“IN AFRICA WE CAN DO IT”

South Africa’s Project Management Experiences

as an South African ‘Export’

Presentation by Sean Flanagan

African Rhythm Project Management Conference
22 April 2002

Paper presented at African Rhythm Project Management Conference 22 – 24 April 2002, Johannesburg, South Africa
Hosted by: Project Management Institute of South Africa (PMISA): www.pmisa.org.za ISBN Number: 0-620-28853-1
 On the Proudly South African campaign, President Thabo Mbeki,

“The campaign initiative "should serve not only to inculcate in

every South African a deeper consciousness of who they are and what they
can do to change their lives for the better, but also help in a particular way
to promote our exports. This, of course, would impact positively on
economic growth and job creation."
In particular, Mbeki noted, the campaign offered a "unique opportunity to
our exporters and trade promotion agencies to entrench South Africa's
brand in global markets".

South African Project Management expertise applied

outside the country should lead to an increase in the
export of goods and services
 PRESENTATION OVERVIEW

Project Management in the perspective of South Africa

• First world expertise in an emerging economy
• Diversity of challenges and yet world class
• South African projects on par with the rest of the world
• Homegrown examples of world class industrial projects

Murray & Roberts Engineering Solutions as World Class Implementers of Projects

• Developing leading Project Management teams
• Why World Class?

Project Management in the context of a case study

• Mozal
 PROJECT MANAGEMENT
IN THE PERSPECTIVE OF
SOUTH AFRICA

• First world expertise in an emerging economy

• Diversity of challenges faced, yet world class
• South African projects on par with the rest of the
world
• Home grown examples of world class industrial
projects
FIRST WORLD EXPERTISE IN AN EMERGING ECONOMY
• Misperception of available expertise in South Africa
- We work within an emerging economy, but are capable of delivering first world
projects
- Take first world technology and apply in a third world country
• Joint venturing on projects best leverages international expertise
- International expertise used to augment our knowledge base and skills
- Extensive experience required to select most effective joint ventures
- Challenges to managing the joint venture
• In South Africa obstacles CAN be overcome
- A solution can always be found
- South Africans make a plan - Mozambican flood example
- South Africans proud to share learnings, expertise and experiences
 DIVERSE CHALLENGES FACED, YET WORLD CLASS
• Diversity of challenges to working in an emerging economy
- Lower skills level
- Language obstacles
- Labour force issues/ working with unions
- Cultural problems and issues
- Diseases and HIV AIDS affecting the work force
- Environmental issues
- HSEC

• Confirmed world class performance

- Third occasion that International PMI of Year Award won by a South African company
- The joint venture of SNC Lavalin Murray & Roberts Mozal project - won International PMI
of Year Award 2001
 SOUTH AFRICAN PROJECTS ON PAR WITH THE
REST OF THE WORLD
• Leveraging of homegrown expertise:
- South Africa has the deepest mines in world
- Low power costs leads to greater beneficiation
- Sasol Gas to Liquids
- Denel technology
- Electronic and IT
• South African companies have listed operations on the London Stock Exchange:
- SAB, BHP Billiton, Anglo American and Sasol
- Humble beginnings in South Africa, now global players
- Project opportunities created by them afford ‘tag-on’ for local companies
• Worldwide the value and high level of South African project management expertise
being recognised
- Port Hidd, Bahrain
- Lake Kivu, Rwanda
- Pebblebed Modular Reactor
 HOMEGROWN EXAMPLES OF WORLD CLASS
INDUSTRIAL PROJECTS

• Uranium Enrichment Project

• Richards Bay Coal Terminal
• Sasol 11 and 111
Past
• Kelloggs Factory Revamp
• Mossgass
• Aluminium Smelters

• Long pipelines
Future • Sasol Gas to Liquid Projects
• PBMR
MURRAY & ROBERTS
ENGINEERING SOLUTIONS
AS WORLD CLASS
IMPLEMENTERS OF
PROJECTS

Developing leading Project Management teams

Why World Class?
 DEVELOPING LEADING PROJECT MANAGEMENT TEAMS

• Recognised value of joint ventures

• Selecting the right joint venture partner to complement existing skills and expertise using
the right commercial formula
• Once off projects requires Project Management flexibility
- Expertise is developed
• Grabbing a larger share of the future:
- Integrated project management system
- New resource model/ outsourcing alternatives
- Knowledge management
- Value chain management
- Attracting the best people to the job
- Resource location and mobility
- Learning processes required for knowledge based company in an emerging economy
 WHY WORLD CLASS?

