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031
MAJOR CAPITAL PROJECTS
(Minerals)
Brief description
Performance requirements for the initiation, development, execution, close out and transition to operations of
minerals major capital projects.
The Gate references in the Major Capital Projects Group Level Document (GLD) are linked to the Investment
Process GLD.
Key contact
Andy Higgins, Head of Group Project Management Services.
GLD.031
MAJOR CAPITAL PROJECTS
(Minerals)
1. Project initiation
Major capital projects must be initiated and prioritised in accordance with the Corporate Objective, CSG strategy
and CSG approved 5 Year Plan.
Ensure continuous single point accountability for ownership and delivery of the major capital project.
Develop clear business objectives as specified in Appendix 2 Section 1.1.
Register all major capital projects in the Investment Tracking System.
Comply with authorities (Appendix 1).
2. Project development
Major capital projects must be developed, refined, and optimised by advancement through the identification phase,
selection phase and definition phase.
Conduct the study activities in accordance with the requirements specified in Appendices 2 to 4.
Study budgets, pre-commitments, execution phase budgets and approval to Gate between phases must
be authorised in accordance with the group investment process.
Comply with authorities (Appendix 1).
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Appendix 1. Authorities
Endorse
Approve
Inform
President <CSG>
5.12.2 Phase requirements (study and execution phase objectives, study work plan, project execution plan, phase
elements and phase deliverables)
Vice President Marketing (Appendices 2 to 4 Section 6.0)
Project leader
5.12.3 Recommendation to advance or not to next phase
Project leader
President <CSG>
5.12.4 Assignment of major capital projects to a Project Hub, approval of project execution strategy and key project
resources
Head of Group Project Management Services
President <CSG>
5.12.5 Exemptions to investment phase mineral resource and ore reserve requirements
Head of Group Resource and Business Optimisation
President <CSG>
5.12.6 Approval of operations strategy and key operations resources
Asset President <Asset>
President <CSG>
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Appendix 2. Identification phase
1.0 Identification phase study overview
Description
1.1 Business
objective(s)
and
strategic fit
What
Develop and clearly document the business objective(s) for the investment opportunity, including identifying
how this project fits into the resource development potential of the province.
Ensure the investment is consistent with the corporate objective, CSG strategy and CSG approved 5 Year
Plan. If it is not aligned, provide detailed reasoning.
Provide a concise overview of the strategic rationale, strategic fit and any required exit strategy.
Reference existing material from the CSG approved 5 Year Plan and CSG directional appraisal.
The identification phase study objectives must be based on the group investment process investment phase
objectives, investment phase activities and the individual needs of the investment opportunity.
Investment phase objectives:
Identify a value-creating investment, assess the material risk issues, identify the potential strategic investment
alternatives to be assessed further during the selection phase and ensure alignment of the investment with the
business strategy.
define what work needs to be done to further assess the investment opportunity;
Conduct the identification phase study activities in accordance with the approved Study Work Plan (SWP) and
budget to meet the agreed study objectives and deliverables.
The SWP and budget must cover all activities in the identification phase up to the forecast approval date for the
start of the selection phase.
Appendix 2 Sections 2.0 to 15.0 detail the specific performance elements that must be considered during the
study.
Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where
compliance cannot be achieved must be documented in the SWP.
Direction on the application of the identification phase study requirements is available from Group Project
Management Services (PMS).
Complete all planning required for transition to the selection phase including:
ensuring that the selection phase owners study manager and key study team resources are available;
preparation of the zero harm HSEC Management Plan for the selection phase;
If the recommendation from the study is to proceed to the selection phase then the following additional
documentation is required:
CSG independent peer review (IPR) summary and functional reports, if required by approver;
contains an executive summary that includes confirmation of meeting the study objectives and a clear
recommendation to proceed, or not to proceed, to the next phase that is logically supported by the data,
documentation and analysis;
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1.0 Identification phase study overview
Description
What
addresses the minimum requirements for each applicable element as required by the SWP;
is version controlled, stored in an approved document management system and accessible to the IPR
team;
separates the materially sensitive sections or data such that joint venture partners or other third parties are
restricted from accessing confidential information;
is, together with the investment evaluation, the source of information and data used to complete the
necessary approval documentation.
The index of the study report must follow the same structure as Appendix 2 Sections 2.0 to 15.0 with the addition of
the study report executive summary in Section 1.0.
1.7 Timing
The business objectives are identified before and developed during the identification phase.
The identification phase study objectives, SWP and budget are:
The identification phase deliverables are completed at the end of the study and approved as part of Gate 1 (the
advancement from the identification phase to the selection phase).
2.0 Geology and mineral resources
Description
What
Collect sufficient data from exploration and drilling/sampling programs to support the determination of whether or
not an investment opportunity exists.
In the event that an investment opportunity is found to exist, prepare a selection phase work plan for geology
and resources including an estimate of the requirements for the drilling and other field programs.
Describe the major geological controls on the mineralisation and the geometry of the ore body.
Develop a mineral inventory model that includes appropriate potential mineralisation and Mineral Resource.
Describe the resource and the potential mineralisation in terms of parameter ranges and uncertainty resulting
from Resource Range Analysis and other analysis.
Describe the geometallurgical, hydro-geological and geotechnical environment and how it could affect future mine
development, mining operations and processing.
3.0 Mining
Description
What
Develop a conceptual mining configuration that supports the investment opportunity.
In the event that an investment opportunity is found to exist, prepare a selection phase work plan for mining
including a list of plausible mining strategies for further evaluation and the actions required to investigate the
major mine factors and key risks.
Develop a conceptual mining plan that will support the investment opportunity.
Demonstrate that the major mine factors and key risks that impact the potential investment have been identified
including:
definition of the key issues that impact mine design, including local and regional infrastructure,
environmental, cultural, processing and market considerations;
identification of the key value drivers that impact or influence the mine plan and design.
Develop and describe a conceptual mine design to demonstrate technical viability including:
potential mining methods and for each potential mining method, the assumptions as to the type and size of
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3.0 Mining
Description
What
mining equipment;
outline of conceptual mine excavations, waste dumps, ore stockpiles, mine site ore processing (for example,
crushing), material handling and transport within the mine site, mining infrastructure and final mining limits.
Describe the major factors and assumptions used to convert the resource to mineable resources.
3.4
Mine operations
Develop and describe a conceptual mining sequence and schedule including assumptions and risks for the
investment opportunity.
Summarise the assumed mining operations, mine equipment and manning levels. These can be based on
benchmarking information.
3.5
Ore Reserves
statement
4.0 Processing
Description
4.1 Processing
strategy
What
Develop a conceptual process flow sheet and complete any test work required to support the investment
opportunity.
Describe the metallurgical characteristics of the different ore types including value minerals and impurities and
discuss any variability.
Describe the information and data used to support the processing configuration proposed and assumptions
made.
Identify at least one metallurgical processing configuration that supports a value creating investment opportunity.
Identify the major alternative processing configurations for evaluation in the selection phase.
Identify processing and technology risks including potential issues and opportunities regarding the acquisition and
implementation of new or alternative technology.
4.5 Metallurgical
performance
Outline the technically viable process facilities required for the conceptual processing configuration.
Describe assumptions made regarding annual ore and product capabilities, plant availability, major operating and
maintenance consumables and utilities, product handling, transportation and ramp-up strategies. These can be
based on benchmarking information.
5.1 Location
What
Identify potential locations for the plant, infrastructure and residue disposal sites (for example, tailings dams).
Describe the significant parameters and factors influencing the choice of locations (for example, environmental,
site conditions and access to major utilities such as power and water).
Use existing topographical and geotechnical information/data to provide a reasonable level of assurance as to
the viability of the locations selected.
Document conceptual site layouts for the materials handling between the mine and plant, the processing plant,
materials handling and export, infrastructure and waste management facilities.
5.2 Infrastructure
Outline requirements for all non production support facilities for the project including: power, water, utilities, waste
disposal and drainage, buildings and facilities, transport Infrastructure, communications and temporary facilities.
Include on site and off site infrastructure and define their battery limits.
Outline existing infrastructure available to support the project, the new infrastructure required and the respective
locations (on and off site).
Identify potential locations proposed for the infrastructure using ground-level geotechnical survey (by surface
observation and local pits), and topographical investigations via existing data to provide a reasonable level of
support for the viability of the locations selected.
Outline the transport and logistics requirements for the conceptual configuration.
Highlight any existing transport or logistics available to support the project and any new facilities and/or
arrangements required.
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6.0 Market analysis
Description
6.1 Marketing strategy
What
Develop a preliminary marketing strategy in relation to the investment opportunity.
Identification Phase
Use normal BHP Billiton reference prices to confirm that an investment opportunity exists.
Identify any potential pricing strategies that are different from the norm.
6.3 Product
specification
Identify the standard required for product(s). This must be a targeted quality or demonstrated by test work.
Outline world demand or supply forecasts, utilising internal or external existing data or reports.
demand forecasts
Outline the likely product shipping, storage and distribution system post point of sale.
6.6 Marketing
Identify key contracts or agency agreements current or required for marketing the product.
contracts
7.0 Scope
Identification Phase
Description
What
7.1 Statement of
requirements
Outline key internal and external stakeholder requirements for the investment opportunity and document in a
preliminary statement of requirements (SoR).
Develop outline scopes for the major alternatives to be evaluated in the selection phase.
Prepare a preliminary scope of work (SoW) for the identified investment opportunity.
The identified investment opportunity is the value-creating alternative which is documented and described in the
ICN.
8.0 Schedule
Identification Phase
Description
8.1 Project master
schedule
What
Develop a preliminary project master schedule (overall timeline for all study phases and the execution phase).
This can be based on benchmarking data.
