Early in my career as a management consultant, a colleague and I were working on a project for a large gold mining company. The mine had more improvement opportunities than they had funding for and so wanted to ensure that they spent their limited capital on the best possible combination of opportunities. They needed four months worth of modelling completed in two weeks to meet budget deadlines. So, we locked ourselves away in tiny, windowless room with a steady supply of coffee and ingenuity and two weeks later we had created two value calculators identifying 35 million tonnes in increased productivity.
I’ve taken what I learnt from that project, and many like it, to identify 15 principles that allow you to successfully use value driver modelling and avoid many of the pitfalls that can derail a project.
These principles group into three broad categories:
- Building a model
- Using correct logic
- Working with data