When a Small Oversight Becomes a $400K Problem

Imagine running a mining project, hitting all your targets, and keeping the client happy—only to realize months later that you’ve lost $400,000 because of a single missed contractual notification.

This isn’t a hypothetical scenario. It actually happened at an underground mine, and we broke down exactly how it unfolded—and how AI-powered contract management could have prevented it.

This case study is a perfect example of why contract administration failures are costing the mining industry millions, and why it's time for a smarter, AI-driven approach.

‍
The $400K Mistake: What Went Wrong?

The project started off well:
The contractor was delivering a development contract smoothly.
Margins were strong at +15%.
The client was happy, and targets were being met.

Then, things changed.

Bad ground conditions emerged in an ore drive—fractures, increased jointing, and a major slip plane.
Cycle times blew out—scaling took 3 x longer and bolting took 5 x longer.
Performance plummeted—and in a matter of months, the contractor's profit margin flipped from +15% to -15%.

The team was working overtime to fix the operational issues. But what they didn’t do was check the contract.

The Contract Clause That Could Have Saved Them:
A latent condition clause in the contract allowed the contractor to claim additional compensation for unexpected ground conditions—but only if the client was notified within 7 days.

The Problem? They missed the deadline—and it cost them $400K.

‍

Why Did This Happen?

Like many contract administration failures in mining, this came down to three core issues:

Lack of Awareness

The site team didn’t recognize that this was a claimable condition under the contract.
Their focus was on solving the operational issue, not checking contractual entitlements.

Process Failure

The claim process wasn’t flagged in time—by the time commercial management got involved, it was months too late.
Emails and site reports mentioned bad ground conditions, but there was no system in place to connect this to contractual obligations.

No Systematic Review of Records

When the commercial team tried to build a case for compensation, they had to search through months of scattered emails, site reports, and desktops.
It took weeks to find evidence that could support a claim—but none of it mattered because the notification deadline had passed.

The client agreed that the ground conditions were unexpected, but only approved compensation from the day the notification was sent onward.

The result? The contractor lost $400K in recoverable costs.

‍

How AI Would Have Prevented This Loss

In a traditional contract management process, issues like this slip through the cracks because people are busy firefighting operational challenges. AI fixes this by providing real-time risk detection, instant contract answers, and automated compliance tracking.

Here’s how Hevi’s AI-powered contract intelligence would have stopped this $400K loss:

Step 1: AI Email Monitor Detects the Issue

• Hevi’s AI Email Monitor scans site reports, emails, and correspondence.
• As soon as “bad ground conditions” are mentioned in the ore drive, it flags the contractual risk.
• Project managers & the commercial team are notified immediately.

Step 2: AI Chat Confirms the Claim Process

• The team asks: “Does this qualify as a latent condition claim?”
• AI cross-references the contract and responds:
  Yes, this qualifies under the latent condition clause.
  Notify the client within 7 days to secure compensation.

Step 3: AI Generates the Notification

• AI generates a formal notification letter to send to the client.
• The claim is submitted on time, securing full cost recovery.

Step 4: AI Search Provides Defensible Documentation

• AI retrieves all supporting evidence (emails, site diaries, reports) instantly.
• The contractor has a strong, defensible case—eliminating disputes.

The result? No missed claims. No lost revenue. No unnecessary disputes.

‍

Don’t Let the Next $400K Slip Away

Mining contracts are complex, and human error is inevitable.
But AI doesn’t miss deadlines. AI doesn’t forget contract clauses. AI doesn’t let money slip through the cracks.

If your team is still managing contracts manually, the question isn’t if you’ll lose money—it’s how much.

Want to see how AI can safeguard your contracts?
Book a live demo today: https://calendly.com/paulculvenor/30min

The future of contract administration in mining is AI-powered. Are you ready?