There may be different timelines associated with the different investment alternatives. Include the key milestones
from the project master schedule for the identified investment opportunity in the ICN.
Implement, manage and control the identification phase activities and durations in accordance with the
approved study schedule.
Prepare a detailed (Class 2) schedule for the selection phase and include in the forward work plan.
Develop an outline duration for the execution phase of the identified investment opportunity. This can be based
on benchmarking data.
9.0 Cost
Identification Phase
Description
9.1 Overall investment
amount
What
Develop a preliminary estimate of the total investment amount (expected expenditure for all study phases and the
execution phase). This can be based on benchmarking data.
There may be different capital estimates associated with the different investment alternatives. Include the total
investment amount for the identified investment opportunity in the ICN.
Prepare a detailed (Class 2) cost estimate for the selection phase and include in the forward work plan.
Implement, manage and control the identification phase costs in accordance with the approved study budget.
Prepare outline (Class 4 or Class 5) cost estimates for the definition phase and execution phase of the
identified investment opportunity. This can be based on benchmarking data.
Prepare an outline (Class 4 or Class 5) operations cost estimate for the identified investment opportunity. This
can be based on benchmarking data from similar Assets.
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10.0 Risk management
Description
10.1 Risk register
What
Identify and analyse the business material risk issues associated with the investment opportunity.
Identification Phase
Identify and describe, in general terms, any risk control actions required to manage residual risk to a tolerable
level.
Assess the practicality of managing the business and project material risk issues.
Document any areas of intolerable high residual risk (potential fatal flaws).
Description
What
Apply a valuation methodology appropriate for the valuation of an identification phase investment opportunity.
Complete the investment evaluation using a valuation model structure that is appropriate for an identification
phase investment opportunity.
Details on valuation modelling and investment evaluation are available from Group Investments & Value
Management (I&VM). The valuation model must use key assumptions for valuation published by Group I&VM.
11.3 Investment
evaluation
identify the major potential value-creating investment alternatives for more detailed evaluation in the
selection phase.
Low, mid, and high cases must be sufficiently understood to reflect key uncertainties that affect value and
impact the selection of the major alternatives to be carried over into the selection phase.
Low case must be clearly understood and consideration must be given to a minimum screening criteria (for
example, critical resource threshold) when deciding on the recommendation to proceed or not to the selection
phase.
11.4 Value enhancement
Description
12.1 HSEC risk
assessments
What
Identify material HSEC issues associated with the investment opportunity.
Prepare initial Health and Safety (H&S) and Environment and Community (E&C) risk assessments.
Document these in an initial project HSEC Risk Register.
Identify and document the scope and requirements of the project Environmental and Social Impact Assessment
(E&SIA) or local equivalent.
Develop, implement, manage and control the HSEC requirements for the identification phase with the objective
of achieving zero harm during the study.
Including all significant baseline studies and investigations required together with their required timeline.
Cover all material identification phase HSEC issues and risks (for example, travel, site visits and sampling).
Prepare a HSEC Management Plan for the selection phase.
12.4 Execution phase
HSEC management
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12.0 Health, safety, environment and community
Description
What
Identify and summarise any significant decommissioning, closure and rehabilitation issues associated with the
investment opportunity.
What
13.1 Stakeholder
management
Identify the key stakeholders associated with the investment opportunity and prepare an Initial Stakeholder
Register.
Ensure that the stakeholder groupings include as a minimum:
material media;
shareholders.
For investment opportunities where successful stakeholder management is critical to the investment outcome
(for example, a greenfield project in a developing country with a local joint venture partner) develop an initial
Stakeholder Management Plan and highlight the material risk issues and potential mitigation options available.
13.2 Communications
Prepare an initial Project Communications Plan including an external relations assessment for the opportunity.
Identify any key issues and special or unique requirements.
13.3 Ownership
Identify key ownership issues associated with the investment opportunity, including ownership of the resource or
reservoir and land needed for the investment opportunity and any rights and prior uses.
Prepare an initial Ownership Register.
Identify key legal and regulatory approval requirements associated with the investment opportunity.
Prepare an initial Legal and Regulatory Approvals Register including:
highlighting any legal and regulatory requirements that could present a material risk issue to the project
including consideration of sovereign risk, legal risk, ownership risk, project structure/entities and regulatory
approvals;
Identify the potential legal structure(s) required for the development and execution of the project and the steps
required to implement.
13.5 Contractual
Identify any key contracts (for example, power, water, third party port access) required that materially impact on
the investment opportunity and assess the practicality of achieving a successful outcome in these areas.
Identify the project operator if not BHP Billiton and provide an initial assessment of their capability and suitability
(for example, funding capacity, HSEC performance, previous track record in projects and operations).
Finalise any joint venture agreement(s) required for development of the investment opportunity.
Prepare a Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated projects
which have JV partner(s).
The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface
areas (for example, JV approvals) will be successfully managed.
When choosing JV partners, third parties or agents ensure all business conduct and governance considerations
have been incorporated and that all counterparty risks (including reputation risks) have been fully assessed.
What
Develop and implement the identification phase resource requirements.
Develop a detailed Project Resource Plan for the selection phase.
Critical elements in the plan include: organisation, mobilisation, locations, local content, responsibilities,
competencies, team integration and interfaces with key support contractors.
14.2 Study
procedures
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14.0 Study/Project delivery
Description
14.4 Value
improvement
14.5 Innovation
What
A Value Improvement Plan is not required in the identification phase.
Review, document and implement all relevant learning's from post investment reviews, Project Close-Out
Reports and other sources.
Demonstrate that opportunities to add material value to the investment opportunity through innovative
technology (immature, emerging or novel) have been considered.
Document the reasons for inclusion or exclusion of innovative technology and provide a preliminary description
of the technology maturity, novelty, intellectual property aspects and high level risks.
Ensure full disclosure of innovative technology risks and appropriate mitigation planning in the study report.
Prepare an initial high level project execution strategy or strategies for the investment opportunity.
A Project Execution Plan is not required in identification phase.
Not required in identification phase.
Develop the selection phase study objectives to meet requirements of Appendix 3 Section 1.2.
Develop the selection phase SWP and cost estimate to meet requirements of Appendix 3 Sections 1.0 to 15.0.
What
Onboard (or access) the operations resource(s) required to complete the operations strategy.
A detailed Project Operations Resource Plan is not required in the identification phase.
15.2 Operations
strategy
Prepare an initial high level operations strategy for the investment opportunity.
The operations strategy defines the operational value drivers, operational philosophy, operational requirements
and key operational issues (for example, fly in fly out versus local workforce, contract versus owner operated),
operations organisational structure and operations management systems.
Ensure that the requirements of the operations strategy are built into the identified investment opportunity and the
major value-creating investment alternatives being carried into the selection phase for further evaluation.
15.5 Commissioning
15.6 Operations
readiness
15.7 Operations
procedures
15.8 Operations
Information
Management (IM)
systems
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Appendix 3. Selection phase
1.0 Selection phase study overview
Description
1.1 Business
objective(s)
and
strategic fit
What
Describe the main strategic options considered and reasons for selecting the preferred investment alternative.
Show the preferred investment alternative in the context of the resource potential of the province.
Ensure that the preferred investment alternative will meet the agreed business objective(s).
Provide a concise description of the strategic fit and any required exit strategy for the preferred investment
alternative.
Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.
The selection phase study objectives must be based on the group investment process investment phase
objectives, investment phase activities and the individual needs of the investment opportunity.
Investment phase objectives:
Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into
account net present value, risk, uncertainty and embedded option value.
Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in
the definition phase.
Investment phase activities:
Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing).
Step 2: Select the optimal investment alternative, taking into account net present value (NPV), risk, uncertainty
and embedded option value (opportunity selection).
Step 3: Produce a summary of the investment alternatives considered, the criteria used and the reasoning
behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A).
Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to:
have the main areas of the project scope clearly understood and frozen;
Conduct the selection phase study activities in accordance with the approved SWP and budget to meet the
required study objectives and study deliverables.
The SWP and budget must cover all activities in the selection phase up to the forecast approval date for the
start of the definition phase.
Appendix 3 Sections 2.0 to 15.0 detail specific performance elements that must be considered during the study.
Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where
compliance cannot be achieved must be documented in the SWP.
Direction on the application of the selection phase study requirements is available from Group PMS.
Complete all planning required for transition to the definition phase including:
ensuring that the definition phase owners project manager and key project team resources are available;
Identification of key definition phase support contractor(s) and contracts developed to stage of
conditional agreements;
development of the definition phase SWP and cost estimate including details of any outstanding
optimisation studies required on the preferred investment alternative;
preparation of the zero harm HSEC Management Plan for the definition phase;
development of the action plan to progress all required statutory and third party approvals;
investment evaluation model(s) that support the selection of the preferred investment alternative.
If the recommendation from the study is to proceed to the definition phase then the following additional
deliverables are required as part of the group investment process:
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1.0 Selection phase study overview
Description
What
contains an executive summary that includes both confirmation of meeting the study objectives and a clear
recommendation to proceed, or not to proceed, to the next phase that is logically supported by the data,
documentation and analysis;
addresses the minimum requirements for each applicable element as required by the SWP;
is version controlled, stored in an approved document management system and accessible to the IPR
team;
separates the BHP Billiton confidential sections or data such that joint venture partners or other third parties
are restricted from accessing confidential information;
is, together with the investment evaluation, the source of information and data used to complete the
necessary approval documentation.
The index of the study report must follow the same structure as Appendix 3 Sections 2.0 to 15.0 with the addition
of the executive summary as per Section 1.0.
