A Capital Investment System

the support and assurance needed to back the right decisions

by Nicole Belbin

Investment decisions to develop new capital assets or acquire existing ones should be made on information via a phased evaluation process. The technical and other project information changes over time and in essence is never final. Due to this uncertainty, investment decisions and mining projects are never absolutely accurate and complete in forecasting the economic outcomes.

However, using systematic processes and achieving study standards ensures the investment evaluations achieve known content, quality, and accuracy levels.

There are many examples of mining investment decisions which did not deliver the forecast values. Enthalpy considers that either or both of two fundamental aspects underlie such unfavourable outcomes:

  1. The investment decisions were made on flawed, inadequate, or inaccurate evaluations.
  2. The new project developments or project acquisitions were not able to be delivered to the evaluations made.

A disciplined and rigorous approach using a capital investment process to the evaluation of mining capital investments addresses the first aspect.

The second aspect – the ability to reliably deliver the investment decision, via project implementation or business acquisition – is dependent on diligent project management, supported by a focus on planning and controls.

There are three primary management mechanisms that underpin the consistent delivery of new assets and projects:

  1. Minimum Standards of content, quality and accuracy
  2. Study and Project Planning and Control Standards
  3. Independent Peer Review Processes.

While project owners may use these three management processes to varying extents, many companies don’t define the Minimum Standards to be achieved for the content, quality and accuracy of studies. Instead, they adopt general guidelines or use generic checklists.

This can lead to a major failure because decision makers don’t define the quality to be achieved as a prerequisite for their investment decisions.

Enthalpy’s Capital Investment System addresses these key aspects in one system.

The importance of thorough planning is to bring together the right people, processes and platforms to ensure the best projects are selected for investment and implementation, and then well planned and executed effectively.

Learn more about Enthalpy’s Capital Investment System.

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