Jansen Mining Company: Conceptual Model Based On Transaction Costs

Introduction to Jansen Mining Company

Question:

Discuss About The Conceptual Model Based On Transaction Costs?

Jansen Mining Company Jansen construction project has not yet received any approval from the company stakeholders. This means that the construction has not officially commenced, however, there is the need for trials in such large and expensive projects. The project is actually needed by the company to increase its current potash production hence business expansion. By opening the Jansen potash mining site, the company will be increasing its potash locations and plant mines. The project’s most important need is towards business expansion and increase of potash mining and production.

Jansen Mining Company is a public multinational company that specializes on multinational mining of metals and petroleum. The company’s headquarters are based in Melbourne, Victoria, Australia. However, the company has branches located in the major towns of Australia e.g. New Zealand, Australiaand New South Wales among others. Furthermore, it also has branches in other parts of the world like Brazil, London, UK, Canada, Mexico, Us to name a few of them. Besides being one of the oldest and largest mining companies in Australia, it is also one of the successful ones in the country. It has been listed to be among the four largest companies in relation to market values, marketing share and revenues received per year. Jansen Mining Company is also good at extracting other metals like iron ore, coal copper, natural gas, nickel and uranium. Being a public company, Jansen Mining Company is owned by a large number of stakeholders or shareholders who can sell or buy share in the Australian stock exchange market. This fact gives the company the opportunity for fast growth and development.

Our mission is to be a highly rated and respected company in the mining industry dealing with natural resources, by focusing on excellent deliverance of value to investors, employees, business owners and other company stakeholders.

Jansen Mining Companyis a diversified mining company that strives hard to bring value, development and improvement to the society by extracting and production of the natural minerals and other materials. The company participates in community activities that lead to community growth through educating and creating awareness on benefits that attribute to thmining industry. Most of the company’s benefits are focused on developing and benefiting the company stakeholders, both internal and external exclusively.

• The projects main objectives are:
• To expand the company operations to Saskatoon, Melbourne
• To increase volumes of potash mining and production
• To take part in the development of Melbourne town
• To provide jobs to the public especially those with mining and construction knowledge, skills and experience

These refer to the basic and most important factors or activities to be completed with high standards and quality to be able to achieve the project’s goals and objectives. The following are some of Jansen’s construction project critical success factors:

Jansen Mining Company’s construction project

The budget of this project will be estimated in such a way that it will cover all the expected costs during the project implementation. The project budget was estimated to cost approximately US$14billion. However, the amount of funds that have been set aside towards the project to date is just US$ 3.8 billion. Jansen Mining Company Jansen project has been a costly and has been deemed expensive because so far the project has not been approved till 2020.

The project’s scope is limited to the extraction of potash only and no other mineral or metal in the areas. Also, the Company has specified the site to be around Saskatoon, Melbourne.

The project having not been approved, it will take a long time for it to be aproned and officially commence the potash mining and production. However, the company has revealed some rumors that the project may commence and start operating in 2020 or 2023.

Jansen Mining Company’s organizational change will be adverse but still planned for. In a construction project, the organizational change will affect both the management and the employees. Jansen Mining Company is a public company owned by a group of shareholders but headed by a group of board of directors with a single management structure. The senior management is headed by the company’s CEO then other managers under him. When the project becomes operational, the organization’s management structure will be affected. New managers will need to be hired, increase the number of board of directors and employees to be increased. The management structure will be modified to suit the new size of the company.

Currently, Jansen construction project currently has some options at its disposal. The reason is because the company has been revolving around approving the project and deeming it operational for a number of years now, but has not yet done any of that.

Option 1: Selling the whole project to a new company or rather a capable company

Option 2: To continue with the project but as a joint venture between Jansen Mining Company and another company.

Option 3: to fund the company on its own and continue with the approval process no matter how long it will take.

With the chosen options, the business has to evaluate them in order to agree on the best option. Therefore, the business should come up with suitable way of evaluating the options. This means that there should be certain measure to be taken under consideration. In this case, the business will consider the cost of the option, effectiveness and efficiency of the option towards business objectives, the option must be affordable for all parties involved, the urgency of the option or project itself and the seriousness of the parties involved. The following table will help the business in making the best decision about the project.

Option	Urgency	Cost	Affordability	Effectiveness towards objective achievement	Seriousness of involvement	Option Rating
1	Very	US $3million	Very affordable	Most effective	Very serious	4
2	Fairly	Total cost divided i.e. US$7 each	Fairly affordable	Fairly effective	Fairly serious	3
3	Less urgent	US $14Billion	Less affordable	Less effective	Les serious	2

Critical Success Factors of Jansen Mining Company’s Construction Project

Through evaluating the business, the business will have an idea about which option is best for its financial status and which one is capable of achieving its goals and objectives. The evaluation criteria will also evaluate all the possible companies that can be part of each option. The business will rate the options on a level of 1-5. The option rated higher on all aspects will be the one that will be chosen which will also help in making an economic evaluation on each option besides the above listed aspects. The evaluation can be done in terms of possible returns in case of success, identify the future impact or effect of each option to the project’s goal and objective and most importantly its economic status or rather how efficient the option is to the project’s status.

