By Dr. Nick Fleming
As the world’s population grows and developing nations become more affluent, demands for resources continue to escalate. These resources are being extracted from progressively more difficult or distant locations, bringing their own challenges and risks.
This is occurring within a backdrop of mounting sovereign debt and an expanding array of complex challenges: a changing climate, heightened social expectations, fast global communications that heighten visibility and transparency, new regulations and pricing regimes, and economic values being placed on what were once “intangibles” like biodiversity.
These translate into increasing costs for development and management, challenging the value of assets and commercial viability of projects.
While private and institutional sources of finance remain available to fund resource development and enable infrastructure, investors are closely scrutinizing the projects and their proponents to verify the quality of projects and their capacity to retain and grow in value over time.
In this context, well-governed and forward thinking organizations recognize that “business as usual” is no longer a recipe for success and, in fact, presents material risks to the corporate balance sheet and reputation.
Indeed, many organizations—both private and public—are seeking step-change productivity improvements just to remain viable. These operating conditions demand that companies “achieve more with less” via smarter commercial, stakeholder and technical solutions that sit well under the banner of “sustainable development.”
Of course, many organizations persist with outdated resource development and operational practices, only to be impacted by the actions of aggrieved stakeholders and regulatory reforms initiated by reactive governments.
It’s little wonder, then, that the costly actions to remedy stakeholder concerns and environmental impacts are interpreted as the cost of sustainable development. Indeed, a large, yet declining group of businesses still perceive that sustainable development is “just a green issue” that will delay their business activities and impose additional costs on project development.
Yet these are myths, the opposite is often true: Sustainable development can save time, cost, resources and reputations.
What does it mean to develop “sustainably”—whether a capital project or an organization? We suggest that it means getting “fit for the future”—ensuring an organization or its capital assets are useful, (resource) efficient and producing goods or services that are relevant and valued (by shareholders and stakeholders) throughout their economic life.
Unfortunately, all too many business leadership and project teams continue to unwittingly apply traditional mindsets and practices without sufficient scrutiny on this question of “fit for the future.” Critically, this means projects are often conceived—with major capital allocation consequences—without taking important factors into account. Projects then get fixed at a later date and at additional cost to make them sustainable (that is, “less bad”) instead of designing them smartly to be “good” from the outset.
The good news is that these habits and outcomes can be corrected, relatively easily, and often in a way that results in a substantial reduction in the total cost of ownership of an asset, reduced risk, and better social and environmental outcomes. Through experience on development projects worldwide, we have consolidated insights that enable much better results, time after time:
1) Systems thinking—By facilitating genuine connection between people across functions, disciplines and the supply chain, their knowledge and insights can also connect to enrich understanding and identify “joined up” solutions.
2) Integrated risk analysis—By examining the nature and interrelationship of risks of different types over the project life cycle, not just the planning and construction phases that are typically front-of-mind during project development, important strategic risks are identified that often go unnoticed.
3) Stakeholder analysis—Fostering a real empathy for stakeholders who have both an interest and influence over project success engenders greater ownership and desire for win-win solutions.
4) Solution focus—Maintaining the collective focus on finding solutions that transcend business as usual regularly unleashes smarter and cheaper solutions. For example, rather than mitigating risks, we seek to eliminate risks by design.
5) Selling the benefits—Conveying the merits of smart solutions in terms of their short- and longer-term or whole-of-life financial, risk, social, and environmental benefits helps to gain support for the product of collaborative thinking and design.
6) Integrated delivery—Maintaining focus to ensure smart solutions are effectively implemented, retaining integration and integrity of the solution through the delivery process, particularly when scope changes arise. Otherwise, the likely stream of benefits will be eroded. We are confident that, effectively applied, these insights can achieve cost savings in the order of 20% or more.
It’s these sorts of results witnessed across the world and across industries that provides the basis for our confidence and excitement. Far more cost-effective, productive, value-enhancing and sustainable solutions are available to the mining industry now.
With the courage of leadership and project managers to challenge their thinking and with effective facilitation to support the design, engineering and execution process, progressive mining companies can unlock far greater returns for their shareholders and society.
Dr. Fleming is the chief sustainability officer for the global operations of Sinclair Knight Merz, a leading consulting, engineering and project delivery firm. He has more than 20 years of experience leading multidisciplinary projects in mining, water, natural resource, infrastructure and defense sectors. He operates as a strategist and integrator of technical disciplines dealing with aspects of strategic project design, organizational change and leadership, and decision support. As chairman of the Sustainability Taskforce of Infrastructure Partnerships, Australia, and a director of the Board of the Infrastructure Sustainability Council of Australia, he is also the recipient of an Honorary Fellowship at the Asian Foresight Institute.