Case Study

Post M&A Asset Management Support



A large transmitter retained METSCO  to help it devise a process to integrate its existing operations with those of a  smaller utility it recently acquired.  Among many other factors, the two utilities were substantially different in their extent of reliance on data analytics and the scope and manner of work planning and execution practices.

The task was further complicated by the client’s request to quickly develop a  long-term capital plan for the acquired  (smaller) utility, leveraging the acquiring utility’s AM tools as much as possible.

At the time of METSCO’s engagement, the acquiring transmitter was in the process of converting the acquired utility’s asset data records into a format consistent with its own asset management tools and databases. Data conversion work revealed a number of content and process gaps,  driven by the fact that the smaller utility was either not collecting certain types of asset data parameters, and/or not formally leveraging the data that it was collecting through a centralized quantitative framework to drive capital decisions. In short, while the acquiring utility was well underway with using data-driven risk-based planning frameworks, its new acquisition relied on hard asset data insights in a less formal way — as a  contextual input and validation of engineer SMEs decisions.

From the organizational standpoint, the integration project was impacted by the fact that the AM integration accountabilities and lines of oversight were not yet clearly apportioned between the staff / departments of the two entities.  This scenario (not wholly uncommon in  post-M&A settings) led to some hesitation among the key SMEs as to their respective scope of authority in shaping the next steps.  

METSCO’s Engagement Objectives:  

Our approach to this complex project was  prioritized with three key objectives:  

  • Lead with the process: let the creation of a robust integration process shape the organic alignment of post-integration roles and responsibilities. 
  • Shape new insights from current data:  in spite of data gaps, use the data that is on hand today to drive new insights,  articulate the impact of gaps, and enrich the status quo with more info. 
  • Tolerate partial gaps in specifics to foster overall process congruence: prioritize concepts and their intent — rather than their strict articulation in the first run of the acquiring utility’s AM process for the acquired assets.Tolerate partial gaps in specifics to foster overall process congruence: prioritize concepts and their intent — rather than their strict articulation in the first run of the acquiring utility’s AM process for the acquired assets.  

With the client’s buy-in in hand, METSCO went to work on implementing the project. 

Recommendations and Actions Taken:  

Using the process development to gain organizational momentum: recognizing that lack of clarity in pre– and post-integration roles between the acquired and acquiring utility’s AM functions was affecting the pace and nature of integration work, METSCO shifted the focus onto the process itself. Instead of exploring which part of the pre and post-transition activities was to be led by various internal parties, we urged the responsible parties to focus on the need to develop a robust integration process first.  We advised that process design without undue focus on accountabilities early on, had the advantage of fostering inter-entity collaboration and bringing about objective assessment of needs, risks, and priorities at the early stages of planning. As the desired process began to take shape, the management would find itself in a better position to make informed decisions regarding accountabilities and reporting structures, leveraging mutual trust developed in the process planning stage.  

Acting as the development lead, METSCO proposed a three-phase AM function integration process. The first phase  (effectively ongoing at the time of the engagement) would conclude with the initial iteration of the multi-year capital plan using the data insights available today, evaluated through the lens of the key components of the larger utility’s  AM & system planning frameworks. The second phase would entail detailed analysis and critical path development for consolidation of physical equipment, fieldwork, planning, and forecasting. The final phase would entail the actual consolidation of work execution planning and management.  At the conclusion of the Third phase, the integrated utility would be expected to be in a position to perform the next iteration of long-term asset planning using the full scope of the larger utility's processes.  

Using Available Data to Shape New Insights: although the types and volumes of asset data available to the acquired at the time of engagement were below the normal requirements of the acquiring organization, METSCO felt it was critical to utilize the data at hand to leverage the value of consistent data-driven asset analytics early on. Rather than doing so by way of adapting the acquiring utility's analytical processes to account for multiple data gaps, METSCO performed a  customized asset condition assessment on all key classes of the acquired assets, using the data available to construct multi-factor quantitative health indices for the first time in the utility’s existence. In our assessment, using an independent party’s framework to develop a transitional  ACA that prioritized maximization of available data in developing health indices (while being guided by industry best practices), was preferable to using the acquired utility’s  ACA framework that assumed availability of certain types of data to derive reliable results. Having completed the ACA, METSCO used it in the ensuing long-term planning process. Unlike the past practices, the ACA (and asset data it synthesized) now acted as the objective foundation for planning work — not a supplemental input.  

Tolerate partial gaps in specifics to foster overall process congruence: recalling our client’s desire to integrate as much of its existing processes into the first iteration of the capital plan for the newly acquired utility, METSCO  concentrated on higher-level process elements, focussing on the intended objectives of each step rather than their specific manifestations in the existing process. Having performed the numerical asset health assessment using a customized methodology, METSCO then worked to translate its key insights into the format used in the acquiring company’s planning and prioritization process. While certain adjustments and omissions were still inevitable, the client was able to leverage the core principles and processes underlying its risk-based planning process to determine a viable portfolio of projects to proceed with while the AM process integration activities continue.  

Our Next Frontier: METSCO’s consultants are developing practical tools that help prioritize among potential operations-level KPIs on the basis of their impact to company-wide return on invested capital. We expect these tools to be valuable both in post-M&A scenarios and regular operations.  

The METSCO difference 

We approach every project with a unique blend of engineering, economics, and management science tool appropriate in each context, delivering new age insights grounded in old school expertise.

METSCO’s Strategy and Operations consulting practice helps our clients identify and resolve complex pressure points that straddle departmental authority lines, extend across time horizons and incorporate a significant degree of uncertainty. 

It is our conviction that utilities possess major incumbent advantages they can unlock and leverage to remain technology leaders and progress conduits for years to come.  

Contact us today and see why utilities and industrial customers across the continent trust METSCO  to make things possible.