IN AFRICA WE CAN DO IT

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1 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 April 2002, Johannesburg, South Africa Hosted by: Project Management Institute of South Africa (PMISA): ISBN Number:

2 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

3 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

4 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

5 - South Africans proud to share learnings, expertise and experiences 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

6 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

7 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

8 HOMEGROWN EXAMPLES OF WORLD CLASS INDUSTRIAL PROJECTS Past Uranium Enrichment Project Richards Bay Coal Terminal Sasol 11 and 111 Kelloggs Factory Revamp Mossgass Aluminium Smelters Future Long pipelines Sasol Gas to Liquid Projects PBMR

9 MURRAY & ROBERTS ENGINEERING SOLUTIONS AS WORLD CLASS IMPLEMENTERS OF PROJECTS Developing leading Project Management teams Why World Class?

10 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

11 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

12 PROJECT MANAGEMENT IN THE CONTEXT OF A CASE STUDY Mozal

13 MOZAL: PROJECT OVERVIEW

14 MOZAL: LOCATION Mozal Aluminium Smelter Project

15 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.

16 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

17 OWNER MOZAL S.A.R.L. Mitsubishi - 25% Mozambican government - 4% IDC - 24% BHP Billiton - 47%

18 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: tpa 1st metal: June 1995 Stable operation above nameplate capacity

19 Project Management Engineering EPCM SERVICES PROVIDED Procurement Project Controls and Administration Construction Management Pre-Commissioning Owner assistance during commissioning

20 COMMUNICATIONS STRUCTURE Suppliers Contractors Turnkeys AP Key: EPCM Consultants SLMR MPT MOT AP - Aluminium Pechiney MPT BHP Billiton Project Team MOT - Mozal Operating Team SLMR - SNC Lavalin Murray & Roberts Engineering Solutions (EPCM team) Government Regulatory agencies Working level communication Establish protocol

21 KEY SUCCESS FACTORS/ ENABLERS Agreement with Eskom on power price Support from Mozambique government: Industrial Free Zone (IFZ) Project approval (IPA) - December, 1997 Low cost production

22 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

23 MAJOR SUPPLY POINTS

24 LOGISTICS SHIPMENT POINTS Swaziland for Note: TRAC corridor road was under construction during smelter construction NAM IBIA BOTSWANA ZAMBIA Lusaka Harare ZIMBABWE MALAWI MOZAMBIQUE BEIRA abnormal loads Windhoek Air shipments RSA Gabarone Johannesburg Durban MAPUTO Ressano Garcia (main entry point for surface shipment) Marine shipments

25 MAJOR QUANTITIES tons of structural steel 16km of drainage culverts m³ 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

26 MAJOR CHALLENGES Country factors Infrastructure Government liaison issues Labour issues Safety Health care Climate

27 Infrastructure Border and customs facilities Geotechnical CONSTRUCTION CHALLENGES Labour requirements 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 cases in clinic HIV AIDS/STDs

28 PROGRESS - A BIRD S EYE VIEW April 1998 Aug 1998 May 1999 Sept 1999 July 2000

29 IN SUMMARY Summary and conclusion Questions and answers Thanks to the PMISA

30 African Project Management is world class We have reserved a place on the global stage

Investment Opportunities

Investment Opportunities Industrial Manufacturing Dry Port Construction Materials Transport and Logistics Food Processing Complete Investor Solutions Industrial Land Access to Electricity All-weather Roads