Are Estimators Getting It Right? Comparing Actual And Estimated Costs

As is readily apparent, the reliability of the early-stage costs estimated for any mining project are critical to the viability of that project. An estimate too high might leave a potentially profitable deposit undeveloped or worse yet, available to a competitor. One too low might waste investment dollars in a project not yet economically ripe. There are two aspects critical to any estimate: 1. The cost data used to represent the values of the wages, salaries, supplies, and equipment. 2. The design used to determine the engineering parameters upon which the above estimated values are based. Given that all of the information contained in Mining Cost Service is provided by suppliers, equipment manufacturers and mine operators, one wonders why there is any question as to the reliability of cost estimates developed using this information. Given that it is all actual (as opposed to statistically derived) data, where do the problems with estimate reliability lie and what is the impact of the data on that reliability? The following presents a series of analyses designed to assess the reliability of the cost estimating process. Both the actual cost data and the engineering parameters upon which they are based are examined in an attempt to quantify and understand the importance of each. While several sources of cost information are available (Means, Richardson, Primedia?s Equipment Watch, and individual suppliers and manufacturers), the following rely solely on data contained in InfoMine USA, Inc?s, Mining Cost Service and in its Sherpa Mine Cost Estimating Software.