Simulation Analysis for Mining Project Risk Mangement

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Proceedings of the 2009 Winter Simulation Conference M. D. Rossetti, R. R. Hill, B. Johansson, A. Dunkin and R. G. Ingalls, eds.

USING SIMULATION ANALYSIS FOR MINING PROJECT RISK MANAGEMENT Undram Chinbat Soemon Takakuwa Furo-cho, Nagoya University Chikusa-ku Graduate School of Economics and Business Administration, Nagoya University Nagoya, 464-8601, JAPAN ABSTRACT As a result of the current economic crisis, which led to metal prices fall, mining company managers have been encouraged to cut costs. Thus, improvement projects to reduce cost has become major interest in the Mongolian mining industry. Mining projects are subject to high risk because of their size, uncertainty, complexity and high cost. This paper focuses on the development
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The Project Management Body of Knowledge (PMBOK), stated that project risk is an uncertain event or condition that, if it occurs, has positive or negative effects on at least one project objective, such as time, cost, scope, or quality (PMI 2004). PRM includes the processes concerned with conducting risk management (RM) planning, identification, analysis, responses, and monitoring and control on a project; most of these processes are updated throughout a project. According to the PMBOK RM has been designated as one of the nine PM knowledge areas (the other eight being integration, scope, time, cost, quality, human resources, communications, and procurement management). Consequently, RM is considered as an important activity of the PM process. Mining projects are subject to high risk because of their size, complexity and high cost. Unfortunately, very little research related to a particularly mining project risks have been conducted up to date. Most of the research related to mining project risks studied oil and petroleum well development projects. Del Cano and de la Cruz (2002) noted that RM becomes an integral part of project management and plays such an important role that its application goes beyond the traditional scope which normally center on the construction phase. Williams (1995) stated in his paper titled “A classified bibliography of recent research relating to project risk

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