedures make up of all the contractor's obligations under the the administration of a shaft-sinking contract. contract. ~ Retention is held to the value of 10 per Daily Sinking Reports cent of the amount due up to a limit of Daily sinking reports record the work achieved 3 per cent of the contract price. against the work planned, and include all the ~ The maintenance period is twelve months. safety statistics and the delays, both unavoid- Within this period the contractor must able and those attributable to slippage by the make good any defects. If defects are not contractor. These reports, authorized by the made good, the company can arrange for contracts/mining engineer, are of fundamental the work to be carried out at the contrac- value in determining the payment certificates tor's expense. and contract progress, and generally monitoring ~ The contract is subject to escalation. The the performance. escalation formula with co-efficients is closely examined at the tender-adjudi- Payment Certificates cation stage, and provisional factors are Payment certificates are prepared at the monthly applied in a determination of whether the certificate meeting by the quantity surveyors. co-efficients are competitive. The certificate is based on measurements sup- ~ All the work is carried out in accordance plied by the contractor and approved by the with the mine's safety requirements. contract/mining engineer and the project's Should the engineer consider that the quantity surveyor. Only completed work is works are being carried out in an unsafe considered for inclusion in the monthly manner, he has the right to suspend the certificate, Le. payment for performance. works. ~ The company has an option to terminate Claims the contract at any time. The contractor is Where a measurement or item cannot be agreed paid for the work already carried out, upon at the certificate meeting, the contractor is together with proven costs. required to lodge a claim in writing. The claim is ~ The company may also terminate the then evaluated in terms of the provisions of the contract due to default by the contractor. contract. One calendar month is allowed for resolving a claim. ~ 162 JULY 1994 The Journal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects Contract Meetings The special conditions of contract defines standing time as 'a period of time, measured in A meeting chaired by the project manager is held hours, when the contractor's normal operational on a monthly basis to record and resolve all con- cycle is affected by causes beyond his reasonable tractual matters pertaining to the project. All cor- control and results in total stoppage or major respondence, claims, payment certificates, and disruption to the regular progress of the works'. progress are recorded and actioned when The special conditions also specify when pay- required. ment is to be authorized for standing time. Pay- Change control ment is made at cost, Le. standing-time rates should not attract a profit element. The pay- No work is actioned or performed, or any costs ments for standing time are exclusive of prelim- incurred, that are not part of the order placed on inary and general costs. Standing-time claims the contractor. During the execution of the con- will attract an extension-of-time cost only if the tract, it may become necessary to change or vary activity under consideration falls on the critical the scope as defined in the contract. Various path of the schedule. There should be no incen- avenues are available depending on the nature tive on the part of the contractor to wilfully cause of the variation or change. standing time if his standing-time rates do not >- OrderAmendments. An order is amended attract a profit element. It would be more cost- to include any additional work required. effective for the contractor to perform the work. Such work is budgeted for, but does not An extension-of-time claim applies when form part of the initial scope of the additional work or influences, such as changes contract. to work methods that were not part of the origi- >- Changes qf Scope. Where an amendment to nal contract, are undertaken by the contractor. the contract is required and there is no The extension of time is primarily there to com- allocation of funds in the budget, a change pensate the contractor for the additional or variation of scope is initiated and, once preliminary and general costs that are incurred approved, the order on the contractor is as a result of being on site. The escalation costs amended. that apply to an extension-of-time cost are high >- Requestsfor Site Variations. Where minor since these costs are incurred at the end of the work outside the scope of the contract contract period. needs to be done immediately, site varia- tion requests (SVRs) are made to prevent Project Control unsafe site conditions arising or continuing, or to