Independent Project Analysis Newsletter

Independent Project Analysis, Inc. is the preeminent organization for quantitative analysis of
capital project effectiveness worldwide. At IPA, we provide practices you can use to ensure
your success.

Volume 2, Issue 2 June 2010

Research Spotlight:
Sustainable Capital Project Delivery
Christopher Carabetta

It is hard to pick up any type of business or trade Shareholder Returns

journal lately and not find an article on sustainabil- • Profitability
ity. But what is sustainability and what are its • Future Opportunities
benefits and risks for capital projects? Many of
IPA’s clients already have a corporate-level re-
sponsibility or sustainability function that is report-
ing performance on the “triple bottom line”:
shareholder returns, environment, and commu- Environment Community
nity (Figure 1). The focus of corporate responsi- • Social &
• Climate Change
bility can be as global as a climate change policy Economic
and as local as the social and economic impact of • Waste Minimization Advancement
its operations. The emphasis that companies • Energy Efficiency
• Health &
place on sustainability varies by industry. • Water Safety
Management
The extractive petroleum and mining industries
have special sustainability concerns. The sus-
tainability focus in these industries is on obtain- Figure 1. Triple Bottom Line
ing and maintaining a social license to operate and enhancing corporate reputations. Compa-
nies in these industries are going further afield to gain access to scarce resources. Capital pro-
(Continued on page 2)

Best Practices for Mining Projects

During the last several years, IPA has analyzed approximately 700 projects in the mining, miner-
als, and metals industries from around the world. These projects range from smaller sustaining
capital projects to multi-billion dollar new mine developments. Research into the performance of
Inside this issue: minerals companies shows that the best performing organizations have costs 10 percent more
Sustainable Capital competitive than other industry projects. These projects have comparable execution durations,
1
Project Delivery indicating they are not trading schedule for cost.
Best Practices for 1 The Best Practices for Mining Projects program provides par-
Mining Projects
ticipants with project management Best Practices and learnings The IPA Institute is recognized
Owner Involvement targeted to improve cost, schedule, and quality of both mine as a registered education
3
and Small Project extraction projects and minerals processing facilities projects. provider with the Project
Success Management Institute (PMI).
A Summary of
This 2-day program, as with all IPA Institute programs, can be
6
Recent IPA Mining customized to meet your organization’s needs. The instruction
and Minerals method includes lecture, active class discussions, and case
Research studies.
Upcoming IPA 9
Events The program is intended for all involved in defining, planning, and executing minerals invest-
ments. This program is registered with the Project Management Institute (PMI), and enables
2010 IPA 10
Institute Programs attendees to earn 16 Professional Development Units (PDUs) upon completion of the course.

Editor: Kelli L. Ratliff To view registration details and to learn about special discounts, please visit our website at
[email protected] www.IPAInstitute.com, or call +1 (703) 729-8300.

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 Volume 2, Issue 2 Page 2

(Continued from page 1)

jects are being deployed in less-developed and familiar locations with little infrastructure and high impact on the
local population. Maintaining a social license to operate in the presence of increased NGO and government
activism and rapid global communications is a challenge that affects the bottom line. Proactively managing a
complex network of stakeholders is essential to remaining on the A-list of companies invited to develop and
expand assets. Missteps can tarnish corporate reputations and take years to recover from. In extreme cases,
production can be interrupted or assets expropriated.

Corporate responsibility, as translated into capital projects, can take many forms. Some projects include budg-
ets for building infrastructure such as schools and health clinics. Others focus on achieving zero water dis-
charge and restoring local flora and fauna. The form of sustainability investment has evolved over the years
from unilateral local content and livelihood replacement to more participative community investment and capac-
ity building. Investments are designed to help ensure short- and long-term enterprise and community sustain-
ability. Success is now measured over the asset life cycle and seeks to answer the question: After the asset is
closed, is the community better off than if the resource had never been developed in the first place?