From the details given on the project need and business introduction, the best option is to make the project a joint venture operations with a willing business. However, the business should be from the same industry or rather should be famous and popular for its business operations in the same sector. Also, the option will be decided upon after a thorough evaluation summary has been done by the business management team to ensure that nothing is left out. Therefore, this joint venture is the best because it will give the business an opportunity to recover its previous costs and expenses that were used in the trial operations. Also, it may be a great opportunity for the business to achieve the project objective at a faster rate than when working on the project on its own.

Project scope definition can be said to be a management process which determinesa project deliverables, goals and objectives, identification of resources to be used, roles and responsibilities or tasks to be carried out, project costs and the project timeline among other things. Technically, the project scope gives the boundaries to what the project should and should not achieve or act upon (Fageha et al, 2013). This project, the scope will involve all these aspects and other activities that relate to construction projects. In this scope, the client (business owners and shareholders)and the project managers will be involved in the definition of project scope.

Normally, no project is independent, all project depend on a certain environmental aspects for its completion and success, i.e. both the internal and external environment in which they are being implemented. Therefore, dependency basically refers to the relationship of different project tasks relying upon one another (Izmailov et al, 2016). A constraint is a limiting factor towards certain performance. Therefore, in this project, the following aspects will be listed as some of the project constraints: Scope- This aspects is a limiting factor to every project because it constraints a project to cover certain specific roles and responsibilities, by use of specific amount of resources, an estimated budget and cost at a specific period of time (Dmitrievich et al, 2016). The scope also ensures that the end product of the project has achieved certain specific quality standards and can achieve the specific objectives (Adler, 2015).

Evaluating Options for Jansen Mining Company’s Construction Project

Time schedule- this is a limiting to the project because it provides the project managers with a time span within which they should complete the project.

Estimated budget costs- the project is limited to be completed within the budget that is estimated during the implementation plan.

Resources- every project has limited resources to use in the execution process of the project.

Quality- every end product of a project and the project process as well have certain specific quality standards to be reached after completion.

To manage the scope of the project successfully, all the deliverables have to identified and planned for effectively (Banda et al, 2016). The project managers will also ensure that the business owners and stakeholders are involved in the process so that they can air out their opinions and ideas.

The project’s deliverables will be provided by the stakeholders and the business owners because they are the ones to use the project’s end product. Project deliverable will include issues like product quality, quality of the project process and other characteristics that relate to the end product of the project.

Some of the projects KPI’s listed will be: the major project milestones or activities, actual cost of the project verses the estimated costs, major tasks to be done, the available resources and their allocation methods among others. These will be the main project aspects that will push it towards completion and objective achievement.

This is whereby a project manager and the team members will be based on the same organizational department. In this structure the project manager will be in charge of all the team member but there will be freedom of speech and opinion in matters relating to the team members (Poli et al, 2009).

The organization’s top management team will include of the company’s board of directors and its top managers, then the project director, then the project managers and lastly the project team members respectively

This will include the following persons, project specialist reporting to project group leader, who reports to project manager who then reports to the project director who reports to the board of directors. The reports will involve the project status and progress whenever they are needed.

This involves resource purchases, reimbursement, types of suppliers, terms and conditions of the contracts etc (Chong et al, 2014). The project managers will be responsible for purchasing the required resources but the organization management team will fund the purchases.

Defining Project Scope, Dependencies, and Constraints

The stakeholders will be communicated to through emails, group meetings, phone calls, print media advertisements, social media networks and other effective communication channels.  The project managers will be responsible of ensuring that the intended information has reached them whenever required (Too et al, 2014).

The time period set for the project to befinished and operational in the next 3 years, i.e. by 2023 the project should have been completed. The time was estimated by considering the all the project constraints and project trials undertake in the previous years.

Itwas funded by the organization’s investor funds or the stakeholder money. In other words, the organization’s funds will take care of any costs involved in the project in case the company decided to continue with the project on their own. However, in case the other options are chosen, the costs will be divided according to agreement.The budget that was estimated totaled to US$14billion.

The project managers will ensure that any possible risk is identified early enough and solution found. In this kind of project, the following are some of the risks that may arise (Zou et al, 209): technical risks (caused by change in project scope, client demands and designs), logistics risks (relate to lack of crucial equipment and materials like nails, fuel and labor), environmental risks (changes in weather and climate causing loss of time and other resources (Omran et al, 2015)), financial risks (related to lack of enough funds to finance the project till its completion) and management risks (involves the change in management structure and technique).The quality of the project and its end product will be determined by the business owners and the stakeholders, they will have to approve the quality standards of the project and its product after it they are sure of its success in achieving the expected objectives and met its required quality standards.

The project will be deemed complete only if it is completed on time, within budget and within the project scope (Gibson et al, 2007). Additionally, the project will be said to be complete if its end product is capable of achieving its set objectives.

The organization will realize the benefits when the end product from the project starts its function and achieving the expected goals and objectives. The mining site should be able to show profit realization and business growth.

References

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Jansen Mining Company’s Mission and KPIs

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