prevent an overall delay General Control in the project's progress where such a delay has resulted from factors beyond the Control has a pejorative connotation that implies control of the contractor. The contracts/ power, domination, and authority. It is associ- mining engineer may authorize work of ated with action and, more explicitly, corrective this nature up to a value of RlO 000 only. action arising from the output of the monitoring function. Variances are identified, and the control Potential Claims system provides the means to correct the Experience shows that claims related to standing variance. It is therefore axiomatic that there is a times or extensions of time often result in pro- base plan against which performance can be tracted negotiations. An endeavour is therefore measured. Project control is the process in which made to define the situation very clearly. Cycle deviation between the actual performance and times are broken down into the smallest the planned performance in the areas of cost, elements so that a change can be defined more time, and quality is reduced. easily. The planning and control cycle is a structured, The evaluation of a claim involves a determin- closed-loop flow of information from the ation of whether the delay incurred is launching of the plan to the monitoring of pro- gress and adjustment of the plan in accordance >- beyond the reasonable control of the con- with the feedback. Time is of the essence. It is tractor essential for effective project control that perfor- >- unavoidable after the contractor has taken all reasonable measures to avoid or reduce mance is measured while there is still time to correct the action. Corrective action is compara- the delay tively cheap early in the life of the project, but it >- the cause of a major disruption or total may be prohibitively expensive at a later stage. stoppage in the regular progress of the works. The Joumal of The South African Institute of Mining and Metaliurgy JULY 1994 163 .... Project management, and the design of shaft-sinking projects In the dynamic shaft-sinking environment, Milestone Scheduling traditional, manual-based procedures are not Milestone schedules are clearly list-defined, adequate for the measurement of project pro- achievable goals that may require approval gress, evaluation of performance, and implemen- before further work is done (Figure 8). These tation of control actions. Computers proVide the milestones may be established on specific capabilities for the acquisition of a large amount requests from the client, but the key to their of data, measurement of the data, and presenta- helpful use is selectivity: they must be used tion of a formal analysis in a consistent and sparingly and with circumspection to avoid timely manner. A further enhancement is the turning milestones into pebbles over which use of expert systems and real-time data-entry people are always stumbling. Milestones with and analysis techniques that enable project attendant schedule and budget measures managers to keep track of small and large shaft- emphasize the key points of a project. sinking projects. Nonetheless, milestones do not clarify the The breakdown structure of the work is activity and task interdependencies. Such inter- seminal to the planning process. Functional dependencies are best explained by one of the tasks, emanating from the sub-projects and many forms of network diagrams, most notably deliverable items in the WBS, are identified, PERT, CPM,and PCD.Each method has its classified, and fed into the planning process. The particular field of application, although there is a WBS offers team members a means of visualiz- growing tendency towards precedence ing the entire project in a meaningful way. They networking. can then think through all the elements of the project. This helps to avoid omissions and clari- PERT fies the scope of the work assigned to each PERT is a networking system used when there is project leader. The final output of the WBS in the great uncertainty about the duration of activities. form of the work packages that provide the input To arrive at a most likely time, it employs prob- to the planning process. To be useful for control ability theory based on best, most likely, or purposes, functional tasks should be of re~atively worst times as determined by independent short duration and small cost compared wIth the observers. Assuming that activity durations duration and cost of the total project. follow a beta distribution, one can compute the An important part of the project planning probability of completing a project in a given effort is the identification of the major interface time. This method is particularly useful when events to be managed by the project manager. one has to forecast durations for sinking Such interface events must be incorporated into through ground of unknown conditions. Because