Business challenge
Our client needed to remove redundancy, expand capacity and ensure an optimal contracting strategy to provide the lowest capital option.
A major iron ore producer was expanding production at a brownfields operation from 10 to 20 mtpa.
They were concerned about the high capital cost of the expansion project, and also interested in determining the most effective contracting strategy (in a buyer's market) while still appropriately managing risk.
$0m
reduction in capital costs from $800m to $740m
$0m
additional potential capital cost savings available by adopting a minimum technical solution
How we helped
- Conduct a value improvement review of the entire project and reduce scope to achieve only core requirements
- Evaluate the current contracting strategy and market conditions to recommend an optimal contract strategy
- Identify opportunities to further reduce cost through the exploration of gain sharing and penalty assessment
- Focus on contract terms to drive project performance management and ensure transparency regardless of contractual approach