Project Due Diligence.

M&A Due Diligence.

PROJECT and M&A DUE DILIGENCE

 

PROJECT DUE DILIGENCE SERVICES 

Project due diligence utilizes cold eye reviews of a project’s performance against the baseline scope, budget and schedule to advise clients on the actual progress/status of the project and forecast cost and completion schedule. When necessary course corrections are identified, mitigation measures are developed. Due diligence can be carried out at any stage of a capital project but is normally performed at each of the following project milestones:

 

  • Completion of basic engineering
  • 30% detailed engineering completion
  • 60% engineering completion
  • 90% detailed engineering completion
  • 30% construction completion
  • 60% construction completion
  • 95% construction completion

Our team members are selected based on project scope and subject matter expertise, and initially meet with the project leadership team to gain an understanding of the baseline scope, budget, schedule, and execution plan. The following documents are typically reviewed:

 

  • Scope document detailed down to level 3
  • Project estimate (budget)
  • EPC schedule
  • Risk register
  • Contingency cost and schedule
  • HSE plan
  • Quality plan
  • Execution plan
  • Project procedures
  • Construction plan
  • Actual performance against the above baseline documents
  • Review of cost estimate to go and schedule completion forecast

During the review process, additional client team member input may be required for clarification of specific details.

Deliverables typically consist of an initial report to the client leadership team covering our team’s assessment of the physical progress of the project (engineering, procurement and construction), the forecast of completion cost to go and completion schedule, identification of project risks not already tracked by project team, and recommended mitigation measures to minimize/eliminate any cost and schedule overruns. This is followed by a final report inclusive of the above items,  incorporating feedback on the initial report provided by the project team.

M&A DUE DILIGENCE SERVICES 

We help achieve envisioned success of buy or sell side M&A deals.

In addition to capital project management due diligence services our professionals assist investment banks, private equity and venture capital firms, contractors, owners, and counsel with go/no-go decisions in M&A transactions involving engineering and construction businesses, such as EPC companies, operating facilities, fabrication shops, and material and equipment suppliers. Our services include assessment of a targeted facility’s property and equipment condition, production performance data and management processes, ongoing contract liabilities, labor issues, and the asset’s management, operation and maintenance performance.

Our approach involves assignment of multidisciplinary professionals and subject matter experts (SMEs) seasoned in all phases of executive management of a client’s targeted asset. We add value to the planning, evaluation and due diligence stages of an M&A transaction. Our SMEs conduct site visits and perform independent and objective under-the-hood investigations of  provided data. Our focus is identification and assessment of technical and intellectual possessions, evaluation of know-how integration potential, analysis and retention of critical management processes, physical plant and equipment condition, and an appraisal of human resources. Special attention is given to fully understanding potential liabilities of ongoing engineering, construction or supply contracts and mitigation of takeover risk.

Lumen PMC’s technical due diligence experience includes participation in buy and sell side deals involving global engineering and construction firms, operating chemical units, and process equipment fabrication facilities.

 

 
CONTACTS

 

Robert G. James, PE, CFLC
Jan K. Varma, P.Eng.
Ken Bush, PE, PMP
Ronald L. Smith
Thomas Terris
Troy Reynolds

 

REPRESENTATIVE PROJECTS

 

M&A deals in which LumenPMC specialists have added value to the transition team include:

 

  • Assessment of project status of completion and plant equipment condition for an abandoned combined cycle power plant in Connecticut under review for acquisition by a venture capital organization.
  • Due diligence advice prior to its acquisition of several equipment fabrication shops in the Pacific N.W. was provided to an equipment provider in the power generation sector. Services included inspection of plant and fabrication equipment, shop safety and quality operations, and project execution processes.
  • EPC operation and contract management advisory services on a buy-side due diligence acquisition team addressing the potential purchase of an international EPC corporation servicing the global power and process energy sectors. 
  • Evaluation and due diligence examination of property, physical plant, craneage, and fabrication equipment of an operating pipe fabrication facility to be merged into a Houston E&C company.
  • Evaluation of physical plant condition and operating data prior to an ownership change for a styrene-monomer unit in an operating chemical plant in Baytown, TX.
  • Feasibility assessment of logistics for removal and disposition of boiler equipment, piping, and electrical and instrumentation for re-sale by suppliers involved in a bankrupt petrochemical plant in Pasadena, TX.

