004 Pwc Value Based Planning v31

8/19/2019 004 Pwc Value Based Planning v31

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Expositors:

Jim Moraga & Dean Braunsteiner

Session x:

Value Based Planning


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2015 Americas' School of Mines

1.

Statistics

2.

Planning in the Mining

Sector

3.

Value Based Planning

Agenda

Slide 2MayPwC Mining Conference

4.

Driving Value inOperations

5.

Putting it all together


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Statistics

PwC Mining Conference

1.


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PwC Perspective

We often observe that management views the budgeting process as acontrol mechanism to achieve a target and culturally start to think within its boundaries.

This mindset keeps an organization focused inwards and limits the

value it can provide to manage a business which naturally is externallyfocused.

MayPwC Mining ConferenceSlide 4


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Business planning

Financial planning continues to be of limited value and mired with conservatism.

Extended financial planning and forecasting cycle times delay decision-making;

Financial drivers and metrics don’t align with strategies;

The Finance function’s ownership of planning projections adds frustration with manyplanning and forecasting functions;

Dissatisfaction with financial planning echoes across the organization – from executives

who can’t trust the accuracy, functions which feel lack of ownership due to forcedtop down budgets, front line managers who question the amount of time spent on budget analysis.


It imperative for businesses to reassess and transform the value of the overall financial planning process.


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A majority of businesses surveyed agree that the planning process doesn’t align with strategies…


2% Agree that their budgeting model is “well aligned” with business strategy

36%Feel their budgeting model is “unacceptable” (5%) or“poorly” (31%) aligned with business strategy

38% Believe their budgeting model is“adequately” aligned with business strategy

Source: APQC – Dynamic Planning, Forecasting, and Performance Management: Survey Summary Report - November 2014


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…and numerous budget iteration and extendedcycle times

Iterations based on solely on FP&A cycles and disregards function sub-cycles which can add multiples versions to planning development

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Actual examples can be staggering

Highlights from PwC Business Planning Assessment for a Fortune 150 client:

Dedicated hours: 251,000

Cost: $16,000,000

Cycle Time (Days): 203

Budget obsolete afterJanuary!


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Planning andthe MiningSector

PwC Mining Conference

2.


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Mining Industry Trends

Industry observers arequestioning if …

! Costs can be controlled.

! Capital discipline will occur.

! Management can deliver on

expectations.

! Returns on capital employed willimprove (and when).

Mining companies are severelyrestricting their activities toconserve cash, by:

! Slowing down / stoppingdevelopment projects, combined with

increase in hurdle rates

! Significantly reducing capitalexpenditures

! Undertaking projects to drive loweroperating costs

Decliningprofitability as low yield ore bodies

becomeuneconomical

The market haslost confidence

in miningmanagement todeliver results

Falling prices haveresulted in revenue

declines and operatingcash flow decreases

Shareholders

areincreasinglyfocused on

results

An effective, value-based planning process can help mines operate more effectively and addressstakeholder needs


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Our Mining Clients are increasingly telling us thatthey have a need for:

Forecasts that are realistic reflecting actual, achievable operational performance

Improved linkage and alignment between Operations and Finance in the planningprocess

Enhanced support for decision making in Operations

Alignment across the organization from mine site through to the Corporate office

Enhanced partnership between Operations and Finance to drive more effectivedecision-making

Improvements to the Budgeting / Forecasting process to establish linkages toperformance tools / Life of Mine (LoM) models

Advanced cost management in the face of escalating input and uncertain prices

Improved understanding of key cost drivers / behaviours.

Feedback mechanism to identify “course corrections” when results differ from plan /

forecast.

