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Email: [email protected] 29 March 2015

Practical Project Management Strategic Planning and Leadership

Responsible Project Team

Supportive Stakeholders

Project Management Systems

Proven Project Management Practices

Heather “A” oil and gas production platform located in the North Sea

(Latitude 600 57’ N and Longitude 00 53’ E in 470 feet of water).

Don Cowan, MSc (Environ Manage), PMP, PEng,

Project Co-ordinator, Heather Field Development Project,

1974 to 1978

mailto:[email protected]

WDC Environmental Drilling Ltd

Practical Project Management (Linkedin1).Docx of 13

9 May 2015

TABLE OF CONTENTS

PRACTICAL PROJECT MANAGEMENT ......................................................................... 3

Get it Right this Time! ............................................................................................................... 3

What is Project Management? ................................................................................................. 4

Maximize Project Returns! ....................................................................................................... 4

FRAMEWORK FOR EFFECTIVE MINE DEVELOPMENT .................................................. 6

A Commitment to Project Management ................................... Error! Bookmark not defined.

A Responsible Project Team ..................................................................................................... 6

Supportive Stakeholders .......................................................................................................... 7

Useful Project Management Systems ...................................................................................... 7

A Proven Project Management Standard ................................................................................. 7

FORMATIVE PROJECTS .............................................................................................. 8

Silver Queen Mine Development ............................................................................................. 8

Exploration of Oil Sands Lease (Kearl oil sands mine) ............................................................ 10

Heather Field Development Project ....................................................................................... 10

Broom Field Development ..................................................................................................... 13

Prairie Creek Mine Exploration .............................................................................................. 13



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PRACTICAL PROJECT MANAGEMENT

Get it Right this Time!

The main purpose of this commentary is to This short commentary

Benefits of PM

Mining development is a series of phases in one big project

Based on personal experience and project management studies

Need to continue studying project case studies to maximize

benefits of a project team

ll our working lives, as project geologists or engineers, we are members of a

project team, when we work for an exploration company. When we

are prospecting, mapping, logging core or building the mill, we are on

working on a project or phase of a much larger project. The Ontario

government defines five phases in a mining project as exploration,

advanced exploration, development, operations and closure (Practitioner’s

Guide, 2008). The Project Management Institute (PMI) defines a project

as:

A temporary endeavor undertaken to create a unique product,

service or result (PMI, 2013).

Oh Lord, we often wail, just give me one more chance. I promise that this

time we will finish on time and under budget, and that the mill will operate

as promised. We should not discount the power of prayer, but experience

tells me a competent project manager, more often than not, is our best

guide to salvation in the mineral exploration business.

Practical project management uses lessons learned on exploration

projects to tailor The Standard for Project Management of a Project (PMI,

2013) to develop a framework for managing mining projects. We need

everyone’s experience. The more experience we get the better we perform.

Our mantra is Profit by Experience.



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What is Project Management?

Project management is the application of knowledge, skills, tools, and

techniques to project activities to meet project requirements (PMI, 2013).

The focus is on results and project processes that deliver these results, as

follows:

Initiating processes define the project and obtain authority to

start work

Planning processes establish the scope of the project, its objectives

and the course of action required to achieve project objectives

Executing processes complete the work defined in the project

management plan to satisfy project specifications

Monitoring and controlling processes track, review, and regulate the

progress and performance of the project. They identify any areas

in which changes to the plan are required and initiate these changes

Closing processes finalize all project activities

Mining projects are risky and require large, up-front capital

expenditures. There is a long wait for a payback. Fortunately, an effective

project manager applies tools and techniques that reduce the period

between commencement of major expenditure and revenue collection, and

significantly improving project returns. (Check this!!)

Maximize Project Returns!

Initial exhaustive planning before beginning fieldwork is a cheap and high

value adding activity. The importance of up-front planning, rather than

planning as the project progresses, is driven by the extremely low cost of

planning in the in this early stage of the project, as a percentage of the

whole-life costs, and the costs the large cost incurred to correct any wrong

decisions made. Planning costs are likely to be no more than 5 percent of

the capital costs and only 3 percent of the whole-life costs (Mullen.

The essential model of project management—initial exhaustive planning

before beginning work on site—is a relatively cheap and high value adding

activity. Monitoring and controlling follows during the costly construction

phase. Project management can reduce the period between commencement



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of major expenditure and revenue collection, significantly improving project

returns.

Correcting errors late in the life of the project can cost up to a million

times the initial cost of correcting these ‘errors’ during the planning phase.

The potential reduction of construction time (the period during which large

funds are expended with no return on the investment), justifies significant

planning resources being spent during the relatively cheap planning period

before major work occurs on site.



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A FRAMEWORK FOR EFFECTIVE DEVELOPMENT

merada Minerals Corporation of Canada (Canadian subsidiary of the

Hess Corporation), a major American oil company, owned this lease,

and I was their Tar Sands Supervisor. The Hess Corporation had

established policies and procedures for project management. We had to

present a compelling business case to obtain approval and funds for the oil

sands lease evaluation project.

