Planning a Complex Mine Construction Project under Price Cyclicality

Abstract

To maximize the potential of success for a large-scale mine construction project, rigorous scheduling must be employed. Given that the mineral industries are cyclical (due to global supply and demand imbalance, inconsistent growth periods, and technological innovation), timing of a mining construction project has a significant impact on the project. The cost of delays in the project can be devastating if the high prices of the cycle are missed. In this paper, a method is proposed to schedule large projects using a combination of the Critical Path Method (CPM) and Linear Programming (LP) to maximize the value of a construction mega-project. The method is applied to a mine construction project including 80 activities with complex precedence relationships. The critical path for the mine construction is crashed to a minimum duration of 234 weeks at optimality (down from the 263-week base case), providing a net present value (NPV) of $901,772,160 (an improvement of $127 million over the base case).