12


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Financial planning depends from the inputs fromthe mine plan…

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Update Geology and Drill hole Data

Update Mid-Year Resource Models

Mine Plan: Optimization, Design andProduction Scheduling

Site wide Metal Plan

Mine Plan and Metal Plan Outputs to LOM Cost Models•

Mined Tonnage (Ore, Waste)•

Stockpile Tonnage

•

Process Tonnage, Grade, Ounces, Metallurgy

•

Equipment Requirements•

Capital Requirement

Site Life of Mine Plan Creation

LOM Review and Fine-Tuning

LOM Consolidation andFinalization

Preparation Formulation Approval Implementation

Mid-YearReserves and

Resources

Typical Timeline for Strategic Planning and LOM


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… and data comes from multiple, fragmentedsystems

Source: MISOM consulting Services, Mining data flow chart, http://www.misom.com/


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Key Opportunities for Mining CFOs

1. Improve / enhance Finance’s role in performance management to increase the quality,consistency, accuracy, completeness, relevance and speed of management information.

2. Improve the Budgeting / Forecasting process to bring insight to the budgeting / forecastingdiscussion, establish linkage to performance tools / Life of Mine (LoM) models, operationalscheduling and reporting in support of improved scenario development and analysis.

3.

Improve the process / tools used to evaluate investment opportunities, includingimproved use of scenario analysis and modelling.

4. Improve the partnership between Finance and Operations in order to drive faster/moreeffective decision making to support improved shareholder value.

5. Support an optimized close & consolidation process by finding and capturingimprovement opportunities for process / flow of financial & operational information from minesites to the corporate office.

6. Build a high-performing Finance team, at the mine sites, regional offices and corporateoffice; in a competitive global job market. Effectively manage an increasingly global Financefunction, with clearly aligned responsibilities at all levels.


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Key Opportunities for Mining CFOs1. Increasing quality, consistency, accuracy, completeness, relevance and speed of

management information.Getting information that is accurate and timely is a common issue and a priority for CFOs in Mining. Information isclustered in various systems and even from mine to mine these systems can be different. Getting the right informationto flow without spending millions of dollars on ineffective systems can be a challenge.

Strategize•

Strategic Drivers

•

Objective and goals

•

Scenario Planning

• Metrics/Dimensions

Database Actual & Plan Data Relational and Multi-Dimensional Structured and Unstructured

Plan•

Budgets

•

Forecasts

•

Models

• Approvals

Consolidate•

Consolidation

•

Inter-company

•

Allocations

• Currency

Analyze•

Management

•

Statutory

•

Compliance

• Alerts•

Corrective Triggers

D

a t a F l o w

Information

Delivery

Management Applications

Database

SourceData

C o n t r o l s

C o m m o n L a n

g u a g e a n d D e f i n i t i o n s

C o n s

i s t e n t P r o c e s s

Report Tools, Query Tools, Portals, Scorecards, Dashboards and Visualization

Data Transformation

ETLTechnologies

Mine Site 1 Mine Site 2 Mine Site 3 Mine Site 4

SafetyIncident

Management

AssetManagement

System

SafetyIncident

Management

AssetManagement

System

SafetyIncident

Management

AssetManagement

System

SafetyIncident

Management

AssetManagement

System

Mining Information Management Model Common Issues

•

Legacy / manualsystems at the mine

site that don’t

integrate to corporate

databases•

Lack of integration

between operational

and financial systems

•

Lack of necessary

investments to

maintain / enhancetechnical

infrastructure

•

Poor data quality /

lack of consistentdefinitions acrosssites

• Duplication of effort

and numerous ad-hoc

requestsGeologicalDatabase

MinePlanning &Scheduling

GeologicalDatabase


GeologicalDatabase


GeologicalDatabase


Finance Finance Finance Finance


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Key Opportunities for Mining CFOs2. Driving improvements in budgeting and forecasting by linking Operational and

Financial planning

Process needs to be integrated toallow changes in operational schedules

and plans to be updated in financialforecasts. This is where thecurrent process breaks down inmost mining organizations.