the detailed project plans and schedules. it requires a lot of computational effort to make Schedule Planning three-time estimates, and to calculate the expec- ted time and standard deviations, it is expedient There are basically two levels of schedule plan- to use a computer in networking with PERT. ning: the project level, and the task level. The project-level schedules integrate all tasks, inter- CPM faces, and milestones, and the task-level sched- CPM is the workhorse of the mining industry. ules cover all the key activities that must be Only one time estimate is used, and it is therefore carried out to complete the task as defined in the a deterministic method. A critical path is pro- statement of work. duced. This is an aggregation of the activities on The scheduling of a shaft-sinking project a sequential path that has the longest duration. includes five main techniques, which are known The method is simple, and can easily be updated as milestone scheduling, Gantt chart, critical- and tracked. It is used mainly for overall plan- path method (CPM), programme evaluation and ning in the concept or definition phase of a review technique (PERT), and precedence project. network (PCD). PCD Precedence diagramming, also known as lead- lag networking, is a direct off-shoot of the CPM network-scheduling technique. In some cases, mutually dependent activities can be partially performed in parallel instead of serially. In s~ch situations, it is possible to have start and finIsh- ing time restrictions that permit activities to overlap, or restrictions that require activities to disjoint. ~ 164 JULY 1994 The Journal of The South African Institute of Mining and Metallurgy Project management, and the design of shaft-sinking projects APPROVED APPROVED ACTU ALl C.B.E. PLAN CONTROL FORECAST ACTIVITY DESCRiPTION ~Ej{ARKS PLAN PLAN START ITi'INI SH START IFINISH ST ART IFINISH W LEVEL DEVELOPMENT 1!11-Jan-91 14-Feb-91 25-t1er-91 19-Jun-91 1'-May-9f 15-Jun-:H Collpleted 17-Jun-~}1 MAIN SINK & L!NE TO 15 LEVEL lS-Fob-91 02-t1er-91 21!1-Jun-91 2~JuI-91 17-Jun-91 ; ColIPleted ----- IS LEVEL DEVELOPMENT B3-MlIr-91 13-Apr-91 22-Sep-91 03-Sep-91 IB-Jul-91 i1!12-0ct-:31 Collpleted r--" T -- --- MAINSINK & LINE TO 15 LEVB.. 14-Apr-91 2B-Apr-91 B4-5ep-91 27-5ep-91 1!13-0ct-B1128-0ct-:31 Completed ~- -- E LEVEL DEVELOPMENT 29-Apr-91 14-Jun-91 2B-5ep-91 19-Nov-91 29-oct-91 I31!1-Dec-' 31 Collpleted ------VENTHOLE AEAHING 09-feb-91 'IH1er-91 1!19-feb-91jI!l2-Apr-32 Completed I ------MAIN SINK & LINE TO 17 LEVB.. 1S-Jun-91 I!11-Jul-91 21!1-Nov-91 I'I-Dec-91 31-Dec-91 25-Jan-32 Col1pleted ----- IT LEVEL & SE-OS DEVELOPMENT 02-Jul-91 21-Aug-91 11-O8c-91 30-Apr-92 26-Jan-92 1'-Jun-~;2 Collpleted PUMP CHAMBER CONSTRUCTION I!IH1ay-92 14-Hay-92 12-Jun-92 19-Jun-92 Col'llpleted --- SINK TO, t~CAVATE & LINE LOADING BOX 22-Aug-91 21!1-5ep-91 15-t1ey-92 23-Jun-92 21!1-Jun-92 23-Jul-92 Completed MAIN SINK & LINE TOSHAFT BOTTOM 21-~-91 1!12-0ct-91 24-Jun-92 31-Ju1-92 24-Jul-92! 0S-Sep-92 Completed - SHAFT BOTTOM DEVELOPMENT/CONSTRUCTION 03-oct-91 16-Nov-91 1!11-Aug-92 19-Aug-92 25-AU9-92!~-5ep-92 Completed 1B-Nov-91 14-Dec-91 20-Aug-92 26-Sep-92 19-5ep-92113-NOV-92 37 Days SmIP SHAfT I SFC sl",age I1JDIFYHEADGEAR,CI1LAR & STAGE 17-Dec-91 B2-Jan-92 21!1-5ep-82 21-0ct-92 14-Nov-92 07-Dec-92 EDUIP BARREL & STATIONS 1!13-Jen-92 13-M1!y-92 29- Aug-92 1!12-Mar-93 I!IB-Dec-92 3B-Apr-93 VENT HOLE EDUIPPING 31-Jul-92 15-0ct-92 29-Aug-92 19-Apr-93 B7-A"ug-92 13-HDy-93 In progresl --- EDUIP LOADING BOX & SPILLAGE WINZE 14-May-92 1215-Jun-92 B3-l'1lIr-93 12-Apr-93 I!I3-May-93 12-Jun-93 -- INSTALLAIR/WATER & P.R. STATIONS 22-Aug-92 24-Sep-92 2B-Sep-92 1!16-0ct-93 In progress --- ~TALL CONVEYANCES/COMMISSION SHAFT ~6-Jun-g2 31-Jul-92 I3-Apr-93 24-Apr-93 14-Jun-93 01-Jul-93 POST COMMISSIONING i ROCK PASS SYSTEM 1!11-Aug-92 1!12-Mar-93 03-Aug-93 24-Hay-94 22-Nov-93 ----- PUMP STATIIJ~ 22-Hay-92 02-MIIr-93 16-5ep-93 24-Hay-93 06-Dec-93 NOTE: ADJUSTMENT FOR APPROVED DELAYS & C.O.S. TO DATE:- 179,4 DAYS FORECAST COMMISSIONING DATE BASED ON HISTORY ONLY:- 20 APRIL 1993 VENT HOLE EQUIPPING NOW SCHEDULED FOR COMPLETION DURING SINKING OPERATIDNS P.R. STATIONS NOW TO BE POSITIONED DURING STRIPPING OPERATIONS SILO EXCAVATION AND CONSTRUCTION AS WELL AS CONVEYOR CONSTRUCTION NOW BEING COMPLETED DURING SINKING OPERAnONS. Figure 8-A milestone schedule 12 The Journal of The South African Institute of Mining and Metaiiurgy JULY 1994 165 ~ ------Project management, and the design of shaft-sinking projects This system is extremely simple since there Project/Cost Integration are no dummy activities to be considered within I Curves of project/cost integration (Figure 9) the network diagram. Like CPM,it is used display these concepts visually. The BCWP, . mainly for overall planning in the concept or I I BCWS,and ACWPcurves depict some measure definition phase of a project. of