1.7 Timing
The selection phase study objectives, SWP and budget, project hub strategy and key project resources are:
approved as part of Gate 1 (the advancement from the identification phase to the selection phase);
The selection phase deliverables are completed at the end of the study and approved as part of Gate 2 (the
advancement from the selection phase to the definition phase).
2.0 Geology and mineral resources
Description
2.1 Data acquisition
What
Collect sufficient data to define the ore-body limits, the tonnage, density, shape, physical and metallurgical
characteristics, grade and mineral content to enable selection of the preferred investment alternative from the
range of investment options under consideration.
Provide a description of the data acquisition work plan for the definition phase.
2.2 Geology and
mineralisation
description
Describe the geology and the extent of the ore body to a sufficient standard to enable evaluation of the full range
of investment alternatives, including a full range of mining and processing alternatives.
Update the mineral inventory model to sufficient detail and spatial coverage to facilitate a confident, unbiased and
objective comparison of the various investment alternatives. There must be a low residual risk of the preferred
investment alternative changing as a result of further refinement of the geology and mineral inventory.
Provide evidence that the materially significant aspects of the ore body have been modelled with sufficient
accuracy to allow selection of an investment alternative. Provide a description of the mineral inventory that will
underpin the future projects/options in the pipeline.
Present estimates of volume and quality versus cut-off (tabulated and/or graphically) and compare with previous
estimates.
Tabulate the Mineral Resource by classification and domain.
For representative sections of the ore body, demonstrate that the drill spacing is sufficiently close to provide
confidence as to resource classification.
An independent audit of the database, resource model and resource statement must be undertaken prior to a
public declaration of the resource.
2.4 Geometallurgy,
hydrogeology and
geotechnical
Describe the geometallurgical, geotechnical rock mass and the ground water regimes, including aspects that have
the potential to impact on mining method and process selection, rates, scale and operability, in sufficient detail to
ensure valid mine plans and processing route are used for the basis of selection of the preferred investment
alternative.
Develop the public JORC compliant Mineral Resource statement complete with sign off by a Competent
Person.
This is required prior to approval to advance into the definition phase.
For the preferred investment alternative, at least 80% of the ore scheduled for mining in the first five years of
operation must be in the Indicated Mineral Resource classification.
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3.0 Mining
Description
3.1 Mining strategy
What
Commencing with the list of plausible mining strategies developed during the identification phase, develop a
range of mining strategy alternatives and analyse the alternatives in sufficient detail to enable selection of a short
list of alternatives.
For each alternative in the short list develop and analyse a number of mine plans, mine designs and mine
operations alternatives. Describe the range of mining strategies analysed and the analysis outcomes.
Describe the selected mining strategy in detail and describe the rationale for the choice of associated mine plan,
mine design and mine operations.
Analyse the range of mine plans including consideration of these key issues:
local and regional setting, including: climatic, surface and seismic conditions;
tenure conditions, including ownership, mineral titles, water rights, operating licenses and surface access
rights;
site access, plus existing and proposed local and regional infrastructure facilities relevant to the project;
contribution to the creation of long-term value, value drivers and risks, relevant processing, market and
sustainability.
For each short-listed mining alternative, develop a range of production schedules for analysis.
Analyse and describe the risks and uncertainties for each alternative and how these could impact on the
outcome and value.
Select a preferred production schedule and detail the rationale for the selection.
For the selected go forward alternative provide an annualised mining schedule over the payback period from
start of operations. Include:
4.0 Processing
Selection Phase
Description
4.1 Processing
strategy
What
Develop a range of processing strategy alternatives and analyse the alternatives in sufficient detail to enable
selection of the preferred configuration.
Sufficient test work and analysis must be undertaken to select the configuration with the maximum value and an
acceptable risk profile.
4.2 Feed
characteristics
Describe the metallurgical characterisation of the ore types and blends in sufficient detail to facilitate objective
comparison of the alternative processing configurations being considered. Characterisation must include (where
possible) value minerals, impurity behaviour and materials handling characteristics.
Demonstrate that the methodology applied for taking representative samples is aligned to the understanding of
ore and geometallurgy variability and addresses associated processing risks and required controls.
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4.0 Processing
Description
4.3 Test work
What
Describe the metallurgical test work conducted to verify key unit operation for the processing alternatives
considered.
Demonstrate that the test work is sufficient for defining and managing the risk for the preferred alternative to an
acceptable level.
Present the process alternatives considered and discuss the process and methodology for selecting the preferred
flow sheet, including consideration of all risk issues. Include:
test work, modelling and simulation work performed to validate the alternative flow sheets and address risks
associated with any innovative technology; plus any trade-off studies conducted.
Describe and discuss the preferred flow sheet including the range of metallurgically different ore types, their
processing and economic significance and their potential impacts on production targets and product qualities.
Identify if pilot plants, demonstration plants or variability testing are required and if so why.
4.5 Metallurgical
performance
For the selected processing alternative discuss geometallurgical modelling and testing and the basis for
metallurgical prediction. Test work must be shown to be aligned with the preferred mine design and be able to
validate Probable Ore Reserve ore classification for at least 80% of feed for the first five years operation.
Use range analysis to quantify the uncertainty around key processing value drivers and show the impact on
project value.
Prepare mass, energy and water balances for the process alternatives, highlighting assumptions and areas of
uncertainty.
Compare the process facilities and physical plant required for the different process alternatives.
Define to a sufficient level of detail to enable selection of the preferred configuration with maximum value and
acceptable risk profile. This does not require all options to be fully engineered in order to separate and prioritise
them.
Discuss areas of risk and uncertainty for more detailed evaluation in the definition phase.
Describe and document the facilities scope for the preferred investment alternative.
At the end of the selection phase the major areas of the processing scope must be clearly understood, have key
uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate.
Prepare an Engineering Management Plan for the engineering work required during the definition phase.
What
Evaluate the major location alternatives for the investment opportunity and identify the preferred locations for the
plant, infrastructure and residue disposal sites (for example, tailings dams).
Detail the significant parameters and factors influencing the choice of locations (for example, environmental
constraints, topographical, seismological and climatic site conditions, supply and transport considerations and
access to all major utilities like power and water).
Carry out sufficient geotechnical and topographical surveys to ensure that the preferred locations are valid and
that there is a low probability of a material change after the end of the selection phase.
Document preliminary site layouts and general arrangements for the materials handling between the mine and
plant, the processing plant, materials handling and export, infrastructure and waste management facilities.
5.2 Infrastructure
Define the requirements for the supporting infrastructure for the different investment alternatives studied. The
level of definition and investigation must be sufficient to support selection of the preferred investment alternative.
Identify potential locations for the infrastructure required for the different investment alternatives under
consideration.
Identify any key risks or uncertainties to assist the selection of the preferred investment alternative.
Select the preferred supporting infrastructure for the investment and detail the rationale for the selection.
Describe and document the infrastructure scope for the preferred investment alternative.
At the end of the selection phase the major areas of infrastructure scope must be clearly understood, have key
uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate.
Define the transport and logistics requirements for the different investment alternatives.
The level of definition and investigation must be sufficient to enable selection of the preferred investment
alternative. Identify any key risks or uncertainties to assist the selection of the preferred investment alternative.
Select the preferred transport and logistics for the investment and detail the rationale for the selection.
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6.0 Market analysis
Description
6.1 Marketing strategy
What
Prepare the preferred marketing strategy in relation to the product, volume, market share, growth potential, place
and price.
Detail any competition (antitrust) and joint venture issues.
6.2 Pricing
Develop the pricing strategy required for each of the investment alternatives under consideration.
Document the pricing strategy for the selected investment alternative.
Confirm or otherwise that the normal BHP Billiton reference prices are relevant for this investment opportunity.
6.3 Product
specification
Document the product specification (quality standard) required for the selected investment alternative.
Specify the product specification required for each of the investment alternatives under consideration.
Prepare or reference current BHP Billiton world supply and demand forecasts and incorporate an analysis of
short, medium and long term trends, with the basis stated for concluding the forecasts.
Include the key drivers of the demand and supply cycles.
Include an assessment of BHP Billitons expected market share, market impact and a comparison with industry
cost curves.
Include an analysis of the major risks, opportunities or uncertainties that impact these forecasts.
Prepare product shipping, storage and distribution summaries for each investment alternative (where these are
different).
Identify and document the optimum product shipping, storage and distribution system for the preferred
investment alternative.
6.6 Marketing
contracts
7.0
Scope
Description
7.1 Statement of
requirements
Selection Phase Requirements
Document any new contracts or agency agreements required for marketing the product together with any
existing contracts or agency agreements that must be used.
What
Update and finalise the statement of requirements (SoR) for the investment opportunity.
Confirm that the preferred investment alternative satisfies key stakeholder requirements identified in the SoR.
Any requirements where compliance cannot be achieved must be documented in the SoR together with the
measures required to address the outstanding requirement(s), manage stakeholder expectation(s) and minimise
project impact.
Develop the scope for each major investment alternative in sufficient detail to be able to select the preferred
investment alternative.
Describe and document the scope of work (SoW) for the preferred investment alternative.
At the end of the selection phase all major areas of scope must be clearly understood, have key uncertainties
resolved (minimal carry over of selection phase work into definition phase) and meet the level of maturity and
definition requirements of a preliminary (Class 3) cost estimate.
Any areas where this cannot be achieved must be clearly identified in the SoW document together with an
assessment of the resultant exposure. The decision criteria and authorities associated with any outstanding
choices must be fully documented and timed to be unequivocally resolved before the end of the definition
phase.
Configure the preferred investment alternative into the agreed project work breakdown structure (WBS).
The WBS must be capable of further development to ensure an integrated control and reporting standard for the
execution of the project.
