Over two-thirds of mining projects face cost overruns

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Capital projects on average run 62% over budget and another 50% reported delays according to a survey by EY.

During October 2014 108 projects were surveyed by EY at various stages across the investment and project delivery life cycle. Total investment of projects surveyed were US$367 billion. All projects surveyed had budget’s exceeding US$1 billion.

Despite careful planning, overruns and delays were common.

“Overruns occur despite large investments by mining and metals companies to enhance up-front engineering practices and increase delivery maturity,” writes the report’s authors.

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Some of the factors singled out as leading to cost overruns and delays were labour costs; industrial relations; overvalued currency; and logistical challenges of remote geographies. The engineering, procurement, construction management or ECPM was singled, too.

The authors of the survey said cost overruns were ecumenical. No particular region or commodity group were worse than the rest. However, Oceania experienced the highest average budget overruns.

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