Navigating the Rapidly Changing Landscape in Industry: A Case Study in Risk Due Diligence

Management Solutions, LLC (MSLLC) has been delivering technical advisory services to private sector, federal, and state clients for over two decades. Our expertise spans a range of due diligence support, including independent engineering of complex technical projects seeking private and government investment funding.

WHY INDEPENDENT ENGINEERING DUE DILIGENCE MATTERS IN TODAY’S MACROECONOMIC ENVIRONMENT

As U.S. energy and industrial policy continues to evolve, stakeholders in the U.S. energy and industrial sector will need to maintain a well-informed and flexible approach—one that includes the insights of independent engineering experts who can provide objective assessments of technical, regulatory, and financial risks. Incorporating independent engineering into strategic planning can help organizations validate assumptions, anticipate challenges, and position themselves to capitalize on both planned and emerging opportunities. As macroeconomic shifts develop, leaders must focus on what they can control, and independent engineering enables them to make decisions with significantly more confidence on a project’s technical profile.

CASE STUDY IN INDEPENDENT ENGINEERING DUE DILIGENCE

MSLLC recently completed a series of confidential, independent-engineering due-diligence technical risk assessments of a portfolio of technically complex and advanced energy projects in multiple market areas, including fossil fuel and renewable energy generation, cement production, product manufacturing, and metals smelting in support of financial investment decision-making.

In providing this risk due diligence for the client, we established a standardized framework for our technical independent engineering reviews across the lifecycle of each project in the portfolio (as applicable), including preparation of feedback and written deliverables, ensuring quality and consistency.

As a part of our risk due-diligence, MSLLC and our team of subject matter experts reviewed project-specific technologies, technology commercial readiness, design maturity, assurance milestones at various stages of project development from design through construction and commissioning to operations, project efficacy, and—most importantly—project risk and risk mitigants.

Among other things, our reviews considered project-specific applicable regulatory and industry standards, key engineering deliverables and documentation, risk assessment inputs, project planning, project cost and schedule, supply chain, and project risk management.

Identified Risk Provides Opportunities to Mitigate or Pivot, Providing Value for Client

Despite each of these projects in the portfolio having been developed and designed by experienced and competent professionals, MSLLC’s due diligence team uncovered multiple areas of risk in each project that neither the development teams nor our client had considered. Among other things, our due diligence team uncovered risks across these projects in the following areas:

●        Insufficient technology demonstration at planned commercial production output

●        Meeting guaranteed performance metrics

●        Meeting contract obligations

●        Equipment degradation concerns

●        Technology gaps and potential misapplication of proven technology to project construct

●        Performance concerns during startup, shutdown, and reduced output operating conditions

●        Regulatory compliance

●        Raw materials supply

●        Unrealistic project scheduling and costs

●        Constructability concerns

After identification of these risks, the client was positioned for each project (a) to make key go/no-go investment decisions (e.g., walk-away, impose conditions precedent to funding) and (b) to proactively require each project’s developer to refine their project to adequately address or mitigate each risk item to our client’s satisfaction. In most cases, project developers addressed their project’s risk in a manner sufficient to meet our client’s risk appetite, while in other cases the client was able to pivot its plans – always to protect its best interest.

CONCLUSION

Understanding project risk is important, particularly with the quickly evolving U.S. industry landscape. Engaging an experienced technical risk and independent engineering consultant early—before irreversible financial decisions are made—not only helps mitigate risk but also strengthens project planning, supports regulatory navigation, and increases investor confidence through unbiased validation. A proactive approach can lead to more informed decisions, improved financial outcomes, and greater long-term project success.

Management Solutions is a trusted, woman-owned, small business with twenty-three years’ experience delivering project and program management services, engineering and technical advisory services, environmental solutions, digital solutions, and workforce solutions to federal and state agencies, non-government organizations, and private-sector clients. We have managed and supported more than $36B in project spend across the nation’s most complex and mission-critical projects.