cumulative progress on the vertical axis I1Gantt Chart I against time on the horizontal axis. Together, they provide a valuable insight into the status of During the execution phase for day-to-day con- I trol, special-purpose charts such as Gantt charts I a project. They also provide a graphic picture of how the project has been brought to this status. are used to represent the network schedule. A Trends can be forecaston the basis that Gantt chart enables the planner to deal with I calendar-time constraints, resource availability, ~ performance to time will now be main- I specified start and finishing dates, sub-contrac- tained tor reliability, prescribed work periods, and other ~ performance improves because of the 1I project restrictions. Contractors and sub-contrac- I learning-curve effect tors are given the basic format of the chart, and ~ performance decreases after time now. It should be noted that forecasting would be I are expected to present an updated version of the . chart at weekly progress meetings. more accurate if it were based on the tangential rate of progress, because future progress is more Cost/Schedule Analysis likely to occur at the current actual rate of pro- ,I ' I For effective management, it is imperative that gress than at the planned BCWS slope. I accurate and speedy feedback is obtained on Although the scheduling variance provides a I which to base decisions. Experience has shown I comparison between the planned and the actual that control of the physical progress and sched- performance, it does not include costs. ules separately from that of cost usually results I The t:\voprimary items of measurement are . in chaos. The integrated and structured approach ~ discrete elements of work with a definable 1 of a management cost-and-control system en- I schedule and tangible results sures than an orderly and reliable system of cost 1 ~ the level of effort, which alludes to those analysis is maintained. items that are intangible and therefore not Variance analysis, based on three variables easily measured, such as project support (budgeted, actual, and earned value), is a quick and project control. and informative way for the analysis of project performance. The three variables are defined as Variance Methodology followsl3. Variance methodology can be explained by the ~ Budgeted costJor work scheduled (BCW5) following relationships: is the amount of cost for scheduled work BCWP to be accomplished, plus the amount of level of effort or apportioned effort sched- BCWS ACWP uled to be accomplished, within a given time period. Schedule (Variance) Cost ~ Budgeted costJor work performed (BCWP) is the budgeted amount of cost for com- or schedule variance(SV) is: SV =. BCWP - BCWS pleted work, plus budgets for level of effort A negative variance indicates a behind- or apportioned effort activity completed schedule condition within a given time period. This is some- andcostvariance(CV): CV =. BCWP - ACWP times referred to as the 'earned value'. A negative variance indicates a cost over-run ~ Actual costJor work performed (ACWP) is condition. the amount reported as actually expended Varianccs can be made non-dimensional in completing the work accomplished with- when the ratios arc expressed as percentages. in a given time period. TlUtS, The variance in the budgeting and schedule r;; SI systems must be compared because the cost Schedule variance. =. /1(1\\ X lOO variance compares deviations only from the bud- Cost variance. x ]()O. get, and does not provide a measure of compari- ='iJH/> son between the work scheduled and the work accomplished. ~ 166 Forecast cost at completion (EAC) =ACWP + FORECAST COMPLETION DATE Ere. Admittedly, there are many factors to be 110 EAC taken into account, but the extrapolative forecast is a good starting point, and any change in it BAC must be justified. The schedule and test varian- 10 ces, coupled with the schedule and cost-perform- ance indices, give sensitive and reliable indica- ~ tors of the progress achieved against the plan :oi and the budget. The system also automatically r,; It; :r: produces forecasts of final costs for parts of the ~ 50 project as a whole. AV ~ Quality Control :.: CV ::, 5V 'High quality is the key to pride, productivity and BCWP profitability.' This declaration, taken from the BEHIND American Society for Quality Control's Manifesto, c SCHEDULE elevates quality to a strategic business imperative 20 30 38 40 essential to product and process leadership. TlII! (IIONTHS) Quality pervades the total project, and it demands a continuous improvement process. It is therefore Figure 9-A project cost-schedule progress report necessary, not only to control conformance to standards, but to continually improve standards along with the process capability. Threshold levels are allocated to critical items Statistical process control (SPC) techniques so that timeous