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Case Study

A portfolio management journey

Photo of warehouse

We led an integrated team to deliver Arrium’s sustaining capital portfolio across sites in NSW, Victoria and South Australia. Each capital dollar needed to be allocated to where it would deliver the most value, and the portfolio needed to be delivered safely and efficiently. The improvement journey saw continual improvement year-on-year since 2003.

The challenge

Arrium needed to improve their capital performance; only one out of five projects was delivering its promised benefits, and projects were costing much more and taking much longer to execute than originally planned.

Once performance measures were introduced and compared to industry benchmarks, it became apparent that projects were also more expensive and slower than the industry average. What’s more, a very large team was required to deliver the projects.

Our approach

We formed an integrated organisation, with Arrium personnel working alongside our own. A portfolio management office was also established to provide consistent systems and support across the sites, and to deliver integrity of the engineering solutions and safe execution in the field.

Portfolio management processes were introduced to drive increased strategic worth from the capital spend, resulting in a paradigm change from ‘completing a list of projects’ to ‘realising strategic value and benefits for the business’.

Lean principles were also applied. In particular, project cycle time was scrutinised and a ‘Blitz’ process was developed to significantly reduce the timeline from project concept to realisation of benefits.

Results

Working closely with Arrium, we delivered exceptional value to Arrium’s business objectives:

  • Outstanding HSE performance - since its formation in 2004, the alliance worked over two million hours with no lost time injury to any of the alliance team or our execution contractors

  • Projects delivered within our benchmark performance measures. Including improved quality of front-end loading whilst halving the costs and reducing the cycle time by 60%

  • Substantially reduced team size

  • Increase in planned financial benefits by 200-300%

  • Increase in planned risk reduction benefits by 200-300%

  • Reduced rate of cancellations/deferrals from 40% to <10%

  • Reduced unplanned carryover of spend from one year to the next


Arrium moved from low value to high value infographic Arrium moved from low value to high value infographic

“Our Alliance allows us to manage a portfolio of projects across a number of geographical sites without a significant increase in overall labour hours, even though the workload can change as much as 120% on a year-to-year basis. The resource management processes have helped us reduce our Alliance group resources from 90 to 40 during downturns without redundancy costs. According to IPA audit results, our labour productivity is among the best in Australia.”

Robert Finlay, General Manager, OneSteel Engineering and Reliability

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