Applying sustainability
concepts to capital
projects requires a
new performance
model to identify and
measure Best Prac-
tices (Figure 2). One
could envision that
Best Practices exist
for integrating sustain-
ability into capital pro-
jects, engaging stake-
holders, and making
effective investments.
Further, the magni-
tude, timing, and type
of investment might
also be correlated with
outcomes and bench-
marked. Linking sus-
tainability practices in
capital project delivery
to outcomes is key to
isolating Best Prac-
tices. Sustainability
outcomes include
Figure 2. Sustainability Applied to Capital Projects
both direct value
creation, such as the benefits of training local labor, and indirect value protection. Value protection can take the
form of fewer project delays, added costs, avoidance of project cancellation or expropriation, and fewer disrup-
tions to production. Ultimately, through more effective sustainable project delivery, companies will benefit over
the long term through higher company valuation, a better reputation, and more development opportunities.

IPA has been engaged by a major financier of capital projects to use its extensive databases to quantify capital
project sustainability risk. The first stage effort is to examine differences in general risk for petroleum E&P and
mining projects. We are investigating whether the annualized rate of occurrence (ARO) and severity of risks
such as project delays and cost growth are different for developed and developing regions and for onshore and
(Continued on page 3)

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(Continued from page 2)

offshore petroleum E&P projects. Future research opportunities include isolating specific practices that reduce
sustainability driven risks.

Sustainable project delivery is emerging as an increasingly relevant area in the body of capital project knowl-
edge. Research in this field is particularly well suited to IPA’s benchmarking capabilities and proven research
methodologies.

If you have an interest in participating in a multi-company research study or would like to pro-
vide comments on this topic, please contact Christopher Carabetta of IPA at ccara-
[email protected] or +1 (703) 726-5388.

Professional Profile: Christopher Carabetta, Senior Analyst

Chris has assisted clients with projects across a broad array of areas, including aluminum,
steel, chemicals, petroleum refining, foods, and power production. He has led five major
capital project benchmarking studies and has consulted on over 120 projects for 22 clients
worldwide.

Before joining IPA, Chris worked as a product development management intern for the online brokerage
unit of the Donaldson, Lufkin, and Jenrette investment bank. He has also been a consultant with ITT In-
dustries in international programs management where he worked with the Office of the Secretary of De-
fense to develop international technical cooperation programs. Prior to joining ITT Industries, he served
as a project engineer in naval architecture for General Dynamics Electric Boat Division. Chris completed
engineering degrees from Penn State and Rensselaer Polytechnic Institute and an MBA from George-
town University.

Why Owner Involvement Is Critical for Small Project Success

Phyllis Kulkarni

In evaluating over 6,000 small site-based projects around the globe, IPA has observed
that many manufacturing sites, being understaffed with owner personnel, delegate man-
agement of their small projects to an alliance or preferred contractor. IPA research has
consistently found that assigning key roles on small projects to a contractor without ade-
quate owner oversight is a leading root cause of poor project performance. This article will
examine disadvantages in delegating small project management to a contractor, and ex-
plain how owners can mitigate these risks to achieve competitive performance.

Contractor-led projects are less effective in using Best Practices.

IPA divided 28 sites benchmarked in 2009 into two groups: (1) sites where owner project managers com-
prise more than 50 percent of the total project managers (i.e., there are more owner project managers at the
site than contractor project managers), and (2) sites where owner project managers comprise less than 50
percent of the total project managers. We observed that, on their small projects, the first group achieves bet-
ter team development (clear objectives, participation from key functions, etc.) than the second group.
Achieving good team development on small projects can be challenging, particularly when it comes to secur-
ing adequate input from key stakeholders like operations and maintenance. Contractor project managers
often have less pull at a site than owner project managers, and struggle to obtain this input. Likewise, the
first group of sites uses stronger project controls on its small projects than the second. This is not a surpris-
(Continued on page 4)