corrective action can be taken. are used in the analysis of each facet of a Performance indices can be developed to give a project. The first objective is to ensure that the magnitude significance to variances. For process is in control, Le. that elements causing example, a cost variance of RIO 000 on one inconsistencies have been eliminated. Once the work package with a BCWPof RI 000000 is not specific variation has been removed, common as important as a cost variance of RIO 000 on a variation can be tackled. This process capability work package ofRIOO 000: is now compared with the specifications, and the . BCWP Cost performance IIIdex = ACWP necessary adjustments are made. A typical example is the sinking operation Schedule performance index = ~~:. shown in Figure 10 and Table I. The duration of the activities is closely monitored and analysed A performance index of I represents the statistically. performance as planned, an index performance of less than I represents a poorer performance Project Reporting than planned, and an index greater than I repre- sents a better performance than planned. One of the prime functions of a project manager Cost forecasting is a vital element of the cost- is to keep the client informed of all the important analysis process. Senior management is always aspects of the project. Indeed, it is the client's interested in projected cash flows, viability of the right to know how his money is being spent, projects, and final cost of the project or parts of how his objectives are being pursued, and how it. he could influence the project towards his A simple method of extrapolation of perfor- desired goals. mance to date is used. In this way, one can ana- Different clients have different requirements, lyse each cost account and higher-level accounts, and it is in the project manager's interest to including the cost of the project as a whole, by study his client's particular needs, wants, and dividing the budget for the remaining work to be dislikes, and then to structure his reporting carried out by the CPIand adding it to the actual system accordingly. Much depends on the project cost of the work performed: manager's relationship with the client. For the Performance to date (CPI) project manager to understand the client's view BCWP CP1 = ACWP of the relationship, he must deal with him effectively on a day-to-day basis. A successful Budgeted cost for the remaining work = project manager must sometimes modify his own BAC-BCWP management style to conform to the expectations . BAC-BCWP Estlmate to compIete (E 1 C) of the client. Nonetheless, a project manager "'' = CPI ' must always maintain his credibility, honesty, where BAC is the budget at completion. and dignity: he must serve without being servile. The Journal of The South African Institute of Mining and Metallurgy JULY 1994 167 .... Project management, and the design of shaft-sinking projects }- VI ....J-< DJ ~W '-"<: LU c:: er: W u.J 0- '-"<: :> >- :> :::J t- «: IX 0 I VI W CC) :z:1-- ;z W :r oc'-" LU I VI C) ~--' <: VI :> w --' :r :«: 0 0: « 0~a: U D:: :::E --' . 1\\1~III ~D ~~0.:; .- 8 8 en a IJJ a IJJ a N '" C; en N I: 0 ,,< "" ~0; Q. 0 a.,,< C> I: :;;: I: .en ("- '" :5'" .s I: '"'N 0'" ~0; u:> Q. N 0 '0 I: 0 U> ~N 5 "'C on :5 N '" I:C> .~ ~0 N .r:. E'" CO t;, fi 0 a:: t; i: d, IX) f.D ...... , 5 ~t:o ~;!! ~p ~:= ~en r--- U"} N C>'" u: ~168 Project management, and the design of shaft-sinking projects Table I Duration of shaft-sinking operations (in hours) Moving Date average Plan 24 May 1993 25 May 1993 26 May 1993 26 May 1993 27 May 1993 27 May 1993 28 May 1993 29 May 1993 29 May 1993 15,51 01 June 1993 15,38 02 June 1993 15,53 08 June 1993 15,58 08 June 1993 15,70 09 June 1993 15,59 10 June 1993 15,99 10 June 1993 15,77 11 June 1993 15,70 12 June 1993 15,61 12 June 1993 15,06 14 June 1993 14,83 Standard Mean Absolute Percentage The project manager should not be afraid of The report should open with a brief executive the Persian syndrome (the messenger who summary. Althoughbrief,it must containallthe brings the bad tidings is shot!). Projects cannot essential facts, progress, cost and time variances, always run without deviations from the goal. It safety aspects, and personnel changes. As a busy is impossible to accurately predict the future, no executive will not have time to study the full matter how hard one tries. What is important, report, judicious use must be made of pictorial however, is to take corrective action without presentations such as histograms, charts, sched- delay. The client must be informed timeously. He ules, achievement graphs, variance graphs, and must be involved in the solution of problems, tabulations. In fact, the output from the project- and must always be presented with two or three management control system should be presented alternatives so that he makes the final choice. in pictorial form. This