Example: As an outcome of performing a variance analysis, Finance has identified thatdiesel fuel expenditure is tracking over

budget. If an integrated process is in place, itcan be easily determined whether this is a

“one-off” occurrence, or a longer-term issuethat will impact future profitability. If thelater, higher fuel usage should be reflected in

the updated forecast, on both a site and

consolidated basis.

In most mining companies the financial budgets and forecasts prepared at corporate are disconnected from the LoM models and Operational plans and schedules. This creates the potential for inaccurate forecasts and marketguidance that does not reflect operational realities.


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Key Opportunities for Mining CFOs

Value driver models provide miningcompanies with transparency and

predictability of their cost performance,

allowing:1. Improved understanding of the

operational levers that drive financialperformance

2. Ability to provide integrated reporting on

operational drivers and financial

outcomes

3.

Identification and prioritization of costreduction opportunities and scenario /

sensitivity analysis on results

4. Implementation of an accountability

framework to drive financial

performance

4. Working as a resource and partner with operations to drive productivity, efficiency

and cost effectiveness. Cost analysis in most mining organizations is focused on a backward-facing view of what happened, as opposed toidentifying what actions can be taken to drive sustainable reductions in cost.


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Value basedplanning andforecasting

MayPwC Mining Conference Slide 19

3.


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Budgeting designed for a past age

Old World Paradigm

• Plan, make sell

•

Predictable• Domestic centric

• Bricks and mortar value

•

Central control

New World Paradigm

• Customer centric

•

Rapid change• Global

• Intangible value

•

Empowered and Challenging

Traditional budgeting concepts and tools were designed for a different world:

20

Doubts are cast on the value of traditional budgeting:

• ‘The bane of Corporate America’

• ‘A tool of Repression’

• ‘An unnecessary evil’


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What is Value Based Planning?

Value Based Planningintegrates strategic

and operational plans into a dynamic

forward looking

framework that enablesmanagers to set

priorities and manageperformance against

stakeholder value goals


TRADITIONAL

• Cost

• Complex

• Rigid

•

Unresponsive•

Inefficient

• Controlling

VALUE BASED

• Value

• Structured

• Dynamic

•

Adaptive•

Leveraged

• Motivating


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VBP is based on emerging best practices

22

From To

Setting goals

Performancemeasurement

Reporting &control

Forecasting

Systems

Financial plan basedBalance scorecards linkedto delivering strategy and

competitive advantage

Finance variances against

fixed budget

Trends in key result areas.Individual and team

performance

Detailed monthly, laggingindicators

Leading indicators as wellas current performance

Annualised, limited

reforecast

Driver based, predictive

rolling forecast

Spreadsheets, commandand control

Integrated systems,Collaborative information


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Moving from traditional to value based budgeting

23

Annual LinearProcess

Continual AdaptiveProcess

Gaming andNegotiation

Goals

Assumptions

AnnualBudget

PerformanceTargets

ActualPerformance

Comparison

Strategy

ExternalDrivers

Internalbusiness

model

BusinessPlanPerformance

Scorecard

MeasurePerformance

Actions

DynamicBusinessPlanning


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VBP Cycle

24

BusinessSimulation

Forecasts

Rewards

Learningand

Adaption

Strategy

External Drivers

Internalbusiness model

Business PlanPerformance

Scorecard

MeasurePerformance

Actions

DynamicBusinessPlanning


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The Technology Dimension

Leveraging Software Tools

An integrated VBP application thatsupports a closed-loop system will

provide the advantages of a singlesource of information for budgets,

forecasts, and actual results.

Using Web technology will enablereach to remote users easily and help

keep users up-to-date. New users can be added easily; changes can be

made to, and take immediate effect within, a central database.

PwC Mining Conference Slide 25

Collaborative

A n t i c i p a

t o r y

Low High

Fixed

Dynamic


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Functional dimension

•

Provides complete flexibility in budget layout and format

•

Allows for effective operating, capital budgeting and balance sheet budgeting

•

Caters for any type of cost modelling for both fixed and variablecosts

•

Handles any type of re-allocations between cost centres, projects,companies, etc.

