UBC Theses and Dissertations

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UBC Theses and Dissertations

Recognition, modeling and pricing of flexibility in construction of cave mining systems Ahmed, Haitham Magdi


Mass caving systems require significant capital expenditure and long-term commitment of resources before production commences. Cave mining projects are confronted with numerous challenges in maintaining their construction schedule expectations. Any delay in construction impacts on the production schedule and, in turn, reduces the project value. In order to increase the expected economic value, the construction schedule needs to be accelerated through strategic flexibilities. It is hypothesized that construction acceleration (crashing) can be achieved by prioritizing the construction schedule or changing the construction strategy. This thesis seeks to expand current knowledge on three interrelated domains for decision making in engineering systems—(i) recognition, (ii) modeling and (iii) pricing of flexibility in cave mining construction. An objective of this study was to provide state-of-the-art project formulation techniques employed in planning that can be used to support decision-making processes in cave mining systems. The first domain requires identifying construction strategies that allow the mine management to implement construction crashing in multiple heading development. Three independent and interrelated flexibilities are considered. The second domain requires development of a methodology suitable for investigating and forecasting through modeling the development and construction rates enabling implementation of flexible strategies. A method capable of modeling the development and construction processes with respect to the advance undercut mining strategy is developed, which integrates the geotechnical and equipment-related uncertainties, using the framework of discrete event simulation. Several models are developed to investigate the impact of implementing these flexibilities on the development and construction rates. The results from the flexible models compared to the benchmark models confirmed that significant construction benefits can be achieved. The third domain requires development of an algorithm suitable for evaluating the cost of implementing a construction crashing option that can accommodate delays. A method that is able to respond to schedule uncertainties in construction projects by incorporating the decision-making strategy of project crashing into the budget, including the cost contingency valuation, is developed using the framework of real options and Monte Carlo simulation from a contractor’s perspective. The results indicated that significant change in costs stems from the variation in risk perceptions and confidence levels.

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Attribution-NonCommercial-NoDerivs 2.5 Canada