After winning the US$533 million
bid to build a coal-fired power plant
for Newmont Nevada Energy
Investment Ltd., Fluor Corp. was just
about ready to kick off the project.
Material and labor costs had been
steadily rising, and the Irving, Texas,
USA-based company thought it had
researched and prepared for every
conceivable problem the project
Then Hurricane Katrina hit.
And even though the storm landed
more than 1,500 miles ( 2,414 kilometers)
away from the plant project site in rural
Nevada, USA, it altered everything.
“The entire economic landscape
changed in a month,” says Richard
Gerspacher, PMP, Fluor’s project director.
“We felt the impact right away.”
Laborers across the country flocked
to the ravaged Gulf Coast, leaving Mr.
Gerspacher’s team scrambling to fill
jobs at the project’s remote desert site.
Newmont had launched the project
to offset soaring energy costs at its gold
mine— 25 percent of the total operation
costs went to paying the power bill.
Once complete, the 242-megawatt coal
plant would take the mine off
the local energy grid, reducing
Newmont’s power costs by
US$60 million to US$70 million per year and creating an
additional revenue stream from
power sold back to the grid.
“From a business perspective,
this project was very important
to Newmont,” says Patricia
Downing, project director at
Newmont Mining Corp., which
owns Newmont Nevada Energy
Investment Ltd. “It was a solution to help us improve our cost
It was a solid plan, but costs
skyrocketed when skilled labor
became more scarce. As the team
scrambled for resources, the project
deadline was in jeopardy. And that
“Staying on schedule was
extremely important on this
project,” says Gary Hevelone,
Newmont’s project manager.
“Newmont establishes its budgets
three years in advance. Any
delays would have considerable
financial impact on the mine
because the reduced cost of energy
had already been factored into the
budget. It translated to US$5 million to US$7 million per month.”
THE NEW DEAL
Mr. Gerspacher was left with an awful
choice: Ask Newmont for more money—
or figure out how to do more with less.
He and his team sat down and
devised a detailed plan. They tracked
the cost of labor around the country,
Contractors on projects tend to be reserved and
don’t want to talk about problems they see, but
through these offsite meetings we were able to be
honest and listen to each other. —Gary Hevelone, Newmont