will deepen the client's involvement and This should be followed by a technical sec- understanding of the project. The surest way to tion under each discipline giving the technical avoid client 'meddling' is to keep the client and design progress. This section will be of informed and involved. A reporting system will interest to the client's technical staff since it will go a long way towards marketing a project since enable them to track the project and monitor the merits of a project are not self-evident to compliance with their specifications. everyone. If the project is not understood, Weekly Status Report and Daily Site valued, or supported, the reporting has not been Report effective. The main reporting tools are the project The weekly status report gives a brief review of manager's monthly report, the weekly status the progress, safety, and major variances during report, and the daily site report. the preceding week. The Project Manager's Monthly Report The project manager's monthly report forms the main point of discussion at the monthly project review. The report must be clear, concise and to the point, and without padding or embell- ishment. The Joumal of The South African Institute of Mining and Metallurgy JULY1994 169 .... Project management, and the design of shaft-sinking projects References , The dailysite report is producedto keep mine Challenges for the Future I management informed of safety aspects, breaches I. DOUGLAS, A. GFCMining I There is a Chineseproverbthat says 'ProphecYis (Ply) Ltd, private of the Minerals Act, and major changes such as extremely difficult, especially if it concerns the communications. ground conditions and abnormal ingress of I 2. PMI STANDARDS water. Care must be exercised. Where the dura- future'. The future is fickle, and to predict it is ! folly. Great intellects who succumbed to this COMMIITEE. Prqject tion of an activity was longer than the reporting management body if I period, considerable confusion can result when a temptation have rued the day. At best, current knowledge. Drexel Hill ! (USA), Project person unskiIIed in scheduling estimates percent- trends can be considered, and a number of shifts I Management Institute, age completions. For this reason, such reporting i in strategy will become apparent immediately. 1987. Firstly, a dramatic flattening of the corporate I should be done only from the project office by a 3. YOUKER,R. Organisational ' skilled project planner. pyramid is evident. Hierarchical layers have been alternatives for project reduced, bringing top executives closer to the management. Prqject Management Quarter(y, The Close-out I market - the work face.Dis-economicsof scale vo!. 3, no. 1. Mar. 1975. I set in at much lower levels of capacity than 4, KIRZ\EH, H. Prqject The close-out is a very important part of a pro- before.Corporatestaff have been reduced in management. 3rd cd. 14. ject manager's job. In a way, the project team is ratios of up to 20: 1 in some extreme cases New York, Van Nostrand, I Reinhold, 1989. engineering their own demise. For this and other This is particularly true of mergers, where in 5, ARCI/IBALD,R.D. reasons, projects have a tendencY to run on after many cases the combined staff have been Managing high tech- the scheduled completion dates. A poorly struc- reduced to a level below those of either company programs and I no!""y , before the merger. There is a strong move to- prqjects. 2nd cd. New tUred close-out plan can mean the difference York, John Wiley, t992. between the success and failure of a project. It wards decentralization and smaller groups. 6, SMM,IEY,L.J. Prqject I should be remembered that the race is often won Secondly, product Iifecycles have shrunk management study guide or lost in the home straight. At some point, the considerably. New and better products arc con- jar honours bachelor q( tinuously displacing 'older' products, and profit commeree. Pretoria, project must come to an end. [n the close-out have University of South phase, the following should take place. margins consequentlyalso shrunk. Hence, Africa, 1990. the competitive spirit has been raised to an ali- ~ All the work packages must be handed I 7. LUCK,D. Prqject time high. What was adequate yesterday may be over formally to the client. The client must management handbook. rejected by the market today. The net effect is to ;\Idnshot (UK), Gower. be satisfied with all the deliverablcs. decrease lead times to the lowest levels ever. 1981' ~ All the contractual arrangements have to Thirdly, there have been dramatic improve- 8. ;\SI.\\UN, M. Introduction be concluded. All the orders and contracts ro design. Engelwood, I ments and advances In the microprocessor field, must be settled, and the retentions must Clilfs (USA), Prentice and in computers as a whole. The tremendous be in place. /\ comprehensive list of all the Hatllnc., 1962. strides taken in the software market have 9. ;\IIIZAI/AMSON,M. contracts must be handed to the client. brought toplcvel executives closer to the oper- Dlgil/l'en'ng law and the' ~ All the surplus material must be returned ((m/racts. 