•

Enables easy implementation of strategic rolling forecasts, with

incorporation of actual monthly and year to date information

26


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Functional dimension cont. …

•

Addresses both ‘top down’ and ‘bottom up’ planning approaches andprovides synchronicity between them

•

Incorporates full process control and e-mail alerts to obtainmaximum efficiencies

•

Allows for user-definable assumptions or budget drivers that can bemade visible to users and which can be used to drive scenariomanagement

• Facilitates automated interfacing with the organisation’s financial

and subsidiary systems for historical and fiscal year to dateinformation

•

Allows multiple versioning at both organisational and local userlevels

27


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Driving valuein operations


4.


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Closing the Value Gap in Mining Putting strategy into action to drive value

Most mining companies today are successful in capturing and accessing data, transformingdata into business information, and making data available to users, however, they are not assuccessful in directly linking information to action, and its corresponding value

Common challenges in mining include:

Slide 29

•

Strategy is not clear or disseminated• Planning is not performance driven•

Lack of integration between strategy,

risk, budget, business and LOM

Value

•

Lack of alignment of people,processes and tools

•

Cultural barriers

•

Organizational biases

•

Data quality challenges• Too many KPIs or irrelevant measures•

Lagging indicators and inability to forecast accurately

•

Measures not linked to decision making sphere/cascaded strategic outcome


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Management Operating System Framework Linking strategy to execution to drive action

Slide 30

•

Integrated Planning – Linking LOMplanning & strategic planning to the business planning cycle and integrating

actual performance back into the planningcycle

• Performance indicators – Developingmeasures linked to strategy and valuecreation. Cascading measures through the

organisation to support decision making atall levels

•

Report and Review – Consistent and balanced reporting across the full spectrumof strategic objectives with focus on

forward view and bias on action

•

Reward and Compensation –Performanceculture needs to be reinforced through

performance measurement, recognition,and accountability to drive the desired

behaviours

Strategy

IntegratedPlanning

Report&

Review

Reward &Compensation

PerformanceIndicators

In Scope Out of Scope

Vision and businessstrategy

Leverage existing technology and provide for reporting ofhistorical and forward-looking metrics

Performance Appraisal

Goal SettingRevisions

Basis for plan and budgets

Key aspects of MOS


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Benefits of a Management Operating System

Slide 31

Enhanced business insight and decision support

•

Assist in evaluating strategic and tactical alternatives,and sensitivity to change in underlying assumptions

•

“Early Warning System” to enable earlier identificationof emerging business issues and faster response torapidly changing events

•

Enhanced understanding of the complex inter-relationships between different parts of the business,including multi-dimensional views

• Improved identification of cost or capital improvementopportunities

Improved effectiveness

•

Improved forecast accuracy through use of business drivers,performance metrics and other assumptions

•

Improved alignment of plans and resource allocations withstrategic objectives and priorities

• Aid in setting challenging but achievable performancetargets, and reduction in “gaming” behaviour

•

Fewer iterations through tighter integration of strategy,

planning and budgeting

Increased efficiency

• Focusing on the value drivers and key metrics that drivestrategic outcomes

•

Integration of inputs and outputs with related strategy,performance management and rewards processesreduces duplication, inconsistencies and reconciliationchallenges

•

Shorter management reporting cycle times throughmore efficient process design and use of a consistenttoolset across the enterprise

Developing a “Performance Management Culture”

• Motivates the “right” behaviours (focus on value drivers andperformance metrics rather than potentially disconnectedfinancial outcomes)

• Increased accountability and ability to tie rewards toperformance to drive behaviours

• Aids in transforming support functions to a “BusinessPartner” role

•

Performance management processes cascaded throughoutthe organization driving accountability and control at theright levels