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ing result, given that sites which delegate project management to contractors often fail to retain (or never
had) ownership of the project control function.
Contractor-led projects tend to use more resources than owner-led projects to accomplish the same
amount of work.
Site-based projects with a contractor project manager or contractor cost estimator use significantly more en-
gineering hours to complete the same scope of work than projects in which these roles are filled by owner
personnel (Figure
1). This difference
can be somewhat
mitigated if an owner
specialist conducts a
detailed cost valida-
tion of the contrac-
tor’s cost estimate,
but unfortunately
many small projects
lack owner capability
in this area. In addi-
tion, there are clear
advantages in engi-
neering productivity
when basic design is
conducted by the
owner rather than by
a contractor and the
improvement in en-
gineering productivity Figure 1. Contractor Project Manager/Estimator Has Negative Effect on Engineering
is magnified when Productivity
both basic and de-
tailed design are conducted by the owner. Delegating either of these responsibilities to the contractor results
in more engineering hours. Owner engineering tends to have a greater stake in producing competitive pro-
jects, whereas contractor engineering―even when well integrated into the site―is ultimately beholden to its
own management, and motivated to maximize profitability.
Contractor-led projects tend to be more expensive than owner-led projects.
Cost competitiveness is affected because (1) contractor-led projects do not use the same level of Best Prac-
tices as owner-led projects and (2) contractor-led projects tend to use more engineering hours to accomplish
the same scope of work. These discrepancies translated to a 14 percent difference in cost performance
for the sites IPA benchmarked in 2009. The sites with a greater proportion of owner project managers
achieved an average cost index on their small projects of 0.93 (in other words, they spent 7 percent less
than industry average) versus an average of 1.07 for the sites with a greater proportion of contractor project
managers.
We recognize that it may not be practical for some sites to routinely staff key functions with owner personnel.
Furthermore, some of the best sites in Industry―sites that consistently pay 10 to 15 percent less for their small
projects than industry norms―have an alliance contractor that is heavily leveraged to support their small project
portfolio. How do these sites achieve excellent performance despite filling many roles with contractor person-
nel? The role of the owner and the owner process is crucial; these are some key practices that help drive excel-
lence when sites rely on contractor personnel:
An owner cost specialist performs a quantitative validation of each cost estimate.
The validation process helps push back against any over-estimating by the contractor, and ensures that the
project targets set at authorization are competitive.
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(Continued from page 4)

The gatekeeping process is strong and is followed rigorously.

The best sites all have strong small-project processes oriented toward achieving comprehensive use of Best
Practices. At each gate, owner management (usually the site projects director) evaluates each project’s level of
Front-End Loading (FEL), team development, project controls, and other key practices and deliverables. Small
projects that do not meet the site’s standards for use of these Best Practices are recycled until they comply.

The owner provides clear business objectives for all small projects.
Contractor-led projects sometimes struggle to obtain clarity of objectives from the owner and, as a conse-
quence, suffer more churn and recycle in the definition phase than owner-led projects. This can drive up the
amount of engineering hours used. Consistently providing and documenting clear objectives helps mitigate the
delays that often occur when objectives are not understood. Owner leadership can also be instrumental in as-
sisting contractor-led projects in obtaining input from other key functions at the site.
In summary, all sites, regardless of their contracting approach, have the opportunity to achieve excellent per-
formance. The best sites make consistent use of Best Practices, often have more owner project managers than
contractor project managers, and retain key functions such as cost estimating and validation. Even when they
delegate project management to a contractor, best sites maintain strong gatekeeping processes, and site lead-
ership helps projects succeed by giving them clear objectives and promoting team development. In contrast,
poorly performing sites have turned over key functions (particularly cost estimating and validation) to the con-
tractor with little or no owner oversight. The owner’s “hands off” approach can undermine small project perform-
ance even when Best Practices are employed.

For more information, contact Phyllis Kulkarni, Manager Plant-Based System, by e-mail at
[email protected] or by phone at +1 (703) 726-5472.

