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Expositors:
Jim Moraga & Dean Braunsteiner
Session x:
Value Based Planning
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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.
MayPwC Mining ConferenceSlide 5
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…
MayPwC Mining ConferenceSlide 6
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!
MayPwC Mining ConferenceSlide 9
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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
MinePlanning &Scheduling
GeologicalDatabase
MinePlanning &Scheduling
GeologicalDatabase
MinePlanning &Scheduling
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
MayPwC Mining Conference Slide 21
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
MayPwC Mining Conference Slide 28
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
40
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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
MayPwC Mining Conference
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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2015 Americas' School of Mines
Improvingfinancial
performance
MayPwC Mining Conference
Slide 47
7.
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2015 Americas' School of Mines
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
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