8.0 Schedule
Selection Phase
8.1
Description
What
Project master
schedule
Update and maintain the overall project master schedule including the forecast or actual start and finish dates for
the identification phase, selection phase, definition phase and execution phase and ramp up period for the
preferred investment alternative.
A request for approval of significant pre-commitments (>US$50M, 100% basis) in the definition phase requires
development of the project master schedule in more detail at the end of the selection phase in order to confirm
the impact of early funding on the overall schedule.
8.2
Study schedule
Implement, manage and control the selection phase activities and durations in accordance with the approved
study schedule.
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8.0 Schedule
Description
What
Prepare a detailed (Class 2) schedule for the definition phase and include in the forward work plan.
8.3
Execution phase
schedule
Develop outline (Class 4 or Class 5) execution phase schedules for each major investment alternative under
consideration, with a focus on the key schedule drivers, to be able to select the preferred investment alternative.
Develop a preliminary (Class 3) schedule and associated basis of schedule (BoS) for the execution phase of
the preferred investment alternative.
Cost
Description
What
9.1
Overall investment
amount
Update and maintain the overall investment cost estimate (including the forecast or actual cost for identification
phase, selection phase, definition phase and execution phase) for the preferred investment alternative.
9.2
Prepare a detailed (Class 2) cost estimate for the definition phase and include in the forward work plan.
9.3
Execution phase
cost estimate
Implement, manage and control the selection phase costs in accordance with the approved study budget.
Develop outline (Class 4 / Class 5) execution phase cost estimates for each of the major investment
alternatives under consideration, with a focus on key capital cost drivers, in order to be able to select the
preferred investment alternative.
Develop a preliminary (Class 3) cost estimate and associated basis of estimate for the execution phase of the
preferred investment alternative.
The estimate must cover all activities from the start of the execution phase up to project completion. Carry out
a deterministic range analysis of this estimate.
9.4
Operations phase
cost estimate
Develop outline (Class 4 or Class 5) operations cost estimate for each of the major investment alternatives
under consideration, with a focus on the key operations cost drivers, in order to be able to select the preferred
investment alternative.
Develop a preliminary (Class 3) operations cost estimate and associated BoE for the preferred investment
alternative.
Carry out a deterministic range analysis on this estimate.
Description
10.1 Risk register
What
Develop the Risk Register for each major investment alternative in sufficient detail to be able to select the
preferred investment alternative.
Develop a preliminary project Risk Register for the selected investment alternative.
All material risk issues identified in other parts of the study must be rolled up and included in the Risk
Register (for example, HSEC).
If risk is a critical factor in deciding on the preferred investment alternative, develop outline risk control action
plans for each of the major investment alternatives under consideration so that the residual risk rating (RRR)
and maximum foreseeable loss (MFL) can be quantified for each alternative.
Develop a preliminary risk control action plan for the preferred investment alternative.
Confirm the practicality of managing the business and project material risk issues.
Implement, manage and control the Risk Management Plan for the selection phase.
The plan must cover all selection phase material risk issues (for example, sampling, test work and pilot plants).
Prepare a Risk Management Plan for the definition phase.
Selection Phase
Description
11.1 Method for
estimating
expected value
What
Apply one or more valuation methodologies that are appropriate for:
Document any concerns with the application of the valuation methodology that impact the selection of the
preferred investment alternative.
11.2 Valuation model
Complete the investment evaluation using a valuation model structure that is appropriate for:
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11.0 Investment evaluation
Description
What
selecting the preferred investment alternative from the studied investment alternatives;
Document the investment evaluation model(s) and lodge in the Investment Tracking System.
Details on valuation modelling and investment evaluation are available from Group I&VM. The valuation model
must use key assumptions for valuation published by Group I&VM.
11.3 Investment
evaluation
Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into
account net present value, risk, uncertainty and embedded option value.
Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in
the definition phase. This is carried out in a series of steps as follows:
Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing).
Step 2: Select the optimal investment alternative, taking into account net present value (NPV), risk, uncertainty
and embedded option value (opportunity selection).
Step 3: Produce a summary of the investment alternatives considered, the criteria used and the reasoning
behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A).
Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to:
11.4 Value
enhancement
have the main areas of the project scope clearly understood and frozen;
Document and take into consideration the relative impact each investment alternatives future options have on
the selection of the preferred investment alternative (for example, future expansion, future development).
For the preferred investment alternative detail and quantify any key opportunities to enhance value through the
existence of options in the investment that require funding during the definition phase (for example, precommitments).
Document a summary of the investment alternatives considered, the criteria used and the reasoning behind the
decision to select the preferred investment alternative.
Describe the optimised without and optimised with alternatives that demonstrate the incremental value of the
selected investment alternative.
Describe any unique characteristics and the physical scope of the proposed investment.
Describe any key valuation risks, issues or constraints associated with the preferred investment alternative.
What
Develop a preliminary project HSEC Risk Register for the preferred investment alternative.
All material HSEC risks identified in other parts of the study (for example, drilling, air transport or site surveys)
must be rolled up and included in the register.
Commence baseline studies and any necessary investigations and prepare the detailed E&SIA or local
equivalent for the preferred investment alternative. Include socio-economic considerations, local service industry,
community services, work force planning, on and off site accommodation, and recruitment.
The E&SIA must reflect the level of accuracy of the project scope at the time of preparation and contain sufficient
flexibility to accommodate future optimisation of the project as it moves through subsequent investment phases.
Timing of submission of the E&SIA for approval must take into account the critical path for the project.
Implement, manage and control the HSEC Management Plan for the selection phase with the objective of
achieving zero harm during the study.
The plan must cover all material selection phase HSEC risks (for example, site surveys, drilling, sampling and
test work).
Prepare a HSEC Management Plan for the definition phase.
Update the summary of significant decommissioning, closure and rehabilitation issues associated with the
preferred investment alternative.
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What
Prepare a preliminary Stakeholder Management Plan for the preferred investment alternative.
Provide an assessment of the international trade considerations for the investment.
Ensure that the stakeholder groupings include as a minimum:
13.2 Communications
national, provincial and local government: include an authoritative opinion and appraisal of views of
governments and their authorities to the investment, involving the legislative and regulatory environment;
non-government organisations (NGO): include an authoritative assessment on the views and potential
actions of NGOs to the project;
media: include an authoritative assessment on likely impact of local media on the proposed investment;
shareholders: include details of stock exchange/media engagement and communications (releases, Q&As,
briefings and any special requirements).
Develop the preliminary Project Communications Plan including an external relations assessment for the
preferred investment alternative.
Document and discuss any key issues and special or unique requirements.
13.3 Ownership
Review and update the Ownership Register and key issues for the preferred investment alternative, including:
ownership of the resource or reservoir, any rights or royalties and make reference to the sources of
information. Describe the status of any negotiations or agreements for ownership alternatives or rights.
Where possible ownership alternatives or rights must be negotiated and an agreement reached in principle;
ownership of lands or other surface rights required for the preferred investment alternative, any rights and
uses. Where possible current title and a right to purchase or lease must be agreed in principle and recorded
in writing.
Review and update the Legal and Regulatory Approvals Plan for the preferred investment alternative.
As a minimum include details on: sovereign risk, legal risk, ownership risk, project structure/entities and all
material regulatory approvals or other legal actions required for the investment together with the status of any
negotiations or applications.
Provide a plan and schedule for obtaining the necessary approvals.
Implement (as necessary and appropriate) any new or modified legal structure required for the development and
execution of the project.
13.5 Contractual
Define all material contractual arrangements for the preferred investment alternative. Include as a minimum
consideration of: power, water, facilities construction, asset transfers, plant and equipment supply and operations.
Key definition phase support contractor(s) (for example, FEED or ESC/EPCM) must be identified and
developed to the stage of conditional agreements.
Confirm project operator if not BHP Billiton and their capability and suitability (for example, funding capacity,
HSEC performance, previous track record in projects and operations).
Implement the Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated
projects which have JV partner(s). The plan must ensure compliance with the requirements of the JV
agreement(s) and detail how key interface areas (for example, JV approvals) will be successfully managed.
When choosing JV partners, third parties or agents ensure all business conduct and governance considerations
have been incorporated and all counterparty risks (including reputation risks) have been fully assessed.
What
Implement the selection phase Project Resource Plan.
Selection Phase
Develop a detailed Project Resource Plan for the definition phase and an outline Project Resource Plan for the
execution phase for the preferred investment alternative.
Critical elements in the plan include: organisation, additional resource mobilisation, locations, local content,
responsibilities, competencies, team integration and interfaces with key support contractors.
Key project resources in the selection phase must meet minimum competency and experience standards. See
Appendix 1. These must, where possible, be company employees rolled over from a previous project or study as
part of a deliberate program to grow internal project capability.
14.2 Study
procedures
Develop, update, implement and maintain the procedures required for the selection phase study.
Cover all key functional processes required to safely and successfully deliver the selection phase objectives and
include the review and endorsement of support contractor(s) key procedures.
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14.0 Study/Project delivery
Description
14.3 Study Information
Management (IM)
systems
What
Develop and implement the required suite of IM systems for the selection phase.
Cover all key functional IM support required to safely and successfully deliver the selection phase study
objectives and include the review and endorse of support contractor(s) key project IM systems and procedures.
Prepare the IM Management Plan for the definition phase and execution phase.
14.5 Innovation
Revise the details of any innovative technology required for the preferred investment alternative, including an
update of the status of the technology maturity and novelty.
Include an analysis of prior experience with the technology against the intended duty and take into consideration
the intended location.
Prior to selection of an innovative technology establish a definitive view of any intellectual property implications
and ensure that material technology risks are resolved.
Ensure full disclosure of all residual technology risks and detail how they will be reduced to an acceptable level
during the definition phase.
