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Delivering on The Promise: Strategies for successful integration of a newly acquired EPC operation

August 4, 2017

Olfa Hamdi

CEO and Co-Founder

Concord Project Technologies Inc., Palo Alto California 

 

A spate of multi-billion-dollar merger and acquisition deals are bringing leading American infrastructure companies together at a phenomenal rate. It’s a $22 billion horse race, with these highly competitive firms wagering that U.S. President Donald Trump will make good on his proposed $1 trillion infrastructure plan.

 

The latest announcement came Wednesday, with news that Jacobs Engineering Group Inc. will acquire CH2M HILL Companies Ltd. for $3.27 billion. The deal made headlines in the trade press across the country and the globe. But what happens when the media frenzy dies down?

 

The next chapter is far less sexy. Two companies have to integrate beyond the purchase transaction. That means two sets of powerful leaders have to get in one boat and start rowing in the same direction. Two sets of entrenched middle managers have to find a way to see eye-to-eye on protocols and practices. Systems and processes will come under heavy strain as people from different corporate cultures find themselves face-to-face with erstwhile competitors who have vastly different strategies and attitudes. Front-line teams often find themselves speaking entirely different languages. Then delayering and layoffs begin.

 

Acquisitions often deliver less value than expected precisely because companies fail to integrate effectively. For EPC companies operating in capital construction markets, the demands on the integration team are even heavier because of the complex project environment.

 

The key is deliberate, conscious and effective alignment. To deliver on the promised synergies, preserve and expand value to shareholders, the parent and acquired companies have to function as one unit when serving Owner clients. Simply put: the deal is not done until successful integration is complete.

 

 

Here we look at five strategies to be taken into account to set the new, combined operation on a path to success.

 

1 | Remembering that a signed deal is the beginning, not the end.

 

After the merger is announced, the hard work of integration begins. Make sure you’re doing everything you can to create continuity. How?

For starters, your due diligence team has developed a deep knowledge of the company you’ve acquired. Instead of dissolving the team after the merger, as many companies do, leverage team members’ expertise. Make them a part of the integration effort. Continuity like this ensures the integration team has a firm grasp of the intricacies involved in bringing the two companies together. It also protects against the loss of knowledge that often comes with a turnover in leadership.

 

2 | Find the right person to lead the integration team

 

The integration leader will guide everyone through the uncharted territory that two organizations must cross before they can function as one. Guiding this kind of transition takes a leader with special skills. The person you choose must be at ease in complex situations, comfortable working with people at all levels and able to bring people together even when they come from different corporate cultures.

 

It is a challenging job, made even more difficult at Engineering, Procurement and Construction (EPC) firms where the complex project delivery system needs to be integrated as well. As a result, the integration leader needs strong project management skills and a deep understanding of both companies. When complex mergers involve industry giants like the Jacobs/CH2M pairing, the best integration managers rely on sophisticated technology platforms that help automate the integration of work processes and requirements so that they can focus on driving accountability and establishing a strong operation.

 

3 | Make quick decisions about layoff and delayering

 

Your top priority is to tell people in both organizations exactly what the acquisition means for them. Honest, meaningful communication and speedy decision-making show respect and help earn the faith and goodwill you’ll need to carry you through the transition. People who are worried about their future won’t be focused on the task at hand, and may even undermine your efforts to integrate and your ongoing project delivery operations.

 

For EPC companies, a critical first step is to open the lines of communication between the integration office and project leaders. In part, this is because the people who are at the helm of ongoing projects at both companies are best positioned to calm any fears about the consequences that will flow from the acquisition.

 

More importantly, however, these project managers, engineering leads, functional leads, project directors and gatekeepers need to know what role they’ll play in the new organization. Delayering is inevitable, so the earlier you can establish effective alignment, the better. Things change.

 

4 | At the project level, align teams and create functional baselines by segment and owner-client

 

Project delivery systems vary dramatically between teams – even teams who work at the same company. Execution processes and styles are different. Documentation, assurance and controls might be different, too. In the final analysis, you can’t even assume that a team’s documented processes are the same as the understood processes (the ones they actually follow, in practice). If these factors vary so significantly inside a single company, imagine how different they might be between two different companies! During a merger or an acquisition, how do you get everyone on the same page?

 

The good news is that the integration phase of an acquisition gives you a remarkable opportunity to take the best practices from each organization and align them across the new company. Managed well, this can become an inspiring educational process for those responsible for delivering projects.

 

Consider taking a Process and Requirements Alignment Approach, piloted and championed by a select project leadership group.

 

Practically, this means the integration team begins by selecting group of project managers, project directors, project sponsors and functional leads from across the different sectors of operations. These people should come from both the parent company and the acquired company.

 

The team brings these leaders together in collaborative "project performance acceleration workshops™" The primary goal is to get seasoned input into the core project delivery process. The outcome will be a segment functional baseline.

 

A segment functional baseline is a pre-defined and configured project environment that has the support of decision makers in the context of a project, a client relationship or an organizational objective. This functional baseline enables fast project kick-off and stronger interface management for the rest of the workforce delivery projects.

 

In the case of an acquisition, a joint venture or simply a newly formed Owner-EPC team, these workshops could be completed on Concord's project performance acceleration platform™, Team-Concord™ (T-CON™), which supports a team in building out work processes for sub-teams, functional groups, interfaces and third-party relationships (including relationships with owners). These same work processes are governed by a permission scheme that is driven by single-point accountability. Within few days – even a few hours, in some cases – a select group of project leaders could build an aligned functional baseline that is ready to go for the rest of the organization working on that specific segment.

 

5 | Understand the historical data from the acquired company and merge lessons learned to build common ground

 

The acquired company comes with a wealth of project data and documentation. The people who work at the acquired company know what’s there, but for the most part it sits in silent archives and databases that are different from the parent company. Tapping into these silent archives through the power of advanced search engines supports easy access to historical information about project delivery.

As an integral part of the the Concord Project Performance Acceleration Platform, we have built the most powerful knowledge search engine purpose built for historical project information allowing EPC and Owner companies to leverage this historical data as they embark on an integration protocol. 

 

With these five strategies – and the enabling power of a technology and platform purpose built for our industry – integration work gets accelerated, the risk of performance loss is reduced significantly and the likelihood of success increases dramatically, thus enabling the best of our industry to deliver on their shareholder promise 

 

 

Contact: ohamdi@tconglobal.com 

Working together on your Company + Concord's Project Performance Acceleration Platform™ 

www.tconglobal.com 

 

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