2nd cd. ational areas. Another effect is the greater IC/:' to the rightful owners, e.g. client, project London, Applied Science. flexibility in the requirements of systcm integra- office, or contractors. 191'9. p. 390. tion. tvlcmbns of a project team can now verv 10 L,xns, P.e. Engineen'ng >- All the project files must be up-to date and easily operate our of centres that are remote "from ({I/d construction law, handed over to the client. onc another. Cape Town, Juta, 1985. ~ All the functional departments must be Fourthly. there has been an increasin.~ 11 TI/O\lI'so\, P. notified formally that the project has Oli{al/isation and econo sophistication on the part of 11ll'work force, and closed, and that no further expenditure mics ,,(constructiOll. hence the concomitant increasing interest in the Wilson-Hill Book Com- can be made against the project. pany \UK) human clement of management. Ltd, 1981. ~ A post-completion evaluation must be 12 OIR MERWE,E./CI \Yhat does this all mean for project manage- V." made and included in the close-out report. fi/,WCI procedures ment as a whole, and whal ISirs appliGHion to mal/lla!, johannesburg, The evaluation should shaft -sinking practices? There is no doubt that I\)liannesburg Consoli- daled Investment Carp" ~ list and explain all the variances both the highly volatile business environmenr de- I'!'!:\ negative and positive mands a greater !1exibility, faster shifting of J:i :\1((1111"11.0,R.D, Op. dt., ~ identify the mistakes focus, and quicker response time. Wc have p.228. ). determine their impact entered the age of the ephemeral. Competition 14 I'IIII(S, T. Liberatioll ~ determine how they can be avoided on will be based more and more on flexible mal/a,i,ement, London, Macmillan, 1992, future projects management, ability, and technological sophisti- IS. I'ITIIZS, T,Ibid., p. 110. ~ suggest appropriate changes and improve- cation. Devolution of power and authority down ments in projectmanagementand in func- towards smaller groups means that the system is tional policies and procedures. moving closer to the project -management form of organizational structure. ~ 170 1')CI4 " Project management, and the design of shaft-sinking projects Tom peters15 goes even further. He says, Inter-relationships and interaction among 'most of tomorrow's work will be done in project the elements of management are central to the configurations. Functional staffs will all but effective operation of project management. When disappear, and maybe not "all but". The profes- deviations occur, swift decisions and quick sional service firm is the best possible model for actions are required to keep the project on track. future survival.' Project management is a process designed to It is of paramount importance that our shaft- manage change. It does this by a total integra- sinking techniques and managerial practices be tion of functions, technologies, and the client. In changed and improved. Smaller teams, greater the final analysis, the success of a project is how decentralization, and technical innovation are the client perceives the outcome of the project. the factors that will need close scrutiny. If this The triad of cost, time, and quality remain impor- does not take place, we shall lose our position in tant. but they are subordinate to the client's terms of global competitiveness. The world has preceptions of the project. shrunk, and it is not inconceivable that teams The project-management organizational for- from outside our borders will be sinking shafts mat may not be flawless. Most organizational in this country! formats will work if the participants want them These ideas will become more focused and to work. However, project management has all made more acute by the current worldwide the elements required by the new world of economic downturn. When the upturn comes, exciting change. Organized business using our house had better be in order if we want to be sophisticated electronic facilities is moving in the part of the new prosperity. direction of smaller, more autonomous groups. This is a fertile environment for the growth of project management. Conclusion . This paper has examined some systems, tools, and techniques of project management in respect of shaft-sinking projects. These techniques are not dissimilar to those of other disciplines of business economics. What is different is the thread of integration that ties it all together. Project management cannot be treated piecemeal -there has to be a system's approach. The total picture must be looked at to make it successful. The Journal of The South African Institute of Mining and Metallurgy JULY 1994 171 ...