Risk Management in Construction Projects in the South African Mineral Processing Industry

Abstract

Construction projects in mineral processing plants in South Africa have high failure rates despite the availability of many risk management processes, tools and practices to project managers. This industry application paper investigates the effectiveness of risk management in mineral processing projects. The mining and mineral processing industry is one of the world’s most uncertain and hazardous industries and in recent years South Africa has experienced its fair share of economic, political and industrial challenges. Despite these challenges, a recent survey revealed that many African mining executives remain focused on the importance of securing new projects to ensure future production and growth. These new projects include new and complex technologies aimed at increasing productivity and efficiencies in the extraction and processing of minerals. South African mining industry risks unique to the region include knowledge and skills shortage, quality of education, prevalence of HIV/AIDS, power outages, political involvement and increased talks on nationalization, insufficient expenditure on R&D projects and increased unionisation. The effective management of risks is essential for project performance especially in this particular industry, due to significant investments required as well as the combination of both construction and mining/mineral processing risks involved. The study uses qualitative research methods to collect and analyse data from project management practitioners involved in construction projects in mineral processing plants. Operational, financial, legal and compliance, political and SHE risks are identified as major risks that need to be effectively managed to reduce project failure. The actions and behaviours of leaders and followers in projects are found to precipitate project failure. These include limited risk knowledge and competence, complacency and poor collaboration with team members. Risk management processes are also noted as a problem as they tend to be complex and impractical. Finally, the lack of comprehensive application of formal risk management along all the stages of the project life cycle is found to have a negative effect on risk management. The study recommends the development of a risk management culture, project team training and the reassessment of the effectiveness of currently used risk management tools in order to improve project success rate.