The Economic Evaluation of Lost Production Time

Baker, David (2002). The Economic Evaluation of Lost Production Time Honours Thesis, School of Engineering, The University of Queensland.

       
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Author Baker, David
Thesis Title The Economic Evaluation of Lost Production Time
School, Centre or Institute School of Engineering
Institution The University of Queensland
Publication date 2002
Thesis type Honours Thesis
Supervisor A.D.S Gillies
Total pages 50
Language eng
Subjects 091405 Mining Engineering
Formatted abstract
Mining is an extremely high turnover and high capital industry. If a mining operation stops or reduces production for an extended period of time, the resulting lost revenue has the potential to lead to significant financial distress for both the mining company and the community as a whole. Despite the large cost associated with periods of lost production time and the frequency of occurrences throughout the industry each year, there is very little literature available on the cost of lost production time in the mining industry.

There are a number of insurance options available to a mining operation to mitigate the long term effect a period of lost production will have on its revenue. Business interruption insurance is an insurance policy which enables a mining operation insure against periods of lost production. Business interruption insurance policies are designed put the operation in the same financial position that it would have enjoyed, but for the loss that gave rise to a disruption in production. Some bigger mining operations choose to use a mixture of self insurance and business interruption insurance through third parties. However, the directors and senior management of mining companies must consider the corporate governance issues that could arise should the company face financial trouble due to underinsurance.

Once the insurance pay out has been calculated, the time value of money, the ‘knock on effect’ of lost production and any extra costs that arise as a direct result of a period of lost production must be taken into account. It is then possible to determine the loss a mining operation has suffered during a period of lost production.
Keyword Lost Production Time
Economic

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
 
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Created: Thu, 27 Nov 2014, 16:37:54 EST by Asma Asrar Qureshi on behalf of Scholarly Communication and Digitisation Service