Develop the project execution strategy for each major investment alternative in sufficient detail to be able to
select the preferred investment alternative.
Document the project execution strategy for the preferred investment alternative.
14.7 Program
management
14.8 Study reporting
Major capital projects, where BHP Billiton is the project manager, must be developed via a project hub in the
selection phase. See Appendix 1.
Develop and issue a monthly study progress report to key stakeholders.
Update the Investment Tracking System in accordance with the group investment process.
Develop the definition phase study objectives to meet the requirements of Appendix 4 Section 1.2.
Develop the definition phase Study Work Plan (SWP) and cost estimate to meet the requirements of Appendix 4
Sections 1.0 to 15.0.
A request for approval of significant pre-commitments (>US$50M, 100% basis) in the definition phase
requires bringing forward into the definition phase the development of appropriate activities required to
successfully implement, manage and control the pre-commitments (for example, Contracts and Procurement
Plan, procedures and controls, relevant sections of the Quality Management Plan, project authorities
framework). Include in the definition phase work plan.
What
Onboard (or access) the operations resources required to develop the operations strategy, Operations Plan and
implement the operations input into design.
A detailed Project Operations Resource Plan is not required in the selection phase.
Key operations resources in the selection phase must meet minimum competency and experience standards.
See Appendix 1.
15.2 Operations
strategy
Develop the operations strategy for each major investment alternative in sufficient detail to be able to select the
preferred investment alternative.
Develop the operations strategy for the preferred investment alternative.
The operations strategy defines the operational value drivers, operational philosophy, operational requirements
and key operational issues (for example, fly in fly out versus local workforce, contract versus owner operated),
operations organisational structure and operations management systems.
Use this as a key input into the Operations Plan.
Ensure the requirements of the operations strategy and plan are built into the SoW for the preferred investment
alternative.
Include: operations participation in design reviews for operability, maintainability, reliability, human factor
considerations, hazard identification and mitigation, operations risk management.
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15.0 Transition to operations
Description
What
15.5 Commissioning
15.6 Operations
readiness
15.7 Operations
procedures
15.8 Operations IM
systems
Identify and document the key operations and maintenance Information Management (IM) systems associated
with the preferred investment alternative.
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Appendix 4. Definition phase
1.0 Definition phase study overview
Description
1.1 Business
objective
and
strategic fit
What
Prepare a detailed set of project objectives based on the agreed business objective(s).
Show the selected investment alternative in the context of the resource potential of the province.
Ensure that the project objectives are clearly measurable, cover all required areas (for example, HSEC, cost,
schedule and operability) and will demonstrably meet the business objective(s).
Confirm that there has been no material change to the external or internal business drivers for the investment. If
there has been a change, document the reason(s) and the impact on the expected investment outcomes.
Provide a concise description of the strategic rationale, strategic fit and any required exit strategy for the preferred
investment alternative.
Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.
The definition phase study objectives must be based on the group investment process investment phase
objectives, investment phase activities and the individual needs of the selected investment alternative.
Investment phase objectives:
Define the investment by optimising the selected configuration for life cycle costs (LCC) and net present value
(NPV) and finalising the scope, cost, schedule, commercial terms and statutory and regulatory
approvals/agreements prior to project execution.
include any upside alternatives that may accrue outside the project scope;
Conduct the definition phase study activities in accordance with the approved SWP and budget to meet the
required study objectives and study deliverables.
The SWP and budget must cover all activities in the definition phase up to the forecast approval date for the start
of the execution phase.
Appendix 4 Sections 2.0 to 15.0 detail the specific performance elements that must be considered during the
study.
Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where
compliance cannot be achieved must be documented in the SWP.
Direction on the application of the definition phase study requirements is available from Group PMS.
1.5 Study
deliverables
Complete all planning required for transition to the execution phase including:
ensuring that the execution phase owners project manager and key project team resources are available;
ensuring that key implementation support contract(s), contractor leader(s) and key team members are
available;
development of specific project objectives, project KPIs, Project Execution Plan and cost estimate;
development of key contracts or purchases that are on the early critical path to the stage of firm and
actionable bids (conditional agreements);
understanding of all material risk issues and have appropriate controls in place;
preparation of the zero harm HSEC Management Plan for the execution phase;
ensuring all statutory and third party approvals are in place or available;
If the recommendation from the study is to proceed to the execution phase then the following additional
deliverables are required as part of the group investment process:
Board papers, Board presentation, draft media release and media Q&As;
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1.0 Definition phase study overview
Description
What
contains an executive summary that includes both confirmation of meeting the study objectives and a clear
recommendation to proceed, or not to proceed, to the next phase that is logically supported by the data,
documentation and analysis;
addresses the minimum requirements for each applicable element as required by the SWP;
is version controlled, stored in an approved document management system and accessible to the IPR
team;
separate the BHP Billiton confidential sections or data such that JV partners or other third parties are
restricted from accessing confidential information;
is, together with the investment evaluation, the source of information and data used to complete the
necessary approval documentation.
The index of the study report must follow the same structure as Appendix 4 Sections 2.0 to 15.0 with the addition
of the executive summary as per Section 1.0.
1.7 Timing
The definition phase study objectives, SWP and budget, project execution strategy and key project resources
are:
approved as part of Gate 2 (the advancement from the selection phase to the definition phase);
The definition phase deliverables are completed at the end of the study and approved as part of Gate 3 (the
advancement from the definition phase to the execution phase).
2.0
What
Collect sufficient data to optimise the recoverable resource for the selected option as input to Life of Asset
planning.
The spatial variability of the key resource parameters must be well understood and defined in sufficient detail to
support the mine design and schedule requirements.
2.2 Geology and
mineralisation
description
2.3 Mineral inventory
sufficient resource is in the measured and indicated category to provide local estimation of the ore body
characteristics for final Life of Asset planning;
it supports the definition phase case and in particular the mining and processing methods.
If an independent audit of the database and Mineral Resource was not completed during the selection phase it
must be undertaken in the definition phase unless agreed otherwise with the IPR Leader.
Define and document the risks to the key mineral inventory parameters.
2.4 Geometallurgy,
hydrogeology and
geotechnical
Detail the geometallurgical, hydro-geological and geotechnical environment for the selected investment
alternative.
Identify and discuss all key issues and risks.
Demonstrate the adequacy of the proposed dewatering and de-pressurisation programs, the ground support and
the stability assumptions used.
3.0
Mining
Description
What
Optimise the selected mining strategy and demonstrate how it delivers the maximum value with acceptable risk.
Provide a comprehensive and detailed description of the selected mine plan including mine configuration,
infrastructure and site logistics.
Provide a detailed site description, summarising all key mine aspects.
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3.0
Mining
Description
What
Define any aspects on which the selected optimum mine plans place high reliance.
Show how the risks have been addressed can be managed.
Highlight any residual tenure issues or constraints.
Demonstrate optimisation of the selected mine configuration, infrastructure and site logistics.
Discuss the sensitivity of the investment and mine plans to any processing or market issues.
Provide a comprehensive description of the selected mining operation, including the preferred contracting
strategy.
Mining operation and mining equipment must be optimised and rationalised.
Describe the designed mine production phases and the selected mining sequence including ore blending and ore
and waste stockpiling strategies as appropriate.
Describe the waste characteristics, and the impact of these on mining rates.
Provide the mining schedule in monthly increments for the first two years of production, quarterly for the
subsequent three years and then annually. The ore scheduled for the first two years must all be in the Proved Ore
Reserve classification.
Develop the JORC compliant Ore Reserve statement from the final mine layout and the mineable resource model.
An independent audit of the reserve model and reserve statement must be undertaken prior to a public declaration
of the reserve.
At least 80% of the ore scheduled for mining for the first five years of operation must be in the Proved Ore
Reserve classification.
4.0 Processing
Description
4.1 Processing
strategy
4.2 Feed
characteristics
What
Define the optimised process design and plant configuration for the selected investment alternative.
Provide a full characterisation of the predicted ore and ore blends.
Describe the impact of ore variability on the selected flow sheet and plant performance.
Describe any blending strategy and the link to the selected mine design.
Show how the plant has been optimised taking into consideration feed characteristics and variability.
4.3 Test work
Undertake sufficient test work to understand, optimise and manage operational risks and variability.
Report the sample selection and test work carried out for the optimisation and verification of the selected
metallurgical processing flow sheet.
Characterise any wastes and tailings during test work.
Focus test work on performance and product predictions and variability, and on design criteria determination.
Provide details of the selected flow sheet, the optimisation of the plant design and the selection of major equipment
and infrastructure items.
Provide details of:
Discuss key technology issues and risks relating to the process including scale-up factors required, the costs of
any technology acquisition and the potential for competitive advantage.
4.5 Metallurgical
performance
Describe the geomet model for the selected flow sheet and relevant ranges and uncertainties.
Test work must be shown to be aligned with detailed mine design and validate Proved Ore Reserve ore
classification for the first two years of operation and at least 80% of feed for the first five years.
Present a range analysis for metallurgical performance including product quality variability; metallurgical
production schedule and project ramp up.
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4.0 Processing
Description
What
Show the impact of these on project value.
major plant mass and energy flows and capacities, with variability estimates;
describe the plant operations strategies, including ore blending and stockpiling, product handling and
transportation and plant residues/effluent disposal/water management;
Implement and control engineering resources and activities in accordance with the Engineering Management
Plan.
During definition phase the engineering focus must be on developing the functional requirements for the selected
investment configuration into functional specifications which can then be used as the basis for the subsequent
detailed design in the execution phase. Consideration must be given to doing this in two stages:
Preparation of a basis of design (BoD) for the facilities. The BoD details the design intent, design criteria
and engineering standards, specifications and/or codes that the plant will be engineered and designed to
meet).
