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Ingeniera de Enlace (Liaison Engineering) What is it and what is it for?

From the point of view of investment, engineering has been divided into two stages: Pre-investing stage Investing stage

The decision as to whether to invest or not is what makes the division here. All studies and engineering before taking the decision to invest are part of the preinvesting stage. Everything done afterwards is part of the investing stage. Thus, there are the preliminary, conceptual and basic engineering for the preinvesting stage and the detail engineering for the investing stage. Normally, the detail engineering is complemented by the ingeniera de terreno (on site engineering) which is done to solve problems that arise during the construction stage. Theoretically, if the 3D model is well done, this on site engineering should not exist. However, generally speaking, projects correspond to expansions of something already existing and sometimes the information available about that is not 100% reliable. Another possibility is that the start-up of a project is intended to be as soon as possible and then a fast-track project is done, in which the construction is started when the detail engineering is still under development or incomplete because the certified information from the equipment manufacturers has not been already received. This happens because the manufacturers deliver their drawings with certified dimensions for their pieces of equipment only after receiving the purchase order. All this rush for the start-up is because the costs generated with a plant in operation are higher than the costs of fixing the problems that may arise due to an incomplete engineering. This being the case, a question arises as to what the limit is between the preinvesting and the investing stage. The answer comes from an agreement between the engineering company and the client, but what is usually agreed is the accuracy of the budget. For example, lets say that for the basic engineering, a 25% accuracy CAPEX should be obtained. In this case, the engineering scope or stage of development has to do with the error percentage that is expected. There is no fixed rule for the scope as to its development stage. Some people determine a list of documents and drawings that must be completed by the end of the basic engineering. What is normally expected is that by the end of the basic engineering the layouts are defined and frozen, but this is just an aspiration, sometimes it does not turn out like that, because to do that, the sizes of the main equipment must be defined and theres the question about which are the main pieces of equipment? Generally, they are defined according to their cost, for instance, the pieces of equipment above US$250.000. Once again, it is something that the parties must agree on.

Finally, once the pre-investing stage is completed (Basic engineering), the owner must decide whether to invest or not, and he also needs to obtain the money (i.e. arrange for the funding to be provided). If the owner is a private company, the project will be presented to the board of the company so that a decision to invest or not is taken. If the company is a state owned company (like Codelco), the project passes through revisions from Codelco, Cochilco (Chilean Copper Commission) and Mideplan (Ministry of Planning and Cooperation) before the money is requested from the Ministry of Finance. In all these approvals certain period of time passes, sometimes it may be half a year or more, during which there is no progress. It is here that the liaison engineering arises. Some examples: - In order to mine the ore, it is accustomed to remove a certain amount of material to facilitate access to orebodies. - In order to access the site with equipment, it will be necessary to build access roads. - It is necessary to wait for the final resolution of permits requested to the National Geology and Mining Services (Sernageomin), the Water Authority (DGA), the Electricity Superintendence, etc. - Other low cost activities that would allow saving time, etc. So the owner is requested a certain amount of money that he would be willing to lose if finally a decision is taken not to invest. This is what is called risk capital. With these funds several design and even some minor works on site are financed which is what is called Ingeniera de Enlace. During this engineering some activities of the detail engineering are done ahead of time while the decisions are taken and the funds become available. What should be included in the scope of this engineering? It depends on the characteristics of each project. For example, there are some sites where works can only be done during summer because of the snow at high altitudes and so it would seem a good strategy to have some designs and some works done in advance. Some designs of the necessary earthworks can also be made to build platforms where the facilities will be built. How about designing a tunnel that allows the access to some strategic place to start developing the mine or earthworks that will allow starting the excavation of tunnels or the designs of the electrical supply system that will be needed to start works on site? In the end, each project has its characteristics and it is based on that the decision to do things ahead of time will be taken. Generally, these activities are those that affect the critical path of the project.