Professional Profile: Phyllis Kulkarni, Manager Plant-Based Systems

As Plant-Based Systems Manager, Phyllis oversees the worldwide business and techni-
cal development needs for the Plant-Based Systems business sector. Plant-Based Sys-
tems encompasses small project benchmarking, turnaround benchmarking, and licens-
ing of IPA’s FEL Toolbox.

Previous to her promotion to a managerial position, she served on IPA’s Review Board for two years, re-
viewing projects for multiple IPA business areas. Before her position as a Reviewer, she was a Senior
Project Analyst with IPA's Latin American Project Center (Centro de Proyectos Latinoamericanos) and
was involved in the analysis of petroleum, chemical, and mining projects in Latin America, the U.S., and
Spain. In addition, Phyllis has led megaproject assessments, site benchmarkings, turnaround evalua-
tions, and analyses of exploration and production projects. In 2003, Phyllis presented the results of a
research study that she led on Joint Venture projects at IPA’s annual Industry Benchmarking Consortium
(IBC). Phyllis was the Coordinator for IBC 2010.

Prior to joining IPA in 2002, Phyllis interned as a translator for Repsol YPF in Buenos Aires, Argentina.
Phyllis holds a B.S. in Languages and Linguistics from Georgetown University, Washington, D.C.

To subscribe to IPA’s Newsletter, please visit our website at www.ipaglobal.com.

To be kept informed regarding upcoming IPA Institute programs and courses being devel-
oped for capital project improvement, join our mailing list at www.IPAInstitute.com

© Independent Project Analysis, Inc. 2010 Excellence Through Measurement®

 Volume 2, Issue 2 Page 6

Advances in Understanding Mining and Minerals Project Cost

and Operational Performance: A Summary of Recent IPA Research
Sally A. Glen

Over the last several years, IPA has invested in developing a better understanding of the
cost and operational performance of mining, minerals, and metal (MMM) projects. This
article discusses our recent research results in the areas of mine definition, mineral proc-
essing project operational performance, heavy haul railroad cost analysis, hydrometallur-
gical plant cost per tonne analysis, and coal handling and preparation plant cost curves.

The Database
IPA’s MMM project database has grown from 300 projects in 2005 to 700 projects and now contains more than
35 owner organizations. Since 2005, approximately 65 mine development projects have been evaluated by IPA,
including data from 25 completed mine development projects. The database has worldwide coverage across
remote and diverse locations, containing both open pit and underground mine developments. The primary com-
modities represented include bauxite, coal, copper, diamonds, gold, iron ore, nickel, and oil sands.

Mine Definition and Cost Growth

Since 2005, IPA has been assessing the
level of mine definition for projects contain-
ing a mine development at the time the pro-
ject is authorized. The Mine Front-End
Loading (MFEL) Index is made up of four
categories: orebody and waste definition,
site factors, design status, and project exe-
cution planning. A rating is assigned to each
of the 16 sub-components, and an overall
MFEL rating is then calculated.

Our data analysis shows a strong relation-

ship between the level of mine definition
and cost growth. Better-defined mining pro-
jects, as measured by the MFEL Index,
have less cost growth. As shown in Fig-
ures 1-3, better MFEL helps to improve Figure 1. Mine Definition Drives Predictability
project cost and schedule predictability,
eliminate cost growth, enhance startup and
early operability performance, and achieve
better safety results. Well-defined mine de-
velopment projects are also more likely to
experience fewer late changes after authori-
zation.

A mine development project is character-

ized as being capital intensive, having a
long cycle time from concept to an operat-
ing facility, and having a large environ-
mental and community impact. Project eco-
nomics are sensitive to product prices and
frequently require modification because of
poor predictability of the far-future commod-
(Continued on page 7) Figure 2. Better Mine Definition Correlates With Better Safety Results

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ity and currency market, placing the project definition phases at risk of extreme business pressure.