Effective companies use a business case as input to project initiation, the

first step in the project management life cycle (PMI, 2013). The project

was a success, but the world is not perfect. Hess restructured and sold

their Canadian assets to Exxon Mobile. They built the mine and Hess built

another refinery in the Caribbean. Meanwhile, I learned that to succeed

projects requires a systematic approach with well-defined project

management processes.

I consider everything that I have ever

done to be a project. However, for this

document, I have analysed five of my most

productive assignments (i.e., projects that

generated useful ideas and knowledge) to

develop the project management

framework. Here, I have defined each

element of the framework and shown how

its presence or absence had a significant

effect on a project’s success or failure.

A Responsible Project Team

A

Kearl Oil Sands Mine



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Supportive Stakeholders

Useful Project Management Systems

A Proven Project Management Standard



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FORMATIVE PROJECTS

Silver Queen Mine Development

History of the Silver Queen Mine

The Silver Queen is enticing and still building

hopes in the hearts of rugged explorers, even

after a 100 years. She is resides at Owen Lake,

south of Houston B.C. and is certainly, but not

wholly, responsible for the demise of my career as

an exploration geologist with Pacific Petroleums

Ltd and a number of other careers with Pacific

Petroleums and Bralorne Can-Fer Resources Ltd.

Prospectors staked the main vein in 1912 and

between initial staking and 1924, prospectors discovered additional vein

systems. As a result, in 1928 Owen Lake Mining and Development Company

acquired the Silver Queen deposit, sank a shaft and drove an adit to

explore the polymetallic, epithermal, vein system (Cummings, ).

In 1941, Canadian Exploration Ltd. acquired the claims covering the

vein system and explored them until 1947. Nadina Explorations acquired an

option to explore the Silver Queen deposit, in 1963. To this day New

Nadina Exploration Ltd continues to explore, and has not lost faith.

Nadina and others continued to explore until 1971, when Nadina formed the

Bradina Joint Venture with Bralorne Can-Fer Resources and Pacific

Petroleum. The Bradina Joint Venture developed and operated the mine

until 1973, milling 500 tons per day. They had to shut down the mine in

1973 because of poor production (too few headings to provide enough

feed), and mining and concentrator problems (poor liberation) that led to

low metal recover (Sinclair, 2002).

The Silver Queen



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What I Learned from the Project

The project manager and his team delivered a mining-mill complex that

failed to meet cost and scope constraints of the project. My management

told me that Pacific Petroleums expected to pay a million dollars, but they

ended up paying eight million. Mining and milling operations failed to

produce the specified concentrate. The consortium cancelled the project

because it could not produce the expected revenue.

In the 1970s mining executives, and everyone else, were not aware of the

discipline of project management and its tools and techniques that enable

the project team to organize their work to meet time, cost, scope and

quality constraints. They believed that competent mining engineers,

geologists or mine managers were capable of managing development

projects.

The Silver Queen project had many shortcomings. To begin with, the

project sponsors should not have approved it, in the first place. Specifically

from a project management point of view:

In the early 1970s luck and contingency

The project team (very experienced engineers and accountants

from the Bralorne-Pioneer mine) did not have sufficient knowledge

of the skills, tools and techniques needed to manage the project

Specifically, nobody was tracking costs nor taking corrective action

to control spending



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Lease 87

Exploration of Oil Sands Lease (Kearl oil sands mine)

Oil Sands Lease 87 Exploration Program

The Amerada Minerals Corporation of Canada Ltd

hired me to evaluate Lease their manager

Learning from Exploration of Lease 87

Heather Field Development Project

Project Description

Heather “A” oil and gas production platform located at Latitude 600 57’

N and Longitude 00 53’ E in 470 feet of water, and set with piles

driven into the bed of the North Sea.

Build an inventive organization. Profit by experience. Develop your mine

following the four principles of inventive project management.

Alberta Oil Sands



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Develop a proactive team

Buil d a learning organization

Nurture supportive stakeholders

Use good systems

Union Oil Company of Great Britain awarded J. Ray McDermott, Inc.an

EPCIM contract and initiated the Heather Project. The contractor, now

McDermott International, provided engineering, construction, procurement,

installation, hookup, commissioning, and start-up assistance and project

management services.

The project started in 1974 when McDermott completed modification of an

off-the-shelf jacket design and started construction, at their fabrication

yard in Scotland.

In 1977, the jacket was loaded onto a barge and towed to the Heather

Oilfield, 90 miles NE of the Shetland

Islands, where it was installed on the

bottom of the North Sea in 470 feet of

water. Heather “A” platform was

completely assembled and started

producing oil in 1978.

The project was successful and the

Heather Field still

continues to produce

oil 40 years after

work on the project

started in 1974.

This success was due

to good contract

people, especially;

good company and contractor organizations and a good

project management system.

A project team makes its own luck by never taking its eyes off the “Iron

Triangle” of project management. That is by balancing all the conflicting

daily requirements of a building program.

Fabric

He



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Unocal was the first American oil company to use a planning system on a

North Sea construction project. The jacket was loaded out and installed on

schedule.

The Heather Field made her backers lots of money and continues to do so,

40 years after the Heather Project was initiated.


Practical Project Management (Rev 0) of 13

31 Mar 2015

Responsible Project Team

The project team as it evolved

Broom Field Development

Prairie Creek Mine Exploration

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