We have extensive experience in directly managing EPC projects and advising owners, contractors, investors and lenders.  We bring this experience to bear in performing due diligence services across industry sectors:  

Petrochemical

  • Project advisory and supervision services for a 1.3 million ton/year ethylene cracker in Jubail, Saudi Arabia. The scope included technology front end engineering, procurement, construction and start up.
  • Design management for expansion of a major ethylene plant on the US Gulf Coast. Plant capacity was increased 70% by the addition of four new cracking furnaces and implementation of an innovative recovery process.
  • Site resident engineering services for the construction phase of an ethylene unit expansion project in Beaumont, TX. The upgrade involved addition of three new cracking furnaces and a new cold train, doubling the unit’s capacity to 900 million pounds per year.
  • Oversight services for engineering, design, procurement and construction management for an upgrade and capacity increase of a US Gulf Coast Polysilicon facility.
  • Program management services including project development and economic justification; FEED and appropriations estimates; and execution of detailed engineering, design, construction and start-up for a major operator based in The Woodlands, TX.
  • Management services for a polymer compounding organization’s global capital projects program involving projects for existing operations in the US and Canada and development of a grassroots facility in Jubail, Saudi Arabia.

Refining

  • Project management services for a multi-billion dollar heavy oil processing plant expansion at an existing Tar Sands facility in northern Alberta, including EPC execution of the offsites and utilities for the project.
  • Management of in-Kingdom engineering procurement and construction operations for a major utility upgrade of a 550,000 bpd refinery complex at Ras Tanura, Saudi Arabia.
  • Management of site operations during construction of an upgrade of three crude processing units for a major California based oil corporation at their Nederland, TX refinery.

Gas Processing

  • Project management services for an LPG project being developed in the Arabian Gulf by the Abu Dhabi Gas Liquification Company (ADGAS), involved working on the PMC team directly with the engineering contractor and the owner to develop the FEED package.
  • Project management advisory services for a major helium producer involved analysis and reports addressing the quality of its supplier’s engineering contractor’s failed design-build delivery method for construction of a natural gas processing unit in western Wyoming.

 

 

 

Power Generation

  • Construction examination pursuant to state of Florida threshold inspection regulations during construction of an emergency generator unit at the Turkey Point Nuclear Station in South Florida.
  • Consulting services addressed evaluation of alleged engineering errors and omissions by a Chicago based global engineering contractor in the design of a 630 MW cogeneration facility in South Carolina.
  • Management of PMC services providing oversight of an Atlanta based engineering contractor for the design of a 1000 MW combined cycle gas generation project to be constructed in Freestone County, TX.
  • EPC management services for a captive power project with generation capacity of 220 MW located in a petrochemical complex in Singapore.

Commercial Building

  • Owner representation during design and construction of a solid waste fleet maintenance facility for Dade County Solid Waste Department, Miami, FL.
  • Project estimating to determine construction demobilization and remobilization costs due to interruption of operations for a health center under development by a major hospital in Sugar Land, TX.
  • Consulting services regarding hurricane preparation by a general contractor constructing a 35-story condominium tower in South Padre Island, TX.
  • Construction advisory services regarding compliance with manufacturers’ specifications by an installation contractor applying metal roofing at an automobile dealership in Alice, TX.
  • Architectural constructability review and estimating services provided in support of litigation for repair of failed balconies at a 240 unit residential complex in Galveston, TX.

Infrastructure

  • Project oversite and management advisory services in the UAE for seven remote area desalination plants. Each project included desalination process and waste water disposal equipment providing an average of 1.2 MMGD of treated water to the Villages and Islands division of the government of Abu Dhabi Water & Electricity District.
  • Resident engineering services to the Florida Department of Transportation for a road widening and bridge construction project in Cooper City, Florida, including construction management for widening an arterial surface roadway and construction of four new bridges.
  • Contract review services regarding alleged error and omissions, change orders, and adherence to industry standards in application of the engineering and construction process for construction of a roadway project in the city of Pearland, TX.

Project Risk Management

  • A project risk management program developed for a South Korean contractor addressed project risk analysis and regular follow up mitigation. The program, which includes training of project managers in the value of risk management, followed an ethane cracker project to the field in Uzbekistan where instruction was provided for project management.
  • Risk analysis principles were used to develop mitigation plans during preparation of a contractor’s fixed price proposal based only on a performance specification for a refinery and loading dock project in far east Russia.