Common problems in Industry include

costly commissioning problems and delays
in startup, poor recoveries, and cost growth
and associated poor profitability. A review of
the key drivers of poor performance fre-
quently points to gaps in basic data knowl-
edge related to mine definition. Inadequate
drilling to support geological interpretations,
misunderstanding of grade variability, and
insufficient metallurgical testwork are some
of the technical data gaps. Team alignment
and project execution planning are also ar-
eas of opportunity for many projects, with
delinked mine and facilities teams and a
lack of joint mine and facilities project exe-
cution planning evident in many projects.

IPA’s MFEL data are showing strong links Figure 3. Better Mine Definition Drives Reduced Startup/Operability
to key project outcomes and IPA’s MFEL Problems
Index is a tool that can be used in Industry
to enable more successful mine development projects and enhance shareholder returns through competitive
and predictable project outcomes.

Understanding Operational Performance Deviation

The early attainment of operability performance consistent with the promise to an organization's Board of Direc-
tors is crucial to the cash flow in the first year of operations and the ultimate return on investment. IPA’s meas-
ure of operational performance for projects is the percentage of nominal planned or actual design nameplate
capacity, depending on whether the project is completed or just authorized, during months 7 through 12 follow-
ing mechanical completion.

To capture and discuss differences between the planned early operability targets and actual early operability
performance, IPA will now report early operability performance deviation, which, by definition, is the difference
between planned and actual design nameplate capacity expressed as a percentage of the target, for all MMM
projects containing a processing plant and for mine production shortfalls.

Heavy Haul Railroad Cost Analysis

During 2009, IPA conducted research into heavy haul railroad costs. These railroads are typically constructed
to transport sea-borne commodities from mine to port. Not surprisingly, we found a strong relationship between
length and capital cost. Scope included in the benchmark cost analysis includes tracks, bridges, crossings, the
main line, spurs, switches, signaling, typical site preparation and embankment, and typical access road require-
ments. IPA is now providing benchmarks for railroad components of mining projects and this cost analysis tool
can be applied in cases in which the railroad length is between 5 km and 865 km.

Hydrometallurgical Plant Cost per Tonne Analysis

Recent work has been completed on a cost regression for hydrometallurgical processing plants, relative to
throughput in tonnes per year. The dataset includes projects installing greenfield and expansion gold, copper,
and nickel plants and involves 12 owner organizations from the world’s key mining districts.
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The research found a strong cost relationship between cost and throughput, which can now be applied in cases
in which a project contains a hydrometallurgical processing plant. Capacity ranges up to 150,000 tonnes per
day of throughput are contained within the regression.

Coal Handling and Preparation Plant Cost Curves

In late 2009, IPA completed a preliminary study of the relationship between the total installation cost and plant
design capacity and other process parameters in millions of Run of Mine (ROM) tonnes for greenfield coal han-
dling and preparation plants (CHPPs). For the study, the CHPP scope included the process facilities between
the ROM tip and product stacking. Scope exclusions included ROM conveyors, ROM material and product
stockpiles, and tailings transport and disposal facilities. The study involves a database of completed and ongo-
ing greenfield CHPP projects, executed by four different companies in South Africa and Australia. More obser-
vations are required and IPA plans to capture additional data from projects as they are completed.

The study found that the plant design ROM capacity (expressed in millions of tonnes per annum [MMtpa]) is a
significant driver of CHPP total installation cost, with the statistical model explaining a majority percentage of
the cost variation in the dataset. This preliminary cost analysis tool can be applied, with limitations, to both cok-
ing and thermal CHPPs with capacity ranges of between 5 and 18 ROM MMtpa.

Future Research
The next generation of cost relationships is now being tested on the following scopes: residue and tailings
ponds, port/marine facilities, materials handling, and copper/gold and iron ore plant cost regressions.

For additional information regarding IPA’s mining and minerals project cost and operational perform-
ance research, please contact:

Sally Glen, Frederick Biery, Rob Young,

Australian Office Director Business Area Manager Regional Director, Asia Pacific

[email protected] [email protected] [email protected]

Professional Profile: Sally Glen, Australian Office Director

Sally heads the Australian operation for IPA and is based in Melbourne. Since joining IPA in
2003, Sally has held project analyst positions and has been a Business Area Manager for
the Mining, Minerals, and Metals (MMM) industry sector, responsible for developing the
clients and project analysts that are involved in the industry sector.

