AAOM Handbook

ES.02 Apply Resource Type and Cost

Context

The ExPenditure Schedule (EPS) is a costed version of the Operating Master Schedule (OMS). That is, the forecast cost for the labour, materials, equipment and utilities, etc. that will be required to implement the OMS is combined with a quantity estimate on each OMS Activity, and the frequency/timing of the Activities, to forecast the expenditure profile over time. The preferred source for the cost data is directly from the costing system(s) of record. Work management system records are the most likely to provide useful cost estimates and actual values for Activities that occur as a series of distinct events dispersed over time. This would typically cover Service work Activities such as maintenance of plant and equipment, but may also include the elements of the mining Production work cycle (drilling, blasting, loading, hauling, etc.) if these are managed through a work management system. Provided that the work management system and OMS/EPS each adequately specify the location (mine bench/block or equipment), plus the work description/type and accountable position, it should be possible to produce a report from the work management system that will allow the resources, quantities and costs to be identified for the OMS/EPS. In the case of high impact, low frequency events the information from the work management system should be extracted to provide a clear picture of the range of values that might be expected for any discrete event. This is necessary since the low sample rate of these events within a forecasting period (typically monthly) means that the variation is likely to have a large impact on the period. Where an OMS/EPS Activity represents a group of many low impact high frequency events the information from the work management system can be extracted to provide the total count of events, and the total resources, quantities and costs for the forecasting periods, since for large population samples values tend sharply towards the mean. Where discrete event records are not created in the costing systems of record for OMS/EPS Activities, and this would often be the case for 'continuous' activities such as crushing, grinding, etc., and the mining Production cycle where it is not managed through a work management system, the costing system records are likely to contain a cost collector (e.g. Cost Centre) for each such 'continuous' activity. Cost information within a cost collector is typically further divided into expense classifications (labour, materials, utilities, etc.) that should be able to provide resources, consumption rates and cost records for the Activity over time. Whether conscious or not, classification of these activities as 'continuous' is recognition that they can be viewed as a very high repetition of a unit of work – e.g. loading, crushing or grinding a tonne of material. With inherently high sample sizes in any forecasting period, and provided that the distribution of key characteristics is random (i.e. there is no shift or drift in the control chart of such characteristics), then the average values that can be extracted from the costing system will be adequate for the EPS forecasts.

© McAlear Management Consultants 2006

Operational Planning: Set Expenditure Schedule

Updated: August 2018

Page 9