IMPROVED ENERGY BUDGETING PROCESS USING MEASUREMENT AND VERIFICATION PRINCIPLES

Chantelle Van Aarde,Andries Gous,Marius Kleingeld

doi:10.7166/31-3-2418

Abstract

Budgets are used to predict and measure a mine’s performance. Problems arise when the budget is developed by financial resources with little focus on operational changes. The implementation of energy-saving measures, and the number of workdays or time-of-use profiles are often neglected, making the budget obsolete. Measurement and verification principles are known for their effectiveness when addressing operational changes. This paper presents a novel approach in which measurement and verification principles are altered into financial principles by developing analogies between the fields. A critical analysis of South African mines’ budgets was conducted to create these analogies. The result of the analysis highlights the need for integration, and provides a relationship between well-established measurement and verification principles as an alternative solution to budgeting. The solution was applied to a gold mine complex in South Africa. The new budget could account for an additional R26.2-million (16.8%), compared with the original budget, by successfully incorporating the measurement and verification principles.

Highlights

Budgets are a commonly used tool to determine the revenue and expenses of a mine [1]
This article has addressed the problem by incorporating measurement and verification (M&V) principles into the budgeting structure
This was done by developing analogies between the M&V principles and the budgeting process followed by South African mines

Summary

Introduction

Budgets are a commonly used tool to determine the revenue and expenses of a mine [1]. Implementing energy-saving measures (ESMs), different time-of-use (TOU) profiles, and the number of working days versus weekends during a month ensure large changes in the normal operation of the mine [3]. These operational changes in turn have a large impact on the budget, since they act as the basis for the budget [5]. Neglecting the operational changes causes the budget to become obsolete within the first few months of the assessment period [6] — the period for which the budget was developed This neglect affects the cashflow of the mine, since the operational changes cannot be funded properly. These effects have drastic consequences, and can negatively impact the mine and its operations [7]

Results

Discussion

Conclusion