Westney Consulting Group
2200 West Loop South
Suite 500
Houston, TX 77027
Phone: 713-861-0800
Toll Free: 800-648-3475
Email: info@westney.com

Due Diligence

Today’s executives face major challenges when confronting the opportunities and risks associated with multi-billion dollar investments in major projects.  Many have become skeptical that the project’s final outcome will be anything like the cost estimate or schedule being presented to them. Decision-makers need a good understanding of a project’s predictability.  Unfortunately, this is something they seldom have; in many cases, optimism and overconfidence characterize project proposals, making fact-based decisions difficult. 

The history of major project cost overruns, schedule delays, and lost economic value clearly indicates the importance of an unbiased, external expert’s perspective. Executives and boards in capital intensive industries such as oil & gas, power, chemicals, and mining/metals have come to rely on Westney’s due diligence services to provide an independent expert view they can incorporate into strategic decisions.

Westney due diligence takes an integrated view, considering all the drivers of "bankability" as illustrated below.

 

Applicable to any project at any time, Predictability Calibration™ gives decision-makers an unbiased view of a project’s predictability and the specific issues that must be addressed.  Westney’s expert consulting staff and proprietary Predictability Calibration™ process generally require only a week to develop a rigorous assessment that pinpoints what management needs to know and do to de-risk the project, improve predictability, and gain the confidence needed to move forward.

Westney calibrates predictability by assessing 35 Predictability Factors. Each Factor is scored and the actual score is calibrated against the achievable score for that project at that point in time.  These scores are summarized into an overall score as illustrated by the predictability gauge shown here.

 

Organization Due Diligence

Arguably the most critical driver of a project’s predictability and performance is the ability of the owner/operator’s organization to provide the competencies needed to meet the challenges of a project’s risk profile.  Often, an owner/operator undertaking a “bet the company” project finds that the home office staff will be stretched to (or beyond) the limit.  This creates an unacceptable level of risk exposure.

Organization Due Diligence begins with an assessment of the project’s predictability and risk drivers.  If outcomes are to be predictable, there must be an appropriate organizational competency to proactively engage in managing every risk.  Organization Due Diligence provides an independent assessment of these competencies and identifies critical gaps with particular focus on those owner competencies that cannot be effectively transferred to others.

The results of this gap analysis become the basis for an organization strategy.  The strategy may call for strengthening the owner organization, contracting out key project management and/or technical competencies, or using a different contract strategy.

Contractor Due Diligence

Among the most critical decisions an owner/operator must make is selecting the right contracting strategy and the right contractor to do the work.  These decisions often require an in-depth knowledge of contractors’ business models, market conditions, workload, risk appetite and actual capabilities.  This type of industry intelligence is very difficult for an owner to obtain, since any dialogue between contractors and their potential clients will always be colored by commercial overtones.

Contractor Due Diligence informs contracting strategy and contractor selection with the necessary insight into market conditions, backlogs, and contractor capabilities.  Westney’s consulting team includes former executives from leading engineering and construction contractors who have a deep understanding of what drives engineering and construction contractor costs, risks, and profitability, as well as specific contractor’s current capabilities and potential liabilities from troubled projects.  Following a disciplined due diligence process, a strategy is developed that addresses potential contractors for consideration, allocation of work packages, types of contracts, and allocation of risks.  If needed, this work can be expanded to include guidance and support for pre-qualification, RFP development, and bid evaluations.