The term Minimum Viable Project is becoming an increasingly important initiative in project delivery, but what does it mean?
A minimum viable product is described as a concept from Lean Startup that stresses the impact of learning in new product development.
The concept of minimum viable product is a product with enough features to attract early customers and validate a product idea. Once the minimum viable product is proven successful and sales have been generated, additional features are added and tested for market acceptance.
In essence, the product generates cashflow for further feature development through a staged ‘develop and test’ regime. This concept allows teams to collect the maximum amount of validated learning with the least effort and capital. Further capital is not spent on a feature that has not passed the market acceptance test.
The concept of minimum viable product can easily be applied to projects, hence the term Minimum Viable Project (MVP).
The key business drivers for MVP’s include:
- Derisking a project’s technical profile.
- Increasing the likelihood and success of project funding.
- More efficient and targeted use of project capital.
- Generating early cashflow for further project investment.
As the global economy continues its preparations to emerge from the cloud of Covid-19, considering MVP options should be high on the agenda of any mining or industrial company looking to get a new project off the ground. This involves looking at development opportunities through a different lens in order to maximise the potential of transitioning a positive drill result into a sustainable operation – the most graceful solution may not be what gets the project off the ground.
What does a Minimum Viable Project look like in our industry?
The answer to this question is highly dependent upon the individual characteristics of the project, but essentially it is about identifying the most cost effective option to safely bring a project into production and generate early cashflow.
An MVP could be any one, or combination, of the following:
- Establishing a ‘starter pit’.
- Building a smaller processing plant that can be expanded at a later time.
- Identifying and sourcing a second-hand plant, or large components thereof.
- For bulk commodities in particular, matching production scale to a cost effective logistics solution.
- Producing an intermediate product for early sale, leaving more complex downstream processing as part of future developments.
- Leveraging a toll processing solution to support establishment of mining operations, with the potential to process ore on-site at a later stage. This model is ideal where potential exists to significantly expand an ore body through exploration.
- Proving up an ore body and socio-economic studies to a level sufficient to attract investment and development interest from larger operators. Tier one and tier two resource companies have a keen eye for identifying projects that meet their investment criteria and are an effective way of monetising projects that are too large to ‘go it alone’.
Where are we heading as an industry?
The resources and industrial sector, explorers in particular, are very adept at seeing the blue-sky in project oppportunities but in uncertain and challenging times, scaling back our intentions sometimes provides the best opportunity to monetise projects.
Junior resource companies know this – it is part of their DNA. However, increasingly we are seeing larger and well established global resource companies also embracing the MVP ethos as tier one assets are proving harder to find and develop economically, and satellite ore bodies are being brought online to maintain production levels as the primary assets are depleted.
This is a good thing for our industry. It will enable a larger number of projects to come to fruition, adding value to our economy – something that is at the forefront of everyones thinking as we start the rebuild process from the recent and unprecendented health and subsequent economic crisis.
How could a Minimum Viable Project option fit into your project development scenario analysis?
It is very common for projects to be influenced by signficant change events, both internal and external. These could include:
- A change in resource scale (up or down).
- The introduction of new technologies.
- Regulatory changes.
- Market and industy sentiment influences (i.e. ESG).
- A material change in the availability of investment capital.
- A change in macro supply and demand fundamentals (both positive and negative).
- Or, as we are currently experiencing, a global pandemic.
Establishing some guiding principles for your project early in its lifecycle, that puts some definitions or boundaries around the question ‘What would we do if event ‘X’ were to occur?’, will give you a scenario-based decision making tool to fall back on during times of uncertainty and opportunity.
If a detailed assessment of an MVP initiative does not form part of your baseline approach, a high-level scenario analysis is one way of at least giving the investigation some air time. Having an idea of what the MVP may look like could potentially save you time, money and minimise reputational risk should unforseen circumtances force you to pivot to a fundamentally different development strategy.
How do you approach identifying a Minimum Viable Project?
To maximise MVP potential it is important to recognise the constant tension that exists between the desire to minimise capital and operating costs, boost economic returns and develop an engineering solution that maximises technical certainty. These drivers can be considered somewhat counter-intuitive and are one of the key challenges that we have to address when following a ‘well-chartered, rules based’ study development methodology – primarily a product of the sheer scale of the projects our industry embarks upon. Engenium understands this and tackles every project with an open minded outcomes based approach.
One of Engenium’s strengths lies in our organisational scale – we have the tools in our belt to match many of the larger engineering firms. Our project delivery DNA and flexible approach enables us to tailor our services to suit your specific requirements.
Our systems exist to provide governance and predictability in outcomes, once the preferred development approach is defined – not to dictate terms. This is the ‘Engenium Way’.
Over the years we have successfully helped a broad range of clients bring their projects to fruition, with a strong emphasis on identifying the solution that meets the underlying requirements of the project – quite often far removed from the preferred technical solution.
Our extensive experience with junior resource companies in this regard is portable to companies and projects of all sizes. If your project demands an approach which looks outside the square and challenges the status quo to define the parameters for an MVP, we are here to help.
Business Development Manager, Perth WA
Engenium Pty Ltd