Accenture recently released research illustrating that mining and metals companies could "significantly reduce the costs of large capital projects" by improving their risk analysis and management methods. With billions at stake, and delays and budget overruns the norm, the need for better systematic accounting for risk has never been greater. Accenture’s research was based on 31 interviews with mining and metals executives around the world."
Palisade sees the same trend, with more and more companies in the minerals sector demanding sophisticated, yet easy-to-use quantitative risk solutions like @RISK. The topic spans other sectors involving mega projects as well, such as oil and gas, infrastructure (see Case Study section of this newsletter), aerospace, and defense. The scale and complexity of multi-billion-dollar projects means that risk cannot be ignored. Just a few companies in the mining sector who have publicly given recent talks or workshops on the topic at Palisade events include Collahuasi in Chile, Promon Engenharia in Brazil, Anglo American Kumba Iron Ore in South Africa, and Vale in Brazil.
Fortunately, @RISK’s Monte Carlo simulation is a great tool for understanding the various possible outcomes in any megaproject, and their probabilities of occurrence. With this information, project leaders can better understand the chances of going over budget or of missing deadlines, and what to do about it. @RISK identifies not only what the risks are, but what is driving them, enabling managers to set contingencies and make smarter decisions.