• Vision:

- World Class Implementers of Projects

• Core proposition:

- Seeking Solutions for Emerging Economies

- Applying other people’s technology

• Offering:

- Demonstrated capability

- Accountability for our performance

- Flexible and focused client service

- A passion for what we do

PROJECT MANAGEMENT
IN THE CONTEXT OF A CASE
STUDY

Mozal
MOZAL: PROJECT OVERVIEW
MOZAL: LOCATION

Mozal Aluminium Smelter Project

 In putting the success of Mozal into perspective it is
important to remember that…

“This was a grassroots fast track project in Mozambique, a country that has had a
very poor infrastructure and a largely unskilled labour force following two
decades of war.”
WHY MAPUTO?

Adam Smith - Wealth of Nations

3 requisites for business to flourish
Absence of war
Low taxes
Reasonable application of justice

For a smelter add:

Low price of power
Proximity of deep water port
Reliable Alumina supply
 OWNER MOZAL S.A.R.L.

Mozambican

Mitsubishi government - 4% IDC

- 25% - 24%

BHP Billiton - 47%

 PROJECT HISTORY

Snc-Lavalin Murray & Roberts Engineering Solutions Joint

Venture:
• SNC-Lavalin: Canadian engineering/ construction firm

• Murray & Roberts Engineering Solutions: a Murray & Roberts Group company

BHP Billiton integral to the success of the project team

Successful EPCM contractor for Hillside Aluminium Smelter,

Richards Bay:
• 500 000 tpa

• 1st metal: June 1995

• Stable operation above nameplate capacity

 • Project Management

• Engineering

• Procurement
EPCM SERVICES
• Project Controls and Administration
PROVIDED
• Construction Management

• Pre-Commissioning

• Owner assistance during commissioning

 COMMUNICATIONS STRUCTURE

Suppliers
Contractors
Turnkeys
AP
Key:

AP - Aluminium Pechiney
MPT – BHP Billiton Project Team
MOT - Mozal Operating Team
SLMR - SNC Lavalin Murray &
SLMR MPT Roberts Engineering Solutions
EPCM (EPCM team)
Consultants MOT

Government
Regulatory
agencies

Working level communication Establish protocol

 KEY SUCCESS FACTORS/ ENABLERS

Agreement with Eskom on power price

Support from Mozambique government:

• Industrial Free Zone (IFZ) - 1995

• Project approval (IPA) - December, 1997

Low cost production

 Key performance achievements

Schedule:
• 1st metal achieved six months ahead of schedule

Budget:
• Final capital cost of US$ 100 million under budget

Safety:
• Final LTIFR of 1.7

Industrial Relations:
• <0.5% of manhours lost to industrial action

Empowerment:
• 5,500 Mozambicans trained in construction trades
• 70% of labour force local
MAJOR SUPPLY POINTS
 LOGISTICS SHIPMENT POINTS
Swaziland for

abnormal loads

MALAWI
Note: TRAC corridor road was under
construction during smelter
construction ZAMBIA
Lusaka UE
B IQ
Harare
Z AM
NAM IBIA ZIMBABWE O
M
BOTSWANA BEIRA

Gabarone
Windhoek Ressano Garcia
MAPUTO (main entry point
Johannesburg for surface
shipment)
Air
Air shipments
shipments RSA Durban

Marine
Marine
shipments
shipments
 MAJOR QUANTITIES

• 24 000 tons of structural steel

• 16km of drainage culverts
• 235 000m³ of concrete
• 8.2km of fencing
• 38km of piping
• 800km of cabling
• 18km of cable trays
• Over a construction area equivalent to 340
soccer fields
MAJOR CHALLENGES

• Country factors
• Infrastructure
• Government liaison issues
• Labour issues
• Safety
• Health care
• Climate
 CONSTRUCTION CHALLENGES
• Infrastructure

• Border and customs facilities

• Geotechnical

• Labour requirements
- 9 000 total at peak (6 000 direct)
- Limited use of expatriate labour
- Training and development of immature local labour force
- Untested local labour structures
- Development of empowerment contractors

• Safety performance recognition and safety management programme

• PLA signatories
• Industrial relations (PLA success factor)
• Malaria - 6 500 cases in clinic
• HIV AIDS/STDs
 PROGRESS - A BIRD’S EYE VIEW

April 1998 Aug 1998

May 1999 Sept 1999 July 2000

IN SUMMARY

Summary and conclusion

Questions and answers
Thanks to the PMISA
African Project Management is
world class

We have reserved a place

on the global stage