Preparation of project technical specifications which provide a detailed description of the necessary project
hardware, together with the projects technical requirements. These normally include performance targets for
the facilities in the operation phase (for example, capacity and availability) and form the starting point for the
detailed design and form the basis for the technical sections of tender documentation (for example, acid
plant or power station).
The level of engineering detail at the end of the definition phase must be sufficient to enable design of key
equipment, limit any material changes in the execution phase and meet the requirements of a detailed (Class 2)
cost estimate.
5.0 Infrastructure, transport and logistics
Description
5.1 Location
What
Ensure that locations proposed for the plant, infrastructure and residue disposal sites (for example, tailings dams)
are fully optimised and that the position, orientation and levels will not materially change during the execution
phase.
Complete all outstanding geotechnical and topographical surveys to provide a high level of assurance as to the
selected locations.
Document final site layouts, general arrangements and sections for the materials handling between the mine and
plant, the processing plant, materials handling and export, infrastructure and waste management facilities.
5.2 Infrastructure
Define and describe the optimised infrastructure requirements for the selected investment alternative. Include:
utilities provision;
communications;
temporary facilities.
Include mining infrastructure in mining design. All other project infrastructure must be covered here.
The infrastructure scope at the end of the definition phase must meet the level of definition required of a detailed
(Class 2) cost estimate.
5.3 Transport and
logistics
Define and describe the optimised transport and logistics including the product and other key commodity transport
requirements (for example, reagents) for the selected investment alternative.
Coverage to include mine to plant, plant, utilities, infrastructure and all transport, shipping, storage and distribution
required up to the point of sale. Include:
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5.0 Infrastructure, transport and logistics
Description
What
stockpiles;
transport infrastructure;
the selected optimum product shipping, storage and distribution system up to the point of sale;
cycle times from the project to customer (for the calculation of working capital);
Document conclusions concerning importation and other duties, including export surcharges, into target markets
together with any potential vulnerability to countervailing or shipping duties.
Include transport requirements post point of sale in market analysis.
6.0 Market analysis
Description
6.1 Marketing
strategy
What
Detail the marketing strategy in relation to product, volume, market share, growth potential, place, price and
promotion to customers. Identify entry and competitive strategies.
Forecast low, mid and high sales, substantiated by demand or supply forecast and competitor analysis.
Assess any competition (antitrust) and joint venture issues and ensure compliance with the relevant Group Level
Documents.
6.2 Pricing
Explain the derivation of any specific price premiums or discounts from the normal reference prices.
Detail the impact on existing pricing in the case where market share increases significantly or there is a significant
change in the competitive environment.
6.3 Product
specification
Prepare or reference current BHP Billiton world supply and demand forecasts and incorporate an analysis of short,
medium and long term trends, with the basis stated for concluding the forecasts.
Include the key drivers of the demand and supply cycles and make an assessment of the factors resulting in
historic highs and lows.
Present realistic low and high cases around the deterministic Mid case supply and demand profiles over time.
Include an assessment of BHP Billitons expected market share. Include an analysis of the major risks,
opportunities or uncertainties that impact these forecasts.
6.5 Shipping, storage
and distribution
Detail:
the selected optimum product shipping, storage and distribution system post point of sale;
Conclusions concerning importation and other duties, including export surcharges, into target markets together
with any potential vulnerability to countervailing or shipping duties.
6.6 Marketing
contracts
7.0
Scope
Description
Definition Phase
Progress all contracts or agency agreements required for marketing the product up to the stage of in-principle
agreements.
7.1 Statement of
requirements
What
Update and maintain the SoR.
Confirm that the project at the end of the definition phase meets all key stakeholder requirements.
All requirements where compliance cannot be achieved must be documented in the SoR together with the
measures required to address the outstanding requirement(s), manage stakeholder expectation(s) and minimise
project impact.
Define and describe the optimised SoW for the project in the execution phase.
This scope must be well-understood, have all material uncertainties resolved (minimal carry over of definition
phase work into execution phase) and meet the level of maturity and definition requirements of a detailed (Class
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7.0
Scope
Description
What
2) cost estimate.
Any areas where this cannot be achieved must be clearly identified in the SoW document together with an
assessment of the resultant exposure.
Update the SoW into the agreed project work breakdown structure (WBS).
The WBS must be capable of being mapped to the relevant work packages, equipment packages and contracts in
line with the final understanding of the Project Execution Plan and implementation strategy.
The mapping must enable the project to have an appropriate integrated monitoring and control mechanism in
place for the execution phase.
Definition Phase
8.0 Schedule
Description
What
Update and maintain the overall project master schedule including the forecast or actual start and finish dates for
the identification phase, selection phase, definition phase, and execution phase and ramp up period.
Implement, manage and control the definition phase activities and durations in accordance with the approved
study schedule.
Develop a detailed (Class 2) schedule and associated BoS for the execution phase.
Carry out a probabilistic range analysis of this schedule.
9.0 Cost
Definition Phase
Description
What
9.1 Overall
investment
amount
Update and maintain the overall investment cost estimate (including the forecast or actual cost for identification
phase, selection phase, definition phase and execution phase) for the selected investment alternative.
Manage and control the definition phase study costs in accordance with the approved study budget.
Develop a detailed (Class 2) cost estimate and associated BoE for the execution phase.
What
Develop, update and maintain the detailed project Risk Register.
The register must cover both business level risks associated with the selected investment alternative and project
specific risks associated with both the definition phase and execution phase.
Review, update, implement and maintain the detailed project risk control action plan consistent with the Risk
Register.
The plan must cover both business level risks associated with the selected investment alternative and project
specific risks associated with both the definition phase and execution phase.
Implement, manage and control the Risk Management Plan for the definition phase.
The plan must cover all definition phase material risk issues (for example, early site works, site surveys, drilling,
and sampling).
Prepare a detailed Risk Management Plan for the execution phase and the transition to the operation phase.
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11.0 Investment evaluation
Description
11.1 Method for
estimating
expected value
What
Apply a valuation methodology that is appropriate for:
Document any concerns with the application of the valuation methodology that impact on the decision to proceed
to execution phase.
11.2 Valuation model
Complete the investment evaluation using a valuation model structure that is:
appropriate for fully characterising the incremental value of the investment opportunity;
Document the investment evaluation model(s) and lodge in the Investment Tracking System.
Details on valuation modelling and investment evaluation are available from Group I&VM. The valuation model
must use key assumptions for valuation published by Group I&VM.
11.3 Investment
evaluation
Complete sufficient identification and evaluation of key value drivers, risk and uncertainties in order to fully
characterise the incremental value of the investment opportunity.
Describe any variance between the selection phase NPV with the definition phase NPV with a NPV waterfall
diagram that presents the variance by key value driver.
11.4 Value
enhancement
Detail and quantify the key opportunities to enhance value through the existence of options (for example, future
expansion, future development, pre-commitments) in the investment.
Discuss any other potential upside that exists for the selected investment that "unlock" future value if conditions
change and articulate the circumstances for such upside to become reality.
11.5 Valuation
summary
Describe the optimised without and optimised with alternatives that demonstrate the incremental value of the
selected investment alternative.
Detail any unique characteristics and physical scope of the selected investment alternative.
Detail all key valuation risks, issues or constraints associated with the selected investment.
Description
What
Review and update both the H&S and the E&C risk assessments.
12.2 Environmental
and Social Impact
Assessment
Finalise the detailed project E&SIA or local equivalent and obtain relevant government approval if this has not
already been completed in the selection phase.
All material HSEC risks identified in other parts of the study (for example, drilling, air transport or site surveys)
must be rolled up and included in the project HSEC Risk Register.
The E&SIA must reflect the level of accuracy of the project scope at the time of preparation and contain sufficient
flexibility to accommodate future optimisation of the project as it moves through the subsequent investment
phases.
Timing of the submission of the E&SIA for approval must take into account the critical path for the project.
Implement, manage and control the HSEC Management Plan for the definition phase with the objective of
achieving zero harm during the study.
Prepare a detailed execution phase HSEC Management Plan for the selected investment alternative. This must
be based on the H&S and E&C risk assessments and include:
The plan must cover all material definition phase risks (including early site works, site surveys, drilling, and
sampling).
Prepare a preliminary Closure and Rehabilitation Plan for the selected investment alternative.
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What
Review, update, implement and maintain the project Stakeholder Management Plan.
Provide an assessment of the international trade considerations for the project.
Ensure that the stakeholder groupings include as a minimum:
13.2 Communications
national, provincial and local government: include an authoritative opinion and appraisal of the views of
governments and their authorities to the proposed project, involving the legislative and regulatory
environment;
NGO: include an authoritative assessment on the views and potential actions of NGOs to the project.
media: include an authoritative assessment on the likely impact of local media on the proposed project;
shareholders: include details of stock exchange/media engagement and communications (releases, Q&As,
briefings and any special requirements).
Review, update, implement and maintain the Project Communications Plan including an external relations
assessment.
Report key issues and special or unique requirements in detail.
The plan must be reviewed by the relevant CSG communications/external affairs focal point prior to advancement
into the execution phase.
13.3 Ownership
Finalise and document all key ownership issues associated with the project in the Ownership Register.
As a minimum include details on: ownership of the resource or reservoir, tenure, ownership of lands for the project,
transfer points for products, rights to market the products, rights to import goods and services and to export the
product to the point of sale, ownership or other rights to use intellectual property and technology necessary for the
project.
13.5 Contractual
Review, implement, update and maintain the project Legal and Regulatory Approvals Plan.
As a minimum include details on: sovereign risk, legal risk, ownership risk, project structure/entities and all material
regulatory approvals or other legal actions required for the project together with the status of any negotiations or
applications.