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Embedding value drivers, key risks and indicatorsin the MOS is crucial for success

Slide 32

PLAN (

Plan, Budget & Forecast)

• LOM plan, Business plan, Budget, KPI / KRI target setting•

Identified risk management strategies related to the objectives

Integrate performance

management in one managementdecision making process to ensureperformance issues and risks areconsidered when they matter most

and are acted upon in time

Processes

Adjust or implement technology to

support the new/adjustedprocesses as required (e.g.: BIsoftware or architecture forperformance & risk information)

Systems

Align corporate objectives with thepersonal objectives of staff bycommunicating effectively and by

translating company KPIs to align with employees’ personal

performance indicators

People

Embed the maintenance ofperformance managementprocesses and content in the

organisation

Organisation

CHECK ( Reporting & analysis)•

Management Information (KPIs)•

Forward-looking Reporting• Reporting on Performance Management

DO

•

Execute operational planand risk managementstrategies

• Explicitly consider andaccount for risks duringdecision making

ACT

•

Assessment & RewardCycle

• Identify and monitorimprovementopportunities


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MOS Value drivers and KPIs should link tostrategy execution and shareholder value creation

KPIs

Value drivers

Strategy

Business objectives

Determining value drivers

! Value drivers answer the question “In what should we excelat in order to achieve our objectives?”

! Value drivers can be either financial or non-financial:

- Financial value drivers are linked to key line items on thefinancial statements (EBITDA for example)

- Non-financial value drivers are linked from value-addedcapabilities to financial statements

Determining KPIs

! Identify suitable metrics - think about the effect on human behaviour

!

5 guiding principles:1. The number of KPIs at each level should be limited

2. The organisational structure should guide a logical breakdown of KPIs

3. KPIs should consolidate upwards linking to strategy

4. KPI's must be “SMART”, valid, simple and controllable

5. Define ownership of KPIs

Slide 33


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A MOS performance reporting frameworkcascades down to each level in your business

Slide 34

Transactions

and

Operations

Tactical andFunctional

Strategic

•

Focused on enabling operational & transaction based decisions

• Real-Time• Structured Reports

•

Transactional level KPI/reports•

Reporting frequency – Daily and Weekly

•

Focused on evaluating business execution•

Functional area reporting•

Trending/Interactive Analysis•

Higher Level Operational KPIs/ reports• Exception Reporting/Alerts

•

Reporting frequency – Weekly and Monthly

Performance

and

Root Causes

•

Focused on personal development and performance• Analysis possibilities at the root cause level•

Reporting frequency - On a needs basis

Various levels in an organization drive differentreporting requirements

• Focused on long-term and strategic decisions•

Performance Management•

Exception Reporting / Alerts•

Compliance Reporting•

Reporting frequency – Monthly and Quarterly

Level 3 –Team

Management

Dashboards

Level 2 –Middle

ManagementDashboards

Level 1 –Senior

ManagementDashboards

Level 4 –Individual

Dashboards

Cascading KPI’s ensure everyone is aligned anddelivering to the same goal


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Example: Review Process and Operations KPIs

Slide 35

3

DetermineCauses of Major

Variances

4

DefineMitigation

Projects/ActionSteps

2

IdentifyMajor

VariancesAgainst Plan

5

Monitor and Track

Progress of Action Steps

Collate andAnalyze Monthly

Results

Mining ($/t)

Drilling ($/m)

Blasting ($/mass blasted)

Mucking ($/t)

Mine Services ($)

Management ($)

Drill Availability (%)

Drill Utilization (%)

Penetration Rate (m/hr)

Mechanical Parts ($/hr)

Operating Costs ($/hr)

Operating Time (hours)

Consumables ($/hr)

Maintenance ($/hr)

Hauling ($/t)

Cascading KPI hierarchy example

Six key cost metrics for each keymining value chain process

beneath the total Mining ($/t ) metric.

