A recent industry survey by Australia’s Longwalls (See results in Special Report) identified that mining contractors have a major role to play in the future of the coal industry, with an expected increase in the scope and extent of work performed. The survey highlighted a number of strategic issues impacting the improved utilisation and performance of contractors, and the differing perceptions held by mine operators and contractors in respect to those issues, including:

- Pricing is a major determinant in contract award. Concerns were expressed by operators regarding the lack of transparency in tender pricing, the risks posed by low cost/high claim pricing strategies, and the reluctance of contractors to accept risk. Contractors would prefer to develop a partnering relationship from the tendering process onwards, with an open-book, risk sharing approach.

How do we bridge the lack of trust between operators and contractors in respect to costs and pricing? Are there opportunities to develop tender evaluation and contract award/management approaches that better meet the needs of parties?

- Contractors also identified deficiencies in tendering and evaluation processes, including; the quality of information made available, time allowed for tender preparation (and subsequent contract mobilisation, establishment and ramp-up), and lack of transparent tender selection criteria. Concerns were also expressed regarding tendering costs, particularly in respect to the use of the tender process as pseudo consulting, or in circumstances where projects were not approved or failed to proceed.

- Operators and contractors both identified the likelihood of a continuing focus on improving mine safety, with further legislative changes underpinning improvements. Safety is also recognised as a key determinant in tender evaluation and contract award.

However, the continued reliance on price as the major determinant in contract award, coupled with increased competition, long term coal price trends, and use of limited term/scope contracts, is unlikely to facilitate the investment in people, systems, equipment and training required to achieve the level of improvement expected.

- The reputation, past performance and experience of the project management team and supervisors is a key determinant in tender evaluation and contract award, and a key factor in successful contract completion.

Similarly, contractors identified that the role, experience and authority of the contract superintend and other key mine personnel operators was critical to project success.

- Both operators and contractors identified a critical shortage of experienced personnel. Again, the competitive nature of the industry and the short term of contracts being awarded does not facilitate investment in this key resource, or the development of a contracting culture among former mine employees.

- Contractors often perceived themselves to be better managers than their operating counterparts, able to be more flexible, better focussed, and achieve improved industrial relations, safety and cost outcomes. Fewer overheads, tighter management structures, attuned senior management, a better understanding of business drivers, and a higher emphasis on the bottom line were all seen to contribute to this. Can these approaches be spun-out into by mine operators?

- Contractors are seen to offer operators considerable flexibility in respect to mine operations. However, concerns were raised by contractors regarding the logistics of supply, given the short lead time often associated with projects, and the availability of fit for purpose equipment, and experienced, competent project management, supervisory and operating personnel. Longer term partnering approaches to mine contracting may realise the flexibility and effectiveness required by operators.

- While contractors have also been able to provide cost effective solutions, improving performance by mine operators, longer-term coal price trends, and increasing safety requirements are expected to provide major challenges to contractors in maintaining their competitive advantage with mine operators. Will contractors remain relevant, and can they continue to achieve and maintain higher performance levels, and hence achieve and maintain margins?

- Contractors identified a potential to develop a total mine services capability, from mine design and planning through construction, development and operations. How will operators successfully utilise and manage this emerging capability, and are there sufficient large-scale opportunities to develop these capabilities?

MINE CONTRACTING COLLOQUIUM - Achieving Contracted Objectives And Outcomes

The Colloquium is being organised to provide a forum to allow leading mining contractors, mine operators and key industry stakeholders to discuss the issues impacting achievement of contracted objectives, and present strategies that will assist achievement of successful project outcomes.

The Colloquium will comprise a one-day conference and workshop.

CALL FOR PAPERS

Expressions of Interests are called from suitably qualified and experienced personnel to present papers at the Colloquium on the above issues, or other issues relevant to achieving successful contract outcomes.

Prospective authors should forward a 400 word Abstract to the Organising Committee by May 17, with completed papers due June 21.

Contact: Gary Gibson 0418 422 817 or garygib@ozemail.com.au