Establish a framework for the development and approval of the contract documentation required for the project.
All material arrangements required for the project must be developed to the stage of in-principle agreements.
Include consideration of: power, water, engineering, construction, asset transfers, plant and equipment supply and
operations.
Key contracts or purchases on the early critical path of the execution phase must be developed to the stage of
firm and actionable bids or contracts (conditional agreements).
Continue to implement the joint venture interface plan for non BHP Billiton operated projects and BHP Billiton
operated projects which have JV partner(s).
The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas
(for example, JV approvals) will be successfully managed.
When choosing JV partners, third parties or agents ensure all business conduct and governance considerations
have been incorporated and all counterparty risks (including reputation risks) have been fully assessed.
Definition Phase
R
i
t
What
Implement the definition phase Project Resource Plan.
Update and finalise the execution phase Project Resource Plan. Where possible ensure continuity of key project
owners team and implementation contractors resources between the definition phase and execution phase.
Critical elements in the plan include: organisation, mobilisation, locations, local content, responsibilities,
competencies, team integration and interfaces with key support contractors.
Key project resources must meet minimum competency and experience standards (see Appendix 1). These
must, where possible, be company employees rolled over from a previous project or study as part of a deliberate
program to grow internal project capability.
Develop, update, implement and maintain the procedures required for the definition phase.
Cover all key functional processes required to safely and successfully deliver the definition phase objectives and
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14.0 Study/Project delivery
Description
What
include the review and endorsement of support contractor(s) key procedures.
Prepare an index of critical project procedures required for the execution phase and a plan for their development.
Include all key functional processes required to safely and successfully deliver the execution phase objectives.
14.3 Project
Information
Management (IM)
systems
14.4 Value
improvement
Develop and implement the required suite of project IM systems for the definition phase study.
Cover all key functional IM support required to safely and successfully deliver the definition study objectives and
include review and endorsement of support contractor(s) key project IM systems and procedures.
Prepare the IM Management Plan for the execution phase.
Review and update the project Value Improvement Plan.
Implement the relevant project value improvement practices (VIPs) required during the definition phase.
The plan must include the lessons learned VIP which involves the review, document and implement all relevant
learning's from post investment reviews, Project Close-Out Reports and other sources.
14.5 Innovation
If an innovative technology has been selected for the preferred investment alternative, ensure that this is clearly
highlighted and described.
Ensure full disclosure of all residual technology risks and their potential impact on the execution phase.
Show how any test work supports the view of residual technology risk.
14.7 Program
management
Major capital projects, where BHP Billiton is the project manager, must be developed via a project hub in the
definition phase. See Appendix 1.
Finalise the project objectives and associated project KPIs for the execution phase in accordance with the
requirements of Appendix 5 Section 1.2.
Update the Investment Tracking System in accordance with the group investment process.
Develop optimise and finalise the execution phase Project Execution Plan and cost estimate to meet the
requirements of Appendix 5 Sections 1.0 to 4.0. See Appendix 1.
The Project Execution Plan describes how the full SoW of the project must be safely executed to meet the
agreed project objectives and project KPIs and includes details of the proposed contracting strategy.
Each section of the Project Execution Plan details how the project will implement, manage and control the
respective resources, activities, processes, systems and tools to deliver the required SoW and deliverables.
Depending on size and complexity of the project, this information can be included directly in the Project Execution
Plan or in separate management plans that are then referenced and summarised in the Project Execution Plan.
The structure of the Project Execution Plan must follow the headings and sequence as Appendix 5 Section 2.0.
This section also contains details on the minimum content requirements for the Project Execution Plan.
15.0 Transition to operations
Description
What
Continue to onboard (or access) the operations resources required to develop the operations strategy, Operations
Plan and implement the operations input into design.
Develop a detailed Project Operations Resource Plan for the execution phase.
The plan must cover all operations resourcing from the start of the execution phase through to project
completion and handover to operations. Include: organisation, mobilisation, locations, local content,
responsibilities, competencies, team integration, interfaces and reporting relationship with the project and
interfaces with key operation phase support contractors.
The Project Operations Resource Plan normally transitions directly into the actual operation phase resourcing,
details of which are included in the main Operations Plan.
Key operations resources in the definition phase must meet minimum competency and experience standards.
See Appendix 1.
15.2 Operations
strategy
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15.0 Transition to operations
Description
15.3 Operations plan
What
Develop the Operations Plan required for start-up and subsequent safe and reliable commercial operation.
The Operations Plan describes how the Asset is operated and maintained throughout its life.
Ensure that the requirements of the detailed operations strategy and plan are built into the SoW for the selected
investment alternative.
Include: operations participation in design for operability, maintainability, reliability, human factor considerations,
hazard identification and mitigation, operations risk management, pre-commissioning, commissioning and start up
philosophy.
15.5 Commissioning
15.6 Operations
readiness
15.7 Operations
procedures
Identify and list the key operations and maintenance procedures required during commissioning, start up and
steady state operations.
Cover all key functional processes required to safely and successfully operate the Asset. Include this in the
Operational Readiness and Handover Plan.
15.8 Operations IM
systems
Detail the key operations and maintenance IM systems required during commissioning, start up phase and steady
state operations and include this in the Operational Readiness and Handover Plan.
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Appendix 5. Execution phase
1.0 Execution phase overview
Description
What
1.1 Business
objective(s)
and
strategic fit
The project objectives and associated project KPIs for the execution phase must be based on the group
investment process investment phase objectives, investment phase activities and the individual needs of the
selected investment alternative.
Investment phase objectives:
Deliver the investment to meet the agreed project objectives, scope of work (SoW) and approved execution key
performance indicators (KPIs).
execute the project in accordance with the approved Project Execution Plan and budget to meet the
specific project objectives, agreed project scope and project KPIs;
Execute the project in accordance with the approved Project Execution Plan and budget to meet the specific
project objectives, approved SoW and project KPIs.
The Project Execution Plan and budget must cover all activities in the execution phase up to the forecast date
for project completion.
Appendix 5 Sections 2.0, 3.0 and 4.0 detail the specific performance elements that must be considered during the
execution phase.
Ensure that the project addresses these elements. Any elements considered not applicable, not relevant or where
compliance cannot be achieved must be documented in the Project Execution Plan.
Direction on the application of the execution phase requirements is available from Group PMS.
1.4 Transition to
operations
1.6 Timing
The execution phase project objectives, KPIs, Project Execution Plan, budget and key project resources are:
approved as part of Gate 3 (the advancement from the definition phase to the execution phase);
The Commissioning Plan must be finalised at least three months before construction completion/energisation of
the first system.
The Operations Readiness and Handover Plan must be finalised at least one month prior to start of the handover
activities.
The Project Close-Out Report (PCOR) and the close-out evaluation report by IPA are required within three
months of project completion.
The Post Investment Review (PIR) report is required within eighteen months of advancement into the operation
phase in accordance with the group investment process.
2.0 Project delivery (Project Execution Plan)
Description
What
2.1 Objectives
Document the business objectives, SoR, project objectives and project KPIs in the Project Execution Plan.
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2.0 Project delivery (Project Execution Plan)
Description
2.3 Project execution
What
Implement the project in accordance with the approved Project Execution Plan and contracting strategy.
The Project Execution Plan must include details of how the project will ensure the progressive integration of
critical activities in line with the requirements of ANSI-99-001-2008 (PMBOK) chapter 4.0 Project Integration
Management.
Update and maintain the Project Execution Plan as a live document during the execution phase.
Changes to the scope, budget or plan must be managed via a formal project change control process.
Major capital projects, where BHP Billiton is project manager must be executed via a project hub
(see Appendix 1).
2.4 Project HR
management
Implement, update and maintain the execution phase Project Resource Plan.
The plan must ensure that the right people in the right numbers at the right time with the appropriate responsibility
are in place to successfully deliver the required project outcomes.
In the Project Execution Plan include as a minimum the organisation chart for the project (owners team and
implementation contractors team), responsibility matrix or similar showing interrelationship between functions for
the key project activities; locations of work for respective teams, the requirement for early mobilisation for owners
team and implementation contractors teams and details of how the project will ensure that the resources will
work effectively as a high performance team.
Key project resources must meet minimum competency and experience standards. See Appendix 1.
These must, where possible, be company employees rolled over from a previous project as part of a deliberate
program to grow internal project capability.
2.5 HSEC
management
Update and maintain the execution phase HSEC Risk Register and risk control action plans as key inputs into
the HSEC Management Plan.
Implement the project execution phase HSEC Management Plan including detailed safety plans for construction,
commissioning and the transition between project and operations.
The plan must define how the project will ensure that the health, safety, environmental and community activities on
the project are compliant with the requirements of the HSEC Group Level Documents and how the project
intends to achieve zero harm in these respective areas.
Implement the requirements of the project E&SIA.
Provide a high level summary of the HSEC Management Plan in the Project Execution Plan and reference the
detailed plan.
2.6 Risk management
Implement, manage and control the Risk Management Plan for the execution phase including the associated
Risk Register and risk control action plans.
The plan must define how the project intends to manage to an acceptable level (ALARP) all execution phase
material risk issues, including construction and commissioning. It must also identify the main activities necessary
to prepare for the management of risk in the operation phase.
Provide a high-level summary of the projects material risk issues and the project execution phase Risk
Management Plan in the Project Execution Plan and reference the detailed plan.
2.7 Value
improvement
2.8 Engineering
management
Implement, manage and control engineering resources and activities in accordance with the Engineering
Management Plan.
The Engineering Management Plan must define how the project will manage and control the engineering
resources, activities, processes, systems and tools to produce required engineering deliverables (for example,
approved for construction packages) in accordance with the approved scope of work, BoD and project
technical specifications.