Three key metrics drivingDrilling ($/m) – one financial,

two operational.

Three primary metricsdriving Operating

Costs ($/hr).

Operational metricsfrequently drive cost

outcomes – this linkage

is critical.

Cascading metrics throughout the organization todrive accountability and control at the right levels,relevant to the decision making sphere.

Fact based performance interactions to driveaction/decisions and progress tracking to close out.


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Commitment of Top Management is essential forsuccessfully implementing a MOS project

Many organisations struggle to successfully implement a Management Operating System ifmanagement underestimates the impact it has on its organisation, and time that is required to sustainthe cultural change.

Do’s Don’ts

! Top - down approach

! Actively involve management to create sufficient support in the

organisation

! Invest sufficient time and effort in defining the strategy andunderstanding what impact it has on the business

! Effectively communicate the strategy within the organisation

! A clear and present decision-making process (i.e., importantdecisions are made by senior management)

! Clearly appointed roles & responsibilities

!

Embedding performance management in the company’sprocesses (starting with the Business Planning process) andculture

! Translate the new processes into employees’ performance &reward cycle

! Actively manage and monitor planned actions – driveaccountability

! Lacking management commitment and support

!

Underestimate change management required to drivecultural change

! Define strategy at corporate level and not communicatingit to the rest of the organisation

! Starting with communications and change managementduring the implementation phase, rather than during thedesign phase of the programme

! Focusing on meeting the budget instead of obtaining thestrategic objectives

! Too much data, not enough insightful information –doesn’t support management by exception

! Incentive compensation linked to budgets which drives

sandbagging and avoidance of stretch targets and notsufficiently linked to controllable performance

! Implementing a fully equipped BI solution withoutaddressing underlying processes

Slide 36


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Focus on consistent Business Processes to buildeffective Performance Management

Slide 37

An Anglo American example…


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Key attributes of a leading MOS

Slide 38

…by continuously focusing and aligning theirorganisation

Alignment People

• Rigorous focus on value drivers and value adding activities

• Tangible results through effective andefficient strategy execution

• Strategy focused planning andmanagement

•

Excellent performance analysis anddecision making processes

• Efficient management meetings

• One single source of managementinformation

• One corporate language

• Tight governance of MOS

• Balanced scorecards and KPIs cascadedtowards all levels

• Driver based planning and controlprocesses at all organisational levels

•

Investments in and deployment oftechnology are aligned with strategy

• Sharing of information and leadingpractices between sites / divisions

• Clear organizational structure aligned with strategic goals

• Culture focused on value creation

• Management leads strategic focus &alignment (“walk the talk”)

• Top management as key sponsor ofperformance management

• People performance management

processes are in place and aligned withManagement Operating System, e.g.:

- Clear compensation and incentiveprocesses linked to key drivers

- People understand linkage between

business strategy, personalscorecards and daily decision making

Leading characteristics

Focus


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Putting it all together

MayPwC Mining Conference

Slide 39

5.


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Making it Happen

•

Inextricably link planning and budgeting

•

Create and validate a prototype system

• Make the most of existing IT investments

•

Plan for growth•

Give attention to organizational issues

• Allow user to choose functions

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What are the rewards of VBP?

•

Increased business flexibility

•

Improved planning

• Better decision-making

•

Smarter organizations.•

Unified organizations.

• Stock market rewards

41


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So, we should abandon budgeting?

•

No, budgeting should be an integral part of our managementframework.

•

We should redesign our budgeting and planning framework to meetthe needs of our new business models for today’s world.

•

The planning framework needs to adapt and evolve so that it doesnot become a barrier to value creation.

• Many companies do not require major overhauls to their planning

budgeting and reporting framework. They need to identify specificelements that move them closer to VBM and provide a step change benefit.

