AAOM Handbook

Resources such as materials and utilities (e.g. power) are consumed in the course of completing work, are managed through a supply system, and are charged to the appropriate work order/cost receiver as used. The pricing of these resources will be visible through the supply element of the ERP and the historical costs of these resources will be visible through either work order or cost collector records in the ERP. Resources such as labour and equipment are continually reassigned to new work in a schedule and an ERP utilises the concept of a Work Centre to manage these. A Work Centre resource simply represents the capacity of a particular resource that can be assigned to a schedule (e.g. A mechanics for B hrs, C 100t trucks for D hrs). Where Work Centre costs are required to be quantified and/or charged to specific work activities an ERP cost collector will be created for the Work Centre, in the ERP. The cost centre can be used identify the cost and pricing of the Work Centre resource, and where charge out rates are applied to a Work Centre resource the work order records can be used to identify historical Work Centre resource quantities and costs for the work. The significant set of Resource Types used within an EPS (those that make up >90% of the total costs) should be identified from analysis of the above data and individually and accurately estimated for the appropriate Activities. The remaining resource costs cannot be ignored in the EPS, and should be estimated against the appropriate Activities, but can be grouped into a general cost classification rather than individually identified. The estimates for Work Centre Resource Type quantities are used in the EPS model to forecast the distribution of Work Centre demand over time. The parameters of this distribution can be used to set the fixed capacity for a work Centre as well as guiding the selection of an appropriate strategy for dealing with the variable element of demand (e.g. overtime, over-resourcing, contracting, etc.). The set of Resource Types that are most appropriate will differ from one EPS to another. While there are potentially a multitude of different types of resources and expenses used with the Work Management and costing systems, these can be summarised into a much smaller number of EPS Resource Types to meet the above purposes. The following categories may be used as a guideline; • Equipment, • Labour, • Materials, • Spares, • Contract Services & • Utilities. These categories may be subdivided further, but only where doing so provides a material improvement to the forecasting of cost or demand for critical resources. For example, in a mechanised mining EPS the Equipment Resource Types may be subdivided into to be the different capacity drills, loaders, and trucks since equipment of different capacity is not usually interchangeable in a schedule. Note that since this equipment is scheduled with an operator the operator demand will be linked to the equipment demand and the operator costs can be included in the equipment costs. In a Heavy Mining Equipment

© McAlear Management Consultants 2006

Operational Planning: Set Expenditure Schedule

Updated: August 2018

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