As a project analyst, Sally has evaluated more than 100 petrochemicals, refining, mining and minerals,
and oil and gas projects, ranging from small projects to megaprojects. Sally has been a facilitator at sev-
eral of IPA’s Front-End Loading and Lessons Learned workshops, and in 2004, spent two months in Bra-
zil and the United States co-facilitating a capital project system redesign for a major minerals client.

Sally rolled out the Mine Front-End Loading Index at the Industry Benchmarking Consortium (IBC) 2005,
and researched and presented IPA’s Hot Spot Research for Western Australia at IBC 2006. Sally has
been client coordinator for three of IPA’s clients from the MMM and Oil and Gas industry sectors, and has
taught a range of capital effectiveness-related topics for the IPA Institute. Sally has also been a guest
lecturer at the University of Western Australia since 2007 for fourth-year mechanical engineering stu-
dents. Sally holds a B.E. (Hons) in Civil Engineering from the University of Melbourne.

© Independent Project Analysis, Inc. 2010 Excellence Through Measurement®

 Volume 2, Issue 2 Page 9

Upcoming IPA Events and Presentations for 2010

June 21 Best of UIBC 2009 Road Show in Houston, Texas

The Upstream Industry Benchmarking Consortium (UIBC) 2009 Road Show will be hosted
by Marathon. The UIBC Road Show is open to all UIBC companies, and provides an op-
portunity to extend the UIBC metrics and research to company participants that were un-
able to attend the main UIBC 2009. For more information, please contact Rolando Gächter
at [email protected].

June 22 Best of IBC Roadshow 2010 in Kuala Lumpur, Malaysia

The Asia Pacific IBC 2010 Road Show will be hosted by Petronas. This Road Show is
open to all IBC companies and provides an opportunity to extend the IBC metrics and re-
search to company participants that were unable to attend the main IBC. Both large and
small (site-based) project Best Practices and outcomes will be presented at the Road
Show, and opportunities for discussion and networking will be provided. In addition, key-
note presentations from PETRONAS and DOW will highlight specific Best Practices and
opportunities for projects executed in Asia. The Road Show is highly recommended for pro-
ject and business professionals directly involved in the management of capital projects and
turnarounds. For more information or to register, please contact Loretta Tan at ltankim-
[email protected] or Yvonne Tay at [email protected].

June 22 Upstream Cost Engineering Committee (UCEC) 2010 in Houston, Texas

The purpose of the Upstream Cost Engineering Committee (UCEC) Annual Meeting is to
improve upstream project and business results by providing metrics for better cost engi-
neering. The UCEC metrics provide asset evaluation and concept development functions
with a better understanding of costs and schedules. For more information, please contact
Carlton Karlik at [email protected].

September 14 - 16 Cost Engineering Committee (CEC) 2010 in Dulles, Virginia

The purpose of the Cost Engineering Committee (CEC) is to extend the IBC forum to cost
engineering practices with a focus on cost and schedule metrics. By using these cost and
schedule metrics and research findings, companies can improve their project and business
results. For more information, please contact Robert Brown at [email protected].

November 8 - 10 UIBC 2010 in Tysons Corner, Virginia

The UIBC 2010 provides an independent forum for each participating company to view its
performance against the performance of other companies. The consortium highlights Best
Practices, reinforcing their importance in driving improvements in asset development and
capital effectiveness. For more information, please contact Rolando Gächter at
[email protected].

© Independent Project Analysis, Inc. 2010 Excellence Through Measurement®

 Volume 2, Issue 2 Page 10

2010 IPA Institute Program Schedule

To view full course descriptions, pricing, up-to-date registration details,
and special discounts, please visit our website at www.IPAInstitute.com

Practices for Shorter, More Cost Effective Turnarounds (14 Professional Development Units)
June 16 - 17: São Paulo, Brazil October 12 - 13: The Hague, The Netherlands

Project Management Best Practices (22 Professional Development Units)

June 22 - 24: Chicago, Illinois July 27 - 29: Denver, Colorado
August 17 - 19: Lima, Peru August 24 - 26: Calgary, Canada
September 7 - 9: Buenos Aires, Argentina October 12 - 14: Singapore, Singapore
October 26 - 28: Rio de Janeiro, Brazil November 10 - 12: Reading, England
November 24 - 26: Johannesburg, South Africa

Project Management for National Companies (21 Professional Development Units)

June 22 - June 24: Abu Dhabi, United Arab Emirates

Gatekeeping for Capital Project Governance (12 Professional Development Units)

June 23 - 24: Kuala Lumpur, Malaysia

Best Practices for Mining Projects (16 Professional Development Units)

June 30 - July 1: Lima, Peru September 28 - 29: Perth, Australia

Best Practices for Small and Plant Projects (22 Professional Development Units)
July 13 - 15: Shanghai, China August 3 -5: Houston, Texas
September 14 - 16: Dusseldorf, Germany September 21 - 23: Singapore, Singapore
November 16 - 18: Beijing, China November 23 - 25: Sydney, Australia

Executing Successful Complex/Megaprojects (18 Professional Development Units)

July 13 - 15: Santiago, Chile October 5 -7: Houston, Texas
December 6 - 8: Reading, England

Establishing Effective Capital Cost and Schedule Processes (16 Professional Development Units)
August 24 - 25: São Paulo, Brazil

Exploration and Production Project Best Practices (22 Professional Development Units)
September 6 - 8: Reading, England September 14 - 16: Anchorage, Alaska
November 23 - 25: Rio de Janeiro, Brazil

Contracting in the Changing World of Projects (12 Professional Development Units)

September 29 - 30: São Paulo, Brazil October 13 - 14: Santiago, Chile

© Independent Project Analysis, Inc. 2010 Excellence Through Measurement®

 Volume 2, Issue 2 Page 11

Independent Project Analysis, Inc.

Dear Friends of IPA,

On June 1st, I left for my very first sabbatical. I left UCLA the year before I was eli-
gible for sabbatical and there have always seemed to be reasons for not taking one
at IPA. We started our sabbatical program 12 years ago to provide a break of four
months or so for analysts to recharge and gain perspective. I believe it has been an
unqualified success. One becomes eligible after six years of unbroken ser-
vice. The only requirement is that the time be planned; sitting in front of the TV is
not an option.

My plan is to do something I have wanted to do for some time now: write a compre-
hensive book on what goes wrong with megaprojects and what to do about it. I am
writing in the morning and then fishing in the evening--not the ideal order but the
one that is most likely to get the book done. While I am away, the corporate manag-
ers and regional directors will mind the store and I expect my absence will be hardly
noticed.

My best to all of you for a safe and healthy summer.

President, and CEO,

Independent Project Analysis, Inc.

IPA improves the competitiveness of our customers through enabling more effective
use of capital in their businesses. It is our mission and unique competence to con-
duct research into the functioning of capital projects and project systems and to ap-
ply the results of that research to help our customers create and use capital assets
www.ipaglobal.com more efficiently.

The IPA Institute’s mission is aligned with the overall IPA mission to improve the
capital productivity of its clients. The programs offered provide a forum for in-depth
understanding of key elements of the capital project process and how to apply these
www.IPAInstitute.com learnings to effect positive changes and improvements, resulting in the more effec-
tive use of capital.
Independent Project Analysis Newsletter is published and Copyrighted © 2010 by Independent Project Analysis, Inc.
Editor: Kelli L. Ratliff, IPA Institute Analyst. [email protected]
Reproduction of material which appears in Independent Project Analysis Newsletter is prohibited without prior written permission from IPA.

© Independent Project Analysis, Inc. 2010 Excellence Through Measurement®

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