42


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Conclusion

Successful companies see budgeting as the cornerstone to a closed-loopsystem for management planning and decision making. Such a systemdrives a company’s quest for competitive advantage and consists ofinterlinked management processes of which budgeting is centralturning strategic initiatives into plans and budgets that deliver expectedresults

An effective VBP system harnesses the best thinking and collectiveknowledge of all individuals who are most intimate with the operationsof the organization.

43


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Self assessment


Slide 44

6.


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A five-minute review of your Planning and Budgeting

45

The budget is a stand alone costallocation process remote fromthe business

The budget is aligned tostrategy and sources ofcompetitive advantage 5 4 3 2 1

Budget targets are notunderstood or ‘owned’ bymanagers.

The budget provides a strongmotivational force and supportscooperation and team working

The budget is restrictive andacts as a barrier to innovationand creativity.

The budget is congruent withthe business culture of

responsibility and empowerment

The budget is ‘hard wired’ andinflexible.

The budget is adaptive andflexible to changing needs of the

business.

The budget is expensive,inefficient and disruptive tomanagement and the business.

Re-forecasting is demandingand time consuming.

The budget is acknowledged tobe efficient, low cost and value

creating . Regular re-forecasting

is ‘predictive’ based.

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1


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The value see-saw – Value add vs Value destroyed

46

If you score 5 to 10:

It is likely that your budget process is destroying value

Possible issues:

Your budget design is not in line with the strategy process and corporate vision

Budget a management tools are not for enabling operational excellence and innovation

Your budget is not dynamic or responsive to key events and changes

If you score 10 to 20:

It is unlikely that your budget process is consistently adding value

Possible issues:

Budget doesn’t provide “stretch targets” or interface with performance management

Budget doesn’t encourage or reward cross-business cooperation (may inhibit cooperation)

Budget process isn’t within the top quartile of best practice measures

Budget isn’t supported by flexible or adaptive systems

If you score 20 to 25: Your budget process is likely to be adding value

Possible issues:

Budget committee doesn’t examine ways to enhance the budget on a regular basis

Performance measurement systems are not robust and regularly challenged

Potential opportunities exist for the budget to add further value to your businesses


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Improvingfinancial

performance


Slide 47

7.


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Mining companies are looking for ways to driveimproved Financial performance

Levers •

Inventory

•

Payables

•

Projects

• Project management andcontrol

Levers •

Equipment planning and

scheduling•

Labour planning and

scheduling• Equipment availability

• Management reporting

Levers•

Corporate support teams and

management•

Administration costs•

Back office processes• Suppliers and spend

• Consumables•

Repair and maintenance

Profitability• SG&A• Sourcing• Operational Cost

Management

Productivity• Planning & Scheduling• Maintenance Costs• Performance Management• Asset Utilization• Plant Operations

Capital• Working Capital• Investment Capital

Levers todrivefinancialperformance

Examples • Align organization to leading practice on span of control

• Align activities between mine sites and corporate to eliminate

duplication•

Fully leverage current technology and tools•

Complete spend analysis

•

Generate category strategies, aggregate demands, leverage supply

base, and conduct strategic negotiations

• Develop strategies to reduce tire wear and explosive usage

• Reduce maintenance contractor and supplier costs

Examples• Plan truck, hauler, shovel and drill selection and usage to achieve

profitable production•

Plan crew sizes and shift patterns•

Implement information based preventative and reliability(MTBF) programs

•

Optimize intervals between shutdowns and overhauls

• Link operational production reports and to financial outcomes

for integrated reporting

• Stream line safety reporting to gather insight, prevent incidents

and achieve zero harm through shared learnings

Examples•

Pool spare parts across sites through effective modeling and

inventory management•

Maximize planned maintenance activities in order to minimize

required parts inventories•

Work with suppliers to maximize payment terms and streamline

sourcing process

• Manage project portfolio to ensure continued resource

development and production growth•

Deliver the appropriate projects on time and on schedule


49/49

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004 Pwc Value Based Planning v31

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