Implications of mining project cost overruns for QP liability

Cost overruns are not new to engineering projects. It is a problem when the scale and frequency is high. Unfortunately, the mining industry has a reputation for cost overruns during project construction. Different people have estimated mining cost overruns to nearly 40%. This is significant because all the CRIRSCO standards require capital and operating cost accuracy of ±25% and ±15% for prefeasibility and final feasibility studies, respectively. The US Securities and Exchange Commission’s (SEC’s) Regulation S-K 1300, in addition to this, asks qualified persons (QPs) to state the accuracy of their cost estimates in technical report summaries filed with the Commission. In this post, I am going to share my thoughts on the causes of these cost overruns and the implications for QP liability in public reports.

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