The plan must also include provision for follow on engineering support to the construction and commissioning
teams and completion of as-built drawings for handover to operations.
Provide a high-level summary of the Engineering Management Plan in the Project Execution Plan and reference
the detailed plan.
Implement, manage and control the contracts and procurement resources and activities in accordance with the
Contracts and Procurement Plan.
The plan must define how the project intends to develop, implement, manage and control the contracts and
procurement activities needed to deliver the required services and materials in accordance with the approved
SoW, budget and schedule.
Implement all material arrangements and execute all required contract documentation for the project in
accordance with the agreed project authorities.
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2.0 Project delivery (Project Execution Plan)
Description
What
Interface with the Marketing group to arrange execution of all new/revised contracts/agency agreements required
for marketing the product.
Provide a high-level summary of the Contracts and Procurement Plan in the Project Execution Plan. Include
details of how the plan has been integrated with other key project activities (engineering and construction) and how
critical path activities (for example, key contract awards and vendor data) meet the required project timeline.
2.10 Construction
management
Implement, manage and control the construction resources and activities in accordance with the Construction
Management Plan.
The plan must define how the project will build the required plant and facilities in accordance with the project
approved for construction (AFC) package(s) and approved SoW.
The AFC package(s) must contain all the information required for construction (for example, detailed equipment
specifications, P&IDs, 2D schematics, 3D model, construction drawings, procedures for equipment installation,
vendor drawings and spares lists).
Provide in the Project Execution Plan a high-level summary how the project plans to safely manage the
construction activities across all project sites in accordance with the approved SoW and reference the detailed
Construction Management Plan.
2.11 Budget
management and
control
Implement, manage and control the execution phase costs in accordance with the approved budget.
The budget must cover all costs required by the project from the start of the execution phase up to project
completion.
Include in the Project Execution Plan a summary of the approved budget including the provisions for identified
risks, escalation and contingency, and a clear statement of any exclusions.
Reference the detailed execution phase cost estimate and associated BoE.
Consideration must be given to the benefits of developing a definitive (Class 1) execution phase cost estimate to
improve the accuracy of the forecast final cost.
Implement, manage and control the execution phase activities and durations in accordance with the approved
baseline schedule. The execution schedule must cover all activities from the start of the execution phase up to
project completion.
Provide in the Project Execution Plan an overview of the project schedule including key target dates and interim
milestones, the critical path(s), known risks and contingency.
Reference the detailed execution phase schedule and BoS.
Include the as-built execution phase schedule in the PCOR.
Lodge the native format file(s) with Project Management Services for inclusion in the company project schedule
benchmarking database.
Project control systems: Implement the project control systems required to manage and control the scope, cost
and schedule. These must be proven and capable of providing baseline information, current status, forecast to
complete and variance analysis. They can be owner or implementation contractor systems. If the latter, ensure
interface compatibility with owner management systems (for example, GSAP, 1SAP).
Project authorities: Implement and maintain project specific authorities in compliance with company authorities.
Project reporting: Issue a monthly project progress report to key stakeholders. Update the Investment Tracking
System in accordance with the group investment process.
Project procedures: Finalise, implement and maintain the project procedures required for the execution phase.
These must cover all key functional processes required to safely and successfully deliver the project objectives and
include the review and endorsement of implementation contractor(s) key procedures.
Project administration: Implement and manage the required project administration including office locations,
facilities and support, administration policies, correspondence protocols, record keeping, travel, financial control
and reporting, payments, accounting, treasury functions and asset management.
Include in the Project Execution Plan a high-level summary of the project services processes and refer to any
specific plans for project control and reporting.
2.14 Quality
management
Implement, manage and control the in-house and third party quality resources and activities in accordance with the
Quality Management Plan.
The plan must define how the project will assure quality (conformance to specification) for all items of material and
relevant services (for example, welding).
Provide in the Project Execution Plan a high-level summary of the project quality management activities required
in accordance with the scope of work and reference the detailed Quality Management Plan.
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2.0 Project delivery (Project Execution Plan)
Description
2.15 Stakeholder
management
What
Implement the project Stakeholder Management and Communications Plan(s). Any material changes to the plan(s)
must be reviewed by the relevant CSG communications/external affairs focal point.
Update and maintain the project Ownership Register and associated documentation.
Update and maintain the project Legal and Regulatory Approvals Register and plan.
These plans must define how the project will ensure that the project activities are compliant with all statutory and
regulatory requirements and how the project will:
meet the requirements of the Market Disclosure and Public Affairs, Investor Relations and Brand Group
Level Documents;
Include an overview in the Project Execution Plan of the interfaces and relationships with: third-parties, the
procedure for external stakeholder communications (such as the contractors, local community, local government,
central government, regulatory authorities, non-government organisations, the media and visitors), the procedure
for internal stakeholder communication including corporate reporting, reviews, operations, project team members
and other employees. Reference the relevant detailed plans.
Continue to implement the Joint Venture Interface Plan and manage the joint venture partners. This can be a
separate document or form part of the main Stakeholder Management Plan.
Ensure that any use of third parties or agents complies with all business conduct and governance considerations
and that all counterparty risks (including reputation risks) are carefully managed.
2.16 Project IM
systems
Implement, manage and control the execution phase IM program in accordance with the IM Management Plan.
The plan must define how the project will manage all key functional IM requirements (hardware, software and
support) required to safely and successfully deliver the project objectives, including review/endorsement of
implementation contractor(s) project IM systems/procedures and the handover to operations.
Provide an overview in the Project Execution Plan of the required suite of project IM systems for the execution
phase.
Reference the detailed project IM Management Plan.
2.17 Operational
readiness and
handover
2.18 Commissioning
management
Implement, manage and control the commissioning resources and activities in accordance with the Commissioning
Management Plan.
The plan must define how the project will ensure that all plant and facilities function as per their design
specification before handover to operations.
Provide in the Project Execution Plan a high-level summary of how the project plans to manage and execute the
commissioning of all project facilities in accordance with the scope of work and reference the detailed
Commissioning Management Plan.
Develop and implement the plan for regular reviews and audits of the project during the execution phase.
The plan must demonstrate how the project intends to ensure compliance with company Group Level Documents
and provide an independent view of project progress against approved targets through the use of execution
phase reviews (EPRs).
Provide in the Project Execution Plan a copy of the project review and audit plan and detail how the project will
ensure it captures, actions and closes out corrective actions identified from the reviews and audits.
Transition to operations
Description
3.1 Operations
strategy
What
Finalise and handover to operations the agreed operations strategy.
The operations strategy defines the operational value drivers, operational philosophy, operational requirements
and key operational issues (for example, fly in fly out versus local workforce, contract versus owner operated),
operations organisational structure and operations management systems.
Use this as a key input into the Operations Plan.
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3.0
Transition to operations
Description
3.3 Operational
readiness
What
Develop the detailed Operational Readiness and Handover Plan.
The Operational Readiness and Handover Plan details how the project plans to safely and successfully transition
to the operation phase and includes both the preparation work required and the actual handover of all project
facilities and asset(s). It includes the relevant requirements from the operations strategy and Operations Plan.
Prepare for, implement and complete the transition to operations in accordance with the agreed Operations
Readiness and Handover Plan including:
3.4 Operations
resources
owners Asset leader and key operations and maintenance resources in place;
Operations Management Plan in place, including permit to work, zero harm HSEC and Risk Management
Plans;
clear process is in place and milestones agreed for project handover by package, system and asset(s),
including agreement on handover of any outstanding work (punch list items) and associated budget;
clear responsibilities and accountabilities during handover period (for example, site statutory safety manager);
handover of all legal and statutory requirements, asset(s), insurance, documentation and as build drawings,
key contracts, spares and consumables, systems, software and data;
Implement, update and maintain the execution phase Project Operations Resource Plan.
The plan must ensure that the right operations, maintenance and support resources in the right numbers at the
right time with the appropriate responsibility are in place to meet the operational readiness and handover
requirements. It normally transitions directly into the actual operation phase resourcing, details of which are
included in the main Operations Plan.
Include in the Project Execution Plan as a minimum the operations team organisation, a mobilisation chart
demonstrating that the operations resources will be available in line with the operational readiness and
commissioning activities in the project schedule and an overview of the required operations and maintenance
training and competency programmes.
The overall training and competency objective for the operations staff and support contractors is to be able to
safely and efficiently operate and maintain the new facilities, equipment and asset(s). Typically key operations
supervision must meet minimum experience and performance standards and the core operations and
maintenance workforce must meet minimum experience and appropriate trade competency standards.
Key operations resources in the execution phase must meet minimum competency and experience standards.
See Appendix 1.
3.5 Operations
procedures
Develop, implement and handover to operations the complete suite of operations and maintenance procedures
and manuals required during commissioning, start up and steady state operations.
3.6 Operations IM
systems
Develop, implement and handover to operations the key operations and maintenance IM systems required during
commissioning, start up phase and steady state operations.
Update and then handover to operations the detailed (Class 2) operations cost estimate and associated BoE.
4.0
Update the preliminary Closure and Rehabilitation Plan with as-built information and handover to operations.
What
The following activities and deliverables must be completed at the end of the project:
Implement, manage and control the project close out activities in accordance with the plan.
a clear definition of (and milestone for) project completion, including confirmation of completion of the
approved SoW and compliance with finance reporting requirements (for example, transition from capital to
operating expenditure);
documentation and close out of all project activities including all key purchase orders, contracts and
commitments;
clean-up of site including removal of temporary facilities and the disposal of surplus material;
demobilisation of implementation contractor and all other project consultants and contractors;
succession planning for project leader, key project resources and project team members;
completion of a PCOR;
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