2641 business case cannot afford or it is assumed that “we will find the money for later once cashflow begins.” During start-up and ramp-up the number of maintenance and operations personnel required is often about three times the number required after steady state operation at full design rate has been achieved. Unfortunately, this is frequently realized too late, impacting the ramp-up schedule and effectiveness, impairing the business case and wearing out the team. This cascades into increasing costs and time, potentially impacting customers expecting the off-take quality and quantity. 6.IMPLICATIONS FOR INDUSTRY To illustrate the impact of ramp-up performance on realization of value, the present authors have developed a simplified financial analysis for a hypothetical gold processing facility with a capital cost of US$397 million to show how Net Present Value (NPV) is a function of the McNulty Curve Series. For financial comparison, we have assumed that these hypothetical projects continued operations for 30 years (we acknowledge that Series 4 projects will likely be abandoned earlier). NPV was calculated using a discount rate of 10%; a high NPV is considered the best outcome. Figure 3 presents the results. It is seen that a Series 2 result destroys almost half of the Series 1 NPV. This clearly shows the impact of ramp-up performance (i.e., production revenue over time) on NPV. Figure 3 – Understanding the implications of ramp-up performance on NPV. Achieving Series 1 ramp-up performance protects the business case, whereas a Series 4 ramp-up performance destroys it. The results of our simplified financial analysis for this hypothetical gold processing facility are to be considered indicative and were used to show the significant impact of extended production ramp-up times. Delays in ramp-up represent delays in production revenue, which directly impacts NPV. Obviously, the huge variance between the NPV of a Series 1 versus Series 4 ramp-up impacts the project’s ability to be considered a success. Understanding how ramp-up performance impacts NPV is essential to protecting the business case for stakeholders and shareholders. 7.CONCLUSIONS The present authors echo the important reminder of the 1998 McNulty paper to owners of a new project to be diligent and careful, have some experienced hands on the project, to use common sense, and to question the validity